<PAGE>
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) NOVEMBER 28, 1997
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P-COM, INC.
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(Exact name of registrant as specified in charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 0-25356 77-02893711
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
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
--------------------------
NOT APPLICABLE
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(Former name or former address, if changed since last report.)
<PAGE>
Item 5 OTHER EVENTS
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(a) On December 8, 1997, the Registrant issued a press release regarding
the acquisitions of Telematics Inc. and R T Masts Limited. Although the press
release states that the acquisitions closed on November 27, 1997, the actual
date of consummation was November 28, 1997. A copy of the press release is
attached hereto and incorporated herein by reference.
Item 7 FINANCIAL STATEMENTS AND EXHIBITS
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(a) Financial Statement of Business Acquired. Not applicable.
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(b) Pro Forma Financial Information. Not applicable.
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(c) 4.1 Exhibit (4.1) - Escrow Agreement dated November 28, 1997, by and
among P-Com, Inc., P-Com Field Services Inc., Telematics Inc. and
Daniel N. Carter.
4.2 Exhibit (4.2) - Registration Rights Agreement, dated November 17,
1997, by and among P-Com, Inc., P-Com Field Services Inc.,
Telematics Inc. and Daniel N. Carter.
4.3 Exhibit (4.3) - Escrow Agreement, dated November 28, 1997, by
and among P-Com, Inc. P-Com Services (UK) Limited and R T Masts
Limited.
10.1 Exhibit (10.1) - Securities Purchase Agreement, dated November
17, 1997, by and among P-Com, Inc. P-Com Field Services Inc.,
Telematics Inc. and Daniel N. Carter (Exhibit 2.2, the Escrow
Agreement, is filed as Exhibit (4.1) hereto, Exhibit 4.6, the
Registration Rights Agreement, is filed as Exhibit (4.2) 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).
10.2 Exhibit (10.2) - Share Purchase Agreement, dated October 14,
1997, by and among P-Com, Inc., P-Com Services (UK) Limited and
R T Masts Limited (Exhibit 2.2, the Escrow Agreement, is filed as
Exhibit (4.3) 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).
99.1 Exhibit (99.1) - Press Release, dated December 8, 1997, issued
by P-Com, Inc. announcing the acquisition of Telematics Inc. and
R T Masts Limited.
Item 9 SALES OF EQUITY SECURITIES PURSUANT TO REGULATIONS
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(a) On November 28, 1997, the Registrant completed the issuance of 766,151
shares of its common stock (the "Shares") to the securityholders of R T Masts
Limited ("R T Masts"), a corporation organized under the laws of the United
Kingdom, in exchange for all the issued and outstanding equity securities of
R T Masts. The Shares were issued pursuant to the exemption from the
registration requirements of the Securities Act of 1933, as amended, provided by
Regulation S. The Shares were issued to non-U.S. persons and did not involve
offers or sales in the United States, as such terms are defined in Regulation S.
The Registrant may choose to register the Shares in the future using a
Registration Statement on Form S-3 although it is under no contractual
obligation to do so. 74,544 of the Shares are being held in escrow as collateral
for all obligations of the securityholders of R T Masts pursuant to the Purchase
Agreement and the provisions of an escrow agreement.
2.
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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: December 9, 1997 By: /s/ Michael J. Sophie
----------------------------------------
Name: Michael J. Sophie
Title: Chief Financial Officer
3.
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EXHIBIT INDEX
Exhibit
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4.1 Exhibit 7(c)(4.1) - Registration Rights Agreement, dated November
17, 1997, by and among P-Com, Inc., P-Com Field Services Inc.,
Telematics Inc. and Daniel N. Carter.
4.2 Escrow Agreement dated November 28, 1997, by and among P-Com,
Inc., P-Com Field Services Inc., Telematics Inc. and Daniel N.
Carter.
4.3 Escrow Agreement dated November 28, 1997, by and among P-Com, Inc.,
P-Com Services (UK) Limited and R T Masts Limited.
10.1 Securities Purchase Agreement, dated November 17, 1997, by and
among P-Com, Inc., P-Com Field Services Inc., Telematics Inc. and
Daniel N. Carter.
10.2 Share Purchase Agreement, dated October 14, 1997, by and among
P-Com, Inc., P-Com Services (UK) Limited and R T Masts Limited.
99.1 Press Release, dated December 8, 1997, issued by P-Com Inc.
announcing the acquisition of Telematics Inc. and R T Masts
Limited.
<PAGE>
EXHIBIT 4.1
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REGISTRATION RIGHTS AGREEMENT
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November 17, 1997
<PAGE>
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS REGISTRATION RIGHTS AGREEMENT is made as of the 17th day of November,
1997, by and among P-Com, Inc., a Delaware corporation (the "Company"), and
Daniel N. Carter (the "Securityholder").
RECITALS
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WHEREAS, the Company and the Securityholder are parties to the Securities
Purchase Agreement dated November 17, 1997 (the "Purchase Agreement") which
provides for the purchase (the "Purchase") of all of the shares of capital stock
of Telematics, Inc., a Virginia corporation ("Telematics") by a wholly owned
subsidiary of the Company;
WHEREAS, in order to induce Telematics and the Securityholder to enter into
the Purchase Agreement, the Securityholder and the Company hereby agree that
this Agreement shall govern the rights of the Securityholder to cause the
Company to register shares of Common Stock issued or issuable to the
Securityholder and certain other matters as set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as follows:
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1.1 Definitions. For purposes of this Section 1:
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(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
Section 1.11 hereof.
(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 issuable or issued in the Purchase to the Securityholder and (ii) any
Common 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
2.
<PAGE>
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.
This term shall also include any Common Stock held in Escrow pursuant to the
Escrow Agreement.
(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 Request for Registration.
------------------------
(a) Subject to the terms of this Agreement, if the Company shall receive at
any time after the Closing Date (as defined in the Purchase Agreement), a
written request from the Securityholder that the Company file a registration
statement under the Act covering the registration of at least seventy-five
percent (75%) of the Registrable Securities then outstanding, then the Company
shall:
(i) file as soon as practicable, and in any event within sixty (60)
days of the receipt of such request, a registration statement under the Act of
all Registrable Securities which the Holders request to be registered, subject
to the limitations of subsection 1.2(b). In any event, such registration
statement covering the Registrable Securities shall be filed by January 26,
1998.
(b) If the Securityholder intends to distribute the Registrable Securities
covered by his request by means of an underwriting, he shall so advise the
Company promptly following the date hereof as a part of his request made
pursuant to subsection 1.2(a). The underwriter will be selected by the Company
and the terms of the underwriting agreement shall be reasonably acceptable to
the Securityholder. In any event, the Company shall allow the Securityholder to
substitute an underwriter that is reasonably acceptable to the Company.
Securityholder shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting. In no event shall
the addition of the securities held by any other stockholders with rights
similar to those granted herein limit the number of Registrable Securities that
Securityholder has requested to be registered pursuant to Section 1.2(a).
(c) In addition, 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
3.
<PAGE>
(ii) If the Company can otherwise include all Registrable Securities
requesting registration on a registration statement effected on behalf of other
stockholders of the Company exercising rights similar to those in Section 1.2
hereof; provided, however, that such inclusion does not limit the number of
Registrable Securities that would otherwise be registrable under this Section
1.2 and that the obligations of the Company pursuant to Section 1.4 hereof are
satisfied.
1.3 Company Registration. If (but without any obligation to do so)
--------------------
the Company proposes to register any of its Common Stock under the Act in
connection with the public offering of such securities for the Company's account
solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock or option plan, or a SEC Rule 145
transaction), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder prior to
the filing on such registration statement, the Company shall, subject to the
provisions of Section 1.8, cause to be registered under the Act all of the
Registrable Securities that Securityholder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this Section
--------------------------
1 to effect the registration of any Registrable Securities, the Company shall:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its reasonable best efforts to
cause such registration statement to become effective, and, upon the request of
the Securityholder in the case of the Section 1.2 demand, 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, if necessary, to keep the registration statement effective
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.
4.
<PAGE>
(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 Securityholder 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 him.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the
Securityholder; 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. Securityholder shall also
enter into and perform its obligations under such an agreement.
(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.
(g) Make all appropriate requests, supply information required and
otherwise use its reasonable best efforts (including payment of fees) to obtain
all legal opinions, auditor's consents and comfort letters as may be necessary
to complete the registration process, if applicable.
1.5 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 Securityholder that Securityholder
shall furnish to the Company such information regarding himself, the Registrable
Securities held by him, and the intended method of disposition of such
securities as shall be required to effect the registration of such
Securityholder's Registrable Securities.
1.6 Expenses of Demand Registration. All expenses, other than
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underwriting discounts, commissions and fees and disbursements of counsel for
the Securityholder, incurred in connection with registrations, filings or
qualifications 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; provided, however, that the Company shall not be required to pay
5.
<PAGE>
for any expenses of any registration proceeding begun pursuant to Section 1.2 if
the registration request is subsequently withdrawn at the request of the
Securityholder (in which case Securityholder shall bear such expenses), unless
Securityholder agrees to forfeit his right to a demand registration pursuant to
Section 1.2; provided further, however, that if at the time of such withdrawal,
the Securityholder has learned of a material adverse change in the condition,
business or prospects of the Company from that known at the time of his request
and has withdrawn the request with reasonable promptness following disclosure by
the Company of such material adverse change, then Securityholder shall not be
required to pay any of such expenses and shall retain his rights pursuant to
Section 1.2;
1.7 Expenses of Company Registration. The Company shall bear and pay
--------------------------------
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for Securityholder (which right may be assigned as
provided in Section 1.11), including (without limitation) all registration,
filing, and qualification fees, printers and accounting fees relating or
apportionable thereto and the fees and disbursements of counsel for the Company
in its capacity as counsel to the Securityholder hereunder; if Company counsel
does not make itself available for this purpose, the Company will pay the
reasonable fees and disbursements of one counsel for the Securityholder selected
by him up to $7,500, but excluding underwriting discounts and commissions and
taxes, if any, relating to Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering
-------------------------
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Securityholder's
securities in such underwriting unless he accepts the terms of the underwriting
as agreed upon between the Company and the underwriters selected by him (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not,
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by the stockholders to
be included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholders or in such other proportions as shall mutually be agreed to
by such selling stockholders).
1.9 Delay of Registration. Securityholder shall not have any right
---------------------
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
6.
<PAGE>
1.10 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Securityholder the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the SEC that may at any time
permit Securityholder 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.
1.11 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 Securityholder 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, including without limitation the provisions of
Section 1.12 below; 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.
1.12 "Market Stand-Off" Agreement. Securityholder hereby agrees
----------------------------
that, during the period of duration specified by the Company and an underwriter
of common stock or other securities of the Company, following the Purchase it
shall not, to the extent requested by the Company and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company held by it at any time during such period except
Common Stock included in such registration; provided, however, that all
executive officers and directors of the Company enter into similar agreements
and such market stand-off time period shall not exceed ninety days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of
Securityholder (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 1.12 shall not apply to a registration relating solely to employee
benefit plans on Form S-8 or similar forms which may be promulgated in the
future, or a registration relating solely to a SEC Rule 145 transaction.
1.13 Termination of Registration Rights. Securityholder shall not 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 one year after the consummation of the Purchase.
7.
<PAGE>
2. Miscellaneous.
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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 California as applied to agreements among
California residents entered into and to be performed entirely within
California.
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 Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled. Attorney's
fees of the prevailing party for purposes hereof will be limited to the
attorney's fees of the non-prevailing party with respect to such arbitration.
2.6 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.
8.
<PAGE>
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.
2.9 Remedy for Breach. In the event that the Company fails to file a
-----------------
registration statement in accordance with Section 1.2 hereof, the Company shall
agree to pay to Securityholder an amount of $5,000 per day (the "Payment") for
each day that the Company fails to comply with its obligations to file such
registration statement; provided, however, that the Payment shall not be payable
to Securityholder in the event that the Company's failure to file is in any way
caused by the acts or omissions of Securityholder; and provided further, that
the Company shall be entitled, in its sole discretion, to make the Payment in
cash or in shares of its Common Stock, provided such Common Stock is registered
under the Act with the SEC for sale.
9.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
P-COM, INC., a Delaware corporation
By:
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Address:
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-----------------------------------------
10.
<PAGE>
REGISTRATION RIGHTS AGREEMENT
SIGNATURE PAGE
SECURITYHOLDER:
-----------------------------------------
Address:
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11.
<PAGE>
SCHEDULE A
----------
Number of P-Com
Shares of Common Stock
Name (Issued or Issuable)
- ---- --------------------
12.
<PAGE>
EXHIBIT 4.2
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is made and entered into as of
this 28th day of November, 1997, by and among P-Com, Inc., a Delaware
corporation ("P-Com"), Telematics, a Virginia corporation ("Telematics"), Daniel
N. Carter and George Roberts (collectively, "Escrow Committee") and Brobeck,
Phleger & Harrison LLP ("Escrow Agent"). Terms not otherwise defined herein
shall have the meaning set forth in the Purchase Agreement (as defined below).
WITNESSETH
WHEREAS, P-Com, Telematics, Daniel N. Carter ("Securityholder") and P-
Com Field Services, Inc., a subsidiary of P-Com ("Sub") have entered into a
Securities Purchase Agreement, dated as of November 17, 1997 (collectively, with
all amendments, schedules, exhibits and certificates referred to therein, the
"Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement, an escrow (the "Escrow")
shall be established to compensate P-Com, Sub and their respective affiliates
(other than the Securityholder) for Damages each may incur by reason of an
inaccuracy in, breach or nonfulfillment of, or noncompliance with the
representations, warranties, covenants or agreements of Telematics and
Securityholder contained in the Purchase Agreement; and
WHEREAS, the Escrow Committee has been constituted as agent for and on
behalf of the Securityholder to undertake certain obligations herein; and
WHEREAS, the Purchase Agreement provides for an escrow of shares of P-
Com Common Stock issued in connection with the purchase of the Shares, such
escrow to be held by the Escrow Agent; and
WHEREAS, the parties hereto desire to set forth further terms and
conditions in addition to those set forth in the Purchase Agreement relating to
the operation of the Escrow.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants contained in the Purchase Agreement and herein, and intending to be
legally bound, hereby agree as follows:
1. Escrow. Pursuant to the Purchase Agreement, P-Com shall deposit
------
in escrow with the Escrow Agent at the Time of Closing the stock certificate or
certificates representing a sufficient number of shares of P-Com Common Stock as
set forth in the Agreement (the "Escrow Shares") which shall be registered in
the name of the Escrow Agent as nominee for the beneficial owner of such shares.
Concurrently therewith, the Escrow
<PAGE>
Committee shall execute a stock power with respect to the Escrow Shares, which
stock power shall be delivered to the Escrow Agent and attached to the
certificate(s) representing the Escrow Shares. The Escrow Shares shall be held
and distributed by the Escrow Agent in accordance with the terms and conditions
of the Purchase Agreement and this Agreement. The number of Escrow Shares
beneficially owned by Securityholder is set forth in Exhibit A attached hereto.
2. Escrow Period. Except as set forth in the Purchase Agreement,
-------------
the Escrow shall terminate with respect to the Escrow Shares upon the date of
release of P-Com's Annual Report on Form 10-K for the fiscal year ending
December 31, 1997.
3. Application of Escrow Shares to Claims.
--------------------------------------
a. If P-Com, Sub or any of their respective affiliates (other
than the Securityholder) shall have any claim giving rise to Damages against
Telematics or the Securityholder pursuant to Article VII of the Purchase
Agreement, P-Com shall promptly give written notice thereof to each member of
the Escrow Committee, including in such notice a brief description of the facts
upon which such claim is based and the amount of Damages, with a duplicate copy
delivered to the Escrow Agent. If the Escrow Committee agrees to such claim, as
soon as practicable after the expiration of the fifteen (15) business day notice
period set forth in section 3.b. below, the Escrow Agent shall deliver out of
the Escrow to P-Com the lesser of: (a) the number of the Escrow Shares (in whole
shares) in the Escrow that have an aggregate market value (determined as
provided in the Purchase Agreement) most nearly equal to such Damages or claims
for Damages thus to be satisfied, or (b) all of the Escrow Shares in the Escrow.
b. If the Escrow Committee agrees to the validity of any claim
for Damages, it shall give written notice to P-Com within fifteen (15) business
days following receipt of P-Com's notice of claim, with a duplicate copy to the
Escrow Agent, advising P-Com that it consents to the delivery of any of the
Escrow Shares out of Escrow to P-Com for application to such claims. Otherwise,
the Escrow Agent shall hold the Escrow Shares in Escrow until the rights of P-
Com and the Securityholder with respect thereto have been agreed upon among the
Escrow Committee and P-Com or until such rights are finally determined in
accordance with section 3.c. hereof. The Escrow Agent may rely on any memorandum
of P-Com and all members of the Escrow Committee or any determination by any
such arbitration panel. In any such resolution to determine the Escrow Shares to
be delivered out of Escrow, the Escrow Agent shall, as soon as practicable
following receipt of a copy of such determination, deliver out of Escrow the
Escrow Shares from the Escrow in accordance with the terms thereof.
c. In case the Escrow Committee shall not so agree in writing to
any claim or claims by P-Com, P-Com shall have twenty-five (25) days to respond
in a written statement to the objection of the Escrow Committee. If the Escrow
Committee and P-Com should agree after such time, a memorandum setting forth
such agreement shall be
2.
<PAGE>
prepared and signed by P-Com and by all members of the Escrow Committee and
shall be furnished to the Escrow Agent. The Escrow Agent shall be entitled to
rely on any such memorandum and shall distribute the Escrow Shares from the
Escrow in accordance with the terms thereof. If after such twenty-five (25) day
period there remains a dispute as to any claims, the members of the Escrow
Committee shall either (i) mutually agree upon a third party to resolve the
issue or (ii) either party shall have the right to submit the matter to
arbitration with the American Arbitration Association within six (6) months of
the expiration of the aforesaid twenty-five (25) day period. The decision of
the arbitrator or third party as to the validity and amount of any Damages shall
be binding and conclusive upon the parties to this Agreement and the Escrow
Agent shall be entitled to act in accordance with such decision and make or
withhold payments out of the Escrow in accordance therewith. Judgment upon any
award rendered by the third party or arbitrator may be entered in any court
having jurisdiction. Any such arbitration shall be held in Fairfax County,
Virginia under the commercial rules then in effect of the American Arbitration
Association. Through the Escrow or otherwise, the arbitrator or such third
party may apportion among the parties the expenses of the parties, including
without limitation, attorneys fees and costs, fees of the arbitrator, the
administrative fee of the American Arbitration Association, and the expenses
incurred by the other party to the arbitration.
d. In the event P-Com becomes aware of a third-party claim which
P-Com believes may result in a demand against the Escrow, P-Com shall notify the
Escrow Committee of such claim, and the Securityholder shall be entitled, at his
own expense, to participate in any defense of such claim. P-Com shall have the
right in its sole discretion to control the defense, settlement, compromise or
other disposition of any such claim, on behalf of and for the account and risk
of the Securityholder, and the Escrow Committee shall cooperate with P-Com in
any such defense, including, without limitation, by revealing all information
pertinent thereto within their control other than attorney-client privileged
communications. The costs of defense of any third party action or claim or any
settlement or compromise thereof shall be paid from the Escrow Shares. P-Com
shall have no obligation to obtain the consent of the Escrow Committee to any
good faith settlement or disposition of any claim under this section 3.d.;
provided, however, that the Securityholder shall retain the power and authority
to object to the amount of any withdrawal by P-Com against the Escrow for
indemnity with respect to such settlement or disposition, which objection shall
be submitted to arbitration or to a mutually agreed upon third party in
accordance with the provisions of Section 3.c hereof.
4. Escrow Committee.
----------------
a. Upon consummation of the Purchase Agreement and in
consideration of the issuance of the Escrow Shares, Securityholder shall be
deemed to have irrevocably appointed the Escrow Committee as his attorneys in
fact to give and receive notices and communications, to authorize delivery to P-
Com of the Escrow Shares or other property from the Escrow in satisfaction of
claims by P-Com, to object to such deliveries, to agree to negotiate, enter into
settlements and compromises of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such claims, and to
3.
<PAGE>
take all actions necessary or appropriate in the judgment of the Escrow
Committee for the accomplishment of the foregoing. No further documentation
shall be required to evidence such appointment, and such power of attorney shall
be coupled with an interest, thereby confirming such appointment as irrevocable.
Notices or communications to or from the Escrow Committee shall constitute
notice to or from Securityholder. A decision, act, consent or instruction of
the Escrow Committee shall constitute a decision of Securityholder and shall be
final, binding and conclusive upon each Securityholder, and the Escrow Agent and
P-Com may rely upon any decision, act, consent or instruction of the Escrow
Committee as being the decision, act, consent or instruction of Securityholder.
The Escrow Agent and P-Com are hereby relieved from any liability to any person
for any acts done by them in accordance with such decision, act, consent or
instruction of the Escrow Committee. The Escrow Committee shall be empowered to
act by unanimous vote with respect to all matters arising under this Agreement
during the term of this Agreement. No bond shall be required of the Escrow
Committee, and members of the Escrow Committee shall receive no compensation for
their services.
b. The Escrow Committee shall not be liable to anyone whatsoever
by reason of any error of judgment or for any act done or step taken or omitted
by them in good faith or for any mistake of fact or law for anything which he
may do or refrain from doing in connection herewith unless caused by or arising
out of his own gross negligence or willful misconduct, and any act done or
omitted pursuant to the advice of counsel shall be conclusive evidence of such
good faith. The Securityholder and P-Com shall, jointly and severally, indemnify
and hold the Escrow Committee, and each member thereof, harmless from any and
all liability and expense (including, without limitation, counsel fees) which
may arise out of any action taken or omitted by him as an Escrow Committee
member in accordance with this Agreement, as the same may be amended, modified
or supplemented, except such liability and expense as may result from the gross
negligence or willful misconduct of the Escrow Committee.
c. The Escrow Committee may rely and shall be protected in
relying or refraining from acting on any instrument reasonably believed to be
genuine and to have been signed or presented by the proper party or parties. The
Escrow Committee shall not be liable for other parties' forgeries, fraud or
false personations.
d. The Escrow Committee is hereby authorized and directed to
disregard any and all notices and warnings that may be given by any person, firm
or corporation except the final order, judgment or decree of any court made,
filed, entered or issued, whether with or without jurisdiction, from which no
further appeal may be taken and the Escrow Committee is hereby authorized to
comply with and obey any and all such final orders, judgments and decrees of any
court made, filed, entered or issued, whether with or without jurisdiction. If
the Escrow Committee shall comply with or obey any such order, judgment or
decree of any court, the Escrow Committee shall not be liable to any of the
parties hereto, or to any other person, firm, association or corporation, by
reason of any such
4.
<PAGE>
compliance or obedience even if any such order, judgment or decree may be
subsequently revised, modified, annulled, set aside or vacated.
e. If the former Telematics Securityholder on the Escrow
Committee, or his replacement hereunder, shall die, become disabled or otherwise
be unable to fulfill his responsibilities hereunder, the remaining member or
members of the Escrow Committee shall select a replacement member or members
from among those persons who are direct family members of Securityholder. If the
P-Com members of the Escrow Committee, or replacement hereunder, shall die,
become disabled, resign or otherwise be unable to fulfill his responsibilities
hereunder, P-Com shall choose a replacement.
f. The Escrow Committee shall have reasonable access to
information about Telematics and the reasonable assistance of Telematics'
officers and employees for purposes of performing its duties and exercising its
rights hereunder, provided that the Escrow Committee shall treat confidentially
and not disclose any nonpublic information from or about Telematics to anyone
(except on a need to know basis to individuals who agree to treat such
information confidentially).
5. Duties of Escrow Agent. The Escrow Agent shall be entitled to
----------------------
such rights and shall perform such duties of the escrow agent as set forth
herein and in Article VII of the Purchase Agreement, including but not limited
to the following (collectively, the "Duties"):
a. The Escrow Agent shall hold and safeguard the Escrow Shares
during the Escrow Period, shall treat such Escrow as a trust fund in accordance
with the terms of this Agreement and the Purchase Agreement and not as the
property of P-Com, and shall hold and dispose of the Escrow Shares only in
accordance with the terms of this Agreement and the Purchase Agreement.
b. The Escrow Shares shall be voted by the Escrow Agent in
accordance with the instructions received by the Escrow Agent from the
beneficial owner of such shares.
c. Promptly following termination of the Escrow Period as set
forth in Section 2 hereof, the Escrow Agent shall deliver to the Securityholder
the remaining number of Escrow Shares in the Escrow in excess of any amount of
such Escrow Shares or other property sufficient, in the sole judgment of P-Com,
subject to the objection of the Escrow Committee and the subsequent resolution
of the matter in the manner provided in section 3.d. above, to satisfy any
unsatisfied claims for Damages specified in any P-Com notice theretofore
delivered to the Escrow Committee and Escrow Agent prior to termination of the
Escrow Period with respect to facts and circumstances existing prior to
expiration of the Escrow Period, and to pay expenses as provided in this
Agreement. As soon as all such claims have been finally resolved, the Escrow
Agent shall deliver to the Securityholder any
5.
<PAGE>
and all of the Escrow Shares and other property remaining in the Escrow and not
required to satisfy such claims and expenses.
6. Distribution. Any cash dividends, dividends payable in
------------
securities or other distributions of any kind (but excluding any shares of P-Com
capital stock received upon a stock split) shall be distributed by the Escrow
Agent to the beneficial holder of the Escrow Shares to which such distribution
relates. Any shares of P-Com capital stock received by the Escrow Agent upon a
stock split made in respect of any securities in the Escrow shall be added to
the Escrow and become a part thereof. Any provision hereof or in the Purchase
Agreement shall be adjusted to appropriately reflect any stock split or reverse
stock split.
7. Ownership. The Securityholder shall have all indicia of
---------
ownership of the Escrow Shares while they are held in Escrow, including, without
limitation, the right to vote the Escrow Shares and the obligations to pay all
taxes, assessments, and charges with respect thereto, but excluding the right to
sell, transfer, pledge or hypothecate or otherwise dispose of any Escrow Shares;
provided, that any distribution on or with respect to the Escrow Shares and any
other shares or securities into which such Escrow Shares may be changed or for
which they may be exchanged pursuant to corporate action of P-Com affecting
holders of P-Com Common Stock generally shall be delivered to and held by Escrow
Agent in Escrow and shall be subject to the provisions herein and Article VII of
the Purchase Agreement. Except as contemplated hereunder, no Escrow Shares or
any beneficial interest therein may be pledged, sold, assigned or transferred,
including by operation of law, other than by will or by the laws of descent or
distribution in the event of the death of Securityholder, by Securityholder or
be taken or reached by any legal or equitable process in satisfaction of any
debt or other liability of Securityholder, prior to the delivery to the
Securityholder of the Escrow Shares by the Escrow Agent.
8. Exculpatory Provisions of Escrow Agent.
--------------------------------------
a. The Escrow Agent shall be obligated only for the performance
of such Duties as are specifically set forth herein and in the Purchase
Agreement and may rely and shall be protected in relying or refraining from
acting on any instrument reasonably believed to be genuine and to have been
signed or presented by the proper party or parties. The Escrow Agent shall not
be liable for other parties' forgeries, fraud or false personations. The Escrow
Agent shall not be liable for any act done or omitted hereunder as escrow agent
except for gross negligence or willful misconduct. The Escrow Agent shall, in no
case or event be liable for any representations or warranties of P-Com, Sub,
Telematics or the Securityholder. Any act done or omitted pursuant to the advice
or opinion of counsel (other than the Escrow Agent) shall be conclusive evidence
of the good faith of the Escrow Agent.
b. The Escrow Agent is hereby authorized and directed to
disregard any and all notices and warnings that may be given by any person, firm
or corporation except the final order, judgment or decree of any court made,
filed, entered or issued, whether with
6.
<PAGE>
or without jurisdiction, from which no further appeal may be taken and the
Escrow Agent is hereby authorized to comply with and obey any and all such final
orders, judgments and decrees of any court made, filed, entered or issued,
whether with or without jurisdiction. If the Escrow Agent shall comply with or
obey any such order, judgment or decree of any court, the Escrow Agent shall not
be liable to any of the parties hereto, or to any other person, firm,
association or corporation, by reason of any such compliance or obedience even
if any such order, judgment or decree may be subsequently revised, modified,
annulled, set aside or vacated.
c. The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver the Purchase Agreement or any
documents or papers deposited or called for thereunder.
d. The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations with respect to the Purchase Agreement
or any documents deposited with the Escrow Agent.
9. Resignation and Removal of the Escrow Agent. The Escrow Agent
-------------------------------------------
may resign as Escrow Agent at any time with or without cause by giving at least
thirty (30) days' prior written notice to each of P-Com and the Escrow
Committee, such resignation to be effective thirty (30) days following the date
such notice is given. In addition, P-Com and the Escrow Committee may jointly
remove the Escrow Agent as escrow agent at any time with or without cause, by an
instrument (which may be executed in counterparts) given to the Escrow Agent,
which instrument shall designate the effective date of such removal. In the
event of any such resignation or removal, a successor escrow agent shall be
appointed by the Escrow Committee, with the approval of P-Com, which approval
shall not be unreasonably withheld. Any such successor escrow agent shall
deliver to P-Com and the Escrow Committee a written instrument accepting such
appointment, and thereupon it shall succeed to all the rights and duties of the
escrow agent hereunder and shall be entitled to receive the assets in the
Escrow.
10. Further Instruments. If the Escrow Agent reasonably requires
-------------------
other or further instruments in connection with performance of the Duties, the
necessary parties hereto shall join in furnishing such instruments.
11. Disputes. It is understood and agreed that should any dispute
--------
arise with respect to the delivery and/or ownership or right of possession of
the securities held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed to act in accordance with, and in reliance upon, the
terms hereof and of Article VII of the Purchase Agreement. The Escrow Agent may
hold all documents and funds and may wait for settlement of any dispute by final
appropriate proceedings. Furthermore, the Escrow Agent may in its reasonable
judgment, file an action of interpleader requiring the parties hereto to answer
and litigate any claims and right among themselves, in which case, the Escrow
Agent is authorized to deposit with the clerk of the court all documents and
funds held in Escrow, except all
7.
<PAGE>
costs, expenses, charges and reasonable attorneys' fees incurred by the Escrow
Agent due to the interpleader action. Upon initiating such interpleader action,
the Escrow Agent shall be fully released and discharged of and from all
obligations of this Agreement. In the event that the terms of this Agreement
conflict in any way with the provisions of Purchase Agreement, the Purchase
Agreement shall control.
12. Indemnification. Through the Escrow or otherwise, in
---------------
consideration of the Escrow Agent's acceptance of this appointment and, if
applicable, the arbitrator's or third party's appointment pursuant to section
3.c, the other parties hereto, jointly and severally, agree to indemnify and
hold the Escrow Agent and, if applicable, the arbitrator or third party,
harmless as to any liability incurred by it to any person, firm or corporation
by reason of its having accepted such appointment or in carrying out the terms
hereof and the Purchase Agreement, and to reimburse the Escrow Agent and, if
applicable, the arbitrator or third party, for all its reasonable costs and
expenses, including, among other things, counsel fees and expenses, incurred by
reason of any matter as to which an indemnity is paid; provided, however, that
no indemnity need be paid in case of the Escrow Agent's and, if applicable, the
arbitrator's or third party's gross negligence, willful misconduct or breach of
this Agreement; and provided, further, that any liability of the Escrow Agent
shall be limited to and paid out of the Escrow Shares.
13. General.
-------
a. Any notice given hereunder shall be in writing and 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 as
follows:
To P-Com and Sub:
P-Com, Inc.
3175 S. Winchester Blvd.
Campbell, CA 95008
Attention: President
Facsimile: (408) 866-3678
8.
<PAGE>
With a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attention: Warren T. Lazarow, Esq.
Facsimile: (415) 496-2733
With a copy to:
P-Com Field Services, Inc.
8300 Boone Boulevard, Ste. 800
Vienna, Virginia 22182
Attention: Bill Welch
Facsimile: (703) 917-4398
To Telematics:
Daniel N. Carter
Post Office Box 1400
Herndon, VA 21070
Telecopy No: (703) 758-2559
With a copy to:
The Jefferson Law Firm, PLC
1980 Gallows Road, Suite 200
Vienna, Virginia 22182
Attention: W. Thomas Parrott, III
Telecopy No.: (703) 790-2623; and
The Jefferson Law Firm, PLC
6862 Elm Street, Suite 740
McLean, VA 22101
Attention: W. Thomas Parrott, III
Telecopy No.: (703) 790-2623
9.
<PAGE>
To the Escrow Committee:
P-Com, Inc.
c/o George Roberts
3175 S. Winchester Blvd.
Campbell, CA 95008
Attention: Escrow Committee for Telematics
Facsimile: (408) 866-3655
With a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attention: Warren T. Lazarow, Esq.
Facsimile: (415) 496-2733
To the Securityholder
Daniel N. Carter
Post Office Box 1400
Herndon, VA 21070
Telecopy No: (703) 758-2559
With a copy to:
The Jefferson Law Firm, PLC
1980 Gallows Road, Suite 200
Vienna, Virginia 22182
Attention: W. Thomas Parrott, III
Telecopy No.: (703) 790-2623; and
The Jefferson Law Firm, PLC
6862 Elm Street, Suite 740
McLean, VA 22101
Attention: W. Thomas Parrott, III
Telecopy No.: (703) 790-2623
To the Escrow Agent:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attention: Warren T. Lazarow, Esq.
Facsimile: (415) 496-2733
10.
<PAGE>
or to such other address as any party may have furnished in writing to the
other parties in the manner provided above.
b. This Agreement may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
c. This Escrow Agreement may be executed in any number of
counterparts, each of which when so executed shall constitute an original copy
hereof, but all of which together shall constitute one agreement.
d. No party may, without the prior express written consent of
each other party, assign this Escrow Agreement in whole or in part. This Escrow
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto.
e. This Escrow Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to contracts made
and to be performed entirely within the State of California.
f. The terms, conditions, covenants and provisions of the
Purchase Agreement are incorporated by reference herein as specifically set
forth herein.
g. The rights of the parties hereunder are cumulative and are
not exclusive of any other rights each party may have under the Purchase
Agreement or otherwise.
11.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto have executed this Agreement
as of the date first written above.
P-COM, INC.
By:
---------------------------------
Title:
-------------------------------
TELEMATICS, INC.
By:
---------------------------------
Title:
-------------------------------
ESCROW COMMITTEE:
-------------------------------------
Daniel Carter
-------------------------------------
George Roberts
BROBECK, PHLEGER & HARRISON LLP, AS ESCROW AGENT
-------------------------------------
12.
<PAGE>
EXHIBIT 4.3
ESCROW AGREEMENT
This Escrow Agreement ("Agreement") is made and entered into this 28th
day of November, 1997, by and among P-Com, Inc., a Delaware corporation
("P-Com"), P-COM Services (UK) Limited, an English company and wholly-owned
subsidiary of P-Com ("Sub"), R T Masts Limited, an English company ("RTM"), the
securityholders of RTM as represented by Mark Perkins and George Roberts
(collectively, "Escrow Committee") and Brobeck, Phleger & Harrison LLP ("Escrow
Agent"). Terms not defined herein shall have the meaning set forth in the
Purchase Agreement (as defined below).
WITNESSETH
WHEREAS, P-Com, RTM, the securityholders of RTM (individually, a
"Securityholder" and, collectively, the "Securityholders) and Sub have entered
into a Share Purchase Agreement, dated as of October 14, 1997 (collectively,
with all amendments, schedules, exhibits and certificates referred to therein,
the "Purchase Agreement") and
WHEREAS, pursuant to the Purchase Agreement, an escrow (the "Escrow")
shall be established to compensate P-Com and parent or subsidiary companies for
Damages which each may incur by reason of an inaccuracy in, breach or
nonfulfillment of, or noncompliance with representations, warranties, covenants
or agreements of RTM and its Securityholders contained in the Purchase
Agreement; and
WHEREAS, the Escrow Committee has been constituted as agent for and on
behalf of the Securityholders to undertake certain obligations herein; and
WHEREAS, the Purchase Agreement provides for an escrow of shares of
P-Com Common Stock issued in connection with the purchase of the Shares, such
escrow to be held by the Escrow Agent; and
WHEREAS, the parties hereto desire to set forth further terms and
conditions in addition to those set forth in the Purchase Agreement relating to
the operation of the Escrow.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants contained in the Purchase Agreement and herein, and intending to be
legally bound, hereby agree as follows:
1. Escrow Pursuant to the Purchase Agreement, P-Com shall deposit in
------
escrow with the Escrow Agent at the Time of the Closing the stock certificate or
certificates representing (Pounds) 900,000 of P-Com Common Stock as determined
by performing the calculations referred to in Section 2.2 of the Purchase
Agreement for calculating the
1
<PAGE>
number of Purchase Shares (the "Escrow Shares") which shall be registered in the
name of the Escrow Agent as nominee for the beneficial owners of such shares.
Concurrently therewith, the Escrow Committee shall execute a stock power with
respect to the Escrow Shares, which stock power shall be delivered to the Escrow
Agent and attached to the certificate(s) representing the Escrow Shares. The
Escrow Shares shall be held and distributed by the Escrow Agent in accordance
with the terms and conditions of the Purchase Agreement and this Agreement. The
number of Escrow Shares beneficially owned by each Securityholder is set forth
in Exhibit A attached hereto.
2. Escrow Period The Escrow shall terminate with respect to the Escrow
-------------
Shares upon the earlier of the date of filing of the Form 10K for the 12 months
ending December 31, 1997 or March 31, 1998.
3. Application of Escrow Shares to Claims
--------------------------------------
(a) If P-Com or any of its parent or subsidiaries (other than the
Securityholders) shall have any claim giving rise to Damages against RTM or the
Securityholders pursuant to Article VII of the Purchase Agreement, P-Com shall
promptly give written notice thereof to each member of the Escrow Committee,
including in such notice a brief description of the facts upon which such claim
is based and the amount of Damages, with a duplicate copy delivered to the
Escrow Agent. If the Escrow Committee agrees to such claim, as soon as
practicable after the expiration of the fifteen (15) business day notice period
set forth in Section 3(b) below, the Escrow Agent shall deliver out of the
Escrow to P-Com the lesser of (a) the number of the Escrow Shares (in whole
shares) in the Escrow that have an aggregate market value (determined as
provided in the Purchase Agreement) most nearly equal to such Damages or claims
for Damages thus to be satisfied, or (b) all of the Escrow Shares in the Escrow.
(b) If the Escrow Committee agrees to the validity of any claim for
Damages, it shall give written notice to P-Com within fifteen (15) business days
following receipt of P-Com's notice of claim, with a duplicate copy to the
Escrow Agent, advising P-Com that it consents to the delivery of Escrow Shares
out of Escrow to P-Com for application to such claims. Otherwise, the Escrow
Agent shall hold the Escrow Shares in Escrow until the rights of P-Com and the
Securityholders with respect thereto have been agreed upon among the Escrow
Committee and P-Com or until such rights are finally determined in accordance
with Section 3(c) hereof. The Escrow Agent may rely on any memorandum of P-Com
and all members of the Escrow Committee or any determination by the third party
or the courts referred to in Section 3(c)(i) hereof. In any such resolution to
determine the Escrow Shares to be delivered out of Escrow, the Escrow Agent
shall as soon as practicable following receipt of a copy of such determination,
deliver out of Escrow the Escrow Shares from the Escrow in accordance with the
terms thereof.
(c) In case the Escrow Committee shall not so agree in writing to
any claim or claims by P-Com, P-Com shall have twenty-five days to respond in a
2
<PAGE>
written statement to the objection of the Escrow Committee. If the Escrow
Committee and P-Com should agree after such time, a memorandum setting forth
such agreement shall be prepared and signed by P-Com and by both members of the
Escrow Committee and shall be furnished to the Escrow Agent. The Escrow Agent
shall be entitled to rely on any such memorandum and shall distribute the
Escrow Shares from the Escrow in accordance with the terms thereof. If after
such twenty-five (25) day period there remains a dispute as to any claims, the
members of the Escrow Committee shall either (i) mutually agree upon a third
party (the "Third Party") to resolve the issue, or (ii) the matter shall be
resolved by the High Courts of England and Wales. Through the Escrow or
otherwise, the Third Party may apportion among the parties the expenses of the
parties, including without limitation, attorneys' fees and costs, his own fees
and the expenses incurred by the other party.
(d) In the event P-Com becomes aware of a third party claim which P-
Com reasonably believes may result in a demand against the Escrow, P-Com shall
notify the Escrow Committee of such claim, and the Securityholders who have
Escrow Shares deposited in Escrow shall be entitled, at their own expense, to
participate in any defense of such claim. P-Com shall have the right in its sole
discretion to control the defense, settlement, compromise or other disposition
of any such claim on behalf of and for the account and risk of the
Securityholders, and the Escrow Committee shall cooperate with P-Com in any such
defense, including, without limitation, by revealing all information pertinent
thereto within their control other than attorney-client privileged
communications. The costs of defense of any third party action or claim or any
settlement or compromise thereof shall be paid from the Escrow Shares. P-Com
shall have no obligation to obtain the consent of the Escrow Committee to any
good faith settlement or disposition of any claim under this Section 3(d)
provided, however, that the Securityholders shall retain the power and authority
to object to the amount of any withdrawal by P-Com against the Escrow for
indemnity with respect to such settlement or disposition or costs, which
objection shall be resolved in accordance with the provisions of Section 3(c)
hereof.
(e) If within three months of the end of the period of twenty-five
(25) days referred to in Section 3(c) hereof the matter has neither been
referred to the Third Party nor a writ been issued from the High Courts of
England and Wales and served on the Securityholders then the claim by P-Com (or
its parent or subsidiaries) shall be deemed to have been waived and decided in
favour of the Securityholders.
4. Escrow Committee
----------------
(a) Upon consummation of the Purchase Agreement and in consideration of
the issuance of the Escrow Shares, each Securityholder shall be deemed to have
irrevocably appointed the Escrow Committee as their attorneys in fact to give
and receive notices and communications, to authorize delivery to P-Com of the
Escrow Shares or other property from the Escrow in satisfaction of claims by
P-Com, to object to such deliveries, to agree to negotiate, enter into
settlements and compromises of, and
3
<PAGE>
demand arbitration and comply with orders of courts and awards of the Third
Party with respect to such claims, and to take all actions necessary or
appropriate in the judgment of the Escrow Committee for the accomplishment of
the foregoing. No further documentation shall be required to evidence such
appointment, and such power of attorney shall be coupled with an interest,
thereby confirming such appointment as irrevocable. Notices or communications to
or from the Escrow Committee shall constitute notice to or from each
Securityholder. A decision, act, consent or instruction of the Escrow Committee
shall constitute a decision of all Securityholders for whom shares of P-Com
Common Stock otherwise issuable to them are deposited in the Escrow and shall be
final, binding and conclusive upon each such Securityholder, and the Escrow
Agent and P-Com may rely upon any decision, act, consent or instruction of the
Escrow Committee as being the decision or instruction of each and every such
Securityholder. The Escrow Agent and P-Com are hereby relieved from any
liability to any person for any acts done by them in accordance with such
decision, act, consent or instruction of the Escrow Committee. The Escrow
Committee shall be empowered to act by unanimous vote with respect to all
matters arising under this Agreement during the term of this Agreement. No bond
shall be required of the Escrow Committee and members of the Escrow Committee
shall receive no compensation for their services.
(b) The Escrow Committee shall not be liable to anyone whatsoever by
reason of any error of judgment or for any act done or step taken or omitted by
them in good faith or for any mistake of fact or law for anything which he may
do or refrain from doing in connection therewith unless caused by or arising out
of his own gross negligence or willful misconduct, and any act done or omitted
pursuant to the advice of counsel shall be conclusive evidence of such good
faith. The Securityholders and P-Com shall, jointly and severally, indemnify and
hold the Escrow Committee, and each member thereof, harmless from any and all
liability and expense (including, without limitation, attorney fees) which may
arise out of any action taken or omitted by him as an Escrow Committee member in
accordance with this Agreement, as the same may be amended, modified or
supplemented, except such liability and expense as may result from the gross
negligence or willful misconduct of the Escrow Committee.
(c) The Escrow Committee may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed to be genuine and
to have been signed or presented by the proper party or parties. The Escrow
Committee shall not be liable for other parties' forgeries, fraud or false
personalities.
(d) The Escrow Committee is hereby authorized and directed to disregard
any and all notices and warnings that may be given by any person, firm or
corporation except the final order, judgment or decree of any court made, filed,
entered or issued, whether with or without jurisdiction, from which no further
appeal may be taken and the Escrow Committee is hereby authorized to comply with
and obey any and all such final orders, judgments and decrees of any court made,
filed, entered or issued, whether with or without jurisdiction. If the Escrow
Committee shall comply with or obey any such order, judgment, or decree of any
court, the Escrow Committee shall not be liable to
4
<PAGE>
any of parties hereto, or to any other person, firm, association or corporation,
by reason of any such compliance or obedience even if such order, judgment or
decree may be subsequently revised, modified, annulled, set aside or vacated.
(e) If a former RTM Securityholder on the Escrow Committee, or his
replacement hereunder, shall die, become disabled or otherwise be unable to
fulfil his responsibilities hereunder, the remaining member or members of the
Escrow Committee shall select a replacement member or members from among those
persons who are affiliated with, or were themselves, significant Securityholders
of RTM prior to the purchase of the Shares. If the P-Com member of the Escrow
Committee, or his replacement hereunder, shall die, become disabled, resign or
otherwise be unable to fulfil his or her responsibilities hereunder, P-Com
shall choose a replacement.
(f) The Escrow Committee shall have reasonable access to information
about RTM and the reasonable assistance of RTM's officers and employees for
purposes of performing its duties and exercising its rights hereunder, provided
that the Escrow Committee shall treat confidentially and not disclose any
nonpublic information from or about RTM to anyone (except on a need to know
basis to individuals who agree to treat such information confidentially).
5. Duties of Escrow Agent The Escrow Agent shall be entitled to such
----------------------
rights and shall perform such duties of the escrow agent as set forth herein and
in Article VII of the Purchase Agreement, including but not limited to the
following (collectively, the "Duties"):
(a) The Escrow Agent shall hold and safeguard the Escrow Shares
during the Escrow Period, shall treat such Escrow as a trust fund in accordance
with the terms of this Agreement and the Purchase Agreement and not as the
property of P-Com or itself, and shall hold and dispose of the Escrow Shares
only in accordance with the terms of this Agreement and the Purchase Agreement.
(b) The Escrow Shares shall be voted by the Escrow Agent in
accordance with the instructions received by the Escrow Agent from the
beneficial owners of such shares.
(c) Promptly following the termination of the Escrow Period as set
forth in Section 2 hereof, the Escrow Agent shall deliver to the Securityholders
the remaining number of Escrow Shares in the Escrow in excess of any amount of
such Escrow Shares or other property sufficient, in the sole judgment of P-Com,
subject to the objection of the Escrow Committee and the subsequent resolution
of the matter in the manner provided in Section 3(c) above, to satisfy any
unsatisfied claims for Damages specified in any P-Com notice theretofore
delivered to the Escrow Committee and Escrow Agent prior to the termination of
the Escrow Period with respect to facts and circumstances existing prior to the
expiration of the Escrow Period, and to pay expenses as provided in this
Agreement. As soon as all such claims have been finally resolved, the Escrow
Agent shall deliver to
5
<PAGE>
the Securityholders any and all of the Escrow Shares and other property
remaining in the Escrow and not required to satisfy such claims and expenses.
Each Securityholder shall receive that number of Escrow Shares which bears the
same relationship to the total number of Escrow Shares in the Escrow and
available for distribution as the number of Escrow Shares set forth opposite the
name of each such Securityholder on Annex A hereto bears to the total number of
Escrow Shares on Annex A, as calculated by the Escrow Agent.
6. Distribution Any cash dividends, dividends payable in securities or
------------
other distributions of any kind (but excluding any shares of P-Com capital stock
received upon a stock split) shall be distributed by the Escrow Agent to the
beneficial holder of the Escrow Shares to which such distribution relates. Any
shares of P-Com capital stock received by the Escrow Agent upon a stock split
made in respect of any securities in the Escrow shall be added to the Escrow and
become a part thereof. Any provision hereof or in the Purchase Agreement shall
be adjusted to appropriately reflect any stock split or reverse stock split.
5. Ownership The Securityholders shall have all indicia of ownership of
---------
the Escrow shares while they are held in Escrow, including, without limitation,
the right to vote the Escrow Shares and the obligations to pay all taxes,
assessments and charges with respect thereto, but excluding the right to sell,
transfer, pledge or hypothecate or otherwise dispose of any Escrow Shares
provided that any distribution on or with respect to the Escrow Shares and any
other shares or securities into which such Escrow Shares may be changed or for
which they may be exchanged pursuant to corporate action of P-Com affecting
holders of P-Com Common Stock generally shall be delivered to and held by the
Escrow Agent in Escrow and shall be subject to the provisions herein and Article
VII of the Purchase Agreement. Except as contemplated hereunder, no Escrow
Shares or any beneficial interest therein may be pledged, sold, assigned or
transferred, including by operation of law, other than by will or by the laws of
descent or distribution in the event of the death of a Securityholder, by a
Securityholder or be taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of such Securityholder prior to the
delivery to the Securityholder of the Escrow Shares by the Escrow Agent.
8. Exculpatory Provisions of the Escrow Agent
------------------------------------------
(a) The Escrow Agent shall be obligated only for the performance of
such Duties as are specifically set forth herein and in the Purchase Agreement
and may rely and shall be protected in relying or refraining from acting on any
instrument reasonably believed to be genuine and to have been signed or
presented by the proper party or parties. The Escrow Agent shall not be liable
for other parties' forgeries, frauds or false personations. The Escrow shall not
be liable for any act done or omitted hereunder as escrow agent except for gross
negligence or willful misconduct. The Escrow Agent shall, in no case or event,
be liable for any representations or warranties of P-Com, Sub, RTM or the
Securityholders. Any act done or omitted pursuant to
6
<PAGE>
advice or opinion of counsel (other than the Escrow Agent) shall be conclusive
evidence of the good faith of the Escrow Agent.
(b) The Escrow Agent is hereby authorized and directed to
disregard any and all notices and warnings that may be given by any person, firm
or corporation except the final order, judgement or decree of any court made,
filed entered or issued, whether with or without jurisdiction, from which no
further appeal may be taken and the Escrow Agent is hereby authorized to comply
with and obey any and all such final orders, judgments and decrees of any court
made, filed, entered or issued, whether with or without jurisdiction. If the
Escrow Agent shall comply with or obey any such order, judgement or decree of
any court, the Escrow Agent shall not be liable to any of the parties hereto, or
to any other person, firm, association or corporation, by reason of any such
compliance or obedience even if any such order even if any such order, judgment
or decree may be subsequently revised, modified, annulled set aside or vacated.
(c) The Escrow Agent shall not be liable in any respect on
account of the identity, authority or rights of the parties executing or
delivering or purporting to execute or deliver the Purchase Agreement or any
documents or papers deposited or called for thereunder.
(d) The Escrow Agent shall not be liable for the outlawing of any
rights under any statute of limitations with respect to the Purchase Agreement
or any documents deposited with the Escrow Agent.
9. Resignation and Removal of the Escrow Agent The Escrow Agent may
-------------------------------------------
resign as Escrow Agent at any time with or without cause by giving at least
thirty (30) days' prior written notice to each of P-Com and the Escrow
Committee, such resignations to be effective thirty (30) days following the date
such notice is given. In addition, P-Com and the Escrow Committee may jointly
remove the Escrow Agent as escrow agent at any time with or without cause, by
an instrument (which may be executed in counterparts) given to the Escrow Agent,
which instrument shall designate the effective date of such removal. In the
event of such resignation or removal, a successor escrow agent shall be
appointed by the Escrow Committee, with the approval of P-Com, which approval
shall not be unreasonably withheld. Any such successor escrow agent shall
deliver to P-Com and the Escrow Committee a written instrument accepting such
appointment, and thereupon it shall succeed to all the rights and duties of the
escrow agent hereunder and shall be entitled to receive the assets in the
Escrow.
10. Further Instruments If the Escrow Agent reasonably requires
-------------------
other or further instruments in connection with performance of the Duties, the
necessary parties hereto shall join in furnishing such instruments.
11. Disputes It is understood and agreed that should any dispute
--------
arise with respect to the delivery and/or ownership or right of possession of
the securities held by the Escrow Agent hereunder, the Escrow Agent is
authorized and directed to act in
7
<PAGE>
accordance with, and in reliance upon, the terms hereof and of Article VII of
the Purchase Agreement. The Escrow Agent may hold all documents and funds and
may wait for settlement of any dispute by final appropriate proceedings.
Furthermore, the Escrow Agent may in its reasonable judgment, file an action of
interpleader requiring the parties hereto to answer and litigate any claims and
right among themselves, in which case, the Escrow Agent is authorized to deposit
with the clerk of the court all documents and funds held in Escrow, except all
costs, expenses, charges and reasonable attorneys' fees incurred by the Escrow
Agent due to the interpleader action. Upon initiating such interpleader action,
the Escrow Agent shall be fully released and discharged of and from all
obligations of this Agreement. In the event that the terms of this Agreement
conflict in any way with the provisions of the Purchase Agreement, the Purchase
Agreement shall control.
12. Indemnification Through the Escrow or otherwise, in consideration
---------------
of the Escrow Agent's acceptance of this appointment and, if applicable, the
Third Party's appointment pursuant to Section 3(c), the other parties hereto,
jointly and severally, agree to indemnify and hold the Escrow Agent and, if
applicable, the Third Party, harmless as to any liability incurred by it to any
person, firm or corporation by reason of its having accepted such appointment or
in carrying out the terms hereof and the Purchase Agreement, and to reimburse
the Escrow Agent and, if applicable, the Third Party, for all its reasonable
costs and expenses, including, among other things, counsel fees and expenses,
incurred by reason of any matter as to which an indemnity is paid, provided,
however, that no indemnity need be paid in case of the Escrow Agent's and, if
applicable, the Third Party's gross negligence, willful misconduct or breach of
this Agreement; and provided, further, that any liability of the Escrow Agent
shall be limited to and paid out of the Escrow Shares.
13. General
-------
(a) Any notice given hereunder shall be in writing and 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 as
follows:
To P-Com:
P-Com, Inc.
3175 S. Winchester Boulevard
Campbell, CA 95008
Attention: President
8
<PAGE>
Facsimile: (408) 866-3678
With a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attention: Warren T Lazarow, Esq
Facsmimile: (415) 396-2733
To RTM:
W R Perkins
c/o Coopers & Lybrand
Central Business Exchange
Midsummer Boulevard
Central Milton Keynes MK9 2DF
United Kingdom
Telecopy No: 011 44 1908 353100
With a copy to:
Howes Percival
252 Upper Third Street
Grafton Gate East
Central Milton Keynes MK9 1DZ
Attention: Brandon W Ransley, Esq
Telecopy No: 011 44 1908 692447
To the Escrow Committee:
P-Com, Inc.
c/o George Roberts
3175 S Winchester Boulevard
Campbell, CA 95008
Attention: Escrow Committee for Control
Resources Corporation
Facsimile: (408) 866-3655
With a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
9
<PAGE>
Palo Alto, CA 94303
Attention: Warren T Lazarow, Esq
Facsimile: (415) 396-2733
W R Perkins
c/o Coopers & Lybrand
Central Business Exchange
Midsummer Boulevard
Central Milton Keynes MK9 2DF
United Kingdom
Telecopy No: 011 44 1908 353100
With a copy to:
Howes Percival
252 Upper Third Street
Grafton Gate East
Central Milton Keynes MK9 1DZ
Attention: Brandon W Ransley, Esq
Telecopy No: 011 44 1908 692447
To the Escrow Agent:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attention: Warren T Lazarow, Esq
Facsimile: (415) 396-2733
or to such other address as any party may have furnished in writing to
the other parties in the manner provided above.
(b) This Agreement may be altered, amended, modified or revoked
only by a writing signed by all the parties hereto.
(c) This Escrow Agreement may be executed in any number of
counterparts, each of which when so executed shall constitute an original copy
hereof, but all of which together shall constitute one agreement.
(d) No party may, without the prior express written consent of each
other party, assign this Escrow Agreement in whole or in part. This Escrow
Agreement shall be binding upon and inure to the benefit of the respective
successors and assigns of the parties hereto.
10
<PAGE>
(e) This Escrow Agreement shall be governed by and construed in
accordance with the laws of England and Wales as applied to contracts made and
to be performed entirely within England and Wales.
(f) The terms, conditions, covenants and provisions of the Purchase
Agreement are incorporated by reference herein as specifically set forth herein.
(g) The rights of the parties hereunder are cumulative and are not
exclusive of any other rights each party may have under the Purchase Agreement
or otherwise.
IN WITNESS WHEREOF, each of the parties hereto have executed this Agreement
as of the date first written above.
P-Com, Inc.
By: _______________________________
Title: ____________________________
P-COM Services (UK) Limited
By: _______________________________
Title: ____________________________
R T Masts Limited
By: _______________________________
Title: ____________________________
Escrow Committee
___________________________________
Mark Perkins
___________________________________
George Roberts
Brobeck, Phleger & Harrison LLP
as Escrow Agent
___________________________________
11
<PAGE>
EXHIBIT A
Allocation of Escrow Shares by Securityholders
SHAREHOLDER NUMBER OF
ESCROW SHARES
12
<PAGE>
EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
by and among
P-Com, Inc., a Delaware corporation,
P-Com Field Services, Inc., a Delaware corporation,
Telematics, Inc., a Virginia corporation
and
Daniel N. Carter
Dated as of November 17, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I PURCHASE, SALE AND SURRENDER OF SECURITIES........................................................... 1
Section 1.1 Purchase, Sale and Surrender of Securities............................................. 1
ARTICLE II PURCHASE PRICE...................................................................................... 1
Section 2.1 Consideration.......................................................................... 1
Section 2.2 Amount................................................................................. 1
ARTICLE III REPRESENTATIONS AND WARRANTIES..................................................................... 2
Section 3.1 Representations and Warranties of the Company and each
Securityholder......................................................................... 2
(a) Organization of Company................................................................ 2
(b) Capital Structure...................................................................... 3
(c) Authorization of Company and Securityholder............................................ 3
(d) Conflict............................................................................... 4
(e) No Consent Required.................................................................... 4
(f) Financial Information.................................................................. 4
(g) Absence of Certain Changes and Events.................................................. 5
(h) Conduct of Business.................................................................... 6
(i) Undisclosed Liabilities................................................................ 6
(j) Inventory.............................................................................. 6
(k) Taxes.................................................................................. 7
(l) Employee Matters....................................................................... 8
(m) Compliance With Law.................................................................... 8
(n) Governmental Consents.................................................................. 8
(o) Intellectual Property Rights........................................................... 9
(p) Service Provider Agreements............................................................ 10
(q) Restrictive Documents or Orders........................................................ 10
(r) Contracts and Commitments.............................................................. 10
(s) Title to the Property.................................................................. 11
(t) Litigation............................................................................. 12
(u) No Conflict or Default................................................................. 12
(v) Consents............................................................................... 13
(w) Labor Relations........................................................................ 13
(x) Brokers' and Finders' Fees/Contractual Limitations..................................... 13
(y) Interested Party Relationships......................................................... 14
(z) Certain Payments....................................................................... 14
(aa) Products Liability..................................................................... 14
(ab) Product Warranties..................................................................... 14
(ac) Returns................................................................................ 14
</TABLE>
i.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(ad) Customers.............................................................................. 14
(ae) Suppliers.............................................................................. 15
(af) Books and Records...................................................................... 15
(ag) Complete Disclosure.................................................................... 15
(ah) Performance of Agreement............................................................... 15
(ai) Absence of Governmental or Other Objection............................................. 15
(aj) Insurance.............................................................................. 15
(ak) Environmental Matters.................................................................. 16
(al) Backlog................................................................................ 19
(am) Accounts Receivable.................................................................... 19
(an) Pooling of Interests................................................................... 19
(ao) Purchase Entirely for Own Account...................................................... 19
(ap) Disclosure of Information.............................................................. 19
(aq) Investment Experience.................................................................. 20
(ar) Accredited Investor.................................................................... 20
(as) Restricted Securities.................................................................. 20
(at) Legends................................................................................ 20
Section 3.2 Representations and Warranties of Purchaser............................................ 20
(a) Organization........................................................................... 20
(b) Brokers' and Finders' Fees............................................................. 20
(c) SEC Filings............................................................................ 21
(e) Limitation on Liability................................................................ 21
(f) Termination of Liability and Representations and Warranties............................ 21
(g) Liability Floor........................................................................ 21
Section 4.1 Covenants Against Disclosure........................................................... 22
Section 4.2 Net Asset Determination................................................................ 22
Section 4.3 Non-Competition........................................................................ 23
Section 4.4 Maintenance of Business................................................................ 24
Section 4.5 Access to Information.................................................................. 27
Section 4.6 Registration Rights.................................................................... 27
Section 4.7 Pooling of Interests Transaction....................................................... 27
Section 4.8 Necessary Consents..................................................................... 27
Section 4.9 Best Efforts........................................................................... 27
Section 4.10 Exclusivity; Acquisition Proposals..................................................... 27
Section 4.11 Breach of Representations, Warranties, Agreements and
Covenants.............................................................................. 28
Section 4.12 Legal Conditions to the Sale or Surrender of the Telematics, Inc.
Securities............................................................................. 29
Section 4.13 Public Announcements................................................................... 29
Section 4.14 Shareholder's Meeting.................................................................. 29
Section 4.15 No Transfer............................................................................ 29
Section 4.16 Unitech Matters........................................................................ 29
Section 4.17 Section 368 Reorganization............................................................. 29
ARTICLE V CLOSING.............................................................................................. 30
</TABLE>
ii.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 5.1 Time of Closing..................................................................... 30
Section 5.2 Deliveries by Company and Securityholder............................................ 30
(a) Certificates and Instruments........................................................ 30
(b) Escrow Agreement.................................................................... 30
(c) Corporate Minute Books.............................................................. 30
(d) Certificate of Good Standing........................................................ 30
(e) Closing Documents................................................................... 30
(f) Books and Records................................................................... 30
(g) Consents............................................................................ 30
(h) Opinion of Counsel.................................................................. 31
(i) Securityholder Certificate.......................................................... 31
(j) FIRPTA.............................................................................. 31
(k) Proprietary Information and Inventions Agreement.................................... 31
(l) Securityholder Agreement and Pooling Opinion........................................ 31
(m) Promissory Note..................................................................... 31
(n) Waiver Letter....................................................................... 31
(o) Stoppleman Opinion.................................................................. 31
(p) Demand Note......................................................................... 31
(q) Other Documents..................................................................... 31
Section 5.3 Deliveries by Purchaser............................................................. 32
Section 5.4 Further Assurances.................................................................. 32
Section 5.5 Termination......................................................................... 32
Section 5.6 Cure Period......................................................................... 32
Section 5.7 Proprietary Information and Inventions Agreement.................................... 33
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS.............................................................. 33
Section 6.1 Conditions to Obligations of Purchaser.............................................. 33
(a) Certificates for Securities......................................................... 33
(b) Representations and Warranties...................................................... 33
(c) Performance of Agreement............................................................ 33
(d) No Material Adverse Effect.......................................................... 33
(e) Absence of Governmental or Other Objection.......................................... 34
(f) Due Diligence Review................................................................ 34
(g) Certificate of President and Securityholder......................................... 34
(h) Execution of Escrow Agreement....................................................... 34
(i) Third Party Consents................................................................ 34
(j) Opinions of Counsel for the Company and the Securityholder.......................... 34
(k) No Violations; No Actions........................................................... 34
(l) Proceedings and Documents........................................................... 34
(m) Schedules........................................................................... 34
(n) Tax Forms........................................................................... 35
(o) Board Approval...................................................................... 35
(p) Other Matters....................................................................... 35
(q) Securityholder Agreements........................................................... 35
(r) Pooling of Interests Transaction.................................................... 35
</TABLE>
iii.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(s) Employment Agreement................................................................... 36
(t) Unitech Matters........................................................................ 36
(u) Promissory Note........................................................................ 36
(v) Waiver Letter.......................................................................... 36
(w) Stoppleman Opinion..................................................................... 36
(x) Demand Note............................................................................ 36
Section 6.2 Conditions to Obligations of the Company and the
Securityholder......................................................................... 36
(a) Performance of Agreement............................................................... 36
(b) Execution of Escrow Agreement.......................................................... 36
(c) Absence of Governmental or Other Objection............................................. 36
(d) Third Party Consents................................................................... 36
(e) Registration Rights Agreement.......................................................... 37
(f) Employment Arrangements................................................................ 37
ARTICLE VII INDEMNIFICATION........................................................................ 38
Section 7.1 Survival of Representations, Warranties, Covenants and
Agreements............................................................................. 38
Section 7.2 Indemnification; Escrow Deposit of Purchase Shares..................................... 39
Section 7.3 Termination of Indemnity and Representations and Warranties............................ 40
Section 7.4 Liability Floor........................................................................ 41
Section 7.5 Limitations............................................................................ 41
ARTICLE VIII MISCELLANEOUS PROVISIONS.......................................................................... 41
Section 8.1 Notice................................................................................. 41
Section 8.2 Entire Agreement....................................................................... 42
Section 8.3 Binding Effect; Assignment............................................................. 42
Section 8.4 Expenses of Transaction; Taxes......................................................... 43
Section 8.5 Waiver; Consent........................................................................ 43
Section 8.6 Third-Party Beneficiaries.............................................................. 43
Section 8.7 Counterparts........................................................................... 43
Section 8.8 Severability........................................................................... 43
Section 8.9 Governing Law.......................................................................... 43
Section 8.10 Arbitration; Attorneys' Fees........................................................... 43
Section 8.11 Securityholder Guarantees.............................................................. 44
Section 8.12 Lease Expiration....................................................................... 44
Section 8.13 Future Prospects....................................................................... 44
Section 8.14 No Reliance............................................................................ 45
</TABLE>
iv.
<PAGE>
Exhibits
- --------
2.2 Escrow Agreement
4.1(d) Form of Affiliate's Agreement
4.6 Registration Rights Agreement
5.2(g) Opinion of the Jefferson Firm, counsel to Securityholder
6.2(d) Form of Offer Letter for Key Employees and Other Employees and
Consultants
6.2(e) Form of Proprietary Information and Inventions Agreement
6.2(g) Assignment and Assumption of the Contracts
Schedules
- ---------
3.1 Disclosure Letter
3.1(b) List of Stockholders
3.1(j) List of Inventory
3.1(m) List of Accounts Receivable
3.1(n) List of Governmental Permits
3.1(o) List of Intellectual Property Rights
3.1(r) List of Contracts
3.1(s) List of Leasehold Interests
3.1(w) List of Employees
3.1(ad) List of Customers
3.1(ae) List of Suppliers
3.1(aj) List of Insurance Policies
3.1(ak) List of Environmental Matters
3.1(al) Backlog of Orders
<PAGE>
SECURITIES PURCHASE AGREEMENT
-----------------------------
THIS AGREEMENT is dated as of November 17, 1997 by and among P-Com,
Inc., a Delaware corporation ("P-Com"), P-Com Field Services, Inc. ("PFS" and,
collectively with P-Com, the "Purchaser"), Telematics, Inc., a Virginia
corporation (the "Company"), and Daniel N. Carter (the "Securityholder").
WHEREAS, PFS desires to acquire all of the rights of equity ownership
of the Securityholder through the purchase by PFS of all of the issued and
outstanding shares of capital stock and all other equity interest and by payment
for the surrender of all outstanding options and all other rights to acquire
shares of capital stock of the Company; and
WHEREAS, in furtherance thereof, Purchaser will pay to Securityholder
consideration in the form of shares of the Common Stock of P-Com for his
securities of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
---------
PURCHASE, SALE AND SURRENDER OF SECURITIES
------------------------------------------
Section 1.1 Purchase, Sale and Surrender of Securities. Upon the
----------- ------------------------------------------
terms and subject to the conditions of this Agreement, the Securityholder shall
sell to PFS and PFS shall purchase from the Securityholder all of the shares of
capital stock and all other equity interest of the Company held by the
Securityholder, and the Securityholder shall surrender all options and other
rights to purchase such shares held by the Securityholder (collectively, the
"Securities") at the Closing (as defined in Section 5.1 hereof).
ARTICLE II
----------
PURCHASE PRICE
--------------
Section 2.1 Consideration. Upon the terms and subject to the
----------- -------------
conditions contained in this Agreement, in consideration for the Securities and
in full payment therefor, Purchaser will pay, or cause to be paid, the purchase
price set forth in Section 2.2.
Section 2.2 Amount. The purchase price ("Purchase Price") for the
----------- ------
Securities shall consist of shares of Common Stock of P-Com to be issued
directly from Purchaser to the Securityholder (the "Purchase Shares").
<PAGE>
The aggregate number of Purchase Shares payable to the Securityholder
at the Time of Closing (the "Closing Shares") shall be determined by dividing
the amount of Five Million Dollars ($5,000,000) by the average closing sales
price of P-Com Common Stock as quoted on the National Association of Securities
Dealers Automated Quotation System National Market ("Nasdaq National Market")
for the thirty trading days ending three trading days prior to the Time of
Closing (the "Closing Date Average Price").
The Purchase Shares shall be paid as follows:
(i) One Hundred Percent (100%) of the total number of Purchase Shares
shall be issued at the Time of Closing. Ninety Percent (90%) of such Purchase
Shares shall be delivered to the Securityholder at the Time of Closing. Ten
Percent (10%) of the Purchase Shares shall be held in an escrow account (the
"Securityholder Escrow Shares") pursuant to an escrow agreement substantially in
the form attached hereto as Exhibit 2.2 (the "Escrow Agreement").
(ii) Except as set forth in this Agreement, the Securityholder Escrow
Shares shall be retained by the Escrow Agent and held until the publication date
of the auditor's report for P-Com in P-Com's Annual Report on Form 10-K that
includes the audited results for the Company for the fiscal year ended December
31, 1997 in an escrow account pursuant to the Escrow Agreement as collateral, in
part, for the indemnification obligations set forth in this Agreement and the
Escrow Agreement.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.1 Representations and Warranties of the Company and each
----------- ------------------------------------------------------
Securityholder. Except as set forth in a letter (Schedule 3.1) specifically
- --------------
referring to this Section 3.1 of this Agreement (the "Disclosure Letter")
delivered by the Company and the Securityholder to Purchaser and Brobeck,
Phleger & Harrison LLP, counsel to Purchaser, the Company and Securityholder
hereby, jointly and severally, represent and warrant to Purchaser that:
(a) Organization of Company. The Company is a corporation duly
-----------------------
organized and validly existing under the laws of the State of Virginia and has
all requisite power and authority to own, operate and lease its assets and to
conduct its business in the manner in which it is now conducted. All of the
formalities required under Virginia law have been complied with, and the Company
is not in default under any applicable statutory or regulatory provision. True
and complete copies of the current charter documents of the Company have been
furnished to Purchaser and its counsel. The Company does not own or lease any
assets or conduct any business in any jurisdiction other than Virginia.
2.
<PAGE>
(b) Capital Structure.
-----------------
(i) The authorized capital stock of the Company consists of a
thousand (1,000) shares of Common Stock, par value fifty dollars ($50.00) per
share. As of the date of this Agreement, there were issued and outstanding
fifty-one (51) shares of Company Common Stock. As of the date of this Agreement,
there were no shares of Common Stock reserved for issuance upon the exercise of
options to purchase shares of Company Common Stock (the "Company Options").
There are no outstanding shares of Company capital stock or any other equity
securities or rights to purchase equity securities of Company (collectively,
"Company Capital Stock"), other than as described in the preceding sentence.
(ii) All outstanding shares of Company Common Stock are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the Company's Articles of Incorporation or
Bylaws or any agreement to which the Company is a party or by which the Company
may be bound. To the best of the Company's and the Securityholder's knowledge,
after due inquiry, all outstanding common stock or other securities have been
issued in compliance with applicable Virginia securities laws. There are no
options, warrants, calls, conversion rights, commitments or agreements of any
character to which the Company is a party or by which the Company may be bound
that do or may obligate the Company to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of Company Capital Stock or that do
or may obligate the Company to grant, extend or enter into any such option,
warrant, call, conversion right, commitment or agreement, other than those
described in Section 3.1(b)(i) above.
(iii) Schedule 3.1(b) contains a complete and accurate list of,
---------------
and the number of shares owned of record by, the holders of outstanding Company
Common Stock and their state or country of residence.
(iv) Except for any restrictions imposed by applicable Virginia
laws, there is no right of first refusal, co-sale right, right of participation,
right of first offer, option or other restriction on transfer applicable to any
shares of Company Capital Stock.
(v) The Company is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between or among any
persons that affects or relates to the voting or giving of written consent with
respect to any outstanding security of the Company.
(c) Authorization of Company and Securityholder. The Company and each
-------------------------------------------
Securityholder has full 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, and other documents and instruments delivered in accordance with
Section 6.2 hereunder (the "Closing Documents") and the Escrow Agreement. Each
of the Company and the Securityholder has taken all necessary and appropriate
action with respect to the execution and delivery of this Agreement, the Closing
3.
<PAGE>
Documents, and the Escrow Agreement. This Agreement and the Escrow Agreement
constitute valid and binding obligations of the Company and the Securityholder,
enforceable in accordance with their respective terms except as limited by
applicable bankruptcy, insolvency, moratorium, reorganization, or other laws
affecting creditors' rights and remedies generally.
(d) Conflict. Subject to satisfaction of the conditions set forth in
--------
this Agreement, the execution, delivery and performance of this Agreement does
not and the performance and consummation of the transactions contemplated hereby
will not, conflict with or result in any violation of any material statute, law,
rule, regulation, judgment, order, decree, or ordinance applicable to the
Company or its properties or assets, and to the knowledge of the Company and the
Securityholder does not and will not conflict with or result in any conflict
with, breach or violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation,
forfeiture or acceleration of any material obligation or the loss of a material
benefit under, or result in the creation of a lien or encumbrance on any of the
properties or assets of the Company pursuant to (i) any provision of the charter
documents of the Company or (ii) any agreement, contract, note, mortgage,
indenture, lease, instrument, permit, concession, franchise or license to which
the Company is a party or by which the Company or any of its properties or
assets may be bound or affected.
(e) No Consent Required. No consent, approval, order or authorization
-------------------
of, or registration, declaration of, or qualification or filing with, any court,
administrative agency, commission, regulatory authority or other governmental or
administrative body or instrumentality, whether of the United States or of any
other country (a "Governmental Entity"), is required by or with respect to the
Company in connection with the execution, delivery and performance of this
Agreement by the Securityholder or the consummation by the Securityholder of the
transactions contemplated hereby. No consent, approval or authorization of the
Company's Board of Directors (or any committee thereof), Securityholder or of
any third party is required in connection with the Securityholder's consummation
of the transactions contemplated hereunder that has not been obtained or waived
by the Closing.
(f) Financial Information. The Company has furnished to Purchaser a
---------------------
complete and accurate copy of its balance sheet as of December 31, 1996 and
September 30, 1997, and its statement of operations, cash flow and shareholders'
equity for its fiscal year ended December 31, 1996 and the nine months September
30, 1997 (which, collectively with the Closing Date Balance Sheet referred to in
Section 4.2 hereof, shall be referred to herein for all purposes as, the
"Financial Statements"). The Financial Statements have been prepared in
accordance with United States generally accepted accounting principles ("GAAP")
consistently applied and fairly present the consolidated financial position of
the Company as and at the dates thereof and the Company's consolidated results
of operations and cash flows for the periods then ended. The projections of the
Company as included in Schedule 3.1(f) were prepared in good faith and are based
on reasonable assumptions. Write-downs of inventory and write-offs of notes
receivable as reflected in Schedules 3.1(j) and 3.1(am) will not be deemed to
breach this Section 3.1(f) or related sections.
4.
<PAGE>
(g) Absence of Certain Changes and Events. Except as contemplated
-------------------------------------
herein, or as disclosed in the Disclosure Letter and Schedules, since September
30, 1997, there has not been:
(i) Any material adverse change in the financial condition,
results of operations, assets, liabilities, business, or prospects of the
Company or any occurrence, circumstance, or combination thereof which reasonably
could be expected to result in any such material adverse change;
(ii) Any event, including, without limitation, 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 a material
adverse effect on the business or assets of the Company or any such event which
reasonably could be expected to have such an effect on the business or the
assets of the Company;
(iii) Any material transaction relating to the business of the
Company (other than the transactions contemplated herein) which was entered into
or carried out by the Company other than in the ordinary and usual course of
business;
(iv) Any change made by the Company in its method of operating
its 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 of the Company 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 of the Company 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 of the Company, other than sales,
leases, or dispositions in the usual and ordinary course of business and
consistent with prior practice;
(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 the Company is a party and relating to or affecting
the business or the assets of the Company, 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 the Company;
5.
<PAGE>
(ix) Any written notice (or to the knowledge of the Company or
any of its officers, unwritten notice) from any employee of the Company who
provides any services to the Company that such employee has terminated, or
intends to terminate, such employee's employment with the Company;
(x) Any notice (written or unwritten) from any of the
Company's Suppliers that any such Supplier will not continue to supply the
current level and type of goods currently being provided by such Supplier to the
Company on similar terms and conditions;
(xi) To the best knowledge of Company and Securityholder, any
adverse relationships or conditions with vendors or customers that may have a
material adverse effect on the business, prospects or assets of the Company;
(xii) Any other event or condition of any character which
materially adversely affects, or may reasonably be expected to so affect, the
assets or the results of operations, prospects or financial condition of the
Company; or
(xiii) Any purchase or lease of or any agreements to purchase or
lease capital assets relating to the business of the Company in excess of
$10,000 individually, or in excess of $25,000 in the aggregate.
(h) Conduct of Business. At all times since September 30, 1997, the
-------------------
Company has conducted its business in the ordinary course thereof and used
reasonable commercial efforts to preserve intact the organization of its
business and the good will of its customers, suppliers, and others having
business relations with the Company.
(i) Undisclosed Liabilities. There are no debts, liabilities, or
-----------------------
obligations with respect to the Company, whether liquidated, unliquidated,
accrued, absolute, contingent, known or unknown or otherwise, that are not
identified in the Disclosure Letter, the Schedules, or that are not reflected in
the Financial Information.
(j) Inventory. Schedule 3.1(j) lists all inventory owned by the
---------
Company relating to the business of the Company, including goods supplied to the
Company by Suppliers, goods on consignment, and all other goods customarily sold
by the Company (whether located on the business premises of the Company, in
transit to or from such business premises, in other storage facilities, or
otherwise), (collectively, "the Inventory") and identifies whether such
Inventory is owned by the Company or held on consignment. The Inventories are
valued at cost (determined on a first-in first-out basis) or market, whichever
is lower, with adequate allowances for excess and obsolete materials and
materials below standard quality in accordance with GAAP consistently applied.
The quality and quantity of the Inventories are such that the Inventories are
readily usable and saleable in the ordinary course of business of the Company,
except such amounts as are reserved in accordance with GAAP consistently
applied. All Inventories materially in excess of reasonable estimated
requirements for the Company based on current operations as of the date hereof
are set forth in Schedule 3.1(j). Except as disclosed in Schedule 3.1(j), the
Company holds no Inventories manufactured to
6.
<PAGE>
customer specifications effectively rendering the Inventories saleable only to
that customer. The Company has continued to replenish the Inventory in a normal
and customary manner consistent with past practices.
(k) Taxes.
-----
(i) Definitions. For purposes of this Agreement:
-----------
a. the term "Taxes" means (A) all United States or foreign,
local and other net income, gross income, value added, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employ ment, 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) The Company has 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. As of the time of filing, the foregoing Returns correctly
reflected the facts regarding the income, the business and assets of the
Company, operations, activities, status or other matters of the Company or any
other information required to be shown thereon. In particular, the foregoing
Returns are not subject to penalties under any federal or local tax law
provision corresponding to Section 6662 of the United States Internal Revenue
Code of 1986 (the Code"), relating to accuracy-related penalties or any other
penalties. An extension of time within which to file any Return that has not
been filed has not been requested or granted. The Company will properly complete
and file on a timely basis and in correct form all Returns required to be filed
on or prior to the Closing. There are no liens for Taxes on the assets of the
Company, 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 of the Company or against Purchaser, have been paid in full.
(iii) With respect to all amounts in respect of Taxes imposed
upon the Company, or for which the Company is or could be 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 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
7.
<PAGE>
all such amounts required to be paid by the Company to taxing authorities or
others on or before the Closing have been paid, and all such amounts required to
be paid by the Company to taxing authorities or others after the Closing which
have not been paid are reflected on the Financial Statements.
(iv) The Company is not, and has not been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(l) Employee Matters.
----------------
(i) The hours worked by and payments made to the Company
employees have not been in violation in any respect of any applicable federal or
local laws dealing with such matters.
(ii) All payments due from the Company on account of employee
health and welfare insurance have been paid.
(iii) All severance and vacation and similar payments by the
Company which are or were due under the terms of any agreement or otherwise have
been paid in full, or have been accrued on the books of the Company.
(m) Compliance With Law. Schedule 3.1(m) sets forth all of the
-------------------
Company's franchises, licenses, permits, use permits, consents, authorizations,
and approvals of any United States or foreign, or local regulatory,
administrative, or other governmental or zoning agency or body (collectively
referred to herein as "Governmental Permits"). The Company has complied and is
in compliance with all applicable United States or foreign, and, to the best of
the Company's and Securityholder's knowledge, local laws, statutes, licensing
requirements, rules, and regulations, and judicial or administrative or zoning
decisions. To the best of the Company's and Securityholder's knowledge, after
due inquiry, the Company has been granted all licenses, permits (temporary and
otherwise), authorizations, and approvals from federal or foreign, and local
government regulatory or zoning bodies necessary to carry on its business and
maintain its assets, all of which are currently valid and in full force and
effect. All such licenses, permits, authorizations, and approvals shall remain
valid and in full force and effect following the Closing and shall not be
adversely impacted by the change in ownership of the Company capital stock
provided under this Agreement. There is no order issued, investigation, or
proceeding pending or of which the Securityholder or the Company has received a
written or oral threat, or notice served with respect to violation of any law,
ordinance, order, writ, decree, rule, or regulation issued by any federal or
foreign, or local court or governmental agency or instrumentality applicable to
the Company. The Company has valid use permits for its business.
(n) Governmental Consents. To the best of the Company's and
---------------------
Securityholder's knowledge, no consent, approval, order, or authorization of, or
registration, qualification, designation, declaration, or filing with any United
States or foreign, or local
8.
<PAGE>
governmental authority on the part of the Company or Securityholder is required
in connection with the consummation of the transactions contemplated hereunder.
(o) Intellectual Property Rights.
----------------------------
(i) The Company owns, or is licensed or otherwise entitled to
exercise, without restriction all rights 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 Company's business (collectively, the "Intellectual
Property Rights") without any conflict or infringement of the rights of others.
Except for the generally available software programs set forth on Schedule
3.1(o), the Company does not have any such Intellectual Property Rights.
(ii) The Company is not, or as a result of the execution and
delivery of this Agreement or the performance of the Company'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 3.1(o), if applicable.
(iii) The Company 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. The Company has taken all actions
and made all applications and filings pursuant to applicable laws to perfect or
protect their interests in such Intellectual Property Rights.
(iv) No claims with respect to the Intellectual Property Rights
have been asserted and the Securityholder and the Company have not received
written or oral notice that such a claim might be asserted, and neither the
Company nor the Securityholder knows of any claims (i) to the effect that the
manufacture, marketing, license, sale or use of any product as now used or
offered or proposed for use or sale by the Company infringes any copyright,
patent, trade secret, or other intellectual property right of any third party or
violates any license or agreement with any third party, (ii) contesting the
right of the Company to use, sell, license or dispose of any Intellectual
Property Rights, or (iii) challenging the ownership, validity or effectiveness
of any of the Intellectual Property Rights.
(v) The Company 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 the Company does
not have any infringement liability with respect to any patent, patent
application, trademark, service mark, copyright or other intellectual property
right of another.
9.
<PAGE>
(vi) No Intellectual Property Right is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting in any manner the
licensing thereof by the Company. The Company has not entered into any
agreement to indemnify any other person against any charge of infringement of
any Intellectual Property Right. The Company 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. The Company has the exclusive right to file, prosecute and maintain all
applications and registrations with respect to the Intellectual Property Rights.
(p) Service Provider Agreements. To the best of the knowledge of the
---------------------------
Company and the Securityholder, after due inquiry, no service provider of the
Company 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 the
Company 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 the Company. The Company and the
Securityholder are not aware that any of the Company'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 the Company or that would conflict
with the Company's business as conducted or as proposed to be conducted or that
would prevent any such service provider from assigning inventions to the
Company. The Company and the Securityholder do not believe that it is or will
be necessary for the Company to utilize any inventions of any of the Company's
service providers (or people it currently intends to hire) made prior to their
employment by or relationship with the Company.
(q) Restrictive Documents or Orders. Neither the Company nor
-------------------------------
Securityholder is a party to or bound under any agreement, contract, 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 of the Company after the Time
of Closing on substantially the same basis as said business was theretofore
operated or which prevents the consummation of the transactions contemplated by
this Agreement.
(r) Contracts and Commitments.
-------------------------
(i) There is set forth on Schedule 3.1(r) a list of all
outstanding contracts (the "Contracts"), whether or not in writing, to which the
Company or any of the Securityholder is a party, to which any of the Company's
assets are subject or that relate to any aspect of the business of the Company.
(ii) The Company and Securityholder, as the case may be, has
performed all of its obligations under the terms of each Contract, and is not in
default there under. To the best of the Company's and Securityholder's
knowledge, no event or omission has occurred which but for the giving of notice
or lapse of time or both would constitute a
10.
<PAGE>
default by any party thereto under any such Contract. To the best knowledge of
Company and Securityholder, each such Contract is valid and binding on all
parties thereto and in full force and effect. The Company has received no
written or unwritten notice of default, cancellation, or termination in
connection with any such Contract. The Company has paid, or will pay, all debts
and performed all obligations accrued or required as of the Time of Closing
under the terms of all Contracts, or will accrue such debts and obligations on
the books of the Company.
(iii) There has not been any notice (written or unwritten) from
any of the Company's suppliers that any such supplier will not continue to
supply the current level and type of goods currently being provided by such
supplier to the Company on the current terms and conditions.
(iv) Schedule 3.1(r) also lists all sole or limited source
supply agreements. Notwithstanding anything in this Agreement or in any
Schedule, the Company and the Securityholder shall also be responsible for all
debts and obligations arising on or prior to the Closing or that have their
basis from actions, conduct, inactions or omissions of the Company or agents
acting on the Company's behalf having occurred on or prior to the Closing except
as specifically provided for in the Company's Closing Date Balance Sheet
delivered pursuant to Section 4.2 of this Agreement.
(s) Title to the Property.
---------------------
(A) The Company has good and marketable title to all title
to all properties, all of which are reflected in the Financial Statements, in
each case free and clear of all liabilities, mortgages, pledges, liens, charges,
conditional sale or other title retention agreements, assessments, easements,
covenants, restrictions, reservations, commitments, obligations or other
encumbrances of any nature whatsoever. Schedule 3.1(s) hereto lists all leases
of property to which the Company is a party. All leases of property are valid,
binding and in full force and effect, and there exists no default thereunder.
There exists no restriction on the use of leased property in connection with the
business now conducted by the Company or any other matter which prevents or
impairs the use of such leased property for the purpose now used or any similar
purpose. There are no easements and rights, including easements for power lines,
telephone and telefax, necessary to conduct the business it now conducts.
(B) All buildings, offices, and other structures occupied
by the Company and all machinery, equipment, tools, fixtures, motor vehicles and
other properties owned or used by the Company are in normal operating condition
and repair in accordance with generally accepted standards.
(C) Neither the whole nor any portion of any property
owned or occupied by the Company has been condemned or otherwise taken by any
public authority, nor does the Company have reasonable grounds to believe that
any such condemnation or taking is threatened.
11.
<PAGE>
(D) All of the properties owned or used by the Company
conform to all zoning, building, health, safety laws, regulations and/or
ordinances relating to such property. No notices of violation relating to any
such laws, regulations and/or ordinances or calling attention to the need for
any work, repairs, constructions, alterations or installations, have been
received by the Company, nor is the Securityholder aware of any action,
inaction, or state of facts which, with or without the passage of time, may
reasonably give rise to any such violation or need for any such work, repairs,
constructions, alterations or installments.
(t) Litigation. None of the Company, the Securityholder nor any of
----------
the Company's officers or directors is engaged in, or, to the knowledge of the
Securityholder and the officers and directors of the Company, has received any
threat of, any litigation, arbitra tion, investigation, claim or other
proceeding relating to the Company, the Securityholder, or its officers,
directors, employees, benefit plans, properties, Intellectual Property Rights,
business, assets, licenses, permits, or goodwill; or against or affecting the
actions taken or contemplated in connection therewith, nor, to the best of
each's knowledge, is there any reasonable basis therefor. There is no action,
suit, proceeding, or investigation pending or, to the knowledge of the Company
and the Securityholder, threatened, against the Company, or the Securityholder,
or the officers or directors of the Company, that questions the validity of this
Agreement, the Escrow Agreement, or the right of the Company or the
Securityholder to enter into this Agreement, the Escrow Agreement, the Closing
Documents, or to consummate the transactions contemplated hereby or thereby, or
which might result in any material adverse change in the assets, business,
condition, prospects or properties of the Company, or the financial condition of
the Securityholder. There is no action, suit, proceeding, or investigation by
the Company or the Securityholder currently pending or which any of them
currently intends to initiate. None of the Company, the Securityholder, nor any
of the Company's officers or directors is 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 of the Company. None of the Company, the Securityholder, nor any of
the Company's officers or directors is bound by any judgment, decree,
injunction, agreement, ruling or order of any court, governmental, regulatory or
administrative department, commission, agency or instrumentality, arbitrator or
any other person which would or could impose any limitations or restrictions on
the ability of the Company to sell its products in any jurisdiction.
(u) 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
the Company's Articles of Incorporation or Bylaws, as presently in effect, or of
any agreement, deed, contract, mortgage, indenture, writ, order, decree, legal
obligation, or instrument to which the Company or the Securityholder is a party
or by which it or they or any of the assets of the Company are or may be bound,
or constitute a default (or an event
12.
<PAGE>
which, with the lapse of time or the giving of notice, or both, would constitute
a default) thereunder.
(v) Consents. No consent, approval, order or authorization of, or
--------
registration, qualification, designation, declaration or filing with any
governmental, regulatory or administrative authority on the part of the Company
is required in connection with the consummation of the transactions contemplated
hereunder. No consent, approval or authorization of the Company's Board of
Directors (or any committee thereof), shareholders or of any third party (other
than Purchaser and parties related to Purchaser, such as lenders, stockholders,
shareholders and similar persons) is required in connection with the Company's
consummation of the transactions contemplated hereunder that has not been
obtained or waived by the Time of Closing.
(w) Labor Relations.
---------------
a. To the best of the Company's and Securityholder's knowledge,
the Company has not failed to comply in any respect with all applicable
United States or foreign 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.
b. There are no labor controversies between the Company and any
of its employees (the "Employees") that is pending or of which the
Securityholder or the officers of the Company have received a written or
oral threat or any labor union or other collective bargaining unit
representing any of the Employees.
c. The Company has never entered into a collective bargaining
agreement or other labor union contract applicable to the Employees.
d. There are no written employment or separation agreements, or
(to the best knowledge of Securityholder or the Company) oral employment or
separation agreements other than those establishing an "at-will" employment
relationship between the Company and any of the Employees.
e. Attached hereto as Schedule 3.1(w) is a list of all
employees of the Company; their positions, their respective salaries or
other forms of potential compensation (including severance packages) and
benefits for which they are eligible.
(x) Brokers' and Finders' Fees/Contractual Limitations. Neither the
--------------------------------------------------
Securityholder nor the Company 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 connec tion with any transactions contemplated hereby.
Neither the Company nor any officer, director, employee, shareholder, agent, or
representative of the Company (collectively "Agent/Representatives") are or have
been subject to any agreement, letter of intent, or under-
13.
<PAGE>
standing of any kind which prohibits, limits, or restricts the Company or
Agent/Representatives from negotiating, entering into and consummating this
Agreement and the transactions contemplated hereby.
(y) Interested Party Relationships. Neither the Securityholder nor
------------------------------
the Company (nor any family member of the Securityholder 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
Securityholder, the Company, 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 Company, or any competitor
with the Company.
(z) Certain Payments. In connection with its business, the Company
----------------
has not and no person directly or indirectly on behalf of the Company has made
or received any payment that was not legal to make or receive.
(aa) Products Liability. There are no claims received by Company or
------------------
Securityholder against Company, fixed or contingent, asserting (a) any damage,
loss or injury caused by any Product or (b) any breach of any express or implied
product warranty or any other similar claim with respect to any Product other
than standard warranty obligations (to replace, repair or refund) made by
Company in the ordinary course of business, except for those claims that, if
adversely determined against Company, would not have a material adverse change
on the business, results of operations, financial condition or prospects of the
Company. As used herein, "Product" shall mean any products manufactured,
designed, developed, distributed, sold, re-sold, customized or serviced by the
Company.
(ab) Product Warranties. The Company has provided to Purchaser copies
------------------
of its warranty policies and all outstanding warranties or guarantees relating
to any of the Company's products, if any, other than warranties or guarantees
implied by law.
(ac) Returns. There are no agreements or arrangements, written or
-------
oral, that expressly entitle any business partner or customer of the Company to
return products sold, delivered or shipped by the Company to such business
partner or customer.
(ad) Customers. Except as indicated on Schedule 3.1(ad) attached
---------
hereto, no single customer of the Company accounted for more than 5% of the net
sales of Company during the twelve-month period ended September 30, 1997. The
Company has furnished Purchaser with complete and accurate copies or
descriptions of all current agreements (written or unwritten) with such
customers, which are set forth on the list of contracts. Neither Company nor
the Securityholder is aware of any event, happening, or fact in existence as of
their execution of this Agreement which would lead it or him to believe that any
of such customers will not continue their current level of purchases after the
Time of Closing. As used in this subparagraph, "current" means in effect as of
the date hereof, and "after the Time of Closing" means the 12-month period
thereafter.
14.
<PAGE>
(ae) Suppliers. Schedule 3.1(ae) hereto lists all suppliers of goods
---------
totalling over five thousand dollars ($5,000.00) to Company during the prior
year and the value of goods supplied to Company in each such year. Company and
the Securityholder are not aware of any event, happening, or fact which would
lead them to believe that any of such suppliers will not continue to supply the
current level and type of goods currently being provided to Company on similar
terms and conditions.
(af) Books and Records. The books and records of the Company to which
-----------------
Purchaser and its accountants and attorneys have been given access are the true
books and records of Company and truly and fairly reflect the underlying facts
and transactions in all material respects.
(ag) Complete Disclosure. No representation or warranty made by
-------------------
Company or Securityholder in this Agreement, nor any document, written
information, statement, financial statement, certificate, schedule or exhibit
prepared and furnished or to be prepared and furnished by Company or
Securityholder or its respective representatives pursuant hereto or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit 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. All schedules and exhibits prepared by Company and the
Securityholder shall be updated as of the Time of Closing. To the best
knowledge of Company and Securityholder after reasonable inquiry, there is no
event, fact or condition that has resulted in, or could reasonably be expected
to result 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 Company based on historical
operations taken as a whole that has not been set forth in this Agreement or in
the Disclosure Letter.
(ah) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
Company and the Securityholder prior to the Time of Closing have been fully
performed and complied with at or prior to the Time of Closing, including the
delivery of the instruments and documents in accordance with Section 6.2.
(ai) Absence of Governmental or Other Objection. There is no pending
------------------------------------------
or, to the knowledge of the Securityholder or the officers of the Company,
threatened, lawsuit or action or hearing challenging the transaction by any body
or agency of the United States, foreign or local government or by any third
party, and the consummation of the transaction has not been enjoined by a court
of competent jurisdiction as of the Time of Closing. There is no legislation
and there are no rulings in effect by any regulatory, administrative or
governmental authority that would make operation of the Company's systems
inoperable anywhere.
(aj) Insurance. Schedule 3.1(aj) lists all insurance policies and
---------
fidelity bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of Company, the amounts of coverage under each
such policy and bond of
15.
<PAGE>
Company. Company has not been refused any requested coverage and no material
claim made by Company has been denied by the underwriters of such policies or
bonds. All premiums payable under all such policies and bonds have been paid,
and Company is otherwise in full compliance with the terms of such policies and
bonds (or other policies and bonds providing substantially similar insurance
coverage). Company is in compliance with each of such policies. Company 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.
(ak) Environmental Matters.
---------------------
(i) For purposes of this Section 3.1(ak), the following terms
shall have the following meanings:
"Court Order" shall mean any judgment, order, award or decree of any
United Kingdom, United States or other foreign local or other court or tribunal,
or any governmental entity, and any award in any arbitration proceeding.
"Disposal Site" shall mean landfill, disposal agent, waste hauler
or recycler of Hazardous Materials.
"Environmental Encumbrance" shall mean any lien, claim, charge,
security interest, mortgage, pledge, easement, conditional sale or other title
retention agree ment, defect in title, covenant or other restrictions of any
kind in favor of any governmental entity for (i) any liability under any
Environmental Law, or (ii) damages arising from, or costs incurred by such
governmental entity in response to, a Release or threatened Release of a
Hazardous Material into the environment.
"Environmental Laws" shall mean all Requirements of Laws which relate
to any Hazardous Material or the use, handling, transportation, production,
spill, leaking, pumping, injection, deposit, disposal, discharge, dispersal,
Release, threatened Release, migration, emission, sale or storage of, or the
exposure of any person to, a Hazardous Material.
"Governmental Permits" shall mean all licenses, franchises, permits,
privileges, immunities, approvals and other authorizations from a governmental
entity.
"Hazardous Material" shall mean any material or substance that is
prohibited or regulated by any Requirement of Law or that is designated by any
governmental entity to be radioactive, toxic, hazardous or otherwise a danger to
health, reproduction or the environment.
"Hazardous Materials Activities" shall mean the use, handling,
transportation, distribution, sale, Release or threatened Release of, or
Remedial Action concerning any Hazardous Material, performed in connection with
the Real Property.
16.
<PAGE>
"Real Property" shall mean real property now or at any time in the
past owned or leased by Company or any predecessors or affiliates.
"Release" shall mean release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Hazardous Material in, on, under or through the Real Property or the air, soil,
surface water, ground water or improvements thereof.
"Remedial Action" shall mean any reporting, investigation,
characterization, feasibility study, health assessment, risk assessment,
remediation, treatment, recycling, removal, transport, monitoring, maintenance
or any other activity incident to the Release, threatened Release,
investigation, remediation or removal of a Hazardous Material existing on the
Real Property or in, on, under or through the air, soil, ground water, surface
water or improvements thereof.
"Requirements of Laws" shall mean any United States, foreign and
local laws, statutes, regulations, rules, guidelines, codes, ordinances,
judgments, injunctions, decrees, orders, permits, approvals, treaties or
protocols enacted, adopted, issued or promulgated by any governmental entity
(including, without limitation, those pertaining to electrical, building,
zoning, environmental and occupational safety and health requirements) or common
law in effect on the date hereof.
(ii) Except as set forth in Schedule 3.1(ak),
a. Company complies in all material respects with all
applicable Environmental Laws;
b. Company has obtained all environmental, health and
safety Governmental Permits necessary for its operation or required by any
Environmental Laws, all such Governmental Permits are in good standing, and
Company is in compliance in all material respects with all terms and conditions
of such permits;
c. none of Company nor any of the Real Property or present
or past Company operations is subject to any pending or ongoing investigation
by, notice or order from or agreement with any person (including, without
limitation, any prior owner or operator of the Real Property) with respect to
(A) any claim of Environmental Law, (B) any Remedial Action, or (C) any claim of
losses and expenses arising from the Release or threatened Release of a
Hazardous Material;
d. Company is not subject to any pending or existing
judicial or administrative proceeding, Court Order or settlement alleging or
addressing a violation of or liability under any Environmental Law;
e. Company has not filed, and Company does not intend to
file any notice or report under any Environmental Law reporting a violation of
any Environmental Law;
17.
<PAGE>
f. there is not now, and to the best knowledge of Company,
there has never been, in any Company Real Property (A) any underground storage
tank or surface impoundment; (B) any landfill or waste pile which either is or
was used in the frequent manner to dispose or store any Hazardous Material or
contains or contained a substantial volume of Hazardous Material; or (C) any
polychlorinated biphenyls;
g. Company has not received any notice of claim to the
effect that it is or may be liable to any person as a result of the Release or
threatened Release of a Hazardous Material into the environment from or on any
Real Property;
h. Company is not aware of any Environmental Encumbrance
on any Real Property;
i. any asbestos-containing material which is on or part of
any Real Property is in good repair according to the current standards and
practices governing such material, and its presence or condition does not
violate any currently applicable Environmental Law;
j. none of the products Company manufactures, distributes
or sells or has manufactured, distributed or sold in the past, contains
substantial amounts of asbestos-containing material;
k. other than Hazardous Materials reasonably necessary for
the conduct of Company's operations which are properly stored in accordance with
applicable Environmental Laws, no Hazardous Material is present on Real
Property, and no reasonable likelihood exists that any Hazardous Material
present on other property will come to be present on the Real Property;
l. Hazardous Materials Activities (A) have been conducted
in compliance with applicable Environmental Laws, and (B) have not resulted in
the exposure of any person to a Hazardous Material in a manner which has or will
cause an adverse health effect to such person;
m. no court order, action, proceeding, liability or claim
exists or, to the best knowledge of Company is threatened, against any Disposal
Site or against Company with respect to any transfer or release of Hazardous
Materials by Company to a Disposal Site, and there is no valid basis for such
claim;
n. Company is not aware of any fact or circumstance which
is reasonably expected to involve Company in any environmental litigation or
impose upon Company any environmental liability which would have a material and
adverse effect on the business condition of Company; and
o. Company has no records pertaining to environmental
audits or environmental assessments of any Real Property.
18.
<PAGE>
(al) Backlog. Schedule 3.1(al) hereto sets forth the backlog of
-------
orders relating to the business of the Company to ship, service and contract
work to be performed as of the Time of Closing. The Company either possesses
sufficient inventory of parts, materials and personnel to produce or service the
same within their scheduled delivery dates or such parts or materials have lead
times such that the Company can acquire such parts and materials in time to
produce, service and ship such backlog in accordance with its scheduled shipping
date, as of the Closing.
(am) Accounts Receivable. The amount of all accounts receivable of
-------------------
the Company will be good and collectible in full in the ordinary course of
business within 90 days of closing; all accounts receivable arise from bona fide
transactions in the ordinary course of business; no contest with respect to the
amount or validity of any amount is pending; and none of such accounts
receivable is or will at the Closing be subject to any counterclaim or setoff.
The value at which accounts receivable are carried reflect the accounts
receivable valuation policy of Company. As of September 30, 1997 and as of the
Closing, except as set forth in Schedule 3.1(am), there is and will be (i) no
account debtor or note debtor delinquent in its payment by more than 30 days,
(ii) no account debtor or note debtor that has refused (or threatened to refuse)
to pay its obligation for any reason, (iii) no account debtor or note debtor
that is insolvent or bankrupt, and (iv) no account receivable or note receivable
which is pledged to any third party by Company. Company holds no deposits from
customers and has received no prepaid service contract revenue or other prepaid
revenue. Purchaser will exercise reasonable best efforts to collect all
accounts receivable and notes receivable on a timely basis.
(an) Pooling of Interests. None of the Company nor any of its
--------------------
subsidiaries and no other "affiliate" of the Company has taken or failed to
take, any action which would prevent the Company or P-Com from accounting for
this transaction for financial accounting and reporting purposes as a pooling of
interests in accordance with generally accepted accounting principles and the
pronouncements of the SEC.
(ao) Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
the Company and Securityholder in reliance upon Securityholder's representation
that the Purchase Shares to be received by Securityholder will be acquired for
investment for securityholder'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
Securityholder 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.
(ap) Disclosure of Information. Securityholder believes it has
-------------------------
received all the information it considers necessary or appropriate for deciding
whether to purchase the Purchase Shares.
19.
<PAGE>
(aq) Investment Experience. Securityholder 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.
(ar) Accredited Investor. Securityholder is an "accredited investor"
-------------------
within the meaning of Securities and Exchange Commission ("SEC") Rule 501 of
Regulation D, as presently in effect.
(as) Restricted Securities. Securityholder understands that the
---------------------
Purchase Shares he 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,
Securityholder is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
(at) 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 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.
Section 3.2 Representations and Warranties of Purchaser. Each of P-
-------------------------------------------
Com and PFS, as applicable, hereby represents and warrants that:
(a) Organization. Each 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 the
assets of Purchaser. Each 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.
P-Com Field Services, Inc. is a wholly-owned subsidiary of P-Com, Inc.
(b) Brokers' and Finders' Fees. Neither 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 the Company, or the
Securityholder would be required or obligated to make or pay.
20.
<PAGE>
(c) SEC Filings. P-Com has filed all forms, reports and documents
-----------
required to be filed with the United States Securities and Exchange Commission
("SEC") since March 2, 1995 (collectively, the "P-Com SEC Reports"). The P-Com
SEC Reports were prepared in accordance with the requirements of the United
States Securities Act of 1933, as amended or the United States Securities
Exchange Act of 1934, as amended, as the case may be.
(d) Section 368 Reorganization. Purchaser does not know of any
--------------------------
circumstances relating to P-Com, Inc., P-Com Field Services, Inc. or their
respective affiliates that would prevent the transactions contemplated hereby
from qualifying as a reorganization within the meaning of Section 368 of the
Internal Revenue Code, provided that Purchaser makes no affirmative
representations or warranties as to any circumstances related to Company or the
Securityholder or any actions taken or agreed to be taken by any of them that
would prevent the transactions contemplated hereby from qualifying as a
reorganization within the meaning of Section 368 of the Internal Revenue Code.
(e) Limitation on Liability. Notwithstanding any provision of
-----------------------
this Section 3.2, the maximum aggregate liability of Purchaser to the
Securityholder shall be limited to the value of the Escrow Shares then held in
escrow, based upon the per share price used in calculating the final purchase
price hereunder.
(f) Termination of Liability and Representations and Warranties.
-----------------------------------------------------------
Absent fraud, the liability of Purchaser pursuant to this Agreement (and the
representations, warranties, covenants and other agreements of Purchaser set
forth in this Agreement, except otherwise set forth herein) for a breach or
inaccuracy of, or a failure to perform or comply with, any or all of Purchaser's
respective representations, warranties, covenants and agreements and all other
rights, claims, actions and causes of action at law or in equity in respect of
such representations, warranties, covenants and agreements shall terminate upon
the publication date of the auditor's report for P-COM that includes the audited
results for the Company for the fiscal year ended December 31, 1997. This
subparagraph is subject to the limitation of liability of Purchaser in paragraph
3.2 (e) above.
(g) Liability Floor. Notwithstanding anything to the contrary in
---------------
this Agreement and any documents related hereto, and subject to other
limitations for the benefit of Purchaser herein, neither the Purchaser nor any
affiliate shall be liable to Securityholder or the Company with respect to any
claim for indemnifiable damages unless the aggregate amount of all indemnifiable
damages incurred by Securityholder or the Company exceed Fifty Thousand Dollars
($50,000.00), in which case the Purchaser and such affiliate shall be liable for
the total amount of such indemnifiable damages. Any other provision of this
Agreement notwithstanding, Sections 3.2(e) and (f) ("Limitation on Liability"
and "Termination of Liability and Representations and Warranties") above will
not apply to Purchaser's obligation to pay the purchase price under Article II
above and any other provision of this Agreement, the Registration Rights
Agreement or the transaction documents relating to Purchaser's issuance and
registration of the Purchase Shares, subject to the terms of the applicable
documents.
21.
<PAGE>
ARTICLE IV
----------
COVENANTS
---------
Section 4.1 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 P-Com. No party shall disseminate (except to the parties to this
Agreement) any press release or announcement concerning the transactions
contemplated by this Agreement or the Escrow Agreement or the parties hereto or
thereto without the prior written consent of the Company and P-Com, except as
required under the public reporting obligations of P-Com as may be required to
obtain consents necessary pursuant to Sections 6.1(i) and 6.2(d) hereof to
consummate the transactions contemplated herein; provided that P-Com shall issue
a press release describing the transaction contemplated herein at any time
within ten (10) days after the date hereof and the Time of Closing.
Section 4.2 Net Asset Determination.
----------- -----------------------
(a) As used in this Section 4.2, the "Net Assets" of the Company
shall mean the difference between the total assets and the total liabilities of
the Company as of the relevant dates, determined in accordance with GAAP.
(b) As soon as reasonably practicable after the signing of this
Agreement, but in no event later than the Closing Date, the Securityholder shall
cause the Company to deliver to Purchaser an unaudited balance sheet (the
"Closing Date Balance Sheet") of the Company dated as of the Time of Closing.
The Closing Date Balance Sheet shall fairly present the Net Assets of the
Company as the Time of Closing in accordance with GAAP and on a basis consistent
with previous periods.
(c) Upon receipt of the Closing Date Balance Sheet by the Company
(the "Post-Time of Closing"), if the Net Assets as of the Time of Closing (as
determined pursuant to Section 4.2(d)) are less than One Million Eight Hundred
Thousand Dollars ($1,800,000) (the "Minimum Net Assets"), then the Company and
the Securityholder shall immediately pay Purchaser in cash the amount by which
the Net Assets as of the Time of Closing are less than the Minimum Net Assets.
In the event that the Company and the Securityholder do not make the payment in
cash within the time set forth in this Section 4.2, Purchaser shall be entitled
to deduct from the shares of Common Stock held pursuant to the Escrow Agreement
that number of shares with a fair market value equal to the closing sales price
of the Common Stock of Purchaser as reported on the Nasdaq/NMS on the execution
date of this Agreement sufficient to cover the payment owed by the Company and
the Securityholder.
(d) As of the Closing, Securityholder shall provide Purchaser
with a draft of the Closing Date Balance Sheet. Within 30 days after closing,
Securityholder will prepare and deliver to the Purchaser the Closing Date
Balance Sheet, and will promptly provide the Purchaser with the basis for all
determinations therein as requested by the
22.
<PAGE>
Purchaser. If within 30 days after receipt of the Closing Date Balance Sheet
the Purchaser shall not have given written notice to Securityholder setting
forth any objection of the Purchaser to the Closing Date Balance Sheet, then
such Closing Date Balance Sheet will be final and binding on the parties hereto.
In the event the Purchaser gives written notice of any objection within the 30-
day period, Purchaser and Securityholder will use reasonable efforts to resolve
the dispute within the 30-day period following the receipt by Securityholder of
the written notice from the Purchaser. If the parties are unable to reach an
agreement within such 30-day period, the matter will be submitted to Price
Waterhouse, LLP, for determination, which will be final and binding upon
Purchaser and the Securityholder. Purchaser and the Securityholder will
contribute equally to all costs (including fees and expenses charged by Price
Waterhouse, LLP) in connection with the resolution of any such dispute.
Section 4.3 Non-Competition.
----------- ---------------
(a) Commencing on the Time of Closing and continuing for five (5)
years thereafter, Securityholder agrees that he shall not engage (except in his
capacity as an officer, director, and/or employee of Purchaser), directly or
indirectly, whether on his own account or as a shareholder (other than as a less
than 1% shareholder of a publicly-held company (other than Purchaser)), 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
worldwide:
(i) Enter into or engage in the business of the Company or
Purchaser (or its affiliates), either presently or during the term of this
Section 4.3;
(ii) Solicit customers, suppliers, or business patronage
which results in competition with the Company, Purchaser or any of its
affiliates;
(iii) Encourage or solicit any employees of the Company,
Purchaser or any of its affiliates to leave the employment of the Company,
Purchaser or any of its affiliates for any reason; or
(iv) Promote or assist, financially or otherwise, any person,
firm, association, corporation, or other entity engaged in the business of the
Company, Purchaser or its affiliates; or
(v) Notwithstanding the five (5) year time limitation set
forth above, ever establish or continue any business in the future using the
name Telematics or any name capable of confusion therewith.
(b) Without limitation, the parties agree and intend that the
covenants contained in this Section 4.3 shall be deemed to be a series of
separate covenants and agreements, one for each and every county of each state
and political subdivision worldwide. 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 provisions hereof for the
23.
<PAGE>
purpose of such proceeding to the extent necessary to permit the remaining
separate covenants to be enforced in such a proceeding.
(c) The parties agree that due to the unique nature of the services
and capabilities of Securityholder, there can be no adequate remedy at law for
any breach of their obligations hereunder, that any such breach may allow
Securityholder 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 Securityholder from any loss or harm,
including, without limitation, attorney's fees, in connection with any breach,
or any enforcement, of Securityholder's obligations hereunder.
(d) Securityholder represents and warrants to Purchaser that the
covenants of Securityholder in this Section 4.3 are reasonably necessary for the
protection of Purchaser's interests under this Agreement and are not unduly
restrictive upon Securityholder.
Section 4.4 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, the Company 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 its best 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, to the end that its
goodwill and ongoing businesses shall be not materially diminished at the Time
of Closing. The Company shall promptly notify Purchaser of any event or
occurrence not in the ordinary course of business of the Company, and any event
which could have a material and adverse effect on the business condition of the
Company. Except as expressly contemplated by this Agreement, the Company,
without the prior written consent of Purchaser shall not:
(a) Accelerate, amend or change the period of exercisability of
options, warrants, stock or purchase rights or authorize cash payments in
exchange therefor or perform any actions that would prohibit the pooling of
interests accounting treatment;
(b) 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;
(c) Grant any severance or termination pay to any service
provider;
(d) Transfer to any person or entity any rights to the Company's
Intellectual Property Rights, except licenses of Intellectual Property Rights in
connection with the sale of the Company's products in the ordinary course of
business consistent with past practice;
24.
<PAGE>
(e) Enter into or amend any agreements pursuant to which any other
party is granted marketing or other similar rights of any type or scope with
respect to any products of Company;
(f) Violate, or, except in the ordinary course of business consistent
with past practice, amend or otherwise modify the terms of any contract;
(g) Except with prior consultation with Purchaser, commence a
lawsuit other than for the routine collection of bills;
(h) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any Company Common Stock or
otherwise, or split, combine or reclassify any of its Common Stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of Company Common Stock, or repurchase or otherwise
acquire, directly or indirectly, any shares of Company Common Stock except
repurchases of Common Stock at cost from former service providers in accordance
with the terms of agreements providing for the repurchase of shares in
connection with any termination of service to the Company;
(i) Issue, deliver or sell or authorize or propose the issuance,
delivery or sale of or authorization of, the purchase of any shares of Company
capital stock or securities convertible into, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than the issuance of shares of Company Common Stock upon the exercise of
previously outstanding options and warrants to purchase Company's capital stock;
(j) Cause or permit any amendments to Company's Articles of
Incorporation or Bylaws;
(k) 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 the Company;
(l) Sell, lease, license or otherwise dispose of any of its properties
or assets except in the ordinary course of business;
(m) 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, except in the ordinary course of business consistent with
past practice, e.g., credit cards, phone cards, and trade accounts.
(n) Adopt or amend any employee benefit plans, or enter into any
employment contract for more than $10,000 per year, pay any bonus or
remuneration to any service provider, or increase the salaries or wage rates of
its employees other than pursuant to
25.
<PAGE>
scheduled employee reviews under the Company'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
the Company to any of its service providers;
(o) Revalue any of its assets, including, without limitation, writing
down the value of inventory or accounts receivable;
(p) Liquidate or discount any account receivable or subject any
account receivable to a claim or setoff;
(q) Pay, discharge or satisfy in an amount in excess of $5,000 in any
one case any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business consistent with past practice of
liabilities reflected or reserved against in the Financial Statements;
(r) Make any material Tax election other than in the ordinary course
of business and consistent with past practice, change any material tax election,
adopt any material Tax accounting method other than in the ordinary course of
business and consistent with past practice, change any material Tax accounting
method, file any material Tax return (other than any estimated tax returns,
payroll tax returns or sales tax returns) or any amendment to a material Tax
return other than in the ordinary course of business, enter into any closing
agreement, settle any Tax claim or assessment or consent to any Tax claim or
assessment;
(s) Engage in any activities or transactions that are outside the
ordinary course of its business consistent with past practice;
(t) 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;
(u) Waive or commit to waive any rights of substantial value;
(v) Cancel, amend or, other than in the ordinary course upon
expiration of a policy term, renew any material insurance policy;
(w) Alter, or enter into any commitment to materially alter, its
interest in any corporation, association, joint venture, partnership or business
entity in which the Company directly or indirectly holds any interest on the
date hereof; or
(x) Take, or agree (in writing or otherwise) to take, any of the
actions described in this Section 4.4 or any action which would make any of the
representations or warranties or covenants of the Company contained in this
Agreement materially untrue or incorrect.
26.
<PAGE>
Section 4.5 Access to Information. The Company will give Purchaser
----------- ---------------------
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 Company's business and the
Company will furnish to Purchaser, their respective accountants, legal counsel,
and other representatives during such period all such information concerning its
business or assets as Purchaser may reasonably request; provided, that any
furnishing of such information pursuant hereto or any investigation by Purchaser
shall not affect Purchaser's right to rely on the representations, warranties,
agreements and covenants made by the Company and the Securityholder in this
Agreement. The Company and the Securityholder shall cooperate (without expense
to the Company or Securityholder) with the Purchaser in auditing the financial
statements of the Company, including, but not limited to, executing any and all
written representations reasonably required by Purchaser's accountants.
Section 4.6 Registration Rights. P-Com hereby agrees to grant to the
----------- -------------------
holder of P-Com Common Stock issued pursuant to this Agreement registration
rights as set forth in the Registration Rights Agreement attached hereto as
Exhibit 4.6 (the "Registration Rights Agreement").
Section 4.7 Pooling of Interests Transaction. P-Com and the Company
----------- --------------------------------
shall use their reasonable best efforts to cause Price Waterhouse LLP, on behalf
of both the Company and P-Com, to deliver to P-Com upon the execution of this
Agreement, an opinion, as to the firm's concurrence with the respective
companies' management regarding the appropriateness of pooling of interests
accounting for the merger under the Accounting Principles Board opinion No. 16
were the transaction to close as of the date hereof and as of the Closing.
Section 4.8 Necessary Consents. Prior to the Closing, the Company
----------- ------------------
and the Securityholder will obtain such written consents and take such other
actions as may be necessary or appropriate to allow the consummation of the
transactions contemplated hereby and to allow the continuation of the Company's
businesses by Purchaser after the Closing as conducted on the date hereof.
Section 4.9 Best Efforts. The Company will perform and fulfill all
----------- ------------
obligations to be performed and fulfilled under this Agreement, and all the
conditions precedent to the consummation of the transactions to be timely
satisfied, to the end that the transactions contemplated by this Agreement shall
be effected substantially in accordance with its terms. The Securityholder and
the Company will cooperate with Purchaser in such actions and in securing
requisite approvals and shall deliver such further documents as Purchaser may
request as necessary to evidence such transactions. The parties do not intend
for this paragraph to require out-of-pocket expenditures by Securityholder or
the Company, except as to obligations specifically identified herein.
Section 4.10 Exclusivity; Acquisition Proposals.
------------ ----------------------------------
(a) The Securityholder and the Company shall not knowingly, directly
or indirectly, through any officer, director, agent or representative of the
Company
27.
<PAGE>
(including, without limitation, investment bankers, attorneys, accountants and
consultants), or otherwise:
(i) solicit, initiate or further the submission of proposals or
offers from, or enter into any agreement with, any firm, corporation,
partnership, association, group or other person or entity, individually or
collectively (including, without limitation, any managers or employees of the
Company or any affiliates), other than Purchaser (for purposes of this Section
4.10, a "Third Party"), relating to any acquisition or purchase or license of
all or any portion of the assets of, or any equity interest in, the Company or
any merger, consolidation or business combination with the Company;
(ii) participate in any discussions or negotiations regarding,
or furnish to any Third Party any confidential information with respect to the
Company or Purchaser in connection with any acquisition or purchase or license
of all or any portion of the assets of, or any equity interest in, the Company
or any merger, consolidation or business combination with the Company; or
(iii) cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any Third Party to undertake
or seek to undertake any acquisition or purchase or license of all or any
portion of the assets of, or any equity interest in, the Company or any merger,
consolidation or business combination with the Company.
(b) In the event that, prior to termination of this Agreement or
November 30, 1997, whichever is earlier, the Company receives any offer or
indication of interest from any Third Party relating to any acquisition or
purchase or license of all or any portion of the assets of, or any equity
interest in, the Company or any merger, consolidation or business combination
with the Company, the Securityholder shall cause the Company to promptly notify
Purchaser in writing, and shall in any such notice, set forth in reasonable
detail the identity of the Third Party, the terms and conditions of any proposal
and any other information requested of the Company by the Third Party or in
connection therewith.
(c) The Securityholder shall cause the Company to immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any Third Party with respect to any of the foregoing.
Section 4.11 Breach of Representations, Warranties, Agreements and
------------ -----------------------------------------------------
Covenants.
- ---------
(a) The Securityholder and the Company shall not take, or fail to
take, any action which from the date hereof through the Closing would cause or
constitute a breach of any of the Securityholder's or the Company's
representations, warranties, agreements and covenants set forth in this
Agreement. In the event of, and promptly after becoming aware of, the actual,
pending or threatened occurrence of any event which would cause or constitute
such a breach or inaccuracy, the Securityholder and the Company shall
28.
<PAGE>
give detailed notice thereof to Purchaser and shall use their reasonable best
efforts to prevent or promptly remedy such breach or inaccuracy.
Section 4.12 Legal Conditions to the Sale or Surrender of the
------------ ------------------------------------------------
Telematics, Inc. Securities. The Securityholder and the Company shall take all
- ---------------------------
reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on the Company or the Securityholder with respect to the
consummation of the transactions set forth herein and will promptly cooperate
with and furnish information to Purchaser in connection with any such
requirements imposed upon Purchaser in connection with the consummation of the
transactions set forth herein. The Securityholder and the Company shall take
all reasonable actions to obtain (and to cooperate with Purchaser in obtaining)
any consent, authorization, order or approval of, or any exemption by, any
Governmental Entity required to be obtained or made by the Company or the
Securityholder (or by Purchaser) in connection with the consummation of the
transactions set forth herein or the taking of any action contemplated thereby
or by this Agreement, and to defend such lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby as the Securityholder and the Company deem advisable in good faith, to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby as the Securityholder and the Company deem it advisable in good faith,
and to effect all necessary registrations and filings and submissions of
information as the Securityholder and the Company deem advisable in good faith
required by any Governmental Entity, and to fulfill all conditions to this
Agreement.
Section 4.13 Public Announcements. The Securityholder and the
------------ --------------------
Company agree to maintain the confidentiality of the terms and conditions of
this Agreement. The Securityholder and the Company will consult in advance with
Purchaser concerning the timing and content of any announcement, press release
or public statement concerning the transactions set forth in this Agreement.
Section 4.14 Shareholder's Meeting. The Securityholder shall cause
------------ ---------------------
all directors and current officers of the Company to resign as of the Closing.
Section 4.15 No Transfer. Securityholder agrees not to sell, offer
------------ -----------
for sale, assign, transfer or otherwise encumber any of the Securities to any
third party other than Purchaser. Securityholder also waives any rights of
first offer or refusal or similar rights that it has with respect to the
transfer of any Company security by any Company securityholder to Purchaser.
Section 4.16 Unitech Matters. Prior to the Closing, Securityholder
------------ ---------------
shall resign all offices he holds in Unitech and shall transfer all shares of
capital stock he holds in Unitech to the separate account of a third party.
Section 4.17 Section 368 Reorganization. The parties will act after
------------ --------------------------
Closing in a manner which is not inconsistent with this transaction's qualifying
as a reorganization under Section 368 of the Internal Revenue Code. The parties
agree to use their respective best
29.
<PAGE>
efforts to contest, or to assist any other party hereto who is contesting, the
assertion of any governmental authority that this transaction failed to qualify
as a reorganization under Section 368 of the Internal Revenue Code.
Securityholder and the Company have each received its own advice, including tax
advice, with respect to all matters set forth in this Agreement.
ARTICLE V
CLOSING
-------
Section 5.1 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 V hereof is fulfilled or waived
(the "Time of Closing"), with the expectation that the Closing shall occur on or
about November 28, 1997 unless otherwise agreed to in writing by the Company and
Purchaser. The Closing shall take place at P-Com Field Services, Inc., 8300
Boone Boulevard, Vienna, Virginia or at such other place or date as may be
agreed to in writing by Purchaser and the Company. The "Closing" shall mean the
deliveries to be made by the parties hereto at the Time of Closing in accordance
with this Agreement.
Section 5.2 Deliveries by Company and Securityholder. At the
----------- ----------------------------------------
Closing, the Securityholder and the Company, as applicable, shall deliver to PFS
and P-Com, as applicable, all duly and properly executed, the following:
(a) Certificates and Instruments. Certificates representing the
----------------------------
Securities endorsed over to Purchaser or accompanied by duly executed stock
powers or similar instruments of transfer or, in the case of Securities to be
surrendered, instruments effecting such surrender;
(b) Escrow Agreement. The Escrow Agreement in the form attached
----------------
hereto as Exhibit 2.2 duly executed by the Company and Securityholder;
(c) Corporate Minute Books. The corporate minute books of the
----------------------
Company and its subsidiaries duly updated as of the Closing;
(d) Certificate of Good Standing. Certificate of Good Standing,
----------------------------
dated as of a recent date, with respect to the Company and its subsidiaries
issued by the appropriate government agency;
(e) Closing Documents. All other Closing Documents and
-----------------
performance of the transactions contemplated hereby;
(f) Books and Records. All of the stock ledgers and similar
-----------------
corporate records of the Company and such subsidiaries;
(g) Consents. Evidence that all consents, approvals, or
--------
authorizations of or notifications to any third parties (including governmental
agencies), if
30.
<PAGE>
any, required to issue and exchange the Securities for the consideration set
forth herein, and to consummate the transactions contemplated hereby, have been
obtained or made, as applicable, by the Company and/or the Securityholder;
(h) Opinion of Counsel. An Opinion from counsel for the Company
------------------
and the Securityholder, dated the Closing Date, in the form attached as Exhibit
5.2(g) (the "Securityholder's Opinion");
(i) Securityholder Certificate. A certificate from the President
--------------------------
of the Company and the Securityholder, dated the Closing Date, containing the
information required pursuant to Section 6.1(g);
(j) FIRPTA. A Foreign Investment and Real Property Tax Act of
------
1980 Notification Letter executed by the Securityholder;
(k) Proprietary Information and Inventions Agreement. Executed
------------------------------------------------
Proprietary Information and Inventions Agreement from each employee and
consultant in a the form attached hereto as Exhibit 6.1(j);
(l) Securityholder Agreement and Pooling Opinion. The
--------------------------------------------
Securityholder Agreement and Pooling Opinion; and
(m) Promissory Note. The promissory note from Securityholder in
---------------
the form attached hereto as Exhibit 5.2(m) (the "Promissory Note").
(n) Waiver Letter. The letter waiving certain of the
-------------
Securityholder's rights in the form attached hereto as Exhibit 5.2(n) (the
"Waiver Letter").
(o) Stoppleman Opinion. An opinion from the Stoppleman Firm (the
------------------
"Stoppleman Opinion") to the effect that the shares of the Company held by
Securityholder will be transferred from Securityholder to Purchaser in
compliance with applicable federal and state securities laws; provided, however,
that such opinion shall be in a form typical in transactions of this type.
(p) Demand Note. A demand note from Unitec Digital Systems in the
-----------
amount of $8,954.80 plus interest dated as of the Time of Closing.
(q) Other Documents. Such other documents and instruments as
---------------
Purchaser or its counsel shall deem necessary to consummate the transactions
contemplated hereby; provided, however, that such documents as are not
specifically identified herein will not result in expenses to Securityholder or
the Company, or materially increase their respective obligations or liabilities
under this Agreement.
All documents delivered to Purchaser under this Agreement shall be in
form and substance satisfactory to Purchaser.
31.
<PAGE>
Section 5.3 Deliveries by Purchaser. At the Closing, P-Com or PFS,
----------- -----------------------
as applicable, shall deliver, or cause to be delivered, to the Company and/or
the Securityholder, as applicable, all duly and properly executed, the
following:
(a) Payment. The payment set forth in Section 2.2.
-------
(b) Resolutions. A copy of the resolutions of the Board of
-----------
Directors of each Purchaser, certified by its corporate secretary as having been
duly and validly adopted and being in full force and effect, authorizing
execution and delivery of this Agreement and the Closing Documents and
performance of the transactions contemplated hereby by each Purchaser;
(c) Consents. Evidence that all consents, approvals or
--------
authorizations of or notifications to any third parties (including governmental
agencies), if any, required to purchase the Securities and to consummate the
transactions contemplated hereby have been obtained or made, as applicable, by
Purchaser;
(d) Purchase Certificate. A Certificate from the Chief Financial
--------------------
Officer of P-Com and the President of PFS, dated the Closing Date, containing
the information required pursuant to Section 6.2(j).
(e) Other Documents. Such other documents and instruments as the
---------------
Securityholder or his counsel reasonably shall deem necessary to consummate the
transactions contemplated hereby provided, however, that such documents as are
not specifically identified herein will not result in expenses to Purchaser, or
materially increase its obligations or liabilities under this Agreement.
All documents delivered to the Securityholder shall be in form and
substance satisfactory to the Securityholder.
Section 5.4 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 of the
Company or to consummate, in any other manner, the terms and provisions of this
Agreement; provided, however, that such documents as are not specifically
identified herein will not result in expenses to Securityholder or the Company,
or materially increase their respective obligations or liabilities under this
Agreement.
Section 5.5 Termination. Either party may terminate this Agreement
----------- -----------
if Closing is not fully accomplished by or on November 30, 1997. Time is of the
--------------
essence with respect to this paragraph.
- -------
Section 5.6 Cure Period. If Purchaser should determine prior to
----------- -----------
Closing that there has been a breach of, inaccuracy in, or nonfulfillment of any
representation, warranty,
32.
<PAGE>
covenant, or agreement of Securityholder or the Company herein or in any other
transaction document, then Purchaser will use best efforts to promptly hand
deliver written notice to the Securityholder and the Company stating the facts
of such matter with reasonable specificity, so Securityholder and the Company
will have an opportunity to effect a cure. No matter will be deemed a default
under this Agreement or any other transaction document if cured by the
Securityholder or the Company prior to Closing; provided, however, that this
paragraph will not in any case be deemed to give any party the right to extend
the date of Closing and provided further that nothing contained in this Section
5.6 shall limit Purchaser's ability to rely on the representations, warranties,
covenants and agreements of Securityholder and the Company contained in the
Agreement.
Section 5.7 Proprietary Information and Inventions Agreement. The
----------- ------------------------------------------------
Company and Securityholder shall use reasonable best efforts to (i) have the
engineers and other staff to be employed at the PFS offices sign a copy of the
Company's Form B Proprietary Information and Inventions Agreement (in the form
attached) and (ii) have all other employees and consultants of the Company sign
a copy of the Company's Form A Proprietary Information and Inventions Agreement
(in the form attached), in each case within 15 days of the Closing.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO OBLIGATIONS
-----------------------------------
Section 6.1 Conditions to Obligations of Purchaser. Each and every
----------- --------------------------------------
obligation of P-Com and/or PFS, as applicable, 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 and/or PFS, as
applicable):
(a) Certificates for Securities. PFS shall have received all written
---------------------------
certificates and other documents evidencing the Securities.
(b) Representations and Warranties. The representations and
------------------------------
warranties of the Company and the Securityholder set forth in Section 3.1 of
this Agreement shall have been true and correct when made and shall be true and
correct at and as of the Time of Closing as if such representations and
warranties were made as of such date and time.
(c) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
the Securityholder and the Company, as the case may be, including Board of
Directors and shareholder approval, shall have been fully performed and complied
with at or prior to the Time of Closing, including the delivery of the
instruments and documents in accordance with Section 5.2 hereof.
(d) No Material Adverse Effect. During the period from September 30,
--------------------------
1997 to the Closing, there shall not have been any material and adverse effect
on the business condition or prospects of the Company.
33.
<PAGE>
(e) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the United States or foreign, 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 law shall have expired.
(f) Due Diligence Review. Purchaser shall have completed to its sole
--------------------
satisfaction its due diligence review of the Company and its operations,
business, and financial condition, and Purchaser shall have received favorable
reviews from their advisors of the results of their final due diligence review
of the Company.
(g) Certificate of President and Securityholder. The Company shall
-------------------------------------------
have delivered to Purchaser a certificate executed by its President and the
Securityholder, dated the date of the Closing, to the effect that the conditions
set forth in subsections (a), (b), (c) and (d) of this Section 6.1, have been
satisfied.
(h) Execution of Escrow Agreement. Purchaser shall have received
-----------------------------
fully executed copies of the Escrow Agreement.
(i) Third Party Consents. The Company and Securityholder shall have
--------------------
obtained all third party consents and approvals and assignments to all Contracts
and all other instruments required to consummate the transactions contemplated
by this Agreement or as reasonably requested by counsel to Purchaser.
(j) Opinions of Counsel for the Company and the Securityholder.
----------------------------------------------------------
Purchaser shall have received the Securityholder's Opinion.
(k) No Violations; No Actions. Consummation of the transactions
-------------------------
contemplated by this Agreement shall not violate any order, decree or judgment
of any court or Governmental Entity having competent jurisdiction and no action
or proceeding shall have been instituted or threatened by any person, entity or
Governmental Entity which, in any such case, in the sole but reasonable judgment
of Purchaser, has a reasonable probability of resulting in (i) the obtaining of
material damages from Purchaser; (ii) an order, judgment or decree restraining,
prohibiting or rendering unlawful the consummation of the transactions
contemplated by this Agreement; or (iii) other relief in connection therewith.
(l) Proceedings and Documents. All corporate and other proceedings in
-------------------------
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be in form and substance
reasonably satisfactory to Purchaser and its counsel, and Purchaser shall have
received all such counterpart originals or certified or other copies of such
documents as it may reasonably request.
(m) Schedules. If necessary or appropriate, the Company shall have
---------
updated or amended all schedules required by this Agreement, and all such
updated or amended schedules shall have been acceptable to Purchaser in its sole
but reasonable discretion.
34.
<PAGE>
(n) Tax Forms. The Securityholder shall have provided to Purchaser an
---------
executed Form W-8 or Form W-9 properly reporting the transactions set forth in
this Agreement.
(o) Board Approval. This Agreement shall have been duly approved by
--------------
the Board of Directors of each Purchaser.
(p) Other Matters.
-------------
(i) Between September 30, 1997 and the Closing Date, the
Company shall not have suffered any damage, destruction or loss by reason of
fire, flood, accident, or other casualty, of such character as would interfere
in a materially adverse way with the continuous operation of the Company's
business, regardless of whether or not such loss was covered by insurance;
(ii) No strike shall be on-going on the Closing Date;
(iii) From September 30, 1997 to the Closing Date:
a. no distribution of profits of the Company shall
have been made or, if any such distribution has been made, it shall have been
repaid prior to the Closing;
b. no compensation shall have been paid, directly
or indirectly, to any officer, director, employee or agent by the Company other
than as applicable on September 30, 1997 and no such person or firm shall have
received, directly or indirectly, funds or assets belonging to the Company or,
if any such compensation has been paid or assets have been received, the amount
thereof shall have been repaid prior to Closing;
c. there shall have been no material increase in
the compensation currently payable or to become payable (over that applicable as
of September 30, 1997) to the Company's directors, managers, key employees or
agents, except as required by law;
d. the Company shall not have entered into any
transaction otherwise than in the ordinary course of business nor otherwise than
in accordance with generally accepted commercial practice.
(q) Securityholder Agreements. P-Com shall have received from
-------------------------
Securityholder a Securityholder Agreement substantially in the form attached
hereto as Exhibit 6.1(q).
(r) Pooling of Interests Transaction. P-Com shall have received
--------------------------------
opinions from Price Waterhouse, LLP and the Company's accountants as to the
respective firms' concurrence with the respective companies' management
regarding the appropriateness of
35.
<PAGE>
pooling of interests accounting for the merger under the Accounting Principles
Board opinion No. 16.
(s) Employment Agreement. P-Com shall have the received employment
--------------------
agreements in the form attached as Exhibit 6.1(s), executed by Securityholder
and Greg Frank.
(t) Unitech Matters. Securityholder shall have resigned from all
---------------
offices he holds with Unitech and shall have transferred all shares of capital
stock he holds in Unitech to the separate account of a third party.
(u) Promissory Note. Purchaser shall have received the Promissory
---------------
Note executed by Securityholder.
(v) Waiver Letter. Purchaser shall have received the Waiver Letter
-------------
executed by Securityholder.
(w) Stoppleman Opinion. Purchaser shall have received an executed
------------------
version of the Stoppleman Opinion.
(x) Demand Note. Purchaser shall have received an executed version
-----------
of the demand note referenced in Section 5.2(p).
Section 6.2 Conditions to Obligations of the Company and the
----------- ------------------------------------------------
Securityholder. Each and every obligation of the Company 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 the Company):
(a) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
Purchaser shall have been fully performed and complied with at or prior to the
Time of Closing.
(b) Execution of Escrow Agreement. Purchaser shall have received
-----------------------------
fully executed copies of the Escrow Agreement.
(c) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the United Kingdom, U.S 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.
(d) Third Party Consents. The Company and Securityholder shall have
--------------------
obtained all third party consents and approvals and assignments to all Contracts
and all other instruments required to consummate the transactions contemplated
by this Agreement and the Escrow Agreement or as reasonably requested by counsel
to Purchaser.
36.
<PAGE>
(e) Registration Rights Agreement. Securityholder shall have received
-----------------------------
a copy of the Registration Rights Agreement executed by P-COM.
(f) Employment Arrangements. P-COM shall have delivered executed
-----------------------
employment agreements in the form attached hereto as Exhibit 6.1(t) to
Securityholder and Greg Frank prior to or on the Closing Date.
(g) Purchaser's Opinion. The Company and Securityholder shall have
-------------------
received an opinion of Purchaser's counsel dated as of Closing, in form and
substance reasonably acceptable to the Company and the Securityholder, with
reasonable limitations acceptable to Purchaser's counsel, to the effect that:
(i) P-Com, Inc. and P-Com Field Services, Inc. are
corporations duly organized and existing and in good standing under the laws of
the State of Delaware and are authorized to carry on the business now conducted
by them and own or lease the properties now operated or leased by them;
(ii) Purchasers have obtained all necessary authorizations
and consents of their respective Boards of Directors to effect the transactions
contemplated herein.
(iii) Such counsel does not have actual knowledge that there
is any litigation, proceeding or investigation pending or threatened which might
result in any material adverse change in the properties, business or in the
condition of P-Com, Inc. or which questions the validity of this Agreement;
(iv) This Agreement is a valid and binding obligation of
Purchasers, jointly and severally, and enforceable against Purchasers in
accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the enforcement
of creditors' rights generally; and
(v) Upon consummation of this transaction and the issuance
and delivery of certificates representing P-Com, Inc. shares to the
Securityholder, the P-Com, Inc. shares will be validly issued, fully paid and
non-assessable shares of P-Com, Inc. common stock.
(h) Consents. All consents and authorizations required of Purchaser,
--------
including without limitation an appropriate Board resolution authorizing the
transaction, shall have been received by the Company and Securityholder.
(i) Representations and Warranties. The representations and
------------------------------
warranties of Purchaser set forth in Section 3.2 of this Agreement shall have
been true and correct when made and shall be true and correct at and as of the
Time of Closing as if such representations and warranties were made as of such
date and time.
(j) Purchaser Certificate. Purchaser shall have delivered to the
---------------------
Company and Securityholder a certificate executed by the Chief Financial Officer
of P-Com and the
37.
<PAGE>
President of PFS, dated the date of the Closing, to the effect that the
conditions set forth in subsections (a) and (i) of this Section 6.2, have been
satisfied.
ARTICLE VII
-----------
INDEMNIFICATION
---------------
Section 7.1 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 Company (which includes its subsidiaries) and
Securityholder shall survive the execution, delivery, and performance of this
Agreement, except as set forth herein. All representations and warranties of
the Company (which includes its subsidiaries) and Securityholder set forth in
this Agreement shall be deemed to have been made again by the Company and
Securityholder at and as of the Closing. No investigation made by or on behalf
of Purchaser or any of its respective affiliates with respect to the Company
(including its Subsidiaries) and the Securityholder shall be deemed to affect
the Purchaser's reliance on the representations, warranties, covenants and
agreements of the Company and the Securityholder and shall not be a waiver of
the Purchaser's or any of its respective affiliates' rights to indemnification
as herein provided.
(b) As used in this Article VII, except as otherwise indicated in
this Article VII, any reference to a representation, warranty, agreement, or
covenant contained in any section of this Agreement shall include the schedule
relating to such section.
(c) The Purchaser may take action for any breach or
nonfulfillment of any warranties, covenants, undertakings, agreements and
representations on behalf of any other party or parties before or after Closing
notwithstanding that such breach or nonfulfillment was known to or discoverable
by the Purchaser before completion and notwithstanding that the Purchaser should
delay or otherwise fail to exercise its rights hereunder or generally in such
response.
(d) Nothing in this Agreement shall be construed as limiting in
any way the remedies that may be available to a party in the event of fraud
relating to any of the representations, warranties, agreements or covenants made
by any other party in this Agreement.
(e) Notwithstanding the expiration date of the representations,
warranties, covenants and agreements of the Company and the Securityholder set
forth herein, if the Purchaser or any of its respective affiliates shall notify
the Securityholder, the Escrow Agent or the Escrow Committee pursuant to the
Escrow Agreement with respect to the submission of a claim during the time
period of survivability of the representations,
38.
<PAGE>
warranties, covenants and agreements of the Company and the Securityholder,
Securityholder's liability or obligation for Damages shall continue in full
force and effect until settled to the other party's satisfaction with respect to
those claims timely made. With respect to any claim for indemnifiable damages
hereunder, Purchaser shall give written notice to the Securityholder which
notice shall set forth (i) an estimate of the amount of indemnifiable damages
which Purchaser claims to have sustained; and (ii) the basis of such claim with
reasonable specificity.
Section 7.2 Indemnification; Escrow Deposit of Purchase Shares.
----------- --------------------------------------------------
(a) Except to the extent otherwise set forth herein, the Company
and the Securityholder (regardless of the party making the representation,
warranty, covenant or agreement) shall, to the extent of the Escrow Shares,
indemnify, reimburse, defend and hold harmless each Purchaser and each of its
respective affiliates (other than the Securityholder) 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 incurred or suffered, by each Purchaser and any
of its respective affiliates (other than the Securityholder), as a result of or
arising from or in connection with (1) any inaccuracy in or breach or
nonfulfillment of any of the representations, warranties, covenants, or
agreements made by any of the Securityholder or the Company in this Agreement or
the Escrow Agreement or any facts or circumstances constituting such an
inaccuracy, breach, or nonfulfillment (all of which, including those set forth
in clause (2) below, shall be referred to as "Identifiable Claims"), or (2) any
of the following (but giving effect to any of the disclosures or qualifications
set forth in this Agreement, any accompanying schedule, exhibit, certificate or
the Disclosure Letter):
(i) Any handling, discharge, disposal, release, or
storage of any hazardous or toxic substances, wastes or materials by the
Company, Securityholder, any predecessor of the Company or Securityholder or any
other third party with respect to any of the properties owned, occupied or
leased by the Company or Securityholder occurring prior to the Closing, whether
or not disclosed in this Agreement, any accompanying schedule, exhibit,
certificate or the Disclosure Letter;
(ii) Any litigation or claim arising from actions or
inactions of the Company prior to the Time of Closing;
(iii) Any Damages incurred by the Company, or arising
out of or related to the activities of the Company or services or assets
provided by or products delivered to or by the Company, prior to the Closing;
and
39.
<PAGE>
(iv) Taxes imposed on Purchaser or its affiliates for
periods ending on or prior to the Closing and for portions through the Closing
of periods beginning prior to the Closing and ending after the Closing
(including, without limitation, any deferred Tax liability, any Tax liability
arising from the transactions contemplated in this Agreement and the Escrow
Agreement, or any other transaction entered into or consummated prior to the
Closing), including, without limitation, any liability arising out of or related
to any returns filed prior to the Time of Closing, whether or not disclosed in
this Agreement, any accompanying schedule, exhibit, certificate, or the
Disclosure Letter.
(v) Any Damages incurred by the Company or Purchaser
for (x) injuries suffered or caused by the Company's workers in jurisdictions
outside of Virginia that are not covered by the Company's workers' compensation
insurance or (y) any adverse claims made by Securityholder's spouse, in each
case whether or not disclosed in this Agreement, any accompanying schedule,
exhibit, certificate or the Disclosure Letter.
(b) Absent fraud or a breach of the Securityholder's obligations
under Section 4.3 hereof (for which the liability of Securityholder hereunder
shall not be limited), and except for the Securityholder's obligations with
respect to the representations, warranties, covenants and agreements contained
in Section 4.2 of this Agreement, for which the Securityholder shall be liable
to Purchaser in an amount not to exceed $1,250,000 (in cash or shares of P-Com
Common Stock) Purchaser shall use the Escrow Shares as its sole and exclusive
recourse for the Company's and the Securityholder's obligations pursuant to this
Agreement, the Securityholder Certificate and the Escrow Agreement.
(c) The parties agree that the indemnification provided for in
this Article VII of this Agreement shall be subject to and effected in
accordance with the provisions set forth in the Escrow Agreement, subject,
however, to the terms of this Agreement.
Section 7.3 Termination of Indemnity and Representations and
----------- ------------------------------------------------
Warranties. Absent fraud or a breach of the Securityholder's obligations under
- ----------
Section 4.3 hereof (for which the liability of Securityholder hereunder shall
not be limited), the indemnity obligations of the Securityholder pursuant to
this Article VII (and the representations, warranties, covenants and other
agreements of the Company and the Securityholder set forth in this Agreement,
except otherwise set forth herein) and the liability of the Company or the
Securityholder under this Agreement and the Securityholder Certificate for a
breach or inaccuracy of, or a failure to perform or comply with, any or all of
the Company's and the Securityholder's respective representations, warranties,
covenants and agreements and all other rights, claims, actions and causes of
action at law in respect of such representations, warranties, covenants and
agreements shall terminate upon the publication date of the auditor's report for
P-Com in P-Com's Annual Report on Form 10-K that includes the audited results
for the Company for the fiscal year ended December 31, 1997; provided, however
that the indemnity obligations of the Securityholder with respect to
representations and warranties contained in Section 4.2 and such representations
and warranties shall terminate upon the date one (1) year from and after the
Time of Closing. For purposes of the indemnifications set forth herein, the fair
market value
40.
<PAGE>
of one share of P-Com, Inc. Common Stock shall equal the per share price used in
calculating the Purchase Price.
Section 7.4 Liability Floor. Notwithstanding anything to the
----------- ---------------
contrary in this Agreement and any documents related hereto, and subject to
other limitations for the benefit of Securityholder and the Company herein, the
Securityholder shall not be liable to Purchaser with respect to any claim for
indemnifiable damages unless the aggregate amount of all indemnifiable damages
under the terms of Art. VII incurred by Purchaser exceed Fifty Thousand Dollars
($50,000.00), in which case the Securityholder shall be liable for the total
amount of such indemnifiable damages.
Section 7.5 Limitations. Provided that (i) where the total of all
----------- -----------
claims made by Purchaser and its affiliates pursuant to this Agreement is less
than $500,000 and the Securityholder has previously irrevocably and
unconditionally satisfied in full such claims or (ii) where the total of all
such claims is more than $500,000 and the Securityholder has previously
irrevocably and unconditionally satisfied to the fullest extent possible such
claims by the Securityholder Escrow Shares, Purchaser shall (subject to the
remainder of this Section 7.5) reimburse to the Securityholder all amounts (not
exceeding the aggregate sum paid by the Securityholder) paid by the
Securityholder in respect of any claim which is subsequently recovered by
Purchaser (as the case may be) from any insurance company or other third party
directly referable to the subject matter of such claim. Such reimbursement
shall be paid by Purchaser (as the case may be) after the receipt of such amount
from the relevant insurance company or third party. Purchaser shall deduct from
any amounts received (x) its costs and expenses incurred in recovering such sum
from the third party or insurance company (including any taxation payable by
reason of the receipt thereof) and (y) (where the foregoing (ii) above applies)
the amount of any unsatisfied claims.
ARTICLE VIII
------------
MISCELLANEOUS PROVISIONS
------------------------
Section 8.1 Notice. All notices and other communications required or
----------- ------
permitted under this Agreement shall be delivered to the parties at the address
set forth below their respective signature blocks, or at such other address that
they designate by notice to all other parties in accordance with this Section
8.1:
If to the Company or
Securityholder: Daniel N. Carter
Post Office Box 1400
Herndon, VA 21070
Telecopy No.: (703) 758-2559
41.
<PAGE>
with a copy to: The Jefferson Law Firm, PLC
1980 Gallows Road, Suite 200
Vienna, Virginia 22182
Attention: W. Thomas Parrott, III
Telecopy No.: (703) 790-2623; and
The Jefferson Law Firm, PLC
6862 Elm Street
Suite 740
McLean, VA 22101
Attention: W. Thomas Parrott, III
Telecopy No.: (703) 790-2623
If to Purchaser: P-Com, Inc.
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.
Telecopy No.: (650) 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 8.2 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 supersede all prior and contemporaneous agreements and
understandings, oral or written, relative to said subject matter.
Section 8.3 Binding Effect; Assignment. This Agreement and the
----------- --------------------------
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon the
42.
<PAGE>
Company, its successors and permitted assigns, 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 8.4 Expenses of Transaction; Taxes. Purchaser shall bear its
----------- ------------------------------
own costs and expenses in connection with this Agreement and the transactions
contemplated hereby for its own account and the Securityholder shall bear his
and the Company's own costs and expenses in connection with this Agreement and
the transactions contemplated hereby.
Section 8.5 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 8.6 Third-Party Beneficiaries. Except as otherwise expressly
----------- -------------------------
provided 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 8.7 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 8.8 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.
Section 8.9 Governing Law. This Agreement shall in all respects be
----------- -------------
construed in accordance with and governed by the laws of the State of Virginia
without regard to the conflicts or choice of law provisions thereof.
Section 8.10 Arbitration; Attorneys' Fees.
------------ ----------------------------
43.
<PAGE>
(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 Fairfax, Virginia, 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 Virginia 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. Attorneys' fees of the prevailing party for purposes hereof will be
limited to the attorneys' fees of the non-prevailing party with respect to such
arbitration.
Section 8.11 Securityholder Guarantees. After Closing, Purchaser
------------ -------------------------
will within 90 days, pay all obligations and liabilities of the Company with
respect to which Securityholder has a personal guaranty or is jointly and
severally liable, and will immediately notify all such creditors of the
termination of his guaranty or joint and several obligations as of Closing.
Purchaser will indemnify and hold Securityholder harmless with respect to all
such obligations and liabilities. This paragraph will not apply to the Ford Van
purchased from Koons Sterling Ford.
Section 8.12 Lease Expiration. Purchaser does not object to
------------ ----------------
termination of the Company's office lease at the end of December, 1997.
Section 8.13 Future Prospects. As used in this Agreement, the words
------------ ----------------
"which reasonably could be expected to result", "which reasonably could be
expected to have such an effect", "which may reasonably be expected to so
affect", "reasonably could be expected to materially adversely affect", "might
result", "could result", "would or could have a material adverse effect", "would
or could impose", "prospects", "lead it or him to believe", "lead them to
believe", or words of similar effect, or words which impose any obligation or
liability upon Securityholder or the Company under this Agreement or any other
transaction document with respect to the future profitability, plans, or
prospects of the Telematics, Inc. business, will be deemed to impose such
obligation or liability only if the matter referred to, based on the
44.
<PAGE>
actual knowledge of the Securityholder at the time, is substantially more likely
to occur than not to occur based on such actual knowledge.
Section 8.14 No Reliance. The Company and the Securityholder
------------ -----------
understand and agree that they are relying solely on their own investigations of
P-Com and PFS to enter into this Agreement and are not relying on any oral or
written representation or warranty (including, without limitation, any forecasts
or projections) other than those representations and warranties of P-Com and PFS
specifically set forth in writing herein. Moreover, the Company and the
Securityholder understand and agree that the market price of P-Com's Common
Stock has fluctuated significantly in the past and will fluctuate significantly
in the future and such fluctuations are often unrelated to the operating
performance of P-Com. The Company and the Securityholder have read and
understand (or have had the opportunity to read) the risk factors set forth in
P-Com's report on Form 10Q for the quarter ended September 30, 1997 and the
registration statement on Form S-3 declared effective on July 31, 1997 provided
or made available to the Company and the Securityholder. The Company and the
Securityholder agree that any analyst reports about P-Com provided to them, if
applicable, have not been written, adopted or endorsed by P-Com or its
management and represent independent views of independent parties.
45.
<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: /s/ Michael Sophie
--------------------------------------------
Michael Sophie
Vice President, Finance and Administration
and Chief Financial Officer
P-COM FIELD SERVICES, INC.,
a Delaware corporation
By:
--------------------------------------------
TELEMATICS, INC.
a Virginia corporation
By:
--------------------------------------------
Daniel N. Carter
SECURITYHOLDER:
-----------------------------------------------
Daniel N. Carter
46.
<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: /s/ Thomas A. Stroup
--------------------------------------------
Thomas A. Stroup
President
TELEMATICS, INC.
a Virginia corporation
By:
--------------------------------------------
Daniel N. Carter
SECURITYHOLDER:
-----------------------------------------------
Daniel N. Carter
47.
<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:
--------------------------------------------
TELEMATICS, INC.
a Virginia corporation
By: /s/ Daniel N. Carter
--------------------------------------------
Daniel N. Carter
SECURITYHOLDER:
/s/ Daniel N. Carter
-----------------------------------------------
Daniel N. Carter
48.
<PAGE>
EXHIBIT 10.2
SHARE PURCHASE AGREEMENT
by and among
P-Com, Inc., a Delaware corporation,
P-Com (UK) Services Limited, an English company,
R T Masts Limited, an English company
and
Certain Individuals and Entities Defined Herein
Dated as of October 14, 1997
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE I PURCHASE, SALE AND SURRENDER OF SECURITIES................................ 3
Section 1.1 Purchase, Sale and Surrender of Securities................................ 3
Section 1.2 Waiver of Pre-Emption Provisions.......................................... 3
ARTICLE II PURCHASE PRICE............................................................ 4
Section 2.1 Consideration............................................................. 4
Section 2.2 Amount.................................................................... 4
ARTICLE III REPRESENTATIONS AND WARRANTIES............................................ 5
Section 3.1 Representations and Warranties of the Company and Each Securityholder..... 5
(a) Organization of Company................................................... 5
(b) Capital Structure......................................................... 6
(c) Authorization of Company and Securityholders.............................. 7
(d) Conflict.................................................................. 7
(e) No Consent Required....................................................... 7
(f) Financial Information..................................................... 8
(g) Absence of Certain Changes and Events..................................... 8
(h) Conduct of Business....................................................... 9
(i) Undisclosed Liabilities................................................... 9
(j) Inventory................................................................. 9
(k) Taxes..................................................................... 10
(l) General................................................................... 11
(m) Taxable Profits........................................................... 12
(n) Capital Assets............................................................ 12
(o) Capital Allowances........................................................ 13
(q) Distributions and ACT..................................................... 13
(r) Stamp Duty................................................................ 14
(s) Anti-avoidance............................................................ 14
(t) Inheritance Tax........................................................... 14
(u) Events Since 30 September 1996............................................ 14
(v) VAT....................................................................... 15
(w) VAT on Property........................................................... 16
(x) Customs Duties............................................................ 16
(y) Employee Matters.......................................................... 16
(z) Compliance With Law....................................................... 17
(aa) Governmental Consents..................................................... 17
(ab) Intellectual Property Rights.............................................. 17
(ad) Restrictive Documents or Orders........................................... 18
(ae) Contracts and Commitments................................................. 19
(af) Title to the Property..................................................... 19
(ag) Litigation................................................................ 23
(ah) Labor Relations........................................................... 23
</TABLE>
i
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<TABLE>
<CAPTION>
<S> <C>
(ai) Brokers' and Finders' Fees/Contractual Limitations........................ 28
(aj) Interested Party Relationships............................................ 28
(ak) Certain Payments.......................................................... 28
(al) Products Liability........................................................ 29
(am) Product Warranties........................................................ 29
(an) Returns................................................................... 29
(ao) Customers................................................................. 29
(ap) Suppliers................................................................. 29
(aq) Books and Records......................................................... 29
(ar) Complete Disclosure....................................................... 29
(au) Insurance................................................................. 30
(av) Environmental Matters..................................................... 30
(aw) Backlog................................................................... 30
(ax) Accounts Receivable....................................................... 31
(ay) Regulation S.............................................................. 31
(az) No Directed Selling Efforts............................................... 31
(ba) Offshore Transaction...................................................... 31
(bb) Non U.S. Person........................................................... 32
(bc) Prior Agreements.......................................................... 34
(bd) Agents, Guarantees etc.................................................... 34
(be) Data Protection Act....................................................... 34
(bg) Purchase of Shares........................................................ 34
(bh) No Loans.................................................................. 35
(bi) No Partnership or Insider Contracts....................................... 35
(bj) No Market Conditioning.................................................... 35
(bk) Pooling of Interests...................................................... 35
Section 3.2 Representations and Warranties of P-Com................................... 35
(a) Organization.............................................................. 35
(b) Brokers' and Finders' Fees................................................ 36
(c) SEC Filings............................................................... 36
(d) Valid Issuance of Purchase Shares......................................... 36
(e) Authorization of P-Com and Purchaser...................................... 36
(f) Government Consents....................................................... 36
(g) Litigation................................................................ 37
(h) No Conflict or Default.................................................... 37
(i) Limitation on Liability................................................... 37
(j) Absent Fraud, Termination of Liability and Representations,
Warranties, Covenants and Agreements...................................... 37
(k) FIRPTA.................................................................... 37
ARTICLE IV COVENANTS.......................................................................... 38
Section 4.1 Covenants Against Disclosure.............................................. 38
Section 4.2 Accounts.................................................................. 38
Section 4.3 Non-Competition........................................................... 40
Section 4.4 Maintenance of Business................................................... 44
Section 4.5 Access to Information..................................................... 47
</TABLE>
ii
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<TABLE>
<CAPTION>
<S> <C>
Section 4.6 Regulation S Compliance................................................... 47
Section 4.7 Necessary Consents........................................................ 48
Section 4.8 Best Efforts.............................................................. 48
Section 4.9 Exclusivity; Acquisition Proposals........................................ 49
Section 4.10 Breach of Representations, Warranties, Agreements and
Covenants................................................................. 50
Section 4.11 Legal Conditions.......................................................... 50
Section 4.12 Shareholders' Meeting..................................................... 50
Section 4.13 No Transfer............................................................... 50
Section 4.14 Legal Conditions of the Company and the Securityholders................... 50
Section 4.15 Pooling Treatment......................................................... 51
ARTICLE V CLOSING............................................................................. 51
Section 5.1 Time of Closing........................................................... 51
Section 5.2 Deliveries by Company and Securityholders................................. 51
(a) Certificates and Instruments.............................................. 51
(b) Escrow Agreement.......................................................... 52
(c) Corporate Minute Books.................................................... 52
(d) Certificate of Good Standing.............................................. 52
(e) Closing Documents......................................................... 52
(f) Books and Records......................................................... 52
(g) Consents.................................................................. 52
(h) Certificate............................................................... 52
(j) Service Agreements........................................................ 52
(k) Deed of Tax Indemnity..................................................... 52
(l) Resignations.............................................................. 52
(m) Pooling Opinions.......................................................... 52
(n) Charges and Liens......................................................... 53
(o) Disclosure Letter......................................................... 53
(p) Bank Loans................................................................ 53
(q) Minutes................................................................... 53
(r) Deed of Resignation and Appointment of Trustees........................... 53
(s) Non-Competition Agreements................................................ 53
(t) Service Agreements........................................................ 53
(u) Other Documents........................................................... 53
Section 5.3 Sale of all Securities.................................................... 53
Section 5.4 Deliveries by Purchaser................................................... 54
Section 5.5 Further Assurances........................................................ 55
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS................................................ 55
Section 6.1 Conditions to Obligations of P-Com and Purchaser.......................... 55
(a) Certificates for Securities............................................... 55
(b) Representations and Warranties............................................ 55
(c) Performance of Agreement.................................................. 55
(d) No Material Adverse Effect................................................ 56
(e) Absence of Governmental or Other Objection................................ 56
</TABLE>
iii
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<TABLE>
<CAPTION>
<S> <C>
(f) Certificate of Managing Director and Securityholders...................... 56
(g) Execution of Escrow Agreement............................................. 56
(h) Third Party Consents...................................................... 56
(i) Proprietary Agreements.................................................... 56
(j) Securityholder Agreement.................................................. 56
(k) Documents................................................................. 56
(l) Schedules................................................................. 56
(m) Tax Forms................................................................. 56
(n) Other Matters............................................................. 57
(o) Tax Deed.................................................................. 57
(p) Pooling of Interests Transaction.......................................... 57
Section 6.2 Conditions to Obligations of the Company and the
Securityholders........................................................... 57
ARTICLE VII INDEMNIFICATION................................................................... 58
Section 7.1 Survival of Representations, Warranties, Covenants and
Agreements................................................................ 58
Section 7.3 Termination of Indemnity and Representations and Warranties............... 61
Section 7.4 Limitation on Indemnification............................................. 62
Section 7.5 Limitations............................................................... 62
ARTICLE VIII MISCELLANEOUS PROVISIONS......................................................... 64
Section 8.1 Notice.................................................................... 64
Section 8.2 Entire Agreement.......................................................... 65
Section 8.3 Binding Effect; Assignment................................................ 65
Section 8.4 Expenses of Transaction................................................... 65
Section 8.5 Waiver; Consent........................................................... 65
Section 8.6 Third-Party Beneficiaries................................................. 66
Section 8.7 Counterparts.............................................................. 66
Section 8.8 Severability.............................................................. 66
Section 8.9 Governing Law............................................................. 66
Section 8.10 No Reliance............................................................... 67
Section 8.11 Other Remedies............................................................ 67
Section 8.12 Mutual Drafting........................................................... 67
Section 8.13 Attorneys Fees............................................................ 67
Section 8.14 Appointment and Indemnity of Escrow Committee............................. 68
Section 8.15 Guarantee................................................................. 68
Section 8.16 Non-Competition Agreements................................................ 68
</TABLE>
iv
<PAGE>
EXHIBIT 2.2 ESCROW AGREEMENT
EXHIBIT 5.2 POWER OF ATTORNEY
[EXHIBIT 5.2(j)(i) PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT]
EXHIBIT 5.2(j)(ii) SERVICE AGREEMENTS
EXHIBIT 5.2(k) DEED OF TAX INDEMNITY
EXHIBIT 5.2(l) DEED OF RESIGNATION OF DIRECTORS AND OFFICERS
EXHIBIT 5.2(r) DEED OF RESIGNATION AND APPOINTMENT OF TRUSTEES
EXHIBIT 6.1(j) SECURITYHOLDER AGREEMENT
EXHIBIT 8.16 NON-COMPETITION AGREEMENTS
SCHEDULE 3.1 DISCLOSURE LETTER
SCHEDULE 3.1(b) CAPITAL STRUCTURE
SCHEDULE 3.1(j) INVENTORY
SCHEDULE 3.1(z) GOVERNMENTAL PERMITS
SCHEDULE 3.1(ab) INTELLECTUAL PROPERTY RIGHTS
SCHEDULE 3.1(ae) CONTRACTS
SCHEDULE 3.1(af) PROPERTIES
SCHEDULE 3.1(ah) EMPLOYEES
SCHEDULE 3.1(ao) CUSTOMERS
SCHEDULE 3.1(ap) SUPPLIERS
SCHEDULE 3.1(au) INSURANCE
SCHEDULE 3.1(aw) BACKLOG
SCHEDULE 3.1(ax) ACCOUNTS RECEIVABLE
v
<PAGE>
SHARE PURCHASE AGREEMENT
THIS AGREEMENT is dated as of October 14, 1997 by and among:
1. P-Com, Inc., a Delaware corporation, of 3175 S Winchester Boulevard,
Campbell, California 95008, United States of America ("P-Com");
2. P-COM Services (UK) Limited, a company incorporated in England and Wales
with registered number 3416747 whose registered office is at Hasilwood
House, 60 Bishopsgate, London EC2N 4AJ ("Purchaser");
3. R.T. Masts Limited, a company incorporated in England and Wales with
registered number 01981078 whose registered office is at 3/4 Morris Close,
Park Farm North, Wellingborough, Northants NN8 6XF (the "Company");
4. Andrew William Perkins of 45 Swinford Hollow, Little Billing, Northampton
NN3 9HP, Mary Perkins of 3 Weavers End, Hanslope, Milton Keynes MK19 7PA,
Mark Robert Perkins of 24 Magnolia Close, Abington Vale, Northampton NN3
3XE, Jacqueline Perkins of 24 Magnolia Close aforesaid, Peter Lewis Clayson
of 32 Obelisk Rise, Kingsthorpe, Northampton NN2 8QT and Irene Clayson of
32 Obelisk Rise aforesaid (in respect of the securities legally and
beneficially owned by them) (together called the "Non-Trustee
Securityholders");
5. William Robert Perkins of 3 Weavers End, Hanslope, Milton Keynes MK19 7PA,
Mary Perkins, Mark Robert Perkins and Andrew William Perkins as trustees of
the trust known as the Andrew Perkins Trust constituted on February 14,
1995;
6. William Robert Perkins, Mary Perkins, Mark Robert Perkins and Andrew
William Perkins as trustees of the trust known as the Mark Perkins Trust
constituted on February 16, 1995;
7. Mark Robert Perkins and Andrew William Perkins as trustees of the trust
known as The Perkins 1997 Trust constituted on September 29, 1997;
8. Irene Clayson and Peter Lewis Clayson as trustees of the trust known as The
Clayson 1997 Interest in Possession Trust constituted on September 29,
1997;
9. Mark Robert Perkins and Jacqueline Perkins as trustees of the trust known
as the Ryan Perkins Trust constituted on September 29, 1997;
10. Mark Robert Perkins and Jacqueline Perkins as trustees of the trust known
as the Aimee Perkins Trust constituted on September 29, 1997; and
1
<PAGE>
11. Mark Robert Perkins and Jacqueline Perkins as trustees of the trust known
as the Kathryn Perkins Trust constituted on September 29, 1997
(collectively, the persons in paragraphs 5 to 11 comprising the "Trustee
Securityholders" and the Non-Trustee Securityholders and the Trustee
Securityholders shall together be called the "Securityholders").
WHEREAS, Purchaser desires to acquire all of the rights of share ownership of
the Securityholders through the purchase by Purchaser of all of the issued share
capital of the Company and by payment for the surrender of all outstanding
options and all other rights to acquire share capital of the Company; and
WHEREAS, in furtherance thereof, and at the request of Purchaser, P-Com will pay
to each Securityholder consideration in the form of shares of the Common Stock
of P-Com for the issued share capital of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth
herein, the parties hereby agree as follows:
DEFINITIONS AND INTERPRETATIONS
1. In this Agreement, unless the context otherwise requires, the following
words and expressions shall have the following meanings:
"AGREED FORM" means in a form agreed by the relevant parties thereto and
initialled by or on behalf of such parties;
"OFFICE STAFF" means M Tillcock, R Bates, R Palmer, A Burton, N Tittertan, S
Doll, L J Brooks, T Burton, A Dewin, S Dixon, A Edmead, N York, J Spick, A
Farrow;
"PRINCIPAL SECURITYHOLDERS" means William Robert Perkins, Mark Perkins, Mary
Perkins, Andrew Perkins and Irene Clayson;
"SECURITYHOLDERS' SOLICITORS" means Howes Percival of 252 Upper Third Street,
Grafton Gate East, Central Milton Keynes, MK9 1DZ;
"WARRANTIES" means the representations and warranties set out in Section 3.1;
"SECURITYHOLDERS' ACCOUNTANTS" means Coopers and Lybrand of Central Business
Exchange, Midsummer Boulevard, Central Milton Keynes, MK9 2DF (or any successor
to such firm);
"NET ASSETS" means the aggregate of the following for the Company as shown in
the Agreed Execution Accounts and the Agreed Completion Accounts (as defined in
Section 4.2 and as appropriate) of the Company:
a) tangible fixed assets (less accumulated depreciation) plus
investments; plus
2
<PAGE>
b) current assets; less
c) all liabilities.
2. Where any representation or warranty refers to the knowledge or awareness
of the Principal Securityholders the Principal Securityholders undertake that
(unless specifically provided otherwise) they have made due inquiry including
without limitation of Coopers & Lybrand, Howes Percival and Natalie Green.
3. References to the United Kingdom include to England and Wales, Great
Britain and each of the countries thereof a reference to each of the parts
thereof.
ARTICLE I PURCHASE, SALE AND SURRENDER OF SECURITIES
Section 1.1 Purchase, Sale and Surrender of Securities.
- ----------- ------------------------------------------
(a) Upon the terms and subject to the conditions of this Agreement,
the Securityholders shall sell to Purchaser and Purchaser shall purchase from
the Securityholders all of the shares in the share capital of the Company and
all other equity interests of the Company held by the Securityholders, and the
Securityholders shall surrender all options and other rights to purchase such
shares held by the Securityholders (collectively, the "Securities") at the
Closing (as defined in Section 5.1 hereof). The Securities shall be sold fully
paid free from all liens, charges, encumbrances and other equities of any
description together with the benefit of all rights and profits attaching
thereto including all rights to dividends and other distributions declared, made
or payable thereon but excluding rights to any dividends already paid.
(b) The Non-Trustee Securityholders shall sell with full title
guarantee for the purposes of the UK Law of Property (Miscellaneous Provisions)
Act 1994. The Trustee Securityholders shall sell with limited title guarantee
for the purposes of the UK Law of Property (Miscellaneous Provisions) Act 1994
free from all charges, liens and encumbrances. In this Section the covenants
implied under the Law of Property (Miscellaneous Provisions) Act 1994 by the
words "with full title guarantee" are limited to the covenants that would be
implied if the words "other than any charges, encumbrances or rights which that
person does not and could not reasonably be expected to know about" in Section
3(1) were omitted. In the case of sales by the Non-Trustee Securityholders and
sales by the Trustee Securityholders, Section 6(2) of the Law of Property
(Miscellaneous Provisions) Act 1994 shall be omitted.
Section 1.2 Waiver of Pre-Emption Provisions. Each of the Securityholders
- ----------- --------------------------------
hereby waives and undertakes to procure the waiver of all pre-emption and
similar rights over the Securities or any of them to which he or any other
person may be entitled under the Articles of Association of the Company or
otherwise in relation to the sale and purchase of the same pursuant to this
Agreement.
3
<PAGE>
ARTICLE II PURCHASE PRICE
Section 2.1 Consideration. Upon the terms and subject to the conditions
- ----------- -------------
contained in this Agreement, in consideration for the Securities and in full
payment therefor, Purchaser will pay, or cause to be paid, the purchase price
set forth in Section 2.2.
Section 2.2 Amount. The purchase price ("Purchase Price") for the Securities
- ----------- ------
shall consist of shares of Common Stock of P-Com to be issued directly from P-
Com at the request of Purchaser to each of the Securityholders of the Company,
in accordance with their pro rata ownership interest in the capital stock of the
Company (the "Purchase Shares").
The aggregate number of Purchase Shares payable to the Securityholders at
the Time of Closing shall be determined by dividing the amount of Nine Million
Two Hundred and Fifty Thousand British Pounds Sterling ((Pounds)9,250,000) by
the average closing sales price (ex dividend) of P-Com's Common Stock as quoted
on the National Association of Securities Dealers Automated Quotation System
National Market ("Nasdaq National Market") for the 30 trading days ending three
trading days prior to the Time of Closing, as adjusted for any stock splits,
stock dividends and other stock recapitalisations or reorganisations in such 30
trading days (the "Closing Date Average Price").
The Purchase Shares shall be paid as follows:
(i) One Hundred Percent (100%) of the total number of Purchase Shares
shall be issued at the Time of Closing. Purchase Shares of a value equal to
Nine Hundred Thousand British Pounds Sterling ((Pounds)900,000) as determined in
accordance with Section 2.2 shall be held in an escrow account (the
"Securityholder Escrow Shares") pursuant to an escrow agreement attached hereto
as Exhibit 2.2 (the "Escrow Agreement"). The balance of the Purchase Shares
shall be delivered to the Securityholders at the Time of Closing.
(ii) Except as set forth in this Agreement, the Securityholder Escrow
Shares shall be retained by the Escrow Agent (as defined in the Escrow
Agreement) and held until the earlier of March 31, 1998 and the date of filing
of Form 10-K that includes the independent accountants report for the
consolidated operation of P-Com and the Company for the fiscal year ended
December 31, 1997 in an escrow account pursuant to the Escrow Agreement as
collateral, in part, for the indemnification obligations set forth in this
Agreement and the Escrow Agreement.
(iii) For all conversions of currency from U.S. Dollars to British
Pounds Sterling and vice versa the exchange rate shall be the average closing
exchange rate for the 30 trading days ending 3 trading days prior to the Time of
Closing set out in the Currency Crossrates table of the European edition of the
Wall Street Journal.
4
<PAGE>
ARTICLE III REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company and Each
- ----------- ------------------------------------------------------
Securityholder. Except as set forth fully and fairly in a letter (Schedule 3.1)
- --------------
referring to a particular section of this Section 3.1 of this Agreement (the
"Disclosure Letter") delivered by the Company and the Securityholders to P-Com
and Purchaser signed as accepted by P-Com and Purchaser at the date of this
Agreement or at the Time of Closing (as applicable to the time of the
representations and warranties), Irene J Clayson and Peter Clayson hereby
severally and the Company and each other Securityholder hereby, jointly and
severally, represent and warrant to P-Com and Purchaser that:
(a) Organization of Company. The Company is a corporation
-----------------------
headquartered, duly organized and validly existing as a private company limited
by shares under the laws of England and Wales. Full details of the Company's
registered address, officers and shareholders are set out in the Disclosure
Letter. The Company has all requisite power and authority to own, operate and
lease its assets and to conduct its business in the manner in which it is now
conducted. The Company is not in default under its Memorandum or Articles of
Association. True and complete copies of the current Memorandum and Articles of
Association of the Company together with all amendments thereto have been
furnished to Purchaser or its counsel and attached to the Disclosure Letter.
The Company does not own or lease any assets or conduct any business in any
jurisdiction other than the United Kingdom. The Company owns all of the
outstanding equity interests of each Subsidiary, RT Masts (Property) Limited and
Skymasts Limited (collectively, the "Subsidiaries"), free and clear of all
liens, charges and encumbrances. Save for the Subsidiaries, the Company does
not have, never has had and has not agreed to acquire any subsidiaries or
subsidiary undertakings; nor is it or ever has been and has not agreed to become
the legal or beneficial owner of any share or loan capital of any company; and
nor does the Company control or take part in the management of any other company
or business organization and it has never done so or agreed to do so within the
six years prior to the date hereof. The Company and its subsidiaries do not
have any directors, shadow directors or alternate or associate directors other
than the persons listed in the Disclosure Letter. The Subsidiaries have been
dormant for at least six years prior to the date of this Agreement. The
information in the Disclosure Letter in relation to the Company and the
Subsidiaries headed "Corporate Structure" is true and accurate in all respects.
The Company has only one class of shares being ordinary shares. The Company
only carries on business in the United Kingdom. Each of the Company and each of
the Securityholders has no real property in the United States and has no
interest in any person, body or partnership who has any real property in the
United States.
So far as the Principal Securityholders and Office Staff are aware the
Company has not during a relevant time been a party to any transaction to which
the provisions of Sections 238 to 246 (inclusive) of the Insolvency Act 1986 may
be applicable. No order has been made or resolution passed or so far as the
Principal Securityholders and the Office Staff are aware petition presented for
the winding up or administration of the Company, no receiver or administrator or
administrative receiver has been appointed or an event occurred which
5
<PAGE>
would entitle the same to be appointed by any person of the Company's business
or assets or any part thereof, the Company is not insolvent and has not stopped
payment and is not unable to pay its debts (within the meaning of Section 123 of
the Insolvency Act 1986) and the Company is capable of meeting its liabilities
as and when they fall due.
(b) Capital Structure.
-----------------
(i) As of the date of this Agreement, there were no shares
reserved for issuance upon the exercise of options in respect of shares of the
Company (the "Company Options"). There are no rights to purchase shares or
equity securities of Company (collectively, "Company Capital Stock"), other than
as described in the preceding sentence.
(ii) All issued shares of the Company are duly authorized,
validly issued, fully paid and not subject to preemptive rights created by the
Company's Articles of Association or to any agreement to which the Company is a
party or by which the Company may be bound. To the best of the Principal
Securityholders' knowledge all issued share capital has been issued in
compliance with applicable United Kingdom laws. There are no options, warrants,
calls, conversion rights, commitments or agreements of any character to which
the Company is a party or by which the Company may be bound that do or may
obligate the Company to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of the Company or that do or may obligate the Company
to grant, extend or enter into any such option, warrant, call, conversion right,
commitment or agreement, other than those described in Section 3.1(b)(i) above.
No person has any right to call for the issue of any debenture or share or loan
capital of the Company. The Securities represent 100% of the issued share
capital of the Company. The Securityholders of the Company and their holdings
are as shown in Schedule 3.1(b). Each Securityholder who is an individual is a
citizen and all Securityholders are residents of the United Kingdom.
(iii) Except for any restrictions imposed by applicable United
Kingdom laws, there is no right of first refusal, co-sale right, right of
participation, right of first offer, option or other restriction on transfer
applicable to any shares of the Company's share capital.
(iv) The Company is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between or among any
persons that affects or relates to the voting or giving of written consent with
respect to any issued share capital of the Company.
(v) The Trustee Securityholders described as trustees of the
trusts referred to in the list of parties above are the continuing and current
trustees of each trust in respect of which they are described as being trustees
and there are no other trustees of any such trust. In respect of each such
trust, the Trustee Securityholders described as trustees of each such trust are
the registered holders of the Securities held by each such trust and they hold
the Securities contained in each such trust free from all charges, liens and
encumbrances.
6
<PAGE>
(c) Authorization of Company and Securityholders. The Company and
--------------------------------------------
each Securityholder has in each capacity in which they enter into this Agreement
and collectively the trustees in respect of each of the trusts referred to at
the start of this Agreement have full power and authority to enter into this
Agreement and the Escrow 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 and
the stock transfers, and other deeds, documents and instruments delivered in
accordance with Section 5.2 hereunder (the "Closing Documents") and the Escrow
Agreement. Each of the Company and the Securityholders has taken all necessary
and appropriate action with respect to the execution and delivery of this
Agreement, the Escrow Agreement and the Closing Documents. This Agreement, the
Escrow Agreement and each of the Closing Documents constitute valid and binding
obligations of the Company and the Securityholders, enforceable 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 equitable principles affecting enforcement of
restrictive covenants.
(d) Conflict. Subject to satisfaction of the conditions set forth in
--------
this Agreement, the execution, delivery and performance of this Agreement, the
Escrow Agreement and the Closing Documents by the Company and the
Securityholders does not, and the performance and consummation of the
transactions contemplated hereby will not, conflict with or result in any
violation of any material statute, law, rule, regulation, judgment, order,
decree, or by-law of the United Kingdom applicable to the Company or any
Securityholder or its respective properties or assets, or conflict with or
result in any conflict with, breach or violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of termination,
cancellation, forfeiture or acceleration of any material obligation or the loss
of a material benefit under, or result in the creation of a lien or encumbrance
on any of the properties or assets of the Company or the Securities of any
Securityholder pursuant to (i) any provision of the Memorandum or Articles of
Association of the Company or (ii) any agreement, contract, note, mortgage,
indenture, lease, instrument, permit, concession, franchise or license to which
the Company or any Securityholder is a party or by which the Company or any
Securityholder or any of the Company's respective properties or assets or the
Securityholders' Securities may be bound or affected.
(e) No Consent Required. No consent, approval, order or authorization
-------------------
of, or registration, declaration of, or qualification or filing with, any third
party, court, administrative agency, commission, regulatory authority or other
governmental or administrative body or instrumentality, of the United Kingdom (a
"Governmental Entity"), is required by or with respect to the Company or any
Securityholder or any Subsidiary in connection with the execution, delivery and
performance of this Agreement, the Escrow Agreement and the Closing Documents by
the Securityholders or the Company or the consummation by the Securityholders or
the Company of the transactions contemplated hereby and thereby. No consent,
approval or authorization of the Company's Board of Directors (or any committee
thereof), Securityholders or of any third party is required in connection with
the Securityholders' and the Company's consummation of the transactions
contemplated hereunder that has not been obtained or (where capable of waiver)
waived by the Closing.
7
<PAGE>
(f) Financial Information. The Company has furnished to Purchaser a
---------------------
complete and accurate copy of its audited balance sheet and profit and loss
accounts as of September 30, 1994, 1995 and 1996 (the "Financial Statements")
and its Company-prepared balance sheet and profit and loss account for the
eleven month period ended August 31, 1997 (the "Management Accounts"). The
Financial Statements have been prepared in accordance with generally accepted
accounting principles in the United Kingdom ("GAAP") consistently applied and
give a true and fair view of the financial position of the Company as at the
dates thereof and the Company's results of operations for the periods then ended
and are consistent with the books and records of the Company and the Management
Accounts show with reasonable accuracy the financial position of the Company and
have been prepared in accordance with GAAP consistently applied. The projections
of the Company were prepared in good faith and are based on reasonable
assumptions.
(g) Absence of Certain Changes and Events. Except as contemplated
-------------------------------------
herein, since September 30, 1996, there has not been:
(i) Any material adverse change in the financial position of the
Company;
(ii) Any event, including, without limitation, 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 a material
adverse effect on the business or assets of the Company;
(iii) Any material transaction relating to the business of the
Company (other than the transactions contemplated herein) which was entered into
or carried out by the Company other than in the ordinary and usual course of
business;
(iv) Any change made by the Company in its method of operating
its business or its accounting practices relating thereto;
(v) Any mortgage, pledge, debenture, lien, security interest,
hypothecation, charge or other encumbrance imposed or agreed to be imposed on or
with respect to the assets of the Company 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 of the Company 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 of the Company, other than sales,
leases, or dispositions in the usual and ordinary course of business and
consistent with prior practice;
(vii) Any modification, waiver, change, amendment, release,
8
<PAGE>
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 the Company is a party and relating to or affecting
the business or the assets of the Company, 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 the Company;
(ix) Any notice (written or unwritten) from any employee of the
Company who provides any services to the Company that such employee has
terminated, or intends to terminate, such employee's employment with the
Company;
(x) Any written notice or, so far as the Principal
Securityholders and the Office Staff are aware, any unwritten notice from any of
the Company's suppliers that any such supplier will not continue to supply the
current level and type of goods currently being provided by such supplier to the
Company on terms and conditions no less favourable to the Company;
(xi) So far as the Company and the Securityholders are aware any
adverse relationships or conditions with customers that may have a material
adverse effect on the business, prospects or assets of the Company;
(xii) Any other event or condition of any character which
materially adversely affects the assets or the results of operations, prospects
or financial condition of the Company; or
(xiii) Any purchase or lease of or any agreements to purchase or
lease capital assets relating to the business of the Company in excess of
(Pounds)10,000 individually, or in excess of (Pounds)25,000 in the aggregate.
(h) Conduct of Business. At all times since December 31, 1996, the
-------------------
Company has conducted its business in the ordinary course thereof and used
reasonable commercial efforts to preserve intact the organization of its
business and the goodwill of its customers, suppliers, and others having
material business relations with the Company.
(i) Undisclosed Liabilities. There will be no debts, liabilities, or
-----------------------
obligations to repay money of the Company, whether liquidated, unliquidated,
accrued or absolute that are not specifically identified in the Exchange
Accounts and the Completion Accounts. There are no contingent liabilities.
(j) Inventory. Schedule 3.1(j) lists all inventory owned by the
---------
Company relating to the business of the Company, including goods supplied to the
Company by suppliers, goods on consignment, and all other goods customarily sold
by the Company (whether located on the business premises of the Company, in
transit to or from such business
9
<PAGE>
premises, in other storage facilities, or otherwise) (collectively, the
"Inventory") and identifies whether such Inventory is owned by the Company or
held on consignment. The Inventory is valued at a current file cost basis
(meaning latest supplier price less trade discounts) (and not on a last-in
first-out basis) or market, whichever is lower, with adequate allowances for
excess and obsolete materials and materials below standard quality in accordance
with GAAP and the accounting policies of the Company consistently applied. The
quality and quantity of the Inventory is such that the Inventory is readily
usable and saleable in the ordinary course of business of the Company, except
such amounts as are reserved in accordance with GAAP consistently applied. All
Inventory materially in excess of reasonable estimated requirements for the
Company based on current operations as of the date hereof are set forth in
Schedule 3.1(j). Except as disclosed in Schedule 3.1(j), the Company holds no
Inventory manufactured to customer specifications effectively rendering the
Inventory saleable only to that customer. The Company has continued to
replenish the Inventory in a normal and customary manner consistent with past
practices.
(k) Taxes.
-----
(i) Definitions. For purposes of this Agreement:
-----------
a. the term "Taxes" means (A) all United Kingdom or
foreign, local and other net income, gross income, corporation, advance
corporation, value added, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, lease, service, service use, withholding, payroll,
employment, PAYE, capital gains, excise, severance, stamp, occupation, premium,
property, 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 secondary liability, of
being a member of an affiliated, consolidated or combined 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
(ii) The Company has properly completed and filed on a timely
basis and in correct form all returns, given all notices and supplied all other
information required to be supplied to any competent fiscal authority in any
part of the world required to be filed on or prior to the Time of Closing. As of
the time of filing, the foregoing information, returns and notices were correct
and complete in all material respects, made on a proper basis and correctly
reflected the facts regarding the income, the business and assets of the
Company, operations, activities, status or other matters of the Company or any
other information required to be shown thereon. All Taxes due or payable and all
interest and penalties thereon have been duly paid by the Company within the
time limits set out by law.
(iii) So far as the Principal Securityholders and the Office
Staff are aware, with respect to all amounts in respect of Taxes imposed upon
the Company, or for which the Company is or could be liable, whether to taxing
authorities (as, for example, under
10
<PAGE>
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 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 required to be paid by the Company to
taxing authorities or others on or before the Closing have been paid, and all
such amounts required to be paid by the Company to taxing authorities or others
after the Closing which have not been paid are reflected on the Financial
Statements.
(iv) Definitions.
-----------
"ACT" means advance corporation tax;
"CAA" means the Capital Allowance Act 1990;
"IHTA" means the Inheritance Tax Act 1984;
"Revenue" means all fiscal authorities (national or local) of the United Kingdom
or elsewhere;
"Taxes Act" means the Income and Corporation Taxes Act 1988;
"TCGA" means the Taxation of Chargeable Gains Act 1992;
"VAT" means value added tax;
"VATA" means the Value Added Tax Act 1994.
(l) General.
-------
(i) The Company is not the subject of a back duty investigation
or in depth enquiry by any fiscal authority and there are no known facts which
may give rise to the same.
(ii) All income tax under the PAYE system and payments due in
respect of employees' contributions to national insurance and graduated state
pension have been properly deducted by the Company and (together with any
employers contribution) have been fully and correctly paid to the appropriate
authority and proper records thereof have been maintained.
(iii) All taxation required to be deducted from any payments made
by the Company which it is obliged or entitled to make under Schedules 13 and 16
of the Taxes Act has been deducted and accounted in full to the appropriate
authority.
(iv) The Company has never been requested to furnish information
pursuant to notices served under Section 745 or 778 Taxes Act.
(v) No transactions have been undertaken falling within Sections
765 or 765A Taxes Act.
(vi) The Company is not and has at no time been an investment
company, a close investment company or an investment trust company for taxation
purposes.
(vii) The Company has not taken any action which has had, or
might
11
<PAGE>
have, the result of altering or prejudicing or in any way disturbing any
arrangement or agreement which it has previously negotiated with the Revenue.
(viii) The taxation computations for all accounting periods of
the Company ended on or before the last Financial Statements date have been
agreed with the Revenue.
(ix) The Company is and has always been resident only in the
United Kingdom for taxation purposes and has never carried on any trade,
business or other activities outside the United Kingdom other than the export of
its goods and/or services in the ordinary and normal course of its business.
(m) Taxable Profits.
---------------
(i) The Company has not directly or indirectly paid any
remuneration, emoluments or compensation for loss of office or made any
gratuitous payment or transferred any assets to any of its present or former
directors or employees, the cost of which will not be deductible for taxation
purposes.
(ii) There have been no events or circumstances such that Section
343 Taxes Act has been or could be applied.
(iii) The Company has not made and is under no obligation
pursuant to which it is or at any time may become liable to make any payment of
interest, annuity or other annual payment such as may be disallowed as a
deduction as a set-off or as a charge on income or otherwise be unrelieved for
corporation tax purposes whether by virtue of Section 125 or Section 787 Taxes
Act or otherwise.
(iv) No transactions or arrangements involving the Company have
taken place or are in existence such that the provisions of Section 770 Taxes
Act could be or have been applied.
(v) The Company has no trading loss for taxation purposes.
(n) Capital Assets.
--------------
(i) There are no chargeable assets for the purposes of Section
210 TCGA held by the Company which have been subject to rollover claims under
Sections 152 and 153 TCGA and its predecessor Sections.
(ii) No asset has been acquired otherwise than by way of a
bargain made at arms length and for a consideration equal to its market value.
(iii) The Company is not subject to any contingent liability as
is mentioned in Section 49 TCGA.
12
<PAGE>
(iv) The Company has not effected or been a party to any demerger
such as is mentioned in Section 213 to 218 Taxes Act.
(v) The Company will not be subject to corporation tax on the
disposal of any debt owing to the Company.
(vi) Each and every loan made by the Company is a "qualifying
loan" for the purpose of Section 253 TCGA.
(vii) The Company is not entitled to any loss to which Section
18(3) TCGA applies.
(viii) The Company does not own and has not owned and has never
issued any qualifying corporate bonds (as defined in Section 117 TCGA).
(o) Capital Allowances.
------------------
(i) The Company has not been a party to or involved in any
transaction whereby a balancing allowance would be denied or reduced by virtue
of Section 5 CAA.
(ii) No allowances have been claimed by the Company which are
liable to be reduced or withdrawn by virtue of Sections 1(6), 42 or 47 CAA.
(iii) No capital expenditure has been incurred which is subject
to the provisions of Section 75 CAA.
(p) [Deleted]
(q) Distributions and ACT.
---------------------
(i) No event or series of events has occurred which might cause
the disallowance of the carry forward of losses or excess charges or such that
any of Sections 245 or 245A or 245B Taxes Act have applied or could apply.
(ii) The Company has not issued any share capital to which the
provisions of Section 249 Taxes Act or Section 141(1) TCGA could apply nor does
it own any such share capital nor granted options or rights to any person which
entitles that person to require the issue of any share capital.
(iii) The Company will be entitled in respect of any qualifying
distribution made by it to a full set off of its corresponding payments of ACT
under Section 239(1) Taxes Act or in so far as there is no set off under Section
239(1) or in so far as any set off is restricted under Section 239(3).
13
<PAGE>
(r) Stamp Duty.
----------
All instruments (other than those which have ceased to have a
legal effect) executed by the Company (and which are or were subject to stamp
duty) have been duly stamped and the Company has not executed any other
instrument relating to any property situation in or to any matter or thing done
or to be done in any part of the United Kingdom.
(s) Anti-avoidance.
--------------
The Company has not been party to any other transaction or
arrangement of any nature which could give rise to a charge to taxation under
Part XVII Taxes Act.
(t) Inheritance Tax.
---------------
(i) The Company has not entered into any transaction which has
given or will or may give rise to a charge to taxation under the provisions of
the IHTA.
(ii) There is no Inland Revenue charge as defined in Section 237
of the Inheritance Tax Act 1984 outstanding in respect of any asset of the
Company or the Shares.
(iii) There are not in existence any circumstances whereby the
power mentioned in Section 212(1) of the Inheritance Tax Act 1984 could be
exercised in relation to the Shares or any assets of the Company.
(u) Events Since 30 September 1996.
------------------------------
Since 30 September 1996:
(i) The Company has not disposed of any asset (including trading
stock) or made any supply of any service or business facility of any kind
(including loan of money or the letting, hiring or licensing of any property
whether tangible or intangible) in circumstances where the consideration
actually received or receivable for such disposal or supply is less than the
consideration which could be deemed to have been received for the purposes of
taxation;
(ii) No event has occurred which gives rise to a liability to
taxation to the Company on deemed (as opposed to actual) income, profits or
gains or which results in the Company becoming liable to pay or bear a liability
to taxation directly or primarily chargeable against or attributable to another
person, firm or company;
(iii) The Company has not made or received any distributions for
any taxation purpose;
14
<PAGE>
(iv) The Company has not surrendered or claimed any ACT under
Chapter V Taxes Act or any losses by way of group relief under the Taxes Act;
and
(v) The Company has not paid any remuneration (including
emoluments as defined by Section 131 and Sections 153 to 168 Taxes Act) to any
officer, director or employee or to any member of his family or household in
excess of such amount as will be deductible in computing the taxable profits of
the Company.
(v) VAT.
---
(i) In relation to VAT the Company has complied with all
statutory provisions, rules, regulations, orders and directions and made all
necessary returns and within the prescribed time limits provided all necessary
information and documents to H M Customs and Excise and paid all amounts due to
the proper person.
(ii) The Company has at all times kept complete correct and up to
date records, invoices and other documents required for the purposes of VAT.
(iii) The Company has not been required by H M Customs and Excise
to give security under paragraph 4 of Schedule 11 to the VATA.
(iv) All VAT payable upon the importation of goods has been paid
in full.
(v) No act or transaction has been effected in consequence
whereof the Company is or may be held liable for any VAT calculated by reference
to the supply of goods and services by any other company.
(vi) The Company is not liable:
a. to interest under Section 74 VATA; or
b. to a surcharge under Section 59 VATA.
(vii) Neither the Company nor any of its officers or directors is
or will (in respect of anything done before Closing) be liable to a penalty
under Section 16 VATA or Section 61 VATA.
(viii) The Company is not and has not at any time been a member
of a group of companies for VAT purposes.
(ix) The Company is not and has not agreed to become an agent,
manager or factor for the purposes of Section 47 VATA of any person who is not
resident in the United Kingdom.
(x) No act or transaction has been effected in consequence of
which
15
<PAGE>
the Company is or may be held liable by the Commissioners of Customs and Excise
for any VAT calculated by reference to the supply of goods or services by any
other company.
(w) VAT on Property.
---------------
(i) The Company does not own the fee simple in any building or
civil engineering work which is uncompleted or which was completed (within the
meaning of Note (4) to Group 1 Schedule 9 VATA) less than three years before the
date of this Agreement.
(ii) The Company has not made any election under paragraph 2
Schedule 10 VATA to waive exemption from VAT in relation to any land and no such
election has been made in relation to any land by any member or former member of
any group of companies of which the Company is or was registered for VAT
purposes.
(iii) The Company has not given or accepted any certificate as to
zero rating under the provisions referred to in Section 62 VATA.
(iv) The representations and warranties contained in this
paragraph shall apply as if references to the Company include not only the
Company but also every other company which is or was at any time a member of the
same group of companies for VAT purposes or for which an application to become
such a group member has been made within the preceding three months (including
without limitation any parent of the Company or parent or subsidiary of such
parent).
(x) Customs Duties.
--------------
The Company has complied with all statutory provisions, rules,
regulations, orders and directions and made all necessary returns in relation to
the collection and payment of Customs duties, Excise duties and other charges
having an equivalent effect and the Company has provided all necessary
information and documents and paid all amount due to H M Customs and Excise in
relation to such charges within the prescribed time limits.
(y) Employee Matters.
----------------
(i) The hours worked by the Company employees have not been in
material breach of any applicable European, United Kingdom or local laws dealing
with such matters.
(ii) All payments due from the Company on account of private
employee health and welfare insurance have been paid.
(iii) All severance and holiday payments by the Company which are
or were due under the terms of any agreement or otherwise have been paid in
full.
16
<PAGE>
(z) Compliance With Law. Schedule 3.1(z) sets forth all of the
-------------------
Company's franchises, licenses, permits, use permits, consents, authorizations,
and approvals of any United Kingdom, German or Eire or local regulatory,
administrative, or other governmental agency or body (collectively referred to
herein as "Governmental Permits"). The Company has complied and is in
compliance in all material respects with all applicable United Kingdom, German
and Eire and, to the best of the Principal Securityholders' and the Office
Staff's knowledge, local laws, statutes, licensing requirements, rules, and
regulations, and judicial or governmental administrative decisions and
applicable decisions of the European court. To the best of the Principal
Securityholders' and Office Staff's knowledge, the Company has been granted all
licenses, permits (temporary and otherwise), authorizations, and approvals from
United Kingdom, German and Eire and local government regulatory bodies necessary
to carry on its business and maintain its assets, all of which are currently
valid and in full force and effect. All such licenses, permits, authorizations,
and approvals shall, to the best of the Principal Securityholders' and Office
Staff's knowledge, not be adversely impacted by the change in ownership of the
Company's issued share capital provided under this Agreement. There is no order
or notice served on the Company or to the best of the Principal Securityholders'
and Office Staff's knowledge order issued, investigation, or proceeding pending
or threatened with respect to any violation of any law, ordinance, order, writ,
decree, directive, rule, or regulation issued by any United Kingdom, German,
Eire, European, or local court or governmental agency applicable to the Company.
The Company does not directly export or import goods or services from or to the
United Kingdom. The Company has no taxable presence outside the United Kingdom.
(aa) Governmental Consents. To the best of the Principal
---------------------
Securityholders' and Office Staff's knowledge, no consent, approval, order, or
authorization of, or registration, qualification, designation, declaration, or
filing with any United Kingdom, German, Eire, European or local governmental
authority on the part of the Company or any Securityholder is required in
connection with the consummation of the transactions contemplated hereunder.
(ab) Intellectual Property Rights.
----------------------------
(i) To the best of the Principal Securityholders' and Office
Staff's knowledge, the Company owns, or is licensed or otherwise entitled to
exercise, without restriction all rights it does exercise 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 schematics, technology, source code, know-how, computer
software programs and all other tangible and intangible information or material
used or usable in the Company's business (collectively, the "Intellectual
Property Rights") without any conflict or infringement of the rights of others.
All of such patents, trademarks, trade names, service marks and proprietary
computer software and applications therefor are set forth in Schedule 3.1(ab).
(ii) [Deleted]
(iii) [Deleted]
17
<PAGE>
(iv) The Company has taken all actions and made all applications
and filings pursuant to applicable laws to perfect or protect their interests in
Intellectual Property Rights listed in Schedule 3.1(ab).
(v) No claims with respect to the Intellectual Property Rights
have been asserted or threatened by any person against the Company, and neither
the Principal Securityholders nor any of the Office Staff knows of any claims
(i) to the effect that the manufacture, marketing, license, sale or use of any
product as now used or offered for sale by the Company infringes any copyright,
patent, trade secret, or other intellectual property right of any third party or
violates any license or agreement with any third party, (ii) contesting the
right of the Company to use, sell, license or dispose of any Intellectual
Property Rights, or (iii) challenging the ownership, validity or effectiveness
of any of the Intellectual Property Rights.
(vi) To the best of the knowledge of the Principal
Securityholders and the Office Staff:
a. 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 the Company;
b. the Company 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
c. the Company does not have any infringement liability
with respect to any patent, patent application, trademark, service mark,
copyright or other intellectual property right of another.
(vii) No Intellectual Property Right other than the non-
proprietary computer software is subject to any outstanding order, judgment,
decree, stipulation or agreement restricting in any manner the licensing thereof
by the Company. The Company has not entered into any agreement to indemnify any
other person against any charge of infringement of any Intellectual Property
Right. The Company 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. The Company has the
exclusive right to file, prosecute and maintain all applications and
registrations with respect to the Intellectual Property Rights.
(ac) [Deleted]
(ad) Restrictive Documents or Orders. Neither the Company nor any
-------------------------------
Securityholder is a party to or bound under any agreement, contract, order,
judgment, or
18
<PAGE>
decree, or any similar restriction not of general application which adversely
affects, or reasonably could be expected to adversely affect the continued
operation by the Company of its business after the Time of Closing on
substantially the same basis as said business was theretofore operated.
(ae) Contracts and Commitments.
-------------------------
(i) There is set forth on Schedule 3.1(ae) a list of all
outstanding written contracts not terminable by giving less than three months'
notice and of all material contracts (with an individual purchase or sale value
or aggregate sale or purchase value with any party in excess of (Pounds)25,000
(excluding value added tax)), whether or not in writing, to which the Company or
any of the Securityholders is a party, to which any of the Company's assets are
subject or that relate to any aspect of the business of the Company (the
"Contracts"). Each such Contract is valid and binding on all parties thereto and
in full force and effect.
(ii) The Company and each Securityholder, as the case may be, has
performed all of its material obligations under the terms of each Contract, and
is not in material default thereunder. To the best of the Principal
Securityholders' and the Office Staff'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. The Company
has received no written (or so far as the Principal Securityholders and the
Office Staff are aware unwritten notice) of default, cancellation, or
termination in connection with any such Contract. The Company has paid, or will
pay, all debts and performed all obligations required in accordance with its
normal business practice as of the Time of Closing under the terms of all
Contracts.
(iii) The Company has performed all of its material obligations
under the terms of each contract not limited to those defined in Section
3.1(ae)(i) above, and is not in material default thereunder. To the best of the
Principal Securityholders' and the Office Staff's knowledge, no event or
omission has occurred which but for the giving of notice or lapse of time or
both would constitute a material default by any party thereto under any such
contract. The Company has received no written (or so far as the Principal
Securityholders and the Office Staff are aware unwritten notice) of default,
cancellation, or termination in connection with any such contract. The Company
has paid, or will pay, all debts and performed all obligations required in
accordance with its normal business practice as of the Time of Closing under the
terms of all such contracts.
(iv) Schedule 3.1(ae) also lists all sole or limited source
suppliers.
(af) Title to the Property.
---------------------
(A) Schedule 3.1(af) hereto lists all leases of property to which
the Company is a party (each a "Property" and together the "Properties"). The
Company has good and marketable title to the Property and has not entered into
an agreement to sell or
19
<PAGE>
lease or otherwise dispose of its title to any of the Properties. Save as
contained in the copy leases and the HMLR land or charge certificates supplied
to Purchaser or its solicitors so far as the Principal Securityholders and the
Office Staff are aware there are no material restrictions on the use of the
Properties which prevent or impair the carrying on of the business now conducted
by the Company or any other matter which prevents to a material extent the use
of such properties for the purpose now used. The Company has not received any
outstanding written notice of any alleged breach of any of the covenants or
conditions in any of the leases so copied.
(B) [Deleted]
(C) So far as the Principal Securityholders and the Office Staff
are aware neither the whole nor any portion of the Properties has been or is
likely to be condemned or otherwise taken by any public authority.
(D) No notices of violation relating to any laws or regulations
relating to planning permissions or use or calling attention to the need for any
work, repairs, constructions, alterations or installations, have been received
by the Company.
(E) Other property information.
(1) The Company owns no freehold property.
(2) The Securityholders' solicitors have supplied Purchaser's
counsel prior to the date of this Agreement with a complete and accurate
copy of the Charge Certificate in respect of Unit No. 2 (3 Morris Close)
and the Lease dated 1 September 1986 in respect of Unit No. 3 (3 Morris
Close).
(3) There are no matters of which the Principal
Securityholders and Office Staff are aware which cast any doubt on the
right or title of the Company to the Properties.
(4) So far as the Principal Securityholders and Office Staff
are aware, the Company is not under any liability (actual or contingent) in
respect of any obligation which it may have undertaken as tenant, licensee,
assignee or surety relating to any property other than the Properties.
(F) Title.
All material documents of title to the Properties shall if
required be produced to Purchaser's solicitors for inspection on or before
Closing and, save where they are held by mortgagees, all such documents are
in the possession or under the control of the Company.
(G) Encumbrances.
20
<PAGE>
(1) The Company has exclusive possession and occupation of
all the Properties and save as referred to in the Schedule 3.1(af), none of
the Properties is subject to any lease, tenancy, license to occupy or
agreement to grant any of them.
(2) So far as the Principal Securityholders and the Office
Staff are aware the Properties are not save as contained in the documents
referred to in sub-paragraph (af)(A) above subject to any covenants,
licenses, easements, charges, overriding interests and other rights
affecting the same.
(3) The Company's title to the Properties are not subject to
any options, rights of pre-emption or rights of first refusal.
(4) Save as contained in the documents referred to in the
document referred to in sub-paragraph (af)(A) above, there are no outgoings
affecting the Properties which are of an unusual and onerous nature.
(5) [Deleted]
(6) So far as the Principal Securityholders and the Office
Staff are aware, light and air to all windows and apertures of the
Properties and pedestrian and vehicular access to and egress from the
properties are in each case enjoyed as of right.
(H) Disputes.
(1) So far as the Principal Securityholders and the Office
Staff are aware, there are no disputes concerning boundaries, easements,
covenants, rights, means of access or other similar matters relating to the
Properties or their use or occupation and so far as the Principal
Securityholders and the Office Staff are aware, no such disputes are
anticipated or pending.
(I) Planning.
(1) In this paragraph:
"development" has the meaning given by Section 55 of the Town and
-----------
Country Planning Act 1990; and
"Planning Acts" means the Town and Country Planning Acts 1990 the
-------------
Planning (Listed Buildings and Conservation Areas) Act 1990, the Planning
(Hazardous Substances) Act 1990, the Planning (Consequential Provisions)
Act 1990 and all other statutes referred to in any of them, to the extent
that they remain in force.
(2) So far as the Principal Securityholders and the Office Staff
are aware, the present use of the properties is the permitted use for the
purpose
21
<PAGE>
of the Planning Acts and such use is not adversely affected or likely to be
adversely affected by any planning proposals and is not a use permitted
only for a temporary period or a particular occupier or class of occupiers
or a use subject to onerous or unusual conditions or conditions giving rise
to abnormal expenditure.
(3) No planning permission in respect of the properties has
been revoked or suspended.
(4) So far as the Principal Securityholders and the Office
Staff are aware, there is no outstanding notice or complaint by any
competent authority in relation to any development carried out at the
Properties.
(5) So far as the Principal Securityholders and the Office
Staff are aware no development has been carried out in relation to the
Properties without first obtaining any requisite consent under the Planning
Acts or without complying with any such consent.
(C) Insurance.
(1) All buildings and structures comprised in the properties
including fixtures, fittings and contents are insured under policies (the
"Policies") with reputable insurers against loss or damage by fire and such
other risks as are normally covered by a comprehensive policy for buildings
of the type and in the geographic locality of the properties.
(2) The sum insured under the Policies is not less than the
full reinstatement value of the properties plus architects' and surveyors'
fees and other incidental expenses and in the case of premises which are
let, not less than 3 years' loss of rent.
(D) Leasehold Properties.
(1) In this paragraph the "Leases" means each of the leases,
tenancies, licenses and agreements under which the properties are held by
the Company, details of all of which are contained in the Schedule 3.1(af)
and in the case of a license, references to landlord, tenant and rent are
references to the licensor, licensee and the license fee respectively.
(2) There are no material arrears of rent or other monies
payable under the Leases.
(3) There are no rent or license fee reviews in the course
of being negotiated or determined or exercisable by the landlord pursuant
to any of the Lease.
22
<PAGE>
(ag) Litigation. None of the Company, the Securityholders nor any of
----------
the Company's officers or directors is engaged in, or has received any threat
of, any litigation, arbitration, investigation, claim or other proceeding
relating to the Company or its officers, directors, employees, benefit plans,
properties, Intellectual Property Rights, business, assets, licenses, permits,
or goodwill; or against or affecting the actions taken or contemplated in
connection therewith, nor, to the best of the Principal Securityholders' and
Office Staff's knowledge, is there any reasonable basis therefor. The
Securityholders are not involved in any litigation which impacts on the business
of the Company or this Agreement, nor to the best of each's knowledge, is there
any reasonable basis therefor. So far as the Principal Securityholders and
Office Staff are aware, there is no action, suit, proceeding, or investigation
pending or threatened against the Company, or the Securityholders, or the
officers or directors of the Company, that questions the validity of this
Agreement, the Escrow Agreement or any Closing Documents, or the right of the
Company or the Securityholders to enter into this Agreement, the Escrow
Agreement, the Closing Documents, or to consummate the transactions contemplated
hereby or thereby, or which might result in any material adverse change in the
assets, business, condition, prospects or properties of the Company which
impacts or will impact directly on the Company. There is no action, suit,
proceeding, or investigation by the Company (or the Securityholders) which
impacts or will impact directly on the Company currently pending or which any of
them currently intends to initiate. None of the Company, the Securityholders,
nor any of the Company's officers or directors is bound by any judgment, decree,
injunction, ruling or order of any court, governmental, regulatory or
administrative department, commission, agency, arbitrator or any other person
which would or could:
(a) have a materially adverse effect on the business of the Company;
(b) impose any limitations or restrictions on the ability of the
Company to sell its products in the jurisdiction in which it currently
sells them, nor to the knowledge of the Company and the Securityholder, any
other jurisdictions.
(ah) Labor Relations.
---------------
a. To the best of the Principal Securityholders' and Office
Staff's knowledge, the Company has not failed to comply in any respect with
all applicable United Kingdom, European, German, Eire and local laws,
rules, and regulations relating to employment, and all such applicable
laws, rules and regulations governing payment of minimum wages and overtime
rates, and the withholding and payment of taxes from compensation of
employees.
b. There are no strikes affecting the Company or industrial
disputes between the Company and any of its employees (the "Employees" or
officers or former officers or employees) or any labor union or other
collective bargaining unit representing any of the Employees and so far as
the Principal Securityholders are aware none are pending or threatened.
23
<PAGE>
c. The Company has never entered into a collective bargaining
agreement or other labor union contract applicable to the Employees and no
trade union is recognized or has claimed recognition by the Company.
d. Schedule 3.1(ah) contains an accurate and complete list of all
officers and employees of the Company as at the date of this Agreement and
at the Closing, showing all remuneration payable and other benefits
provided or which the Company is bound to provide either now or in the
future.
e. All appropriate notices relating to terms and conditions have
been properly issued under relevant employment legislation to all employees
(including directors) of the Company.
f. There are no service or consultancy agreements or arrangements
outstanding between the Company and any other person apart from those
disclosed in the Disclosure Letter.
g. The Company is not bound or accustomed to make periodical or
other payments (other than normal fixed salaries and wages) to employees,
ex employees, officers, consultants or others and no employee, officer or
consultant has remuneration on a profit sharing or commission basis or by
reference to the turnover, profits, sales or assets of the Company.
h. The Company does not have and never has had any share option,
share incentive, profit sharing or any other similar scheme.
i. No general increase in the wages of the employees of the
Company or any section or class of such employees has been made or agreed
to be made (whether legally binding or not) either with the employees or
their representatives nor has any negotiation or demand for such increase
been entered into by or made to the Company; and
j. the Company has not received or been notified of any wage
claim.
k. All contracts of employment between the Company and its
officers or employees are lawfully determinable by the Company without
compensation save for statutory compensation by notice (not exceeding the
relevant statutory minimum period of notice or three (3) months, whichever
is greater).
l. The Company has no reason to dismiss (nor does it wish to
dismiss) any of its employees.
m. No person who is or was a director or employee of the Company
has any right or made any claim (which has not yet been settled) to any
24
<PAGE>
compensation or other payment by reason of the termination of his
employment (whether such termination constitutes unfair or wrongful
dismissal redundancy or otherwise) or any breach by the Company of his
terms of engagement or employment; so far as the Principal Securityholders
are aware, there are no circumstances likely to lead to any such claims
being made; and no gratuitous payment has been made within the last 12
months or promised and not been paid by the Company in connection with the
termination or proposed termination of employment of any past or present
director or employee.
n. No order has been made in the twelve (12) months prior to the
date of this Agreement or may be made for the reinstatement or re-
engagement of any employee of the Company.
o. In the five years before the date of this Agreement, there is
not and never has been any strike, picket, lock-out, go-slow, work to rule
or any other similar form of industrial dispute taken or threatened against
the Company and to the best of knowledge, information and belief of the
Securityholders or officers of the Company there are no facts or
circumstances which might lead to any such industrial dispute.
p. Pension Scheme. The Company has no pension schemes other
--------------
than the pension schemes referred to in the Disclosure Letter (such schemes
hereinafter referred to as the "Pension Schemes"). The Pension Schemes are
approved by the Superannuation Funds Office of the Inland Revenue as exempt
approved schemes under Chapter I Part XIV Taxes Act and has at all times
been administered in accordance with the provisions of that Act and of the
Social Security Act 1973 and with the applicable provisions of the Social
Security Pensions Act 1973 and in accordance with any other applicable
legislation, regulations and requirements; and nothing has been done or
omitted to be done which may result in the Pension Schemes ceasing to be
such exempt approved schemes. Details of the pension entitlements of each
of the officers, employees, former officers and former employees of the
Company or for which the Company is liable and of all contributions paid
and payable to such persons are set out in Schedule 3.1(ah).
q. If the Pension Schemes are contracted out, a Contracting-out
Certificate has been issued to or in respect of the Company by the
Occupational Pensions Board under the provisions of the Social Security
Pensions Act 1975 in relation to the Pension Schemes and so far as the
Principal Securityholders and the Office Staff are aware nothing has been
done or omitted to be done which may cause such certificate to be
withdrawn.
r. The Company is not under any legal liability or obligation to
provide any relevant benefits (as defined in Section 612(l) of the Taxes
Act) or any death or disability benefits not within that definition for any
past or present officer or employee of their dependants otherwise than
under the Pension
25
<PAGE>
Schemes and is not under any such liability or obligation to pay
contributions to any Personal Pension Scheme (as defined in Section 630
Taxes Act).
s. The Company has not given any undertakings or assurances to
its officers, employees or consultants regarding the continuance,
introduction or improvement of any retirement, death or disability benefits
(whether or not there is any obligation to do so) or regarding the payment
of contributions to Personal Pension Schemes (whether or not there is any
obligation to do so).
t. In the six years prior to the date of this Agreement the
Company has not granted any ex gratia pension or other like payment to any
of its past or present officers, employees, consultants or their
dependants.
u. The Company has complied in all material respects with all its
obligations under the Pension Schemes and has paid all amounts due to the
Trustees of the Pension Schemes (the "Trustees") and contributions made to
the Pension Schemes have been made at the rate or rates recommended by the
actuary or insurance company advising on the funding of the Pension
Schemes.
v. [Deleted]
w. All benefits under the Pension Schemes payable on death
before normal retirement age are fully insured with a reputable insurance
company.
x. There are no actions, suits or claims (other than normal
claims for benefits) in relation to the Pension Schemes and so far as the
Principal Securityholders and the Office Staff are aware, none are pending
or threatened.
y. The following liabilities of the Company (whether contractual
or otherwise) have been fully met:
- to pay contributions to the Pension Schemes; and
- to make direct payments of pension to ex employees in retirement or
their relatives and dependants.
z. The trustees of the Pension Schemes (the "Trustees") are not
treated as carrying on investment business under the terms of Section 191
of the Financial Services Act 1986 ("FSA"). Neither the Trustees nor any
individuals employed by them in their capacity as such Trustees carry on or
purport to carry on in the United Kingdom investment business within the
meaning of FSA.
aa. Copies of all relevant trust instruments, rules and other
documents governing the Pension Schemes (including members' booklets and
announcements) and the latest actuarial report and trustees' report and
Financial Statements, together with copies of all insurance policies,
annuity contracts and
26
<PAGE>
proposals for such policies or contracts which are pending, a list of all
employees of the Company for whom contributions are being paid or are
payable showing the amount of contributions for each employee, details of
internal dispute resolution procedure, payment schedule and statement of
investment principles for the purpose of the Pensions Act 1995, details of
arrangements to comply with Sections 16 to 21 of that Act, details of all
investments and assets of each Pension Scheme have been provided to
Purchaser and all such disclosed documents are true, complete, accurate in
all material respects and contain no material omission or inaccuracies.
bb. Membership. Every person who has at any time had the right
----------
to join, or apply to join, the Pension Schemes has been properly advised of
that right. No employee or former employee of the Company has been excluded
from membership of the Pension Schemes or from any of the benefits
thereunder in contravention of Art 119 of the Treaty of Rome, the Pensions
Act 1995 or other applicable laws or requirements or the provisions of the
Pension Schemes or otherwise.
cc. Transfer Payments. No transfer value has been paid
-----------------
(directly or indirectly) to the Pension Schemes from another arrangement
for any member of the Pension Schemes under which any benefits referable to
that member contravened Art 119 of the Treaty of Rome, Section 62 of the
Pensions Act 1995 or other applicable law or requirement.
dd. No Other Employer. The Company is the only employer for the
-----------------
time being participating in the Pension Schemes. No employer which has
previously participated in the Pension Schemes has any claim under the
Pension Schemes and in respect of any such employer the period of
participation has been terminated and benefits have been provided in
accordance with the provisions of the Pension Schemes.
ee. No Pay Restructuring. There has not in the last four years
--------------------
been any restructuring of the earnings of all or any members or
prospective members of the Pension Schemes (by way of example, but without
limitation, consolidation of bonuses into basic pay).
ff. Investments. None of the assets of the Pension Scheme:
-----------
(1) is in any form other than cash deposited with a UK
clearing bank in accounts requiring signatures of every trustee to
release sums so held; or
(2) is invested in any description of employer-related
investments (within the meaning of Section 40 of the Pensions Act
1995); or
(3) save for deposits with banks, building societies and
other financial institutions and save for any instrument creating or
27
<PAGE>
acknowledging an indebtedness listed on any recognised stock exchange
of repute, is loaned to any one person; or
(4) is subject to any encumbrance or agreement or commitment
to give or create any encumbrance.
gg. [Deleted]
hh. [Deleted]
ii. Winding-Up. The date of commencement of the winding up
----------
of the Pension Scheme referred to as the RT Masts Limited Pension Scheme in the
Disclosure Letter has been fixed at August 31, 1997. Such schemes liabilities
have been properly valued on the prescribed actuarial basis known as the Minimum
Funding Requirement.
jj. Contributions. The Company's contributions to the Pension
-------------
Schemes on behalf of employees does not exceed and no action has been taken or
agreement or arrangement entered into to make the same exceed 5% of the basic
salary of each employee per annum.
(ai) Brokers' and Finders' Fees/Contractual Limitations. The Company
--------------------------------------------------
is not 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. Neither the Company nor
any officer, director, employee, shareholder, agent, or representative of the
Company (collectively "Agent/Representatives") are or have been subject to any
agreement, letter of intent, or understanding of any kind which prohibits,
limits, or restricts the Company or Agent/Representatives from negotiating,
entering into and consummating this Agreement and the transactions contemplated
hereby.
(aj) Interested Party Relationships. Neither the Securityholders nor
------------------------------
the Company (nor any family member of the Securityholders 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
Securityholders, the Company, 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 Company, or any competitor
with the Company nor has (or has in the last two years had) a trading
relationship with the Company nor have any of them in the last two years entered
into any other type of transaction or arrangement outside the normal course of
business with the Company and none of them provides or has provided goods or
services in connection with the Company.
(ak) Certain Payments. To the best of the knowledge of the Principal
----------------
Securityholders and the Office Staff, in connection with its business, the
Company has not and no person directly or indirectly on behalf of the Company
has made or received any payment that was not legal to make or receive.
28
<PAGE>
(al) Products Liability. There are no claims received by Company,
------------------
fixed or contingent, asserting (a) any damage, loss or injury caused by any
Product or (b) any breach of any express or implied product warranty or any
other similar claim with respect to any Product other than standard warranty
obligations (to replace, repair or refund) made by Company in the ordinary
course of business, except for those claims that, if adversely determined
against Company, would not have a material adverse change on the business,
results of operations, financial condition of the Company. As used herein,
"Product" shall mean any products manufactured, designed, developed,
distributed, sold, re-sold, customized or serviced by the Company.
(am) Product Warranties. The Company has provided to Purchaser copies
------------------
of its warranty policies and all outstanding warranties or guarantees relating
to any of the Company's products, if any (other than warranties or guarantees
implied by law) and its terms and conditions of sale, including any warranties
or guarantees, if applicable.
(an) Returns. There are no agreements or arrangements, written or
-------
oral, that expressly entitle any agent, distributor or joint venture partner or
customer of the Company to return products sold, delivered or shipped by the
Company to such business partner or customer.
(ao) Customers. Except as indicated on Schedule 3.1(ao) attached
---------
hereto, no single customer of the Company accounted for more than 5% of the net
sales of the Company during the twelve-month period ended September 30, 1997.
The Company has furnished Purchaser with complete and accurate copies or
descriptions of all material written current agreements with such customers,
which are set forth on the list of contracts. Neither the Principal
Securityholders nor the Office Staff are aware of any event, (without having
made any inquiry of customers) or fact which would lead it or him to believe
that any of such customers will reduce their current level of purchases after
the Time of Closing to a material extent.
(ap) Suppliers. Schedule 3.1(ap) hereto lists all suppliers of goods
---------
to the Company where the supplies exceed (Pounds)10,000 in value over the last
12 months. The Principal Securityholders and the Office Staff are not aware
(but without having made inquiries of suppliers) of any event, happening, or
fact which would lead them to believe that any of such suppliers will reduce the
supply materially below the current level and type of goods currently being
provided to the Company on similar terms and conditions other than due to any
reduction in sales by the Company.
(aq) Books and Records. The statutory books and records of the
-----------------
Company to which Purchaser and its accountants and attorneys have been given
access are the true books and records of the Company and contain all matters
that they are required to contain by the Companies Act 1985 (as amended).
(ar) Complete Disclosure. No document, written information,
-------------------
statement, financial statement, certificate, schedule or exhibit prepared and
furnished or to be prepared
29
<PAGE>
and furnished by the Company or any Securityholder or its respective
representatives (being the Securityholders' Solicitors, the Securityholders'
Accountants and Natalie Green) pursuant hereto or in connection with the
transactions contemplated hereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material fact necessary to
make the statements or facts contained herein or therein not materially
misleading in light of the circumstances under which they were furnished. To the
best knowledge of the Principal Securityholders, (except that where this
Agreement elsewhere provides that specific enquiries shall not have been made
they shall not have been deemed made for the purpose of this sentence), there is
no event, fact or condition that has resulted in, or could reasonably be
expected to result 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 the Company taken
as a whole that has not been set forth in this Agreement or in the Disclosure
Letter. The Company and its subsidiaries do not have any directors, shadow
directors or alternate or associate directors other than the persons listed in
the Disclosure Letter.
(as) [Deleted]
(at) [Deleted]
-------
(au) Insurance. Schedule 3.1(au) lists all insurance policies and
---------
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company, the amounts of coverage under
each such policy and bond of the Company. To the best of the knowledge of the
Principal Securityholders and the Office Staff, the Company has not been refused
any requested coverage and no material claim made by the Company has been denied
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies and bonds have been paid, and the Company is otherwise
in full compliance with the terms of such policies and bonds (or other policies
and bonds providing substantially similar insurance coverage). So far as the
Company and the Securityholders are aware, there is no notice of termination of,
the invalidation of any coverage of or material premium increase with respect
to, any of such policies.
(av) Environmental Matters. The Company has complied in all material
---------------------
respects with its obligations under all applicable statutes and/or regulations
and/or orders or other provisions of law and/or compulsory codes of practice
(including without limitation the laws of tort) in each case of the United
Kingdom and of the European Community which protect or relate to the protection
of the environment and/or the health and well being of individuals and/or other
living creatures. Without limiting the foregoing none of the Properties (or
land that adjoins the Properties) has been contaminated by the Company and so
far as the Principal Securityholders and Office Staff are aware (without having
conducted an environmental audit or property survey) none of the Properties is
situate on reclaimed or filled land. The business of the Company carried on
thereat does not require the Company to obtain any licence under the Environment
Act 1995 and subordinate legislation.
(aw) Backlog. Schedule 3.1(aw) hereto sets forth a per-customer best
-------
30
<PAGE>
estimate of the backlog of orders relating to the business of the Company which
it is to ship and contract work to be performed within three days of the date of
this Agreement and of the Time of Closing. The Company either possesses
sufficient inventory of parts, materials and personnel to produce the same
within their scheduled delivery dates or such parts or materials have lead times
such that the Company can acquire such parts and materials in time to produce
and ship such backlog in accordance with its scheduled shipping date, as of the
Closing.
(ax) Accounts Receivable. The amount of all debts of the Company as
-------------------
at the date of this Agreement and as at the Time of Closing will be good and
collectible in full in the ordinary course of business by March 15,1998; all
accounts receivable arise from bona fide transactions in the ordinary course of
business; no contest with respect to the amount or validity of any amount is
pending; and none of such accounts receivable is or will at the Closing be
subject to any counterclaim or setoff. The value at which accounts receivable
are carried reflect the accounts receivable valuation policy of the Company. As
of August 31, 1997 and as of the Closing, except as set forth in Schedule
3.1(ax), there is and will be (i) no debtor overdue in its payment by more than
30 days, (ii) no debtor that has refused (or threatened to refuse) to pay its
obligation for any reason, (iii) no debtor that is insolvent or bankrupt, and
(iv) no debt which is pledged or factored to any third party by the Company.
The Company holds no deposits from customers and has received no prepaid service
contract revenue or other prepaid revenue. P-Com and Purchaser shall make no
claim for uncollected debts up to the amount of the bad debt provision contained
in the Agreed Execution Accounts or the Completion Accounts (as defined below)
nor for any amount for which a claim is made under Section 4.2(i) hereof.
(ay) Regulation S. Each Securityholder has complied with the
------------
requirements of Regulation S under the United States Securities Act of 1933, as
amended ("Regulation S").
(az) No Directed Selling Efforts. The Securityholders are not aware
---------------------------
without having made any inquiry save of Satterlee Stevens Burke & Burke of any
Directed Selling Efforts (as hereinafter defined) having been made in the United
States with respect to the Purchase Shares by P-Com, Purchaser or its
affiliates, or any person acting on behalf of any of the foregoing. In
addition, the Company, its affiliates (comprising its officers, directors,
shareholders holding more than 5% or more of the issued share capital of the
Company or holding or subsidiary companies (as defined in Section 736 of the
Companies Act 1985)), the Securityholders, and persons acting on behalf of the
foregoing have not made any Directed Selling Efforts in the United States with
respect to the Purchase Shares. For purposes of this Agreement, "Directed
Selling Efforts" include any activity undertaken for the purpose of, or that
could reasonably be expected to have the effect of, conditioning the market in
the United States for the Purchase Shares, including, but not limited to, the
placement of an advertisement in a publication with a general circulation in the
United States that refers to the offering of the Purchase Shares, the mailing of
promotional materials to persons located in the United States or the holding of
promotional meetings or seminars in the United States.
(ba) Offshore Transaction. The offer and sale of the Purchase Shares
--------------------
31
<PAGE>
qualifies as an Offshore Transaction. For purposes of this Agreement, the term
"Offshore Transaction" means that:
(1) The Company and each Securityholder was outside the United
States at the time the Purchase Shares were offered to the Company and each
Securityholder; and
(2) The Company and each Securityholder was outside the United
States at the time the Company or Securityholder originated the buy order
for the Purchase Shares, including, but not limited to, the time when the
Company and each Securityholder signed and delivered this Agreement and
otherwise subscribed for or agreed to purchase the Shares.
In this Agreement, the term "United States" means the United States of
America, its territories and possessions, any State of the United States, and
the District of Columbia. Notwithstanding the foregoing definition of "Offshore
Transaction," the offer and sale of the Purchase Shares to the Securityholders
shall not constitute an "Offshore Transaction" if the Securityholders are
acquiring the Shares for the account or benefit of any specifically targeted,
identifiable group of U.S. citizens abroad, such as members of the U.S. armed
forces serving overseas, but shall constitute an "Offshore Transaction" if the
Securityholder is a person excluded from the definition of "U.S. Person"
pursuant to Section 3.1(bb)(1)(f) of this Agreement or is a person holding an
account excluded from the definition of "U.S. Person" pursuant to Section
3.1(bb)(2)(a) of this Agreement, solely in its capacity as a holder of such an
account.
(bb) Non U.S. Person. The Company and each Securityholder is not a
---------------
U.S. Person, as such term is defined below, and is not acquiring the Purchase
Shares for the account or benefit of any U.S. Person.
(1) Definition of U.S. Person. For purposes of this Agreement,
-------------------------
the term "U.S. Person" means:
(a) Any natural person resident in the United States;
(b) Any partnership or corporation organized or incorporated
under the laws of the United States;
(c) Any estate of which any executor or administrator is a U.S.
Person;
(d) Any trust of which any trustee is a U.S. Person;
(e) Any agency or branch of a foreign entity located in the
United States;
32
<PAGE>
(f) Any non-discretionary account or similar account (other than
an estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and
(g) Any discretionary account or similar account (other than an
estate or trust) held by a dealer or other fiduciary organized,
incorporated, or (if an individual) resident in the United States; and
(h) Any partnership or corporation if organized or incorporated
under the laws of any foreign jurisdiction, and formed by a U.S.
Person principally for the purpose of investing in securities not
registered under the Securities Act, unless it is organized or
incorporated, and owned, by accredited investors (as defined in Rule
501(a) under the Securities Act), who are not natural persons, estates
or trusts.
(2) Exclusions from Definition. Notwithstanding the foregoing
--------------------------
definition of "U.S. Person":
(a) Any discretionary account or similar account (other than an
estate or trust) held for the benefit or account of a non-U.S. Person
by a dealer or other professional fiduciary organized, incorporated,
or (if an individual) resident in the United States shall not be
deemed a U.S. Person.
(b) Any estate of which any professional fiduciary acting as
executor or administrator is a U.S. Person shall not be deemed a U.S.
Person if an executor or administrator of the estate who is not a U.S.
Person has sole or shared investment discretion with respect to the
assets of the estate, and the estate is governed by foreign law.
(c) Any trust of which any professional fiduciary acting as
trustee is a U.S. Person shall not be deemed a U.S. Person if a
trustee who is not a U.S. Person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of the
trust (and no settlor if the trust is revocable) is a U.S. Person.
(d) An employee benefit plan established and administered in
accordance with the laws of a country other than the United States and
customary practices and documentation of such country shall not be
deemed a U.S. Person.
(e) Any agency or branch of a U.S. Person located outside the
United States shall not be deemed a U.S. Person if the agency or
branch operates for valid business reasons, and the agency or branch
is engaged in the
33
<PAGE>
business of insurance or banking and is subject to substantive
insurance or banking regulation, respectively, in the jurisdiction
where located.
(f) The International Monetary Fund, the International Bank for
Reconstruction and Development, the Inter-American Development Bank,
the Asian Development Bank, the African Development Bank, the United
Nations, and their agencies, affiliates and pension plans, and any
other similar international organizations, their agencies, affiliates
and pension plans shall not be deemed U.S. Persons.
(bc) Prior Agreements. Neither the Company nor any Securityholder has
----------------
entered into, or authorized any agent or representative on its behalf to enter
into, any agreement or understanding (i) to sell, transfer or dispose the
Purchase Shares or any part thereof to any U.S. Person or any person in the
United States, or (ii) to make any short sale in the Common Stock of P-Com in
the United States.
(bd) Agents, Guarantees etc.
----------------------
(1) No person is authorized to act as agent for the Company or to
bind the Company otherwise than the directors of the Company and its
employees.
(2) There are no powers of attorney, guarantees, suretyships,
indemnities or similar commitments (whether secured or unsecured) given by
the Company in respect of which obligations or liabilities of any person
other than the Company (whether actual or contingent) are still
outstanding.
(be) Data Protection Act. The Company has complied in all material
-------------------
respects with requirements of the Data Protection Act 1984 and in particular:
(1) has registered as a data user under that Act for all purposes
for which registration is required by the business as carried on by the
Company;
(2) has complied with the data protection principles; and
(3) the Company has not received any written notice, letter or
complaint and to the best of the knowledge of the Principal Securityholders
and the Office Staff no unwritten notice or complaint alleging a breach by
it of the provisions of the Data Protection Act 1984 and the Principal
Securityholders and Office Staff have no reason to believe that
circumstances exist which may give rise to such a notice letter or
complaint.
(bf) [Deleted]
(bg) Purchase of Shares.
------------------
34
<PAGE>
(1) The Company has not at any time acted in breach of Section
151 of the Companies Act and nor has it ever given financial assistance in
connection with the acquisition of its own or any holding company's shares
in accordance with the provisions of section 155 of the Companies Act.
(2) The Company has never reduced, purchased or redeemed its
share capital or agreed to do so.
(bh) No Loans. The Company has not made in the three years prior to
--------
the date of this Agreement or received any material loans or advanced any
material monies or credit to any person, firm or company (other than credit
given on normal commercial terms in the ordinary and normal course of business)
which remain outstanding.
(bi) No Partnership or Insider Contracts. The Company is not a party
-----------------------------------
to, nor have its profits or financial position during the three years prior to
the date hereof been affected by any contract or arrangement which is not of an
entirely arms length nature made on open market terms.
(bj) No Market Conditioning. Neither the Company nor any
----------------------
Securityholder nor any representative or agent of the Company or any
Securityholder has undertaken any activity for the purpose of, or that
reasonably could be expected to have the effect of, conditioning the market in
the United States for the offer of the Purchase Shares.
(bk) Pooling of Interests. None of the Company nor any of its
--------------------
Subsidiaries and no other "affiliate" of the Company has taken or failed to
take, any action which would prevent P-Com or Purchaser from accounting for the
purchase of the Securities for financial accounting and reporting purposes as a
pooling of interests in accordance with United States generally accepted
accounting principles and the pronouncements of the SEC.
(bl) [Deleted]
Section 3.2 Representations and Warranties of P-Com. Except as set forth in a
- ----------- ---------------------------------------
letter, if applicable, referring to a particular section of this Section 3.2 of
this Agreement (the "P-Com Disclosure Letter") delivered by P-Com to the
Securityholders, P-Com hereby represents and warrants to the Company and each
Securityholder that:
(a) Organization. P-Com is a corporation duly organized and validly
------------
existing under the laws of the State of Delaware and Purchaser is a company duly
organized and validly existing under the laws of England and Wales and each has
all corporate power and authority to lease, own, and operate its respective
properties and assets and carry on its respective 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 the consolidated business and operations of P-Com.
35
<PAGE>
(b) Brokers' and Finders' Fees. 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
the Closing Documents, or in connection with any transactions contemplated
hereby that the Company would be required or obligated to make or pay.
(c) SEC Filings. P-Com has filed all forms, reports and documents
-----------
required to be filed with the United States Securities and Exchange Commission
("SEC") since March 2, 1995 (collectively, the "P-Com SEC Reports"). The P-Com
SEC Reports were prepared in accordance with the requirements of the United
States Securities Act of 1933, as amended ("Securities Act") or the United
States Securities Exchange Act of 1934 ("Exchange Act"), as amended, as the case
may be. None of such forms, reports or documents (including any financial
statements or schedules included or incorporated by reference therein) filed by
P-Com contained, when filed (in the case of documents filed pursuant to the
Exchange Act) or when declared effective by the SEC (in the case of registration
statements filed under the Securities Act), any untrue statement of a material
fact or omitted 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.
(d) 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, subject to the warranties given by the Securityholders and
the Company in paragraphs (ay), (az), (ba), (bb) and (bc) of Article III,
Section 3.1 being true and accurate, the Purchase Shares will be issued in
compliance with all applicable United States and state securities laws.
(e) Authorization of P-Com and Purchaser. Each of P-Com and Purchaser
------------------------------------
has full power and authority to enter into this Agreement and the Escrow
Agreement, if applicable, 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, if applicable, and those other documents and instruments referred to
herein or therein (the "Purchaser Closing Documents"). Each of P-Com and
Purchaser has taken all necessary and appropriate action with respect to the
execution and delivery of this Agreement, the Escrow Agreement and the other
Purchaser Closing Documents, as applicable. This Agreement, the Escrow
Agreement, and the other Purchaser Closing Documents constitute valid and
binding obligations of P-Com or Purchaser (as the case may be), enforceable 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.
(f) Government Consents. 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 Purchaser or P-Com is required in connection with the consummation
of the transactions contemplated hereunder.
36
<PAGE>
(g) Litigation. There is no action, suit, proceeding, or
----------
investigation pending or, to the best knowledge of P-Com or Purchaser,
threatened against either P-Com or Purchaser that questions the validity of this
Agreement, the Escrow Agreement, the other Purchaser Closing Documents or the
right of either P-Com or Purchaser to enter into this Agreement, the Escrow
Agreement or the other Purchaser Closing Documents or to consummate the
transactions contemplated hereby or thereby.
(h) No Conflict or Default. Neither the execution and delivery of
----------------------
this Agreement nor the Purchaser Closing Documents, 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, in the
case of P-Com, its certificate of incorporation or bylaws, and in the case of
Purchaser, its Memorandum and Articles of Association, or of any material
agreement, deed, contract, mortgage, indenture, writ, order, decree, legal
obligation or instrument to which either P-Com or Purchaser is a party or by
which it is 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.
(i) Limitation on Liability. Notwithstanding any provision of this
-----------------------
Agreement, neither P-Com nor Purchaser shall be liable hereunder for a breach of
its respective representations, warranties, covenants and agreements until the
aggregate amount of all liabilities to the Securityholders hereunder exceeds
65,000 British Pounds Sterling, at which point such Securityholders shall be
entitled to the full liability amount pursuant to this Agreement including such
liability cushion.
(j) Absent Fraud, Termination of Liability and Representations,
-----------------------------------------------------------
Warranties, Covenants and Agreements. The liability of P-Com and Purchaser
- ------------------------------------
pursuant to this Agreement (and the representations, warranties, covenants and
other agreements of P-Com and Purchaser set forth in this Agreement, except
otherwise set forth herein) for a breach or inaccuracy of, or a failure to
perform or comply with, any or all of P-Com's or Purchaser's respective
representations, warranties, covenants and agreements and all other rights,
claims, actions and causes of action at law or in equity in respect of such
representations, warranties, covenants and agreements shall, subject to Section
7.1(f), terminate upon the date of the publication of the independent
accountants' report in P-Com's Annual Report on Form 10K that includes the
audited results for the Company for the fiscal year ended December 31, 1997.
(k) FIRPTA. The Company does not own any real estate in the United
------
States, nor does it own any equity or ownership interest in any corporation,
partnership or other entity which owns real estate in the United States.
37
<PAGE>
ARTICLE IV COVENANTS
Section 4.1 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 P-
Com. No party shall disseminate (except to the parties to this Agreement) any
press release or announcement concerning the transactions contemplated by this
Agreement or the Escrow Agreement or the parties hereto or thereto without the
prior written consent of P-Com and Mark Perkins or William Perkins as
representatives of the Securityholders, except as required under the public
reporting obligations of P-Com or as may be required to obtain consents
necessary pursuant to Sections 6.1(h) and 6.2(d) hereof to consummate the
transactions contemplated herein; provided that P-Com shall issue a press
release describing the transaction contemplated herein at any time after the
date hereof, in a form reasonably satisfactory to the Company.
Section 4.2 Accounts.
- ----------- --------
(a) On the date of this Agreement the Securityholders and the Company
shall deliver to P-Com and Purchaser a draft balance sheet and profit and loss
account of the Company for the year ended September 30, 1997 prepared by the
Company in accordance with GAAP applied consistently with its audited balance
sheet and profit and loss accounts for the year ended September 30, 1996.
(b) As soon as practicable after the date of this Agreement and no
later than October 31, 1997 the Securityholders and the Company shall deliver to
P-Com and Purchaser a final balance sheet and profit and loss account of the
Company for the year ended September 30, 1997 prepared in accordance with GAAP
applied consistently with its audited balance sheet and profit and loss accounts
for the year ended September 30, 1996 (the "Execution Accounts"). A provision
for Corporation Tax will be made in the Execution Accounts based upon the
taxable profits for the period from October 1, 1996 to September 30, 1997 (the
"Period"). The Period will be treated as if it were a separate accounting
period for taxation purposes. Full regard will be taken of taxable income,
allowable expenditure incurred in the period and appropriate capital allowances.
For the avoidance of doubt, allowable expenditure will include the provision for
staff bonuses of (Pounds)150,000 and the bonus for M Tillcock of (Pounds)500,000
including employers' National Insurance. The rate of Corporation Tax will be
the rates applicable to the profits chargeable to Corporation Tax for the period
taking into account the maximum number of associated companies for the period
prior to September 30, 1997.
(c) At Closing (as defined below) the Securityholders and the Company
shall deliver to P-Com and Purchaser a draft balance sheet and profit and loss
account of the Company for the period from October 1, 1996 to Closing prepared
in accordance with GAAP consistently with the accounts prepared in accordance
with Section 4.2(b) above and with the audited balance sheet and profit and loss
accounts for the year ended September 30, 1996.
38
<PAGE>
(d) Subject to Closing taking place, as soon as practicable after the
Time of Closing and no later than December 31, 1997 the Securityholders shall
deliver to P-Com and Purchaser the final balance sheet and profit and loss
account of the Company as at Closing prepared by the Company (as approved by the
Securityholders' Accountants if required by and at the cost of the
Securityholders) in accordance with GAAP applied consistently with the accounts
referred to in 4.2(b) above and with the audited balance sheet and profit and
loss accounts for the year ended September 30, 1996 (the "Completion Accounts").
The total bad debt provision in the Completion Accounts will not exceed the
total bad debt provision in the Execution Accounts.
(e) At all times the Securityholders and the Company and P-Com and
Purchaser shall procure that P-Com, Purchaser, the Securityholders and their
respective representatives shall be given all reasonable access to the Company
and its premises, books, files, accounts, records and other assets and
information and to the Company's accountants' books, files, records and
information related to the Company and the preparation of the accounts referred
to in clauses (a), (b), (c) and (d) above.
(f) P-Com/Purchaser and its accountants shall review the Execution
Accounts and the Completion Accounts and no later than March 15, 1998 shall
deliver to William Perkins or Mark Perkins as representatives for the
Securityholders written details of potential claims against the Securityholders
under Section 4.2(i) below.
(g) If, within 10 days of service of the notice referred to in Section
4.2(f) above (or such longer period as the Securityholders and Purchaser may
agree in writing), potential claims of Purchaser and the amounts to be paid to
Purchaser under Section 4.2(i) are not agreed by or on behalf of the
Securityholders and Purchaser, such claims settled in accordance with Section
4.2(i) and the Execution Accounts or the Completion Accounts modified
accordingly (where relevant) Mark Perkins or William Perkins as representatives
of the Securityholders or Purchaser may give written notice to the other to have
the disputed items referred for determination in accordance with Section 4.2(h)
below.
(h) If any dispute in connection with the notices served in accordance
with Section 4.2(f) cannot be resolved by agreement it shall be determined, on
the referral of the Securityholders or Purchaser pursuant to Section 4.2(f)
above, to an independent firm of chartered accountants of England and Wales to
be agreed between the Securityholders and Purchaser or, in the absence of
agreement within 5 days of notification of referral pursuant to Section 4.2(f)
above, to an independent firm of chartered accountants appointed by the
President for the time being of the Institute of Chartered Accountants in
England and Wales upon the application of either party. Such independent firm
of chartered accountants shall act as experts and not as arbitrators and:
(i) their fees and costs will be borne in equal shares by the
Securityholders (as to one part) and Purchaser (as to another part (unless such
firm directs otherwise in order to reflect the conduct of any party);
39
<PAGE>
(ii) they will have the power to receive submissions made by or
on behalf of the Securityholders or Purchaser in such form as they may decide;
(iii) they shall be allowed access to all relevant information,
records and personnel and to the relevant working papers of Purchaser's
accountants and the Securityholders' Accountants;
(iv) their decision shall, in the absence of manifest error, be
final and binding on the Securityholders and Purchaser.
(i) If the Net Assets as at September 30, 1997 and/or as at the Time
of Closing as determined by reference to the Execution Accounts and the
Completion Accounts respectively (as agreed or determined in accordance with
Section 4.2(g) or (h) (the "Agreed Execution Accounts" and the "Agreed
Completion Accounts" respectively) are less than One Million Three Hundred
Eighty Six Thousand Pounds ((Pounds)1,386,000) (the "Minimum Net Assets"), then
a payment shall be made by the Securityholders, (at P-Com's election) to P-Com
or Purchaser as follows within five (5) working days of the Net Assets as at
September 30, 1997 and at the Time of Closing being agreed or determined:
(i) If the Net Assets are below the Minimum Net Assets at
September 30, 1997 and at the Time of Closing then the payment shall be equal to
the difference between (A) the Minimum Net Assets and the Net Assets at
September 30, 1997 and (B) the Minimum Net Assets and the Net Assets at the Time
of Closing, whichever provides the greater difference (and, for the avoidance of
doubt, not the aggregate of the differences).
(ii) If the Net Assets at September 30, 1997 are greater than the
Minimum Net Assets and at the Time of Closing less than the Minimum Net Assets
(or vice versa) the payment shall be equal to the amount by which the Minimum
Net Assets exceeds the lower of such Net Assets.
If the Securityholders do not make the payment in cash within the
time set forth above, Purchaser shall be entitled to deduct from the shares of
Common Stock held pursuant to the Escrow Agreement that number of common stock
with a fair market value sufficient to cover the payment owed by the
Securityholders such common stock to be valued as reported on the Nasdaq
National Market on the date such common stock are deducted sufficient to cover
the payment owed by the Company and the Securityholders and whether payment is
made in cash or in such common stock the figure of (Pounds)9,250,000 referred to
in Section 2.2 shall be reduced by the amount of the payment and read
accordingly.
Section 4.3 Non-Competition.
- ----------- ---------------
(a) Commencing on the Time of Closing and continuing for five
(5) years thereafter William Perkins (in consideration of payments to the trust
of which William
40
<PAGE>
Perkins is a beneficiary) agrees that he shall not (except in his capacity as an
officer, director, and/or employee or consultant of P-Com, Purchaser or the
Company), directly or indirectly, whether on his own account or as a shareholder
(other than as a less than 3% shareholder of a publicly-held company (other than
P-Com)), partner, director, joint venturer, employee, consultant, advisor,
and/or agent, of any person, firm, corporation, or other entity, in any or all
of the following activities worldwide:
(i) Enter into or engage in any business of the Company, P-Com or
Purchaser (or any parent or subsidiary), either presently or during the term of
this Section 4.3(a);
(ii) Solicit customers, suppliers, or business patronage which
results in competition with the Company, P-Com or Purchaser (and any parent or
subsidiary); or
(iii) Encourage or solicit any employees of the Company, P-Com or
Purchaser (and any parent or subsidiary) to leave the employment of the Company,
P-Com or Purchaser (and any parent or subsidiary) for any reason; or
(iv) Promote or assist, financially or otherwise, any person,
firm, association, corporation, or other entity engaged in the business of the
Company, P-Com or Purchaser and any parent or subsidiary; or
(v) Notwithstanding the five (5) year time limitation set forth
above, ever establish or continue any business in the future using the name R T
Masts Limited, RT Masts or any name capable of confusion therewith.
(b) Without limitation, William Perkins, the Company, P-Com and
Purchaser agree and intend that the covenants contained in Section 4.3(a) shall
be deemed to be a series of separate covenants and agreements, one for each and
every country, each state and political subdivision worldwide. 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 P-Com, wholly-
unenforceable covenants shall be deemed eliminated from the 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.
(c) William Perkins, the Company, P-Com and Purchaser agree that due
to the unique nature of the services and capabilities of William Perkins, there
can be no adequate remedy at law for any breach of his obligations hereunder,
that any such breach may allow William Perkins and/or third parties to unfairly
compete with the Company, P-Com or Purchaser resulting in irreparable harm to
the Company, P-Com or Purchaser, and therefore, that upon any such breach or any
threat thereof, the Company, P-Com or Purchaser shall be entitled to appropriate
equitable relief in addition to whatever remedies it might have at law.
(d) William Perkins agrees that the covenants in Section 4.3(a) are
41
<PAGE>
reasonably necessary for the protection of the Company's, P-Com's and
Purchaser's interests under this Agreement and are not unduly restrictive upon
William Perkins.
(e) Commencing on the Time of Closing and continuing for three (3)
years thereafter Mark Perkins (in consideration of payments to the trust of
which Mark Perkins is a beneficiary) agrees that he shall not (except in his
capacity as an officer, director, and/or employee of P-Com, Purchaser or the
Company), directly or indirectly, whether on his own account or as a shareholder
(other than as a less than 3% shareholder of a publicly-held company (other than
P-Com)), partner, director, joint venturer, employee, consultant, advisor,
and/or agent, of any person, firm, corporation, or other entity, in any or all
of the following activities worldwide:
(i) Enter into or engage in any business of the Company, P-Com or
Purchaser (or any parent or subsidiary), either presently or during the term of
this Section 4.3(e);
(ii) Solicit customers, suppliers, or business patronage which
results in competition with the Company, P-Com or Purchaser (and any parent or
subsidiary); or
(iii) Encourage or solicit any employees of the Company, P-Com or
Purchaser (and any parent or subsidiary) to leave the employment of the Company,
P-Com or Purchaser (and any parent or subsidiary) for any reason; or
(iv) Promote or assist, financially or otherwise, any person,
firm, association, corporation, or other entity engaged in the business of the
Company, P-Com or Purchaser and any parent or subsidiary; or
(v) Notwithstanding the three (3) year time limitation set forth
above, ever establish or continue any business in the future using the name R T
Masts Limited, RT Masts or any name capable of confusion therewith.
(f) Without limitation, Mark Perkins, the Company, P-Com and Purchaser
agree and intend that the covenants contained in Section 4.3(e) shall be deemed
to be a series of separate covenants and agreements, one for each and every
country, each state and political subdivision worldwide. 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 P-Com, wholly-
unenforceable covenants shall be deemed eliminated from the 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.
(g) Mark Perkins, the Company, P-Com and Purchaser agree that due to
the unique nature of the services and capabilities of Mark Perkins, there can be
no adequate remedy at law for any breach of his obligations hereunder, that any
such breach may allow Mark Perkins and/or third parties to unfairly compete with
the Company, P-Com or
42
<PAGE>
Purchaser resulting in irreparable harm to the Company, P-Com or Purchaser, and
therefore, that upon any such breach or any threat thereof, the Company, P-Com
or Purchaser shall be entitled to appropriate equitable relief in addition to
whatever remedies it might have at law.
(h) Mark Perkins agrees that the covenants in Section 4.3(e) are
reasonably necessary for the protection of the Company's, P-Com's and
Purchaser's interests under this Agreement and are not unduly restrictive upon
Mark Perkins.
(i) Commencing on the Time of Closing and continuing for three (3)
years thereafter Andrew Perkins (in consideration of payments to the trust of
which Andrew Perkins is a beneficiary) agrees that he shall not (except in his
capacity as an officer, director, and/or employee of P-Com, Purchaser or the
Company), directly or indirectly, whether on his own account or as a shareholder
(other than as a less than 3% shareholder of a publicly-held company (other than
P-Com, Purchaser or the Company)), partner, director, joint venturer, employee,
consultant, advisor, and/or agent, of any person, firm, corporation, or other
entity, in any or all of the following activities worldwide:
(i) Enter into or engage in any business competing with the
business of the Company as at the date of this Agreement; or
(ii) Solicit customers, suppliers, or business patronage which
results in competition with the Company in the business of the Company as at the
date of this Agreement; or
(iii) Encourage or solicit any employees of the Company,
Purchaser and any of its subsidiaries and other affiliates to leave the
employment of the Company, for any reason; or
(iv) Promote or assist, financially or otherwise, any person,
firm, association, corporation, or other entity engaged in the business of the
Company as at the date of this Agreement; or
(v) Notwithstanding the three (3) year time limitation set forth
above, ever establish or continue any business in the future using the name R T
Masts Limited, RT Masts or any name capable of confusion therewith.
(j) Without limitation, Andrew Perkins, the Company, P-Com and
Purchaser agree and intend that the covenants contained in Section 4.3(i) shall
be deemed to be a series of separate covenants and agreements, one for each and
every country, each state and political subdivision worldwide. 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 P-Com, wholly-
unenforceable covenants shall be deemed eliminated from the 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.
43
<PAGE>
(k) Andrew Perkins, the Company, P-Com and Purchaser agree that due to
the unique nature of the services and capabilities of Andrew Perkins, there can
be no adequate remedy at law for any breach of his obligations hereunder, that
any such breach may allow Andrew Perkins and/or third parties to unfairly
compete with the Company, P-Com or Purchaser resulting in irreparable harm to
the Company, P-Com or Purchaser, and therefore, that upon any such breach or any
threat thereof, the Company, P-Com or Purchaser shall be entitled to appropriate
equitable relief in addition to whatever remedies it might have at law.
(l) Andrew Perkins agrees that the covenants in Section 4.3(i) are
reasonably necessary for the protection of the Company's, P-Com's and
Purchaser's interests under this Agreement and are not unduly restrictive upon
Andrew Perkins.
(m) Insofar as any of the restrictions contained in this Agreement are
registerable under the Restrictive Trade Practices Act 1976 (the "RTPA") such
restrictions shall to such extent not come into force until the day following
the day upon which such particulars relating thereto as are required to be filed
with the Office of Fair Trading ("OFT") pursuant to the RTPA shall have been
received by the OFT for filing. P-Com and Purchaser shall be responsible for
making such filing and the Company and the Securityholders agree to provide
reasonable cooperation and assistance in relation thereto.
Section 4.4 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, the Company shall carry on its business in the usual 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 all
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, with the intent that its goodwill and
ongoing businesses shall be unimpaired at the Time of Closing. The Company
shall promptly notify P-Com and Purchaser in writing of any event or occurrence
not in the ordinary course of business of the Company, and any event which could
have a material and adverse effect on the business condition of the Company.
References in this Section 4.4 to the Disclosure Letter shall mean the
Disclosure Letter as at the date of this Agreement. Except as expressly
contemplated by this Agreement, the Company, without the prior written consent
of P-Com and Purchaser shall not:
(a) Accelerate, amend or change the period of exercisability of
options, warrants, stock or purchase rights or authorize cash payments in
exchange therefor or perform any actions that would prohibit the pooling of
interests accounting treatment, except to the extent disclosed in the Disclosure
Letter;
(b) 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 P-Com and
44
<PAGE>
Purchaser, to purchase fixed assets with an aggregate purchase price exceeding
(Pounds)12,000;
(c) Grant any severance or termination pay to any service provider,
except to the extent disclosed in the Disclosure Letter;
(d) Transfer to any person or entity any rights to the Company's
Intellectual Property Rights, except licenses of Intellectual Property Rights in
connection with the sale of the Company's products in the ordinary course of
business consistent with past practice;
(e) Enter into or amend any agreements pursuant to which any other
party is granted marketing or other similar rights of any type or scope with
respect to any products of Company;
(f) Violate, amend or otherwise modify in any material way the terms
of any contract except that with respect to transactions of the type
contemplated in Section 3.1(aj) of this Agreement which shall not be violated,
amended or modified in any way.
(g) Except with prior consultation with P-Com and Purchaser, commence
a lawsuit other than for the routine collection of bills;
(h) Except to the extent disclosed in the Disclosure Letter declare or
pay any dividends on or make any other distributions or pay any bonus or other
form of compensation or any other consideration outside the normal course of
business (whether in cash, stock or property) in respect of any shares of the
Company or otherwise, or split, combine or reclassify any of its shares or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of the Company, or repurchase or otherwise
acquire, directly or indirectly, any shares of the Company except repurchases of
shares of the Company at cost from former service providers in accordance with
the terms of agreements providing for the repurchase of shares in connection
with any termination of service to the Company;
(i) Except to the extent disclosed in the Disclosure Letter issue,
deliver or sell or authorize or propose the issuance, delivery or sale of or
authorization of, the purchase of any shares of the Company or securities
convertible into, or subscriptions, rights, warrants or options to acquire, or
other agreements or commitments of any character obligating it to issue any such
shares or other convertible securities, other than the issuance of shares of the
Company upon the exercise of previously outstanding options and warrants to
purchase Company's capital stock;
(j) Cause or permit any amendments to Company's Memorandum or
Articles of Association;
(k) Acquire or agree to acquire by merging or consolidating with, or
45
<PAGE>
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 the Company;
(l) Sell, lease, license or otherwise dispose of any of its properties
or assets except in the ordinary course of business;
(m) Incur any indebtedness for borrowed money other than trade debts
in the normal course of business or guarantee any such indebtedness or issue or
sell any debt securities or guarantee any debt securities of others;
(n) Except to the extent disclosed in the Disclosure Letter adopt or
amend any employee benefit plans, or enter into any employment contract, pay any
bonus or remuneration to any service provider, or increase the salaries or wage
rates of its employees other than pursuant to scheduled employee reviews under
the Company'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 the Company to any of its service
providers;
(o) Revalue any of its assets, including, without limitation, writing
down the value of inventory or accounts receivable;
(p) Liquidate or discount any debt or subject any debt to a claim or
setoff;
(q) Except to the extent disclosed in the Disclosure Letter pay,
discharge or satisfy in an amount in excess of (Pounds)5,000 in any one case any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction in
the ordinary course of business consistent with past practice of liabilities
reflected or reserved against in the Financial Statements or the Management
Accounts;
(r) Make any material Tax election other than in the ordinary course
of business and consistent with past practice, change any material tax election,
adopt any material Tax accounting method other than in the ordinary course of
business and consistent with past practice, change any material Tax accounting
method, file any material Tax return (other than any estimated tax returns,
payroll tax returns or sales tax returns) or any amendment to a material Tax
return other than in the ordinary course of business, enter into any closing
agreement, settle any Tax claim or assessment or consent to any Tax claim or
assessment;
(s) 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
46
<PAGE>
good faith;
(t) Waive or commit to waive any rights of substantial value;
(u) Cancel, amend or, other than in the ordinary course upon
expiration of a policy term, renew any material insurance policy;
(v) Alter, or enter into any commitment to materially alter, its
interest in any corporation, association, joint venture, partnership or business
entity in which the Company directly or indirectly holds any interest on the
date hereof;
(w) Intentionally take or agree to take (in writing or otherwise) any
action which any of the Securityholders knew or had reason to believe would make
any of the representations and warranties materially incorrect or untrue; or
(x) Except as set forth in the Disclosure Letter, enter into any
transactions with any affiliates of the Company.
(y) Maintain the Subsidiaries as dormant companies.
Section 4.5 Access to Information. The Company will give P-Com and Purchaser
- ----------- ---------------------
and their respective accountants, legal counsel and other representatives all
reasonable access, during normal business hours, to all of the properties,
books, contracts, commitments, and records relating to the Company's business
(provided that such access shall be conducted in a manner that is not
unreasonably disruptive to the Company's business) and the Company will furnish
to P-Com and Purchaser, their respective accountants, legal counsel, and other
representatives during such period all such information concerning its business
or assets as P-Com or Purchaser may reasonably request; provided, that any
furnishing of such information pursuant hereto or any investigation by P-Com or
Purchaser shall not affect P-Com's or Purchaser's right to rely on, or remedies
in relation to any breach of the representations, warranties, agreements and
covenants made by the Company and the Securityholders in this Agreement. The
Company and the Securityholders shall provide such cooperation as P-Com and
Purchaser shall reasonably require in relation to the financial statements of
the Company for the period ending on or before December 31, 1997, including, but
not limited to, executing any and all written representations reasonably
required by Purchaser's accountants.
Section 4.6 Regulation S Compliance. The Company and each Securityholder
- ----------- -----------------------
agrees to comply with all requirements of Regulation S. For a period of 40 days
from the Time of Closing (the "Restricted Period"), neither it nor any of its
affiliates will:
(a) offer or sell any Purchase Shares;
(b) engage in any Directed Selling Efforts with respect to such
Purchase Shares;
47
<PAGE>
(c) offer or sell such Purchase Shares other than: (A) in
accordance with Rule 903 or Rule 904 of Regulation S; (B) pursuant to
registration under the Securities Act or (c) pursuant to an available exemption
therefrom;
(d) offer or sell such Purchase Shares to any U.S. Person or for
the account or benefit of any U.S. Person;
(e) enter into any short sales with respect to the Common Stock
of Purchaser, and
(f) otherwise violate Regulation S.
Section 4.7 Necessary Consents. Prior to the Closing, the Company and the
- ----------- ------------------
Securityholders will obtain such written consents and take such other actions as
may be necessary or appropriate to comply with the obligations of the Company
and the Securityholders under this Agreement, the Escrow Agreement and the
Closing Documents to allow the consummation of the transactions contemplated
thereby. The Company and the Principal Securityholders shall use all reasonable
endeavours (in conjunction with P-Com and Purchaser if appropriate) to obtain
such written consents and take such other actions as may be necessary or
appropriate to allow the Company to continue its business after Closing when the
Securities are transferred to Purchaser.
Section 4.8 Best Efforts.
- ----------- ------------
(a) The Company will perform and fulfil all obligations to be
performed and fulfilled under this Agreement by it, and all the conditions
precedent to the consummation of the transactions to be timely satisfied, to the
end that the transactions contemplated by this Agreement shall be effected
substantially in accordance with its terms. The Securityholders and the Company
will cooperate with Purchaser in such actions and in securing requisite
approvals and shall deliver such further documents as Purchaser may reasonably
request as necessary to evidence such transactions. The Securityholders
guarantee the performance by the Company of its obligations hereunder up to and
including the Time of Closing and for the avoidance of doubt this guarantee of
such obligations up to and including the Time of Closing shall not be affected
by Closing. This guarantee and Purchaser's rights under it shall not be
affected or prejudiced by Purchaser varying, releasing or omitting or neglecting
to enforce any of the terms of this Agreement or by any time being given to any
indulgence granted to the Company or any other facts or circumstances which
would or might discharge a surety or guarantee.
(b) Purchaser and P-Com will obtain such written consents and take
such other actions as may be necessary or appropriate to comply with its
obligations under this Agreement, the Escrow Agreement and the Closing Documents
to allow the consummation of the transactions contemplated thereby. Purchaser
and P-Com will perform and fulfil all obligations to be performed and fulfilled
by it under this Agreement and all the conditions precedent to the consummation
of the transactions contemplated by this Agreement
48
<PAGE>
shall be effected substantially in accordance with its terms. Purchaser and P-
Com will cooperate with the Company and the Securityholders in such actions and
in securing requisite approvals and shall deliver such further documents as the
Company or the Securityholders may reasonably request as necessary to evidence
such transactions.
Section 4.9 Exclusivity; Acquisition Proposals.
- ----------- ----------------------------------
(a) The Securityholders and the Company shall not knowingly, directly
or indirectly, through any officer, director, agent or representative of the
Company (including, without limitation, investment bankers, attorneys,
accountants and consultants), or otherwise:
(i) solicit, initiate or further the submission of proposals or
offers from, or enter into any agreement with, any firm, corporation,
partnership, association, group or other person or entity, individually or
collectively (including, without limitation, any managers or employees of the
Company or any affiliates), other than Purchaser and its professional advisors
(a "Third Party"), relating to any acquisition or purchase or license of all or
any material portion of the assets of, or any equity interest in, the Company or
any merger, consolidation or business combination with the Company;
(ii) participate in any discussions or negotiations regarding, or
furnish to any Third Party any confidential information with respect to the
Company, P-Com or Purchaser in connection with any acquisition or purchase or
license of all or any material portion of the assets of, or any equity interest
in, the Company or any merger, consolidation or business combination with the
Company; or
(iii) cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any Third Party to undertake
or seek to undertake any acquisition or purchase or license of all or any
material portion of the assets of, or any equity interest in, the Company or any
merger, consolidation or business combination with the Company.
(b) In the event that, prior to termination of this Agreement, the
Company receives any offer or indication of interest from any Third Party
relating to any acquisition or purchase or license of all or any portion of the
assets of, or any equity interest in, the Company or any merger, consolidation
or business combination with the Company, the Securityholders shall cause the
Company to promptly notify Purchaser in writing, and shall in any such notice,
set forth in reasonable detail the identity of the Third Party and the terms and
conditions of any proposal.
(c) The Securityholders shall cause the Company to immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any Third Party with respect to any of the foregoing.
49
<PAGE>
Section 4.10 Breach of Representations, Warranties, Agreements and Covenants.
- ------------ ---------------------------------------------------------------
The Company and the Securityholders shall not intentionally take, or
deliberately fail to take, any action between the date hereof and the Time of
Closing which they know would cause or constitute a material breach of any of
the Warranties. In the event of, and promptly after becoming aware of, the
actual, pending or threatened occurrence of any event which would cause or
constitute such a breach or inaccuracy, the Securityholders and the Company
shall give detailed written notice thereof to P-Com and Purchaser and shall use
all reasonable endeavours to prevent or promptly remedy such breach or
inaccuracy.
Section 4.11 Legal Conditions. P-Com and Purchaser shall take all reasonable
- ------------ ----------------
actions necessary to comply promptly with all legal requirements which may be
imposed on either of them with respect to the consummation of the transactions
set forth herein and will promptly cooperate with and furnish information to the
Company and the Securityholders in connection with any such requirements imposed
upon them in connection with the consummation of the transactions set forth
herein. P-Com and Purchaser shall take all reasonable actions to obtain (and to
cooperate with the Company and the Securityholders in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity required to be obtained or made by P-Com or Purchaser) in connection with
the consummation of the transactions set forth herein or the taking of any
action contemplated thereby or by this Agreement, and to defend such lawsuits or
other legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby as P-Com and Purchaser deem advisable in good
faith, to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby as P-Com and Purchaser deem it advisable in good faith, and
to effect all necessary registrations and filings and submissions of information
as P-Com and Purchaser deem advisable in good faith required by any Governmental
Entity, and to fulfil all conditions to this Agreement.
Section 4.12 Shareholders' Meeting. The Securityholders shall, unless they
- ------------ ---------------------
otherwise resign, cause all directors and current officers of the Company and
the Subsidiaries to resign as of the Closing.
Section 4.13 No Transfer. Each Securityholder agrees not to sell, offer for
- ------------ -----------
sale, assign, transfer or otherwise encumber any of the Securities to any third
party other than Purchaser. Each Securityholder also waives any rights of first
offer or refusal or similar rights that it has with respect to the transfer of
any Security by any Securityholder to P-Com or Purchaser.
Section 4.14 Legal Conditions of the Company and the Securityholders. The
- ------------ -------------------------------------------------------
Company and the Securityholders shall take all reasonable actions necessary to
comply promptly with all legal requirements which may be imposed on them with
respect to the consummation of the transactions set forth herein and will
promptly cooperate with and furnish information to P-Com or Purchaser in
connection with any such requirements imposed upon them in connection with the
consummation of the transactions set forth herein. The Company and the
Securityholders shall take all reasonable actions to obtain (and to cooperate
with P-Com and Purchaser in obtaining) any consent, authorization, order or
approval of, or any exemption by,
50
<PAGE>
any Governmental Entity required to be obtained or made by the Company and the
Securityholders in connection with the consummation of the transactions set
forth herein or the taking of any action contemplated thereby or by this
Agreement and to defend such lawsuits or other legal proceedings challenging
this Agreement or the consummation of the transactions contemplated hereby as
the Company and the Securityholders deem advisable in good faith, to lift or
rescind any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated hereby as
the Company and the Securityholders deem it advisable in good faith, and to
effect all necessary registrations and filings and submissions of information as
the Company and the Securityholders deem advisable in good faith required by any
Governmental Entity and to fulfil all conditions to this Agreement.
Section 4.15 Pooling Treatment. Purchaser, the Company and each Securityholder
- ------------ -----------------
agree that they will not take any action, or fail to take any action, to prevent
P-Com and Purchaser from accounting for the purchase of the Securities for
financial accounting and reporting purposes as a pooling of interests in
accordance with United States generally accepted accounting principles and the
pronouncements of the SEC. Concurrently with the execution of this Agreement,
the accountants for each of P-Com and the Company shall provide the other with a
draft opinion in writing in a form acceptable to the other that such transaction
may be accounted for as a pooling of interests transaction.
ARTICLE V CLOSING
Section 5.1 Time of Closing. The transactions contemplated by this Agreement
- ----------- ---------------
shall be completed (the "Closing") with the expectation that the Closing shall
occur on or about November 24, 1997, and no later than December 1, 1997 unless
otherwise agreed to in writing by Purchaser and the Securityholders (the "Time
of Closing"). The Closing shall take place at the London office of Brobeck,
Hale and Dorr or at such other place or date as may be agreed to in writing by
P-Com and Purchaser, William Perkins or Mark Perkins as representatives of the
Securityholders and the Company. The "Closing" shall mean the deliveries to be
made by the parties hereto at the Time of Closing in accordance with this
Agreement.
Section 5.2 Deliveries by Company and Securityholders. At the Closing, the
- ----------- -----------------------------------------
Securityholders and the Company, as applicable, shall deliver to Purchaser, all
duly and properly executed, the following:
(a) Certificates and Instruments. Certificates representing the
----------------------------
Securities accompanied by duly executed stock transfers accompanied by
irrevocable powers of attorney in the form attached hereto as Exhibit 5.2 duly
executed by each Securityholder authorizing Purchaser or its nominee to exercise
all voting or other rights attaching to the securities until registration of
Purchaser or its nominee as the holders thereof or, in the case of Securities to
be surrendered, instruments effecting such surrender.
51
<PAGE>
(b) Escrow Agreement. The Escrow Agreement in the form attached
----------------
hereto as Exhibit 2.2 duly executed by the Company and each Securityholder.
(c) Corporate Minute Books. The corporate minute books of the Company
----------------------
and its subsidiaries duly updated as of the Closing accompanied by the share
certificates of all the issued shares of the Subsidiaries.
(d) Certificate of Good Standing. Certificate of Good Standing dated
----------------------------
as of a recent date, with respect to the Company and its subsidiaries issued by
Companies House.
(e) Closing Documents. All other Closing Documents and performance of
-----------------
the transactions contemplated hereby.
(f) Books and Records. All of the existing share registers and
-----------------
statutory records of the Company and such subsidiaries including certificates of
incorporation, the company seal, register of members, share certificate book.
(g) Consents. Evidence that all consents, approvals, or
--------
authorizations of or notifications to any third parties (including governmental
agencies), if any, required to issue and exchange the Securities for the
consideration set forth herein, and to consummate the transactions contemplated
hereby, have been obtained or made, as applicable, by the Company and/or the
Securityholders.
(h) Certificate. A certificate from the Managing Director of the
-----------
Company and the Securityholders, dated the Closing Date, containing the
information required pursuant to Section 6.1(f).
(i) [Deleted]
(j) Service Agreements. Executed Service Agreements in the form
------------------
attached hereto as Exhibit 5.2(j)(ii) executed by Mr. M. Perkins and Michael
Tillcock.
(k) Deed of Tax Indemnity. A deed of tax indemnity (the "Tax Deed")
---------------------
in the form attached hereto as Exhibit 5.2(k) duly executed as a deed by each of
the Securityholders.
(l) Resignations. Resignations of the directors and officers of the
------------
Company and each Subsidiary, each such resignation to be in the form attached
hereto as Exhibit 5.2(l) and executed as a deed and the resignation of Coopers &
Lybrand as independent accountants of the Company and of each subsidiary.
(m) Pooling Opinions. An opinion from Coopers & Lybrand as to that
----------------
firm's concurrence regarding the appropriateness of pooling of interests
accounting for the purchase of the Securities under the Accounting Principles
Board Opinion No. 16.
52
<PAGE>
(n) Charges and Liens. All liens other than those arising in the
-----------------
ordinary course of business and all charges on the Company's assets shall have
been discharged and removed and all necessary filings made at Companies House in
relation thereto.
(o) Disclosure Letter. A disclosure letter updated at the Time of
-----------------
Closing in a form and substance accepted in writing by P-Com, such acceptance
not to be unreasonably withheld or delayed in respect of disclosures arising
after the date of this Agreement.
(p) Bank Loans. Statements of account for every current, deposit,
----------
loan and other account of the Company as of Closing.
(q) Minutes. Minutes of the board of directors of the Company and of
-------
each of the Subsidiaries accepting the resignations of the directors and
officers referred to in Section 5.2(l) above and appointing the nominees of
Purchaser to the board and as Company Secretary.
(r) Deed of Resignation and Appointment of Trustees. The deed of
-----------------------------------------------
resignation and appointment of the trustees of the R T Masts Pension Schemes in
the form set out in Exhibit 5.2(r).
(s) Non-Competition Agreements. Non-Competition Agreements in the
--------------------------
form attached hereto as Exhibit 8.16, duly executed by each of William Perkins,
Mark Perkins and Andrew Perkins.
(t) Service Agreements. Services Agreements in the form attached
------------------
hereto as Exhibit 5.2(j)(ii), duly executed by each of Mark Perkins and Michael
Tillcock.
(u) Other Documents. Such other documents and instruments as
---------------
Purchaser or its counsel shall reasonably deem necessary to consummate the
transactions contemplated hereby.
All documents delivered to P-Com and Purchaser under this Agreement shall
be in form and substance reasonably satisfactory to P-Com and Purchaser.
Documents in the Agreed Form or in the form attached to this Agreement are in a
form satisfactory to P-Com and Purchaser. Nothing in this Agreement shall
oblige Purchaser to buy any of the securities or otherwise complete this
Agreement unless the sale and purchase of all operable securities is reasonably
completed simultaneously.
Section 5.3 Sale of all Securities.
- ----------- ----------------------
(a) Purchaser may in its absolute discretion waive in writing any
requirement contained in Section 5.2 or Section 6.1.
(b) The Securityholders (acting unanimously) may in their
absolute discretion waive any requirement contained in Section 5.4 or Section
6.2.
53
<PAGE>
(c) Purchaser shall not be obliged to complete the purchase of
any of the Securities unless the purchase of all the Securities is completed in
accordance with this Agreement.
Section 5.4 Deliveries by Purchaser. At the Closing, Purchaser shall deliver,
- ----------- -----------------------
or cause to be delivered, to the Company and/or the Securityholders or into
escrow, as applicable, all duly and properly executed, the following:
(a) Payment. (Pounds)8,350,000 of the Purchase Shares, as calculated
-------
in accordance with Section 2.2 hereof, shall be delivered to the Securityholders
at the Time of Closing. (Pounds)900,000 of the Purchase Shares, as calculated
in accordance with Section 2.2 hereof, shall be delivered at the Time of Closing
into escrow set forth in Section 2.2(i) and evidence satisfactory to the
Securityholders' Solicitors that both such payments have been made. For the
avoidance of doubt, receipt by the Securityholders' Solicitors of faxed copies
of the share certificates in respect of the Purchase Shares and written faxed
confirmation by the issuing transfer agent that the Purchase Shares have been
issued shall be deemed to be evidence satisfactory to the Securityholders'
Solicitors.
(b) Resolutions. A copy of the resolutions of the Board of Directors
-----------
of P-Com and Purchaser, certified by their corporate secretary as having been
duly and validly adopted and being in full force and effect, authorizing
execution and delivery of this Agreement, the Escrow Agreement and the Closing
Documents and performance of the transactions contemplated hereby by P-Com and
Purchaser.
(c) Consents. Evidence that all consents, approvals or authorizations
--------
of or notifications to any third parties (including governmental agencies), if
any, required to purchase the Securities and to consummate the transactions
contemplated hereby have been obtained or made, as applicable, by P-Com and
Purchaser.
(d) The Escrow Agreement in the form attached hereto as Exhibit 2.2
duly executed by P-Com, Purchaser and by Brobeck, Phleger & Harrison.
(e) The Service Agreements and Proprietary Information and Inventions
Agreements referred to in Section 5.2(j) duly executed by P-Com, Purchaser
and/or the Company as appropriate.
(f) The Tax Deed duly executed as a Deed by Purchaser and/or P-Com in
the form attached hereto as Exhibit 5.2(k).
(g) Disclosure Letter. Any Disclosure Letter of P-Com or Purchaser
-----------------
updated at the Time of Closing in a form and substance accepted in writing by
Mark Perkins or William Perkins as representatives of the Securityholders, such
acceptance not to be unreasonably withheld or delayed in respect of disclosures
arising after the date of this Agreement.
54
<PAGE>
(h) Pooling Opinion. An opinion from Price Waterhouse as to that
---------------
firm's concurrence regarding the appropriateness of pooling of interests
accounting for the purchase of the Securities under the Accounting Principles
Board Opinion No. 16.
(i) Other Documents. Such other documents and instruments as the
---------------
Securityholders or their counsel reasonably shall deem necessary to consummate
the transactions contemplated hereby.
All documents delivered to the Securityholders shall be in form and
substance reasonably satisfactory to the Securityholders.
Section 5.5 Further Assurances. At or after the Time of Closing, each party
- ----------- ------------------
shall prepare, execute, and deliver, at the expense of the party requesting the
actions or execution, such further instruments of conveyance, sale, assignment,
or transfer, and shall take or cause to be taken such other or further action
within their immediate control, 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 the Securities or to consummate, in any other
manner, the terms and provisions of this Agreement or to comply with any
applicable United Kingdom or United States laws, statutes, local laws, licensing
requirements, rule and regulations and judicial and governmental administration
decisions.
ARTICLE VI CONDITIONS PRECEDENT TO OBLIGATIONS
Section 6.1 Conditions to Obligations of P-Com and Purchaser. Each and every
- ----------- ------------------------------------------------
obligation of 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):
(a) Certificates for Securities. Purchaser shall have received all
---------------------------
written certificates and other documents evidencing the Securities.
(b) Representations and Warranties. The Company and the
------------------------------
Securityholders shall deliver to P-Com and Purchaser an updated Disclosure
Letter dated as of the Time of Closing as set out in Section 5.2(o) in respect
of disclosures arising after the date of this Agreement. The representations and
warranties of the Company and the Securityholders set forth in Section 3.1 of
this Agreement shall be true and correct when made and shall be true and correct
at and as of the Time of Closing as if such representations and warranties were
made as of such date and time.
(c) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
the Securityholders and the Company, as the case may be, including Board of
Directors and shareholder approval, shall have been fully performed and complied
with at or prior to the Time of Closing, including the delivery of the
instruments and documents in accordance with
55
<PAGE>
Section 5.2 hereof.
(d) No Material Adverse Effect. During the period from September 30,
--------------------------
1997 to the Closing, there shall not have been any material and adverse effect
on the business condition or prospects of the Company.
(e) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the United Kingdom, U.S federal, state, or local government, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing.
(f) Certificate of Managing Director and Securityholders. The Company
----------------------------------------------------
shall have delivered to Purchaser a certificate executed by its Managing
Director and the Securityholders, dated the date of the Closing, to the effect
that the conditions set forth in subsections (a), (b), (c) and (d) of this
Section 6.1, have been satisfied.
(g) Execution of Escrow Agreement. Purchaser shall have received
-----------------------------
fully executed copies of the Escrow Agreement from each of the Securityholders.
(h) Third Party Consents. The Company shall as detailed in Section
--------------------
3.1(ae) have obtained all third party change of control or ownership consents
and approvals required under any of the Contracts.
(i) Proprietary Agreements. The Company shall have delivered such
----------------------
Proprietary Information and Inventions Agreements in the form attached hereto as
Exhibit 5.2(j)(i) as have been signed by employees and consultants of the
Company.
(j) Securityholder Agreement. The Company shall have delivered a
------------------------
Securityholder Agreement in the form attached hereto as Exhibit 6.1(j), duly
executed by each Securityholder.
(k) Documents. All documents delivered to P-Com or Purchaser under
---------
this Agreement shall be in form and substance reasonably satisfactory to P-Com
or Purchaser. Documents in the Agreed Form or in the form attached to this
Agreement are in a form satisfactory to Purchaser.
(l) Schedules. If necessary or appropriate, the Company shall have
---------
updated or amended all schedules required by this Agreement, all such updated or
amended schedules in form and substance accepted by P-Com in writing such
acceptance not to be unreasonably withheld in respect of updates or amendments
arising after the date of this Agreement.
(m) Tax Forms. Each of the Securityholders shall have provided to P-
---------
Com and Purchaser an executed Form W-8 or Form W-9 properly reporting the
transactions set forth in this Agreement.
56
<PAGE>
(n) Other Matters.
-------------
(i) Between September 30, 1997 and the Closing Date, the Company
shall not have suffered any damage, destruction or loss by reason of fire,
flood, accident, or other casualty, of such character as would interfere in a
materially adverse way with the continuous operation of the Company's business,
regardless of whether or not such loss was covered by insurance;
(ii) no strike shall be on-going on the Closing Date.
(o) Tax Deed. P-Com and Purchaser shall have received fully executed
--------
copies of the Tax Deed.
(p) Pooling of Interests Transaction. P-Com shall have received an
--------------------------------
opinion from Price Waterhouse, LLP and the Company shall have received an
opinion from Coopers & Lybrand to the Company regarding each firms' concurrence
regarding the appropriateness of pooling of interests accounting for the
purchase of the Securities under the Accounting Principles Board opinion No. 16.
(q) The Company shall have delivered a Non-Competition Agreement in
the form attached hereto as Exhibit 8.16, duly executed by each of William
Perkins, Mark Perkins and Andrew Perkins.
(r) The Company shall have delivered Service Agreements in the form
attached hereto as Exhibit 5.2(j)(ii), duly executed by each of Mark Perkins and
Michael Tillcock.
Section 6.2 Conditions to Obligations of the Company and the Securityholders.
- ----------- ----------------------------------------------------------------
Each and every obligation of the Company and the Securityholders 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 the Company or
William Perkins or Mark Perkins as representatives of the Securityholders):
(a) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by,
as the case may be, P-Com or Purchaser shall have been fully performed and
complied with at or prior to the Time of Closing, including the delivery of the
instruments and documents in accordance with Section 5.4 hereof.
(b) Execution of Escrow Agreement. The Securityholders shall have
-----------------------------
received fully executed copies of the Escrow Agreement.
(c) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the United Kingdom, US federal, state or local government, and the
consummation of the transaction
57
<PAGE>
shall not have been enjoined by a court of competent jurisdiction as of the Time
of Closing.
(d) No Material Adverse Effect. During the period from the date
--------------------------
hereof until the Closing, there shall have been no material and adverse effect
on the financial condition of P-Com and its subsidiaries taken as a whole. For
purposes of this Section 6.2(e), a "material and adverse effect" shall be
defined as the bankruptcy of P-Com, the placing of P-Com into receivership or a
similar catastrophic event relating to the value of the Purchase Shares (but not
including a change in the value of P-Com's Common Stock as quoted on the Nasdaq
NMS).
(e) The Securityholders shall have received all written certificates
and other documents evidencing (Pounds)8,350,000 of the Purchase Shares, as
calculated in accordance with Section 2.2 hereof, and Brobeck Phleger & Harrison
LLP shall have received all written certificates and other documents evidencing
(Pounds)900,000 of the Purchase Shares, as calculated in accordance with Section
2.2 hereof, and has confirmed (in writing) such receipt to the Securityholders'
Solicitors.
(f) The representations and warranties of P-Com and Purchaser set
forth in Section 3.2 of this Agreement were true and correct when made save as
disclosed in the P-Com Disclosure Letter and shall be true and correct as of the
Time of Closing as if such representations and warranties were made as of such
date and time.
(g) The Securityholders shall have received fully executed copies of
the Tax Deed.
(h) The Securityholders shall have received an opinion from Coopers &
Lybrand and P-Com shall have received an opinion of Price Waterhouse LLP to P-
Com regarding each firms' concurrence regarding the appropriateness of pooling
of interests accounting for the purchase of the securities under the Accounting
Principles Board Opinion No. 16.
ARTICLE VII INDEMNIFICATION
Section 7.1 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 Company and each Securityholder shall survive
the execution, delivery, and performance of this Agreement, except as set forth
herein. All representations and warranties of the Company and the
Securityholders set forth in this Agreement shall be deemed to have been made
again by the Company and each Securityholder at and as of the Closing. No
investigation made by or on behalf of P-Com or Purchaser or any of their
respective affiliates with respect to the Company (including the Subsidiaries)
and the Securityholders shall be deemed to affect P-Com's or Purchaser's
reliance on the representations, warranties, covenants
58
<PAGE>
and agreements of the Company and the Securityholders and shall not be a waiver
of P-Com's or Purchaser's or any of their respective affiliates' rights to
indemnification as herein provided. No investigation made by or on behalf of
the Company or the Securityholders or any of its respective affiliates with
respect to P-Com or Purchaser shall be deemed to affect the Company's or the
Securityholders' reliance on the representations, warranties, covenants and
agreements of P-Com and Purchaser and shall not be a waiver of the Company's or
the Securityholders' rights to indemnification as herein provided. All
representations and warranties of Purchaser and P-Com set forth in this
Agreement shall be deemed to have been made again by P-Com and Purchaser at and
as of Closing.
(b) As used in this Article VII, except as otherwise indicated in this
Article VII, any reference to a representation, warranty, agreement, or covenant
contained in any Section of this Agreement shall include the schedule relating
to such Section.
(c) P-Com and Purchaser may take action for any breach or non-
fulfilment of any warranties, covenants, undertakings, agreements and
representations on behalf of any other party or parties before or after Closing
notwithstanding that such breach or non-fulfilment was known to or discoverable
by P-Com and/or Purchaser before completion and notwithstanding that P-Com
and/or Purchaser should delay or otherwise fail to exercise its rights hereunder
or generally in such response.
(d) Nothing in this Agreement shall be construed as limiting in any
way the remedies that may be available to a party in the event of fraud relating
to any of the representations, warranties, agreements or covenants made by any
other party in this Agreement.
(e) Notwithstanding the expiration date of the representations,
warranties, covenants and agreements of the Company and the Securityholders set
forth herein, if Purchaser or any parent (including without limitation P-Com) or
subsidiary of Purchaser shall notify the Securityholders, the Escrow Agent or
the Escrow Committee pursuant to the Escrow Agreement with respect to the
submission of a claim during the time period of survivability of the
representations, warranties, covenants and agreements of the Company and the
Securityholders, each Securityholders' liability or obligation for Damages (as
hereinafter defined) shall continue in full force and effect until settled.
(f) Notwithstanding the expiration date of the representations,
warranties, covenants and agreements of P-Com and Purchaser set forth herein if
the Securityholders or the Company shall notify P-Com or Purchaser with respect
to the submission of a claim during the time period of survivability of the
representations, warranties, covenants and agreements of P-Com or Purchaser each
of P-Com's and Purchaser's liability shall continue in full force and effect
until settled, provided that the Securityholders and the Company notify brief
particulars of the claim to Purchaser and P-Com forthwith on becoming aware of
the same and within three months of the date of such notification the claim is
settled or proceedings are issued and served on P-Com and Purchaser in respect
of the same.
59
<PAGE>
Section 7.2 Indemnification; Escrow Deposit of Purchase Shares.
- ----------- --------------------------------------------------
(a) The Company and each of the Securityholders (regardless of the
party making the representation, warranty, covenant or agreement) shall, to the
extent of the Escrow Shares, indemnify, reimburse, defend and hold harmless each
of P-Com, Purchaser and each of its respective parent, holding and subsidiary
companies as defined in Section 736 of the Companies Act 1985 (other than the
Securityholders) against any and all losses, liabili ties, damages, demands,
claims, suits, actions, judgments, and causes of action, assessments, costs, and
expenses, including, without limitation, interest, penalties, attorneys' and
other reasonable fees, and expenses properly 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 incurred or suffered, directly or indirectly, by P-Com and/or Purchaser
and any of its respective affiliates (other than the Securityholders), directly
or indirectly, as a result of or arising from or in connection with any
inaccuracy in or breach or non-fulfilment of any of the representations,
warranties, covenants, or agreements made by any of the Securityholders or the
Company in this Agreement or the Escrow Agreement or any facts or circumstances
constituting such an inaccuracy, breach, or non-fulfilment.
(b) The Company and the Securityholders hereby agree, jointly and
severally, to indemnify and hold harmless P-Com and Purchaser and each of their
respective parent, holding and subsidiary companies (as defined in Section 736
of the Companies Act 1985) against any and all losses, liabilities, damages and
courses of action, assessments, costs and expenses, including without
limitation, interest, penalties, attorneys' fees and any and all expenses
incurred in investigating, preparing and defending against any litigation
commenced or threatened:
(i) which arises as a result of the assets of any of the Pension
Schemes being insufficient to secure fully any relevant benefits for
members of such Pension Schemes accrued in respect of service up to August
31,1997 on the basis of the Minimum Funding Requirement basis of valuation
and in relation to any shortfall between such Minimum Funding Requirement
calculation and actual liabilities under the Pension Schemes;
(ii) as a result of benefits payable under the Pension Schemes
not complying with Article 119 of the Treaty of Rome.
(c) Absent fraud (for which the liability of the Securityholders shall
not be limited hereunder) and except for the Securityholders' obligations with
respect to the representations, warranties, covenants and agreements contained
in Sections 3.1(m)(i), 3.1(m)(iii) and 4.2 of this Agreement, for which the
Securityholders shall be liable to P-Com, Purchaser or each of its respective
parent, holding and subsidiary companies in an amount not to exceed
(Pounds)2,250,000 Purchaser shall use the Escrow Shares as its sole and
exclusive recourse
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<PAGE>
for the Company's and the Securityholders' obligations, representations,
warranties and agreements (or breach thereof) pursuant to this Agreement, the
Tax Deed and the Escrow Agreement.
Absent fraud (for which the liability of P-Com and Purchaser shall not
be limited hereunder) the liability of P-Com and Purchaser for their respective
obligations, representations, warranties, covenants and agreements (or breach
thereof) pursuant to this Agreement and the Escrow Agreement shall be limited to
(Pounds)900,000 in the aggregate.
(d) The parties agree that the procedure for indemnification provided
for in this Article VII of this Agreement shall be subject to and effected in
accordance with the provisions set forth in the Escrow Agreement.
(e) The liability of the Company under the warranties and
representations set out in Section 3.1 ceases absolutely at the Time of Closing.
Section 7.3 Termination of Indemnity and Representations and Warranties.
- ----------- -----------------------------------------------------------
(a) Absent fraud or a breach of the obligations of the Securityholders
pursuant to Section 4.3 hereof (for which the liability of the Securityholders
shall not be limited in amount or duration hereunder), the indemnity obligations
of the Company and the Securityholders pursuant to this Article VII (and the
representations, warranties, covenants and other agreements of the Company and
the Securityholders set forth in this Agreement, except otherwise set forth
herein) for a breach or inaccuracy of, or a failure to perform or comply with,
any or all of the Company's and the Securityholders' respective representations,
warranties, covenants and agreements and all other rights, claims, actions and
causes of action at law in respect of such representations, warranties,
covenants and agreements and all liabilities of the Company and the
Securityholders under the Tax Deed shall terminate upon the earlier of March 31,
1998 or the publication date of the independent accountants' report in P-Com's
Annual Report on Form 10-K that includes the audited results for the Company for
the fiscal year ended December 31, 1997; provided, however that the indemnity
obligations of the Securityholders with respect to representations and
warranties contained in Sections 3.1(m)(i) and 3.1(m)(iii) and such
representations and warranties shall terminate upon the date one (1) year from
and after the Time of Closing. For purposes of the indemnifications set forth
herein, the fair market value of one share of P-Com, Inc. Common Stock shall
equal the per share price used in calculating the Purchase Price.
(b) Absent fraud (for which the liability of P-Com and Purchaser shall
not be limited in amount or duration hereunder), the obligations of P-Com and
Purchaser pursuant to the representations, warranties, covenants and other
agreements of P-Com and Purchaser set forth in this Agreement, except otherwise
set forth herein for a breach or inaccuracy of, or a failure to perform or
comply with, any or all of P-Com's and Purchaser's respective representations,
warranties, covenants and agreements and all other rights, claims, actions and
causes of action at law in respect of such representations, warranties,
covenants and agreements and all liabilities of P-Com and Purchaser shall
terminate upon the earlier of
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<PAGE>
March 31, 1998 or the publication date of the independent accountants' report in
P-Com's Annual Report on Form 10-K that includes the audited results for the
Company for the fiscal year ended December 31, 1997.
Section 7.4 Limitation on Indemnification. Notwithstanding any provision of
- ----------- -----------------------------
this Article VII, P-Com and Purchaser shall each be entitled to indemnification
under this Article VII, and all other rights, claims, actions and causes of
action in respect of the representations, warranties, covenants and agreements
herein contained and under the Tax Deed, only when the aggregate amount of all
entitlements to indemnification hereunder and under the Tax Deed exceeds 65,000
British Pounds Sterling, at which point P-Com or Purchaser shall be entitled to
the full amount pursuant to this Article VII and not just the excess over
(Pounds)65,000 including such liability cushion. P-Com and Purchaser shall not
be entitled to both claim more than once in respect of each matter giving rise
to indemnification. This Section 7.4 shall not apply to any claim made in
respect of Section 4.2.
Section 7.5 Limitations.
- ----------- -----------
(a) Provided that (i) where the total of all claims made by Purchaser,
P-Com and its affiliates pursuant to this Agreement and the Tax Deed is less
than (Pounds)900,000 and the Securityholders have previously irrevocably and
unconditionally satisfied in full such claims or (ii) where the total of all
such claims is more than (Pounds)900,000 and the Securityholders have previously
irrevocably and unconditionally satisfied to the fullest extent possible such
claims by the Escrow Shares, P-Com and Purchaser shall and shall procure that
the Company and the parent, holding company and subsidiary of P-Com, Purchaser
or Company shall (subject to the remainder of this Section 7.5(a)) reimburse to
the Securityholders all amounts (not exceeding the aggregate sum paid by the
Securityholders) paid by the Securityholders in respect of any claim which is
subsequently recovered by Purchaser, P-Com or the Company and the parent,
holding company and subsidiary of P-Com, Purchaser or Company (as the case may
be) from any insurance company or other third party directly referable to the
subject matter of such claim. Such reimbursement shall be paid by Purchaser, P-
Com or the Company (as the case may be) promptly after the receipt of such
amount from the relevant insurance company or third party. Purchaser, P-Com or
the Company (as the case may be) shall deduct from any amounts received (x) its
costs and expenses incurred in recovering such sum from the third party or
insurance company (including any taxation payable by reason of the receipt
thereof) and (y) (where the foregoing (ii) above applies) the amount of any
unsatisfied claims;
(b) Subject to Purchaser, P-Com and the Company being secured and
indemnified to their respective satisfaction against all costs and expenses
which they may incur, Purchaser hereby undertakes to use and to procure that the
Company uses its reasonable endeavours to enforce any rights to recover such
sums from insurers or other third parties and will keep the Securityholders
fully informed of its actions and take such action as they reasonably request;
(c) No Claims under the Agreement shall be made against the
Securityholders:
(i) to the extent that the breach giving rise to a possible claim
occurs or is
62
<PAGE>
increased by reason of any voluntary act or transaction which occurs after
Closing carried out or effected by Purchaser or the Company where the act or
transaction is not in the ordinary course of its business and is not carried out
by or under the direction of any Securityholder or as a consequence of any act
or omission on or before Closing of any of the Securityholders or the Company or
any shareholder or officer thereof or any associate or connected person of all
or any of the foregoing; and Purchaser was aware (otherwise than through the
knowledge of any Securityholder or any present director officer or employee of
the Company) or ought reasonably to have been so aware through disclosures
fairly and expressly made in the Disclosure letter that such act or transaction
would give rise to the claim concerned;
(ii) by reason of any matter which would not have arisen but for the
coming into force of any legislation not in force at the date of this Agreement
which takes effect retrospectively to the period before Closing or;
(iii) by reason of the withdrawal of any extra statutory concession
made by the Inland Revenue (or any other fiscal authority) and presently in
operation;
(iv) to the extent specific allowance, provision or reserve has been
or is made in the Financial Statements or the Agreed Execution Accounts or the
Agreed Completion Accounts in respect of the matter to which such liability
relates;
(v) to the extent that the breach giving rise to a possible claim
arises as a result of any change in the basis of accounting after the date of
this Agreement except where effected in order to conform to GAAP not previously
adopted by the Company or any change in the accounting reference date of the
Company after the date of this Agreement;
(d) Purchaser shall be entitled to claim both under the Agreement and the
Tax Deed by reference to the same subject matter but the Securityholders shall
not be liable in respect of any breach of any warranty, undertaking or agreement
given in this Agreement if and to the extent that the loss occasioned thereby
has been recovered under the Tax Deed and vice versa;
(e) Notwithstanding anything expressed or implied in this Agreement or the
Escrow Agreement or the Closing Documents to the contrary, any payment by the
Securityholders pursuant to a claim shall be treated for all purposes by the
parties as a reduction in the consideration payable for the Securities and the
purchase consideration shall be modified accordingly;
(f) The provisions of Clause 3 of the Tax Deed shall apply mutatis mutandis
to any claims under the Tax Warranties set out in paragraphs (k) to (x)
inclusive of Article III and shall be deemed to be set out herein in full.
(g) Nothing in this Section 7.5 shall limit the liability of any
Securityholder thereunder to the extent that such Securityholder has been
fraudulent or wilfully deceptive or has deliberately failed to disclose to
Purchaser information known to him or her.
63
<PAGE>
ARTICLE VIII MISCELLANEOUS PROVISIONS
Section 8.1 Notice. All notices and other communications required or permitted
- ----------- ------
under this Agreement shall be delivered to the parties at the address set forth
below their respective signature blocks, or at such other address that they
designate by notice to all other parties in accordance with this Section 8.1:
If to the Company
or Securityholders: W R Perkins
c/o Coopers & Lybrand
Corporate Finance Department
Central Business Exchange
Midsumer Boulevard
Central Milton Keynes
MK9 2DF
United Kingdom
Telecopy No.: 44-1908-353100
with a copy to: Howes Percival
252 Upper Third Street
Grafton Gate East
Central Milton Keynes
MK9 1DZ
United Kingdom
Attn.: Brandon W. Ransley
Telecopy No.: 44-1908 692447
If to P-Com: P-Com, Inc.
3175 S. Winchester Boulevard
Campbell, California 95008
Attn: Michael Sophie
Telecopy No.: (408) 866-3678
If to Purchaser: P-Com Services (UK) Limited
8300 Boone Boulevard
Suite 800
Vienna, VA 22182
Attn: William Welch
Telecopy No.: (703) 917-4398
64
<PAGE>
with a copy to: Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, CA 94303
Attn: Warren T. Lazarow, 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
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 8.2 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 supersede all prior and contemporaneous agreements and understandings, oral
or written, relative to said subject matter other than any misrepresentation or
breach of warranty which constitutes fraud.
Section 8.3 Binding Effect; Assignment. This Agreement and the various rights
- ----------- --------------------------
and obligations arising hereunder shall inure to the benefit of and be binding
upon the Securityholders, their successors and permitted assigns, the Company,
its successors and permitted assigns, P-Com, its successors and permitted
assigns 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) (i) by any of
Purchaser, P-Com or the Company without the prior written consent of W R Perkins
or M Perkins acting as representative of all the stockholders, (ii) by any
Securityholder without the prior written consent of P-Com and Purchaser.
Section 8.4 Expenses of Transaction. P-Com and Purchaser shall bear their own
- ----------- -----------------------
respective costs and expenses in connection with this Agreement and the
transactions contemplated hereby for their own account. The Securityholders
shall bear their own costs and expenses in connection with this Agreement and
the transactions contemplated hereby. The Company shall not (unless stated
otherwise in this Agreement, the Escrow Agreement or the Closing Documents) be
liable for any costs or expenses in connection with this Agreement and the
transactions contemplated.
Section 8.5 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
65
<PAGE>
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 8.6 Third-Party Beneficiaries. Except as otherwise expressly provided
- ----------- -------------------------
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 other than rights of beneficiaries
under the trusts referred to in the list of parties to this Agreement.
Section 8.7 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 8.8 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.
Section 8.9 Governing Law.
- ----------- -------------
(a) Save as provided in paragraph (b) of this Section 8.9, this
Agreement and the Escrow Agreement shall in all respects be construed in
accordance with and governed by the laws of England and Wales.
(b) The issue, listing and dealing in the Purchase Shares and the
representations, warranties, covenants and agreements related thereto shall be
governed by the laws of the State of California, United States and the Federal
laws of the United States.
(c) Except as set forth in this Agreement and the Escrow Agreement,
the parties hereto submit to the non-exclusive jurisdiction of the High Court in
London, England for the purpose of hearing and determining any dispute arising
out of this Agreement and the Escrow Agreement and for the purpose of
enforcement of any judgment against their respective assets.
(d) Except as set forth in this Agreement and the Escrow Agreement,
none of the parties will object to any disputed matter arising from this
Agreement and the Escrow Agreement being dealt with, heard or transferred to the
High Court of London.
(e) The parties hereby agree that service of any Writ, notice or other
66
<PAGE>
document for the purpose of any proceedings in such Court shall be duly served
upon it if delivered or sent by registered post in the case of the
Securityholders to the Securityholders Solicitors marked for the attention of
Ref: BWR and in the case of Purchaser Brobeck, Hale and Dorr, Hasilwood House,
60 Bishopsgate, London EC2N 4AJ marked for the attention of Ref: JHB/DMG.
(f) In the case of the issue, listing and dealing in the Purchase
Shares and the representations, warranties, covenants and agreements relating
thereto, the parties hereto submit to the non-exclusive jurisdiction of the
courts in the County of Santa Clara or the Federal Courts in California, U.S.A.
None of the parties will object to such disputed matters being dealt with, heard
or transferred to such courts.
Section 8.10 No Reliance. The Company and the Securityholders understand and
- ------------ -----------
agree that they are relying solely on their own investigations of P-Com and
Purchaser to enter into this Agreement and are not relying on any oral or
written representation or warranty (including, without limitation, any forecasts
or projections) other than those representations and warranties of P-Com and
Purchaser specifically set forth in writing herein. Moreover, the Company and
the Securityholders understand and agree that the market price of P-Com's Common
Stock has fluctuated significantly in the past and will fluctuate significantly
in the future and such fluctuations are often unrelated to the operating
performance of P-Com. The Company and the Securityholders have read and
understand (or have had the opportunity to read) the risk factors set forth in
P-Com's report on Form 10Q for the quarter ended June 30, 1997 and the
registration statement on Form S-3 declared effective on July 31, 1997 provided
or made available to the Company and the Securityholders and have received
advice thereon from Coopers & Lybrand. The Company and the Securityholders
agree that the analyst reports about P-Com provided to them have not been
written, adopted or endorsed by P-Com or its management and represent
independent views of independent parties.
Section 8.11 Other Remedies. Any and all remedies set forth in this Agreement
- ------------ --------------
and in the Closing Documents and related agreements conferred upon a party will
be deemed cumulative with and not exclusive of any other remedy conferred hereby
or by law or equity on such party; and the exercise of any one remedy will not
preclude the exercise of any other.
Section 8.12 Mutual Drafting. This Agreement is the joint product of
- ------------- ---------------
Purchaser, the Company and the Securityholders, and each provision hereof has
been subject to the mutual consultation, negotiation and agreement of Purchaser,
the Company and the Securityholders, and their respective counsel, and shall not
be construed for or against any party hereto.
Section 8.13 Attorneys Fees. If any action at law or in equity is necessary to
- ------------ --------------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
67
<PAGE>
Section 8.14 Appointment and Indemnity of Escrow Committee.
- ------------ ---------------------------------------------
(a) By approval of this Agreement, the Securityholders shall appoint
William Perkins and George Roberts as committee members pursuant to the Escrow
Agreement. Such committee (the "Escrow Committee") shall have all of the
authority granted pursuant to the Escrow Agreement.
(b) The members of the Escrow Committee and the escrow agent shall not
be liable to anyone whatsoever by reason of any error or judgment or of any act
done or step taken or omitted by it in good faith or for any mistake of fact or
law as is provided in the Escrow Agreement.
Section 8.15 Guarantee.
- ------------ ---------
(a) In consideration of the Company and the Securityholders agreeing
to enter into this Agreement P-Com as primary obligor hereby guarantees to each
of the Company and the Securityholders the due performance by Purchaser of all
Purchaser's obligations under this Agreement, the Escrow Agreement and the
Closing Documents.
(b) The liability of P-Com under its guarantee under Clause 8.15(a)
shall not be discharged or impaired by any amendment to or variation of this
Agreement, the Escrow Agreement or the Closing Documents by any release of or
granting of time or other indulgence to Purchaser or any third party or any
other act, event or omission which but for this Section would operate to impair
or discharge the liability of P-Com under its guarantee.
Section 8.16 Non-Competition Agreements. The Securityholders understand and
- ------------ --------------------------
agree that the Non-Competition Agreements for William Perkins, Mark Perkins and
Andrew Perkins, duly executed copies of which are attached hereto as Exhibits
8.16(a), 8.16(b) and 8.16(c) respectively, form part of the consideration for P-
Com and Purchaser to enter into this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
68
<PAGE>
Executed (but not delivered until )
the date hereof) as a deed )
by P-COM, INC. )
a Delaware Corporation )
acting by: )
................................
Director
................................
Director/Officer
Executed (but not delivered until )
the date hereof) as a deed )
by P-COM SERVICES (UK) LIMITED )
acting by: )
................................
Director
................................
Director/Secretary
69
<PAGE>
Executed (but not delivered until )
the date hereof) as a deed )
by R.T. MASTS LIMITED )
acting by: )
................................
Director
................................
Director/Secretary
Executed (but not delivered until )
the date hereof) as a deed )
by ANDREW WILLIAM PERKINS )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by MARY PERKINS in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
70
<PAGE>
Executed (but not delivered until )
the date hereof) as a deed )
by MARK ROBERT PERKINS )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by JACQUELINE PERKINS )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by PETER LEWIS CLAYSON )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
71
<PAGE>
Executed (but not delivered until )
the date hereof) as a deed )
by IRENE CLAYSON in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by WILLIAM ROBERT PERKINS, )
MARY PERKINS, MARK ROBERT )
PERKINS AND ANDREW WILLIAM )
PERKINS AS TRUSTEES OF THE ANDREW )
PERKINS TRUST in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by WILLIAM ROBERT PERKINS, )
MARY PERKINS, MARK ROBERT )
PERKINS AND ANDREW WILLIAM )
PERKINS AS TRUSTEES OF THE MARK )
PERKINS TRUST in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
72
<PAGE>
Executed (but not delivered until )
the date hereof) as a deed )
by MARK ROBERT PERKINS AND )
ANDREW WILLIAM PERKINS )
AS TRUSTEES OF THE PERKINS 1997 )
TRUST in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by IRENE CLAYSON AND PETER LEWIS )
CLAYSON AS TRUSTEES OF THE CLAYSON )
1997 INTEREST IN POSSESSION TRUST )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
73
<PAGE>
Executed (but not delivered until )
the date hereof) as a deed )
by MARK ROBERT PERKINS AND )
JACQUELINE PERKINS AS TRUSTEES OF )
THE RYAN PERKINS TRUST )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by MARK ROBERT PERKINS AND )
JACQUELINE PERKINS AS TRUSTEES OF )
THE AIMEE PERKINS TRUST )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
Executed (but not delivered until )
the date hereof) as a deed )
by MARK ROBERT PERKINS AND )
JACQUELINE PERKINS AS TRUSTEES OF )
THE KATHRYN PERKINS TRUST )
in the presence of:- )
Witness:-
Signature
Name
Address
Occupation
74
<PAGE>
EXHIBIT 99.1
[LETTERHEAD OF P-COM]
P-COM, INC. COMPLETES THE ACQUISITIONS OF TELEMATICS, INC.
AND RT MASTS LIMITED IN STOCK-FOR-STOCK MERGERS
- --------------------------------------------------------------------------------
CAMPBELL, CA, USA Dec. 8, 1997--P-Com, Inc. (NASDAQ National Market:
PCMS), announced it has completed the acquisitions of Telematics, Inc., a
Virginia-based company, ("Telematics") and RT Masts Limited, a United Kingdom-
based company, ("RTM"). Telematics, which was acquired through the issuance of
P-Com common stock valued at approximately $5.0 million, provides services to
operators of wireless communications systems in the United States. RTM, which
was acquired through the issuance of P-Com common stock valued at approximately
$15.0 million, provides services to operators of wireless communications systems
in Europe. These acquisitions will be accounted for under the pooling of
interest method of accounting and closed on November 27, 1997.
Telematics, located in Herndon, Virginia, and RTM, located in
Wellingborough, Northhamptonshire, U.K., supply, install and maintain
telecommunications systems and structures including antennas covering high
frequency, medium frequency and microwave systems. They manage the construction
of radio system sites, as well as construction of towers and install radios and
antennas at system sites. With these acquisitions, P-Com's services subsidiary,
P-Com Services, now comprises over 200 employees out in the field serving
customers and reinforcing P-Com's commitment to quality and customer
satisfaction.
--more--
<PAGE>
P-COM, INC. COMPLETES THE ACQUISITIONS OF TELEMATICS, INC. AND RT MASTS LIMITED
IN STOCK-FOR-STOCK MERGERS
- --------------------------------------------------------------------------------
"The completion of these acquisitions marks a significant step toward
our goal of broadening P-Com's abilities to meet our customers' requirements and
helps to further establish P-Com as a provider of worldwide network solutions,"
stated George Roberts, P-Com Chairman and CEO.
P-Com, Inc. develops, manufactures and markets network access systems
for the worldwide wireless telecommunications market. The point-to-point, spread
spectrum, and point-to-multipoint 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. Such factors may include, but are not limited to,
reliance upon subcontractors, fluctuations in customer demand and commitments,
both in timing and volume, the Company's ability to have available an
appropriate amount of production capacity in a timely manner, the ability of the
Company's customers to finance their purchases of the Company's products and/or
services, the timing of new technology and product introductions and the risk of
early obsolescence. Further, the Company operates in an industry sector where
securities 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.
P-Com, Inc., with world headquarters in Campbell, California, USA and
offices in Florida, New Jersey, Virginia, the UK, Italy, France, Germany, Mexico
and Singapore, is an ISO 9001 certified company. For additional information,
contact P-Com at:
P-Com, Inc. - 3175 S. Winchester Boulevard - Campbell, CA 95008 - USA
TEL: 408/866-3666 FAX: 408/ 866-3655
###
