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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) June 4, 1999
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P-COM, INC.
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(Exact name of registrant as specified in charter)
Delaware 0-25356 77-0289371
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3175 S. Winchester Boulevard, Campbell, California 95008
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 866-3666
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None
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
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Exchange of Series B Preferred Stock for Common Stock
As described more fully in the documents attached as exhibits hereto,
on June 4, 1999, we exchanged:
. 5,134,795 shares of our common stock for all 15,000 shares of our
outstanding Series B Preferred Stock, and
. new warrants to purchase 1,242,257 shares of our common stock for
outstanding warrants to purchase 1,242,257 shares of our common
stock.
Cost Reductions
We will continue our efforts to reduce our operating expenses.
Item 7. Financial Statements and Exhibits.
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10.48A Agreement between P-Com, Inc. and Marshall Capital Management,
Inc., dated as of June 4, 1999.
10.48B Agreement between P-Com, Inc. and Castle Creek Technology
Partners LLC, dated as of June 4, 1999.
10.48C Agreement between P-Com, Inc. and Capital Ventures
International, dated as of June 4, 1999.
10.49A Warrant to purchase shares of Common Stock, dated as of June
4, 1999, issued by P-Com, Inc. to Marshall Capital
Management, Inc.
10.49B Warrant to purchase shares of Common Stock, dated as of June
4, 1999, issued by P-Com, Inc. to Castle Creek Technology
Partners LLC.
10.49C Warrant to purchase shares of Common Stock, dated as of June
4, 1999, issued by P-Com, Inc. to Capital Ventures
International.
99.3 Press Release of P-Com, Inc., dated June 4, 1999.
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SIGNATURE
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 thereunto duly authorized.
P-COM, INC.
DATE: June 4, 1999 By: /s/ Robert E. Collins
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Name: Robert E. Collins
Title: Chief Financial Officer
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EXHIBIT INDEX
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Exhibit No. Description
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10.48A Agreement between P-Com, Inc. and Marshall Capital Management,
Inc., dated as of June 4, 1999.
10.48B Agreement between P-Com, Inc. and Castle Creek Technology
Partners LLC, dated as of June 4, 1999.
10.48C Agreement between P-Com, Inc. and Capital Ventures
International, dated as of June 4, 1999.
10.49A Warrant to purchase shares of Common Stock, dated as of June
4, 1999, issued by P-Com, Inc. to Marshall Capital
Management, Inc.
10.49B Warrant to purchase shares of Common Stock, dated as of June
4, 1999, issued by P-Com, Inc. to Castle Creek Technology
Partners LLC.
10.49C Warrant to purchase shares of Common Stock, dated as of June
4, 1999, issued by P-Com, Inc. to Capital Ventures
International.
99.3 Press Release of P-Com, Inc., dated June 4, 1999.
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Exhibit 10.48A
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT is entered into as of June 4, 1999 (the
"Agreement") by and between MARSHALL CAPITAL MANAGEMENT, INC. ("Marshall") and
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P-COM, INC., a Delaware corporation (the "Company").
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RECITALS
WHEREAS, Marshall, the Company and certain other parties are parties
to a certain Securities Purchase Agreement dated as of December 21, 1998 (the
"Purchase Agreement") whereby the Company issued to Marshall 4,500 shares of the
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Company's Series B Convertible Participating Preferred Stock (the "Preferred
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Stock") and stock purchase warrants dated December 22, 1998 (the "Warrants") to
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purchase 372,677 shares of the Company's common stock, $0.0001 par value per
share (the "Common Stock").
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WHEREAS, pursuant to the terms of the Certificate of Designations,
Preferences and Rights of the Preferred Stock (the "Certificate"), the Preferred
Stock (a) is convertible by Marshall at the Conversion Price (as defined in the
Certificate) into shares of Common Stock and (b) accrues a premium (the
"Premium") equal to 6% of the face amount of the Preferred Stock per year
payable in shares of Common Stock or cash.
WHEREAS, pursuant to a certain Registration Rights Agreements dated as
of December 21, 1998 (the "Registration Rights Agreement") by and among the
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Company, Marshall and certain other parties, the Company agreed to register the
resale by Marshall of shares of the Common Stock issuable upon conversion of the
Preferred Stock and upon exercise of the Warrants.
WHEREAS, pursuant to the Registration Rights Agreement if a
registration statement covering the resale by Marshall (the "Registration
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Statement") was not declared effective by April 21, 1999, the Company agreed to
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pay to Marshall a late registration penalty in an amount calculated pursuant to
Section 2.3 of the Registration Rights Agreement (the "Late Registration
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Penalty").
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WHEREAS, the Company desires that Marshall exchange all its
outstanding shares of Preferred Stock for Common Stock, exchange the Warrants
for new warrants, waive all rights to receive the Premium through the date of
conversion, waive certain rights to receive the Late Registration Penalty and
waive certain covenants set forth in certain of the foregoing agreements, all as
more fully described herein.
WHEREAS, Marshall is willing to agree to the foregoing, all as more
fully described herein.
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AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements of the parties contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Definitions: Capitalized terms used herein and not otherwise defined herein
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shall have the meanings ascribed to such terms in the Stock Purchase Agreement
or the Certificate, as applicable.
2. Exchange of Securities. Marshall agrees that on the date hereof it shall
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exchange all its outstanding Preferred Stock for shares of Common Stock and the
Company agrees that on the date hereof it shall:
a. issue to Marshall 1,540,438 shares of Common Stock in exchange for such
Preferred Stock (the "Exchange Shares"); and
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b. issue to Marshall in exchange for the Warrants, new warrants to purchase
shares of Common Stock in the form attached hereto as Exhibit A (the "Exchange
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Warrants").
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The Company agrees that Marshall shall have the same rights and the
Company shall have the same obligations as though the Exchange Shares, Exchange
Warrants and the Registrable Securities were Securities under the Purchase
Agreement.
3. Registration Rights. The Company agrees to amend the Registration
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Statement previously filed on January 21, 1999 with the Securities and Exchange
Commission (the "SEC") to register the resale by Marshall of the Exchange Shares
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and the shares of Common Stock issuable upon exercise of the Exchange Warrants
(collectively, the "Registrable Securities"). Such amendment shall be filed
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within 5 business days of the date hereof and shall be declared effective no
later than 45 days following the date hereof. The Company agrees that it shall
be subject to the same obligations, covenants and agreements contained in the
Registration Rights Agreement as if it were incorporated herein by reference and
applicable to the Registrable Securities (including without limitation,
penalties for delays in registration pursuant to Section 2.3 of the Registration
Rights Agreement).
4. Waiver: Marshall agrees to waive its rights and remedies, and to release the
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Company from all actions, claims, damages, and obligations, and all other
liabilities of whatever nature existing as of the date hereof relating to or
arising from (1) the Late Registration Penalty accrued as of the date hereof,
(2) the Company's failure to solicit by proxy the Stockholder Approval (as
defined in the Certificate) in accordance with the Certificate, and the Purchase
Agreement, (3) the Company's failure to pay the Premium to Marshall on its
shares of Preferred Stock, (4) the failure of the Company to comply with Section
4.3 of the Purchase Agreement and Section 2.5 of the Registration Rights
Agreement with respect to the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, (5) any requirement under Section 2.3 of the
Registration Rights Agreement to make certain payments in Preferred Stock, and
(6) any obligation of the Company to make payments to Marshall in respect of any
Override Election Event occurring prior to the date hereof. Upon the
effectiveness of the amended registration statement in accordance with Section 3
above (including meeting the time deadlines) Marshall
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shall waive all rights and remedies, and release the Company from all actions,
claims, damages, and obligations, and all other liabilities of whatever nature
existing as of the date of effectiveness relating to or arising from the Late
Registration Penalty accrued through the date of effectiveness; provided such
registration statement is available for use as of such date.
5. Put Right.
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a. Beginning on the tenth business day after the date of this Agreement,
except to the extent that and only to the extent prohibited by Section 160 of
the Delaware General Corporation Law or by the Credit Agreement, as amended, by
and among the Company, Union Bank of California, N.A. and Bank of America
National Trust and Savings Association (the "Credit Agreement") in amounts in
----------------
excess of $1,500,000 (in which case, to the extent that such limitations and
prohibitions prevent redemptions under this Section 5, the Company shall use its
best efforts to take all reasonably necessary actions not prohibited by this
Agreement or the Credit Agreement to remove such limitations or prohibition),
upon the occurrence of an Event of Default (as defined below), Marshall shall
have the right to elect at any time and from time to time by delivery of a
notice to the Company (the "Redemption Notice") to require the Company to
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purchase for cash for an amount per share of Common Stock equal to the
Redemption Amount (as defined herein), any or all of the then outstanding
Exchange Shares held by Marshall. To the extent that the Company is unable to
honor any redemption otherwise required by this Section 5.a due to limitations
or prohibitions imposed by the Credit Agreement or Section 160 of the Delaware
General Corporation Law, the Company will, notwithstanding anything contained in
this Section 5.a, be in breach of this Agreement and Marshall will be entitled
to pursue any and all remedies available to it by virtue of such breach.
b. The Redemption Amount per share of Common Stock shall equal the greater
of (I) $4.00 and the (II) the highest closing bid price of the Common Stock
during the period beginning on the date of the Redemption Notice and ending on
the date of redemption, as reported on the principal securities exchange or
trading market on which the Common Stock is traded.
c. The Company shall pay to Marshall the Redemption Amount in cash, with
respect to each share of Common Stock which is subject to the Redemption Notice
within five (5) business days of the Company's receipt of such Redemption
Notice.
d. An Event of Default means any one of the following:
(i) once the Registration Statement as amended pursuant to Section 3
above is declared effective, the Company fails to remove any restrictive
legend on any certificate for Registrable Securities; or
(ii) the Registration Statement as amended pursuant to Section 3 above
is not declared effective within 70 days of the date hereof or after being
declared effective, cannot be utilized by Marshall for the re-sale of all
Registrable Securities for a period of ten (10) consecutive business days or
for an aggregate of more than twenty (20) days in any twelve month period
(not including any Permitted Blackouts (as defined in the Registration
Rights Agreement)).
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6. 8-K: The Company agrees to file on or before the next business day following
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the date hereof a Form 8-K pursuant to the Securities Exchange Act of 1934, as
amended, describing this Agreement and to include as an exhibit therein a copy
of this Agreement.
7. Right of First Refusal. Marshall hereby waives the financing restrictions
----------------------
contained in Section 4.5 of the Purchase Agreement (1) with respect to the
matters described in Section 8 hereof, and (2) with respect to all other
issuances of securities to third parties prior to December 21, 1999 of this
Agreement so long as (a) the Company offers Marshall a right to participate up
to $3,000,000 on the same terms and conditions as are offered to the persons
purchasing the Restricted Securities (as defined in the Purchase Agreement) and
(b) the Company does not file a registration statement with respect to the sale
or resale of the Restricted Securities, or securities issuable upon exercise or
conversion of the Restricted Securities, until the date which is twenty (20)
days following the date the Registration Statement as amended pursuant to
Section 3 above is declared effective (provided such registration statement is
available for use for such twenty (20) days) and the Company may not enter into
any agreement that would obligate it to file such a registration statement prior
to such date.
8. Agreement With Other Holders. The Company shall not offer or pay
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consideration or other inducement to any other holder of the Preferred Stock,
Warrants or other warrants issued in exchange for warrants issued to holders of
Series B Convertible Participating Preferred Stock of the Company (the "Other
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Warrants") (I) to amend or consent to a waiver or modification of any provisions
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of the Purchase Agreement, the Registration Rights Agreement, the Certificate,
the Warrants or the Other Warrants, (II) to convert or exchange any Preferred
Stock or exercise any Warrants or Other Warrants on terms other than as are
contained in the Certificate, Warrants or Other Warrants, as applicable
(including but not limited to, a reduction in the Conversion Price or such other
mechanism as results in a like result, whether directly or indirectly including
an exchange of securities), or (III) to change the economic substance of the
Transaction Documents (as defined in the Purchase Agreement) applicable to any
other holder, unless the same consideration or inducement is also offered to
Marshall or is equivalent (on a per share of Preferred Stock basis) to the
consideration and inducements paid to Marshall under this Agreement.
9. Legend Removal: The Company agrees that upon the effectiveness of the
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Registration Statement as amended pursuant to Section 3 above, the Company shall
at the request of Marshall remove or cause to be removed all restrictive legends
including the Legend (as defined in the Purchase Agreement) from the Registrable
Securities.
10. Representations of the Company. The Company hereby represents and warrants
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to Marshall as follows as of the date hereof:
a. Authorization and Enforcement: (i) The Company has the requisite power
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and authority to enter into and perform its obligations under this Agreement and
the Exchange Warrant; (ii) the execution, delivery and performance of this
Agreement and the Exchange Warrant by the Company and the consummation by it of
the transactions contemplated hereby and thereby have been duly authorized by
the Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors or its stockholders is required;
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and (iii) this Agreement and the Exchange Warrant constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms.
b. No Conflicts. The execution, delivery and performance of this Agreement
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and the Exchange Warrant by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby will not (i) result in a
violation of the Certificate of Incorporation (including without limitation the
Certificate) or the bylaws of the Company; (ii) cause Marshall to be deemed an
"Acquiring Person" under the Amended and Restated Rights Agreement between the
Company and BankBoston, N.A.; or (iii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights under (other than rights to anti-dilution
adjustments resulting in not more than 200,000 additional shares of Common Stock
being issued in the aggregate upon conversion or exercise of the relevant
securities), or result in termination, amendment, acceleration or cancellation
of, any agreement, indenture or instrument to which the Company or any of its
subsidiaries is a party (including without limitation, the Purchase Agreement
and the Registration Rights Agreement), or result in a violation of any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which any property or assets of the Company or any of its
subsidiaries is bound or affected.
c. Availability of Form S-3 for Resale of Registrable Securities. The
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Company will remain eligible to register the Registrable Securities for resale
pursuant to the Securities Act of 1933, as amended, on Form S-3 until all of the
Registrable Securities are sold by Marshall.
d. Issuance of Shares. The shares issuable upon exercise of the Exchange
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Warrants (the "Warrant Shares") are duly authorized and reserved for issuance,
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and, upon exercise of the Warrant Shares in accordance with the Exchange
Warrants will be validly issued, fully paid and non-assessable, and free from
all taxes, liens, claims and encumbrances (except as created by Marshall) and
will not be subject to preemptive rights (except as granted by Marshall) or to
the Company's knowledge after reasonable investigation other similar rights of
stockholders of the Company (other than as granted by Marshall). The Exchange
Shares are duly authorized and reserved for issuance, and are validly issued,
fully paid and non-assessable, and free from all taxes, liens, claims and
encumbrances (except as created by Marshall) and are not and will not be subject
to preemptive rights (except as granted by the Marshall) or to the Company's
knowledge after reasonable investigation other similar rights of stockholders of
the Company (other than as granted by Marshall). The Board of Directors of the
Company (the "Board") has unanimously approved the issuance of Exchange Shares
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and the Warrant Shares upon the exercise of the Exchange Warrants pursuant to
the terms thereof.
e. SEC Documents. Other than with respect to the allegedly untimely filing
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of the Company's Annual Report on Form 10-K for the year ended December 31,
1998, as of their respective dates, the SEC Documents (as defined in the
Purchase Agreement) complied in all material respects with the requirements of
the Exchange Act (as defined in the Purchase Agreement) and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained 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 light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC
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Documents is currently required to be updated or amended under applicable law.
Since December 31, 1998, there has been no material adverse change and no
material adverse development in the business, properties, operations, financial
condition or results of operations or publicly-announced prospects of the
Company, except as clearly disclosed as such in the SEC Documents filed with the
SEC since December 31, 1998.
f. Disclosure. No information (written or oral) relating to or concerning
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the Company and set forth in this Agreement or provided to Marshall in
connection with the transactions contemplated hereby contains an untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading. No material adverse
fact (within the meaning of the federal securities laws of the United States)
exists with respect to the Company or any of its subsidiaries which has not been
publicly disclosed. The Company has not provided Marshall with any material non-
public information.
g. Exemption. The transactions contemplated hereby are exempt from the
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registration requirements of the Securities Act.
11. Representations of Marshall. Marshall hereby represents and warrants to the
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Company as of the date hereof that this Agreement has been duly and validly
authorized, executed and delivered by Marshall and is a valid and binding
agreement of Marshall enforceable in accordance with its terms.
12. Legal Fees and Indemnification. The Company agrees to reimburse Marshall
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for all legal fees and expenses incurred in connection with negotiating and
executing this Agreement and reviewing the Registration Statement in an
aggregate amount not to exceed $50,000. The Company agrees to indemnify and
hold harmless Marshall and each of its officers, directors, employees, partners,
agents and affiliates for actual loss or damage to the extent arising as a
result of (a) any breach by the Company of any of its representations or
covenants set forth herein or (b) any cause of action, suit or claim brought or
made against such indemnitee, other than by the Company solely for breach of
this Agreement by the indemnitee or by governmental or regulatory authorities,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto or contemplated hereby, except to the extent that such
actual loss or damage directly results from a breach by such indemnitee of this
Agreement or from a violation of law. The right to indemnification shall
include the right to advancement of expenses as they are incurred.
13. Successors and Assigns. Except as otherwise expressly provided herein, all
----------------------
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
Notwithstanding the foregoing, the Company may not assign its rights or
obligations under this Agreement to any other party without Marshall's prior
written consent which may be withheld by Marshall for any or no reason.
14. Severability. Whenever possible, each provision of this Agreement shall be
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interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this
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Agreement is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
15. Counterparts. This Agreement may be executed simultaneously in two or more
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counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement. This Agreement may be executed by facsimile signature and shall
be binding when so executed.
16. Descriptive Headings, Interpretation. The descriptive headings of this
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Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation.
17. Governing Law. All issues and questions concerning the construction,
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validity, enforcement and interpretation of this Agreement and the exhibits
hereto shall be governed by, and construed in accordance with the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
18. Notices. All notices, demands or other communications to be given or
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delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each party at the address indicated in the
Purchase Agreement.
19. No Strict Construction. The parties hereto have participated jointly in
----------------------
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
P-COM, INC.
By:____________________________
Its:___________________________
MARSHALL CAPITAL MANAGEMENT, INC.
By:____________________________
Its:___________________________
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Exhibit 10.48B
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT is entered into as of June 4, 1999 (the
"Agreement") by and between CASTLE CREEK TECHNOLOGY PARTNERS LLC, a Delaware
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limited liability company ("Castle Creek"), and P-COM, INC., a Delaware
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corporation (the "Company").
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RECITALS
WHEREAS, Castle Creek, the Company and certain other parties are
parties to a certain Securities Purchase Agreement dated as of December 21, 1998
(the "Purchase Agreement") whereby the Company issued to Castle Creek 5,500
------------------
shares of the Company's Series B Convertible Participating Preferred Stock (the
"Preferred Stock") and stock purchase warrants dated December 22, 1998 (the
---------------
"Warrants") to purchase 455,494 shares of the Company's common stock, $0.0001
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par value per share (the "Common Stock").
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WHEREAS, pursuant to the terms of the Certificate of Designations,
Preferences and Rights of the Preferred Stock (the "Certificate"), the Preferred
Stock (a) is convertible by Castle Creek at the Conversion Price (as defined in
the Certificate) into shares of Common Stock and (b) accrues a premium (the
"Premium") equal to 6% of the face amount of the Preferred Stock per year
payable in shares of Common Stock or cash.
WHEREAS, pursuant to a certain Registration Rights Agreements dated as
of December 21, 1998 (the "Registration Rights Agreement") by and among the
-----------------------------
Company, Castle Creek and certain other parties, the Company agreed to register
the resale by Castle Creek of shares of the Common Stock issuable upon
conversion of the Preferred Stock and upon exercise of the Warrants.
WHEREAS, pursuant to the Registration Rights Agreement if a
registration statement covering the resale by Castle Creek (the "Registration
------------
Statement") was not declared effective by April 21, 1999, the Company agreed to
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pay to Castle Creek a late registration penalty in an amount calculated pursuant
to Section 2.3 of the Registration Rights Agreement (the "Late Registration
-----------------
Penalty").
- -------
WHEREAS, the Company desires that Castle Creek exchange all its
outstanding shares of Preferred Stock for Common Stock, exchange the Warrants
for new warrants, waive all rights to receive the Premium through the date of
conversion, waive certain rights to receive the Late Registration Penalty and
waive certain covenants set forth in certain of the foregoing agreements, all as
more fully described herein.
WHEREAS, Castle Creek is willing to agree to the foregoing, all as
more fully described herein.
<PAGE>
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements of the parties contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Definitions: Capitalized terms used herein and not otherwise defined herein
-----------
shall have the meanings ascribed to such terms in the Stock Purchase Agreement
or the Certificate, as applicable.
2. Exchange of Securities. Castle Creek agrees that on the date hereof it
----------------------
shall exchange all its outstanding Preferred Stock for shares of Common Stock
and the Company agrees that on the date hereof it shall:
a. issue to Castle Creek 1,882,758 shares of Common Stock in exchange for
such Preferred Stock (the "Exchange Shares"); and
---------------
b. issue to Castle Creek in exchange for the Warrants, new warrants to
purchase shares of Common Stock in the form attached hereto as Exhibit A (the
---------
"Exchange Warrants").
-----------------
The Company agrees that Castle Creek shall have the same rights and
the Company shall have the same obligations as though the Exchange Shares,
Exchange Warrants and the Registrable Securities were Securities under the
Purchase Agreement.
3. Registration Rights. The Company agrees to amend the Registration Statement
-------------------
previously filed on January 21, 1999 with the Securities and Exchange Commission
(the "SEC") to register the resale by Castle Creek of the Exchange Shares and
---
the shares of Common Stock issuable upon exercise of the Exchange Warrants
(collectively, the "Registrable Securities"). Such amendment shall be filed
----------------------
within 5 business days of the date hereof and shall be declared effective no
later than 45 days following the date hereof. The Company agrees that it shall
be subject to the same obligations, covenants and agreements contained in the
Registration Rights Agreement as if it were incorporated herein by reference and
applicable to the Registrable Securities (including without limitation,
penalties for delays in registration pursuant to Section 2.3 of the Registration
Rights Agreement).
4. Waiver: Castle Creek agrees to waive its rights and remedies, and to release
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the Company from all actions, claims, damages, and obligations, and all other
liabilities of whatever nature existing as of the date hereof relating to or
arising from (1) the Late Registration Penalty accrued as of the date hereof,
(2) the Company's failure to solicit by proxy the Stockholder Approval (as
defined in the Certificate) in accordance with the Certificate, and the Purchase
Agreement, (3) the Company's failure to pay the Premium to Castle Creek on its
shares of Preferred Stock, (4) the failure of the Company to comply with Section
4.3 of the Purchase Agreement and Section 2.5 of the Registration Rights
Agreement with respect to the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, (5) any requirement under Section 2.3 of the
Registration Rights Agreement to make certain payments in Preferred Stock, and
(6) any obligation of the Company to make payments to Castle Creek in respect of
any Override Election Event occurring prior to the date hereof. Upon the
effectiveness of the amended registration statement in accordance with Section 3
above (including meeting the time deadlines) Castle
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Creek shall waive all rights and remedies, and release the Company from all
actions, claims, damages, and obligations, and all other liabilities of
whatever nature existing as of the date of effectiveness relating to or
arising from the Late Registration Penalty accrued through the date of
effectiveness; provided such registration statement is available for use as of
such date.
5. Put Right.
---------
a. Beginning on the tenth business day after the date of this Agreement,
except to the extent that and only to the extent prohibited by Section 160 of
the Delaware General Corporation Law or by the Credit Agreement, as amended,
by and among the Company, Union Bank of California, N.A. and Bank of America
National Trust and Savings Association (the "Credit Agreement") in amounts in
----------------
excess of $1,833,333 (in which case, to the extent that such limitations and
prohibitions prevent redemptions under this Section 5, the Company shall use
its best efforts to take all reasonably necessary actions not prohibited by
this Agreement or the Credit Agreement to remove such limitations or
prohibition), upon the occurrence of an Event of Default (as defined below),
Castle Creek shall have the right to elect at any time and from time to time
by delivery of a notice to the Company (the "Redemption Notice") to require
-----------------
the Company to purchase for cash for an amount per share of Common Stock equal
to the Redemption Amount (as defined herein), any or all of the then
outstanding Exchange Shares held by Castle Creek. To the extent that the
Company is unable to honor any redemption otherwise required by this Section
5.a due to limitations or prohibitions imposed by the Credit Agreement or
Section 160 of the Delaware General Corporation Law, the Company will,
notwithstanding anything contained in this Section 5.a, be in breach of this
Agreement and Castle Creek will be entitled to pursue any and all remedies
available to it by virtue of such breach.
b. The Redemption Amount per share of Common Stock shall equal the greater
of (I) $4.00 and the (II) the highest closing bid price of the Common Stock
during the period beginning on the date of the Redemption Notice and ending on
the date of redemption, as reported on the principal securities exchange or
trading market on which the Common Stock is traded.
c. The Company shall pay to Castle Creek the Redemption Amount in cash,
with respect to each share of Common Stock which is subject to the Redemption
Notice within five (5) business days of the Company's receipt of such
Redemption Notice.
d. An Event of Default means any one of the following:
(i) once the Registration Statement as amended pursuant to Section 3
above is declared effective, the Company fails to remove any restrictive
legend on any certificate for Registrable Securities; or
(ii) the Registration Statement as amended pursuant to Section 3 above
is not declared effective within 70 days of the date hereof or after being
declared effective, cannot be utilized by Castle Creek for the re-sale of
all Registrable Securities for a period of ten (10) consecutive business
days or for an aggregate of more than twenty (20) days in any twelve month
period (not including any Permitted Blackouts (as defined in the
Registration Rights Agreement)).
3
<PAGE>
6. 8-K: The Company agrees to file on or before the next business day following
---
the date hereof a Form 8-K pursuant to the Securities Exchange Act of 1934, as
amended, describing this Agreement and to include as an exhibit therein a copy
of this Agreement.
7. Right of First Refusal. Castle Creek hereby waives the financing
----------------------
restrictions contained in Section 4.5 of the Purchase Agreement (1) with respect
to the matters described in Section 8 hereof, and (2) with respect to all other
issuances of securities to third parties prior to December 21, 1999 of this
Agreement so long as (a) the Company offers Castle Creek a right to participate
up to $3,000,000 on the same terms and conditions as are offered to the persons
purchasing the Restricted Securities (as defined in the Purchase Agreement) and
(b) the Company does not file a registration statement with respect to the sale
or resale of the Restricted Securities, or securities issuable upon exercise or
conversion of the Restricted Securities, until the date which is twenty (20)
days following the date the Registration Statement as amended pursuant to
Section 3 above is declared effective (provided such registration statement is
available for use for such twenty (20) days) and the Company may not enter into
any agreement that would obligate it to file such a registration statement prior
to such date.
8. Agreement With Other Holders. The Company shall not offer or pay
----------------------------
consideration or other inducement to any other holder of the Preferred Stock,
Warrants or other warrants issued in exchange for warrants issued to holders of
Series B Convertible Participating Preferred Stock of the Company (the "Other
-----
Warrants") (I) to amend or consent to a waiver or modification of any provisions
- --------
of the Purchase Agreement, the Registration Rights Agreement, the Certificate,
the Warrants or the Other Warrants, (II) to convert or exchange any Preferred
Stock or exercise any Warrants or Other Warrants on terms other than as are
contained in the Certificate, Warrants or Other Warrants, as applicable
(including but not limited to, a reduction in the Conversion Price or such other
mechanism as results in a like result, whether directly or indirectly including
an exchange of securities), or (III) to change the economic substance of the
Transaction Documents (as defined in the Purchase Agreement) applicable to any
other holder, unless the same consideration or inducement is also offered to
Castle Creek or is equivalent (on a per share of Preferred Stock basis) to the
consideration and inducements paid to Castle Creek under this Agreement.
9. Legend Removal: The Company agrees that upon the effectiveness of the
--------------
Registration Statement as amended pursuant to Section 3 above, the Company shall
at the request of Castle Creek remove or cause to be removed all restrictive
legends including the Legend (as defined in the Purchase Agreement) from the
Registrable Securities.
10. Representations of the Company. The Company hereby represents and warrants
------------------------------
to Castle Creek as follows as of the date hereof:
a. Authorization and Enforcement: (i) The Company has the requisite power
-----------------------------
and authority to enter into and perform its obligations under this Agreement
and the Exchange Warrant; (ii) the execution, delivery and performance of this
Agreement and the Exchange Warrant by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized
by the Company's Board of Directors and no further consent or authorization of
the Company, its Board of Directors or its stockholders is required;
4
<PAGE>
and (iii) this Agreement and the Exchange Warrant constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms.
b. No Conflicts. The execution, delivery and performance of this
------------
Agreement and the Exchange Warrant by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby will not (i)
result in a violation of the Certificate of Incorporation (including without
limitation the Certificate) or the bylaws of the Company; (ii) cause Castle
Creek to be deemed an "Acquiring Person" under the Amended and Restated Rights
Agreement between the Company and BankBoston, N.A.; or (iii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights under (other than
rights to anti-dilution adjustments resulting in not more than 200,000
additional shares of Common Stock being issued in the aggregate upon
conversion or exercise of the relevant securities), or result in termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party
(including without limitation, the Purchase Agreement and the Registration
Rights Agreement), or result in a violation of any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which any property or assets of the Company or any of its subsidiaries
is bound or affected.
c. Availability of Form S-3 for Resale of Registrable Securities. The
-------------------------------------------------------------
Company will remain eligible to register the Registrable Securities for resale
pursuant to the Securities Act of 1933, as amended, on Form S-3 until all of
the Registrable Securities are sold by Castle Creek.
d. Issuance of Shares. The shares issuable upon exercise of the Exchange
------------------
Warrants (the "Warrant Shares") are duly authorized and reserved for issuance,
--------------
and, upon exercise of the Warrant Shares in accordance with the Exchange
Warrants will be validly issued, fully paid and non-assessable, and free from
all taxes, liens, claims and encumbrances (except as created by Castle Creek)
and will not be subject to preemptive rights (except as granted by Castle Creek)
or to the Company's knowledge after reasonable investigation other similar
rights of stockholders of the Company (other than as granted by Castle Creek).
The Exchange Shares are duly authorized and reserved for issuance, and are
validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances (except as created by Castle Creek) and are not and will
not be subject to preemptive rights (except as granted by the Castle Creek) or
to the Company's knowledge after reasonable investigation other similar rights
of stockholders of the Company (other than as granted by Castle Creek). The
Board of Directors of the Company (the "Board") has unanimously approved the
-----
issuance of Exchange Shares and the Warrant Shares upon the exercise of the
Exchange Warrants pursuant to the terms thereof.
e. SEC Documents. Other than with respect to the allegedly untimely
-------------
filing of the Company's Annual Report on Form 10-K for the year ended December
31, 1998, as of their respective dates, the SEC Documents (as defined in the
Purchase Agreement) complied in all material respects with the requirements of
the Exchange Act (as defined in the Purchase Agreement) and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained 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 light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC
5
<PAGE>
Documents is currently required to be updated or amended under applicable law.
Since December 31, 1998, there has been no material adverse change and no
material adverse development in the business, properties, operations,
financial condition or results of operations or publicly-announced prospects
of the Company, except as clearly disclosed as such in the SEC Documents filed
with the SEC since December 31, 1998.
f. Disclosure. No information (written or oral) relating to or concerning
----------
the Company and set forth in this Agreement or provided to Castle Creek in
connection with the transactions contemplated hereby contains an untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading. No material adverse
fact (within the meaning of the federal securities laws of the United States)
exists with respect to the Company or any of its subsidiaries which has not been
publicly disclosed. The Company has not provided Castle Creek with any material
non-public information.
g. Exemption. The transactions contemplated hereby are exempt from the
---------
registration requirements of the Securities Act.
11. Representations of Castle Creek. Castle Creek hereby represents and
-------------------------------
warrants to the Company as of the date hereof that this Agreement has been duly
and validly authorized, executed and delivered by Castle Creek and is a valid
and binding agreement of Castle Creek enforceable in accordance with its terms.
12. Legal Fees and Indemnification. The Company agrees to reimburse Castle
------------------------------
Creek for all legal fees and expenses incurred in connection with negotiating
and executing this Agreement and reviewing the Registration Statement in an
aggregate amount not to exceed $50,000. The Company agrees to indemnify and
hold harmless Castle Creek and each of its officers, directors, employees,
partners, agents and affiliates for actual loss or damage to the extent arising
as a result of (a) any breach by the Company of any of its representations or
covenants set forth herein or (b) any cause of action, suit or claim brought or
made against such indemnitee, other than by the Company solely for breach of
this Agreement by the indemnitee or by governmental or regulatory authorities,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto or contemplated hereby, except to the extent that such
actual loss or damage directly results from a breach by such indemnitee of this
Agreement or from a violation of law. The right to indemnification shall
include the right to advancement of expenses as they are incurred.
13. Successors and Assigns. Except as otherwise expressly provided herein, all
----------------------
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
Notwithstanding the foregoing, the Company may not assign its rights or
obligations under this Agreement to any other party without Castle Creek's prior
written consent which may be withheld by Castle Creek for any or no reason.
14. Severability. Whenever possible, each provision of this Agreement shall be
------------
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this
6
<PAGE>
Agreement is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
15. Counterparts. This Agreement may be executed simultaneously in two or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement. This Agreement may be executed by facsimile signature and shall
be binding when so executed.
16. Descriptive Headings, Interpretation. The descriptive headings of this
------------------------------------
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation.
17. Governing Law. All issues and questions concerning the construction,
-------------
validity, enforcement and interpretation of this Agreement and the exhibits
hereto shall be governed by, and construed in accordance with the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
18. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each party at the address indicated in the
Purchase Agreement.
19. No Strict Construction. The parties hereto have participated jointly in
----------------------
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
P-COM, INC.
By:
----------------------------------
Its:
---------------------------------
CASTLE CREEK TECHNOLOGY PARTNERS LLC
By: Castle Creek Partners, LLC
Its: Investment Manager
By:
----------------------------------
Its:
---------------------------------
8
<PAGE>
Exhibit 10.48C
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT is entered into as of June 4, 1999 (the
"Agreement") by and between CAPITAL VENTURES INTERNATIONAL, a Cayman Islands
---------
company ("CVI"), and P-COM, INC., a Delaware corporation (the "Company").
--- -------
RECITALS
WHEREAS, CVI, the Company and certain other parties are parties to a
certain Securities Purchase Agreement dated as of December 21, 1998 (the
"Purchase Agreement") whereby the Company issued to CVI 5,000 shares of the
------------------
Company's Series B Convertible Participating Preferred Stock (the "Preferred
---------
Stock") and stock purchase warrants dated December 22, 1998 (the "Warrants") to
- ----- --------
purchase 414,086 shares of the Company's common stock, $0.0001 par value per
share (the "Common Stock").
------------
WHEREAS, pursuant to the terms of the Certificate of Designations,
Preferences and Rights of the Preferred Stock (the "Certificate"), the Preferred
Stock (a) is convertible by CVI at the Conversion Price (as defined in the
Certificate) into shares of Common Stock and (b) accrues a premium (the
"Premium") equal to 6% of the face amount of the Preferred Stock per year
payable in shares of Common Stock or cash.
WHEREAS, pursuant to a certain Registration Rights Agreements dated as
of December 21, 1998 (the "Registration Rights Agreement") by and among the
-----------------------------
Company, CVI and certain other parties, the Company agreed to register the
resale by CVI of shares of the Common Stock issuable upon conversion of the
Preferred Stock and upon exercise of the Warrants.
WHEREAS, pursuant to the Registration Rights Agreement if a
registration statement covering the resale by CVI (the "Registration Statement")
----------------------
was not declared effective by April 21, 1999, the Company agreed to pay to CVI a
late registration penalty in an amount calculated pursuant to Section 2.3 of the
Registration Rights Agreement (the "Late Registration Penalty").
-------------------------
WHEREAS, the Company desires that CVI exchange all its outstanding
shares of Preferred Stock for Common Stock, exchange the Warrants for new
warrants, waive all rights to receive the Premium through the date of
conversion, waive certain rights to receive the Late Registration Penalty and
waive certain covenants set forth in certain of the foregoing agreements, all as
more fully described herein.
WHEREAS, CVI is willing to agree to the foregoing, all as more fully
described herein.
<PAGE>
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements of the parties contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Definitions: Capitalized terms used herein and not otherwise defined herein
- -- -----------
shall have the meanings ascribed to such terms in the Stock Purchase Agreement
or the Certificate, as applicable.
2. Exchange of Securities. CVI agrees that on the date hereof it shall
- -- ----------------------
exchange all its outstanding Preferred Stock for shares of Common Stock and the
Company agrees that on the date hereof it shall:
a. issue to CVI 1,711,598 shares of Common Stock in exchange for such
Preferred Stock (the "Exchange Shares"); and
---------------
b. issue to CVI in exchange for the Warrants, new warrants to purchase
shares of Common Stock in the form attached hereto as Exhibit A (the "Exchange
--------- --------
Warrants").
- --------
The Company agrees that CVI shall have the same rights and the Company
shall have the same obligations as though the Exchange Shares, Exchange Warrants
and the Registrable Securities were Securities under the Purchase Agreement.
3. Registration Rights. The Company agrees to amend the Registration Statement
- -- -------------------
previously filed on January 21, 1999 with the Securities and Exchange Commission
(the "SEC") to register the resale by CVI of the Exchange Shares and the shares
---
of Common Stock issuable upon exercise of the Exchange Warrants (collectively,
the "Registrable Securities"). Such amendment shall be filed within 5 business
----------------------
days of the date hereof and shall be declared effective no later than 45 days
following the date hereof. The Company agrees that it shall be subject to the
same obligations, covenants and agreements contained in the Registration Rights
Agreement as if it were incorporated herein by reference and applicable to the
Registrable Securities (including without limitation, penalties for delays in
registration pursuant to Section 2.3 of the Registration Rights Agreement).
4. Waiver: CVI agrees to waive its rights and remedies, and to release the
- -- ------
Company from all actions, claims, damages, and obligations, and all other
liabilities of whatever nature existing as of the date hereof relating to or
arising from (1) the Late Registration Penalty accrued as of the date hereof,
(2) the Company's failure to solicit by proxy the Stockholder Approval (as
defined in the Certificate) in accordance with the Certificate, and the Purchase
Agreement, (3) the Company's failure to pay the Premium to CVI on its shares of
Preferred Stock, (4) the failure of the Company to comply with Section 4.3 of
the Purchase Agreement and Section 2.5 of the Registration Rights Agreement with
respect to the Company's Annual Report on Form 10-K for the year ended December
31, 1998, (5) any requirement under Section 2.3 of the Registration Rights
Agreement to make certain payments in Preferred Stock, and (6) any obligation of
the Company to make payments to CVI in respect of any Override Election Event
occurring prior to the date hereof. Upon the effectiveness of the amended
registration statement in accordance with Section 3 above (including meeting the
time deadlines) CVI shall waive all rights and remedies,
2
<PAGE>
and release the Company from all actions, claims, damages, and obligations,
and all other liabilities of whatever nature existing as of the date of
effectiveness relating to or arising from the Late Registration Penalty
accrued through the date of effectiveness; provided such registration
statement is available for use as of such date.
5. Put Right.
- -- ---------
a. Beginning on the tenth business day after the date of this Agreement,
except to the extent that and only to the extent prohibited by Section 160 of
the Delaware General Corporation Law or by the Credit Agreement, as amended,
by and among the Company, Union Bank of California, N.A. and Bank of America
National Trust and Savings Association (the "Credit Agreement") in amounts in
----------------
excess of $1,666,667 (in which case, to the extent that such limitations and
prohibitions prevent redemptions under this Section 5, the Company shall use
its best efforts to take all reasonably necessary actions not prohibited by
this Agreement or the Credit Agreement to remove such limitations or
prohibition), upon the occurrence of an Event of Default (as defined below),
CVI shall have the right to elect at any time and from time to time by
delivery of a notice to the Company (the "Redemption Notice") to require the
-----------------
Company to purchase for cash for an amount per share of Common Stock equal to
the Redemption Amount (as defined herein), any or all of the then outstanding
Exchange Shares held by CVI. To the extent that the Company is unable to honor
any redemption otherwise required by this Section 5.a due to limitations or
prohibitions imposed by the Credit Agreement or Section 160 of the Delaware
General Corporation Law, the Company will, notwithstanding anything contained
in this Section 5.a, be in breach of this Agreement and CVI will be entitled
to pursue any and all remedies available to it by virtue of such breach.
b. The Redemption Amount per share of Common Stock shall equal the greater
of (I) $4.00 and the (II) the highest closing bid price of the Common Stock
during the period beginning on the date of the Redemption Notice and ending on
the date of redemption, as reported on the principal securities exchange or
trading market on which the Common Stock is traded.
c. The Company shall pay to CVI the Redemption Amount in cash, with
respect to each share of Common Stock which is subject to the Redemption
Notice within five (5) business days of the Company's receipt of such
Redemption Notice.
d. An Event of Default means any one of the following:
(i) once the Registration Statement as amended pursuant to Section 3
above is declared effective, the Company fails to remove any restrictive
legend on any certificate for Registrable Securities; or
(ii) the Registration Statement as amended pursuant to Section 3 above
is not declared effective within 70 days of the date hereof or after
being declared effective, cannot be utilized by CVI for the re-sale of
all Registrable Securities for a period of ten (10) consecutive business
days or for an aggregate of more than twenty (20) days in any twelve
month period (not including any Permitted Blackouts (as defined in the
Registration Rights Agreement)).
3
<PAGE>
6. 8-K: The Company agrees to file on or before the next business day following
---
the date hereof a Form 8-K pursuant to the Securities Exchange Act of 1934, as
amended, describing this Agreement and to include as an exhibit therein a copy
of this Agreement.
7. Right of First Refusal. CVI hereby waives the financing restrictions
----------------------
contained in Section 4.5 of the Purchase Agreement (1) with respect to the
matters described in Section 8 hereof, and (2) with respect to all other
issuances of securities to third parties prior to December 21, 1999 of this
Agreement so long as (a) the Company offers CVI a right to participate up to
$3,000,000 on the same terms and conditions as are offered to the persons
purchasing the Restricted Securities (as defined in the Purchase Agreement) and
(b) the Company does not file a registration statement with respect to the sale
or resale of the Restricted Securities, or securities issuable upon exercise or
conversion of the Restricted Securities, until the date which is twenty (20)
days following the date the Registration Statement as amended pursuant to
Section 3 above is declared effective (provided such registration statement is
available for use for such twenty (20) days) and the Company may not enter into
any agreement that would obligate it to file such a registration statement prior
to such date.
8. Agreement With Other Holders. The Company shall not offer or pay
----------------------------
consideration or other inducement to any other holder of the Preferred Stock,
Warrants or other warrants issued in exchange for warrants issued to holders of
Series B Convertible Participating Preferred Stock of the Company (the "Other
-----
Warrants") (I) to amend or consent to a waiver or modification of any provisions
- --------
of the Purchase Agreement, the Registration Rights Agreement, the Certificate,
the Warrants or the Other Warrants, (II) to convert or exchange any Preferred
Stock or exercise any Warrants or Other Warrants on terms other than as are
contained in the Certificate, Warrants or Other Warrants, as applicable
(including but not limited to, a reduction in the Conversion Price or such other
mechanism as results in a like result, whether directly or indirectly including
an exchange of securities), or (III) to change the economic substance of the
Transaction Documents (as defined in the Purchase Agreement) applicable to any
other holder, unless the same consideration or inducement is also offered to CVI
or is equivalent (on a per share of Preferred Stock basis) to the consideration
and inducements paid to CVI under this Agreement.
9. Legend Removal: The Company agrees that upon the effectiveness of the
--------------
Registration Statement as amended pursuant to Section 3 above, the Company shall
at the request of CVI remove or cause to be removed all restrictive legends
including the Legend (as defined in the Purchase Agreement) from the Registrable
Securities.
10. Representations of the Company. The Company hereby represents and warrants
------------------------------
to CVI as follows as of the date hereof:
a. Authorization and Enforcement: (i) The Company has the requisite power
-----------------------------
and authority to enter into and perform its obligations under this Agreement
and the Exchange Warrant; (ii) the execution, delivery and performance of this
Agreement and the Exchange Warrant by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized
by the Company's Board of Directors and no further consent or authorization of
the Company, its Board of Directors or its stockholders is required; and (iii)
this Agreement and the Exchange Warrant constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms.
4
<PAGE>
b. No Conflicts. The execution, delivery and performance of this
------------
Agreement and the Exchange Warrant by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby will not (i)
result in a violation of the Certificate of Incorporation (including without
limitation the Certificate) or the bylaws of the Company; (ii) cause CVI to be
deemed an "Acquiring Person" under the Amended and Restated Rights Agreement
between the Company and BankBoston, N.A.; or (iii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights under (other than
rights to anti-dilution adjustments resulting in not more than 200,000
additional shares of Common Stock being issued in the aggregate upon
conversion or exercise of the relevant securities), or result in termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party
(including without limitation, the Purchase Agreement and the Registration
Rights Agreement), or result in a violation of any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which any property or assets of the Company or any of its subsidiaries
is bound or affected.
c. Availability of Form S-3 for Resale of Registrable Securities. The
-------------------------------------------------------------
Company will remain eligible to register the Registrable Securities for resale
pursuant to the Securities Act of 1933, as amended, on Form S-3 until all of
the Registrable Securities are sold by CVI.
d. Issuance of Shares. The shares issuable upon exercise of the Exchange
------------------
Warrants (the "Warrant Shares") are duly authorized and reserved for issuance,
--------------
and, upon exercise of the Warrant Shares in accordance with the Exchange
Warrants will be validly issued, fully paid and non-assessable, and free from
all taxes, liens, claims and encumbrances (except as created by CVI) and will
not be subject to preemptive rights (except as granted by CVI) or to the
Company's knowledge after reasonable investigation other similar rights of
stockholders of the Company (other than as granted by CVI). The Exchange Shares
are duly authorized and reserved for issuance, and are validly issued, fully
paid and non-assessable, and free from all taxes, liens, claims and encumbrances
(except as created by CVI) and are not and will not be subject to preemptive
rights (except as granted by the CVI) or to the Company's knowledge after
reasonable investigation other similar rights of stockholders of the Company
(other than as granted by CVI). The Board of Directors of the Company (the
"Board") has unanimously approved the issuance of Exchange Shares and the
-----
Warrant Shares upon the exercise of the Exchange Warrants pursuant to the terms
thereof.
e. SEC Documents. Other than with respect to the allegedly untimely
-------------
filing of the Company's Annual Report on Form 10-K for the year ended December
31, 1998, as of their respective dates, the SEC Documents (as defined in the
Purchase Agreement) complied in all material respects with the requirements of
the Exchange Act (as defined in the Purchase Agreement) and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained 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 light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC Documents is
currently required to be updated or amended under applicable law. Since
December 31, 1998, there has been no material adverse change and no material
adverse development in the business, properties, operations, financial
condition or results of operations
5
<PAGE>
or publicly-announced prospects of the Company, except as clearly disclosed as
such in the SEC Documents filed with the SEC since December 31, 1998.
f. Disclosure. No information (written or oral) relating to or concerning
----------
the Company and set forth in this Agreement or provided to CVI in connection
with the transactions contemplated hereby contains an untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading. No material adverse fact (within the meaning
of the federal securities laws of the United States) exists with respect to
the Company or any of its subsidiaries which has not been publicly disclosed.
The Company has not provided CVI with any material non-public information.
g. Exemption. The transactions contemplated hereby are exempt from the
---------
registration requirements of the Securities Act.
11. Representations of CVI. CVI hereby represents and warrants to the Company
----------------------
as of the date hereof that this Agreement has been duly and validly authorized,
executed and delivered by CVI and is a valid and binding agreement of CVI
enforceable in accordance with its terms.
12. Legal Fees and Indemnification. The Company agrees to reimburse CVI for
------------------------------
all legal fees and expenses incurred in connection with negotiating and
executing this Agreement and reviewing the Registration Statement in an
aggregate amount not to exceed $50,000. The Company agrees to indemnify and
hold harmless CVI and each of its officers, directors, employees, partners,
agents and affiliates for actual loss or damage to the extent arising as a
result of (a) any breach by the Company of any of its representations or
covenants set forth herein or (b) any cause of action, suit or claim brought or
made against such indemnitee, other than by the Company solely for breach of
this Agreement by the indemnitee or by governmental or regulatory authorities,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto or contemplated hereby, except to the extent that such
actual loss or damage directly results from a breach by such indemnitee of this
Agreement or from a violation of law. The right to indemnification shall
include the right to advancement of expenses as they are incurred.
13. Successors and Assigns. Except as otherwise expressly provided herein, all
----------------------
covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
Notwithstanding the foregoing, the Company may not assign its rights or
obligations under this Agreement to any other party without CVI's prior written
consent which may be withheld by CVI for any or no reason.
14. Severability. Whenever possible, each provision of this Agreement shall be
------------
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
6
<PAGE>
15. Counterparts. This Agreement may be executed simultaneously in two or more
------------
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement. This Agreement may be executed by facsimile signature and shall
be binding when so executed.
16. Descriptive Headings, Interpretation. The descriptive headings of this
------------------------------------
Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation.
17. Governing Law. All issues and questions concerning the construction,
-------------
validity, enforcement and interpretation of this Agreement and the exhibits
hereto shall be governed by, and construed in accordance with the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
18. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each party at the address indicated in the
Purchase Agreement.
19. No Strict Construction. The parties hereto have participated jointly in
----------------------
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
P-COM, INC.
By:_________________________________________
Its:________________________________________
CAPITAL VENTURES INTERNATIONAL
By: Heights Capital Management, Inc.
Its: Authorized Agent
By:_________________________________________
Its:________________________________________
8
<PAGE>
Exhibit 10.49A
VOID AFTER 5:00 P.M. Eastern Standard
TIME ON December 22, 2003
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
Right to Purchase Shares of
Common Stock, par value $0.0001 per share
Date: June 4, 1999
P-COM, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, MARSHALL CAPITAL MANAGEMENT, INC.
or its registered assigns, is entitled to purchase from P-Com, Inc., a Delaware
corporation (the "Company"), at any time or from time to time during the period
-------
specified in Section 2 hereof, 372,677 fully paid and nonassessable shares of
the Company's common stock, par value $0.0001 per share (the "Common Stock"),
------------
which number of shares was calculated as follows:
<TABLE>
<S> <C> <C> <C>
Dollar Amount of Holder's the average Closing Bid Price (as
Investment Pursuant to the (divided by) defined herein) over the fifteen (15)
Securities Purchase Agreement trading day period immediately x .25
(as defined below) preceding December 22, 1998
(the "Closing Date")
------------
</TABLE>
The Warrant exercise price per share of Common Stock (the "Exercise Price")
--------------
shall be equal to $3.00; provided, however, that the Exercise Price shall be
adjusted downward as of June 4, 2000 to the average of the Closing Bid Prices of
the Common Stock for the ten consecutive trading days ending on June 4, 2000 if
such average is less than the Exercise Price otherwise in effect on such date.
This Warrant is being issued pursuant to that certain Securities Purchase
Agreement dated December 21, 1998 among the Company and the signatories thereto
(the "Securities Purchase Agreement"). The number of shares of Common Stock
-----------------------------
purchasable hereunder (the "Warrant Shares") and the Exercise Price are subject
--------------
to adjustment as provided in Section 4 hereof. The term
<PAGE>
"Warrants" means this Warrant and the other warrants of the Company issued
--------
pursuant to the terms of the Securities Purchase Agreement.
The term "Closing Bid Price" and "Closing Trade Price" mean, for any
----------------- -------------------
security as of any date, the closing bid price and the closing trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to the holder hereof (the
"Holder") if Bloomberg Financial Markets is not then reporting closing bid
------
prices or closing sale prices, as applicable, of such security (collectively,
"Bloomberg"), or if the foregoing does not apply, the last reported sale price
---------
of such security in the over-the-counter market on the electronic bulletin board
of such security as reported by Bloomberg, or, if no sale price is reported for
such security by Bloomberg, the average of the bid prices of any market makers
for such security as reported in the "pink sheets" by the National Quotation
Bureau, Inc. If the Closing Bid Price or Closing Trade Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Bid Price or Closing Trade Price, as applicable, of such security on
such date shall be the fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to the
Holder with the costs of such appraisal to be borne by the Company.
This Warrant is subject to the following terms, provisions, and conditions:
1. Mechanics of Exercise. Subject to the provisions hereof, including,
---------------------
without limitation, the limitations contained in Section 8(f) hereof, this
Warrant may be exercised as follows:
(a) Manner of Exercise. This Warrant may be exercised by the Holder,
------------------
in whole or in part, by the surrender of this Warrant (or evidence of loss,
theft, destruction or mutilation thereof in accordance with Section 12(e)
hereof), together with a completed exercise agreement in the form of Exercise
Agreement attached hereto as Exhibit 1 (the "Exercise Agreement"), to the
------------------
Company at the Company's principal executive offices (or such other office or
agency of the Company as it may designate by notice to the Holder), and upon
(i) payment to the Company in cash, by certified or official bank check or by
wire transfer for the account of the Company, of the Exercise Price for the
Warrant Shares specified in the Exercise Agreement or (ii) if the Holder
elects to effect a Cashless Exercise (as defined in Section 12(c) below),
delivery to the principal executive office of the Company ("Attention:
Corporate Secretary") of a written notice of an election to effect a Cashless
Exercise for the Warrant Shares specified in the Exercise Agreement. The
Warrant Shares so purchased shall be deemed to be issued to the Holder or
Holder's designees, as the record owner of such shares, as of the date on
which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such shares as set forth
above.
(b) Issuance of Certificates. Subject to Section 1(c), certificates
------------------------
for the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the Holder within a
reasonable time, not exceeding three (3)
2
<PAGE>
business days, after this Warrant shall have been so exercised (the "Delivery
--------
Period"). The certificates so delivered shall be in such denominations as may be
- ------
requested by the Holder upon exercise and shall be registered in the name of
Holder or such other name as shall be designated by such Holder upon exercise.
If this Warrant shall have been exercised only in part, then, unless this
Warrant has expired, the Company shall, at its expense, at the time of
delivery of such certificates, deliver to the Holder a new Warrant
representing the number of shares with respect to which this Warrant shall not
then have been exercised.
(c) Exercise Disputes. In the case of any dispute with respect to an
-----------------
exercise, the Company shall promptly issue such number of shares of Common Stock
as are not disputed in accordance with this Section. If such dispute involves
the calculation of the Exercise Price, the Company shall submit the disputed
calculations to a nationally recognized independent accounting firm (selected by
the Company) via facsimile within three (3) business days of receipt of the
Exercise Agreement. The accounting firm shall audit the calculations and notify
the Company and the converting Holder of the results no later than ten (10)
business days from the date it receives the disputed calculations. The
accounting firm's calculation shall be deemed conclusive, absent manifest error.
The Company shall then issue the appropriate number of shares of Common Stock in
accordance with this Section.
(d) Fractional Shares. No fractional shares of Common Stock are to be
-----------------
issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Exercise Price of a share of
Common Stock (as determined for exercise of this Warrant into whole shares of
Common Stock); provided that in the event that sufficient funds are not legally
available for the payment of such cash adjustment any fractional shares of
Common Stock shall be rounded up to the next whole number.
2. Period of Exercise. This Warrant is exercisable at any time or from
------------------
time to time on or after the date hereof and before 5:00 P.M., Eastern Standard
time on the fifth (5th) anniversary of the date hereof (the "Exercise Period").
---------------
3. Certain Agreements of the Company. The Company hereby covenants and
---------------------------------
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance
-----------------------
in accordance with the terms of this Warrant, be validly issued, fully paid, and
non-assessable and free from all taxes, liens, claims and encumbrances, except
such as are caused by the Holder.
(b) Reservation of Shares. During the Exercise Period, the Company
---------------------
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
3
<PAGE>
(c) Listing. The Company shall use its best efforts to secure the
-------
listing of the shares of Common Stock issuable upon exercise of this Warrant
upon The Nasdaq National Market System, the New York Stock Exchange or the
American Stock Exchange and upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed or
become listed and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all shares of Common Stock from time to time
issuable upon the exercise of this Warrant; and the Company shall use its best
efforts to so list on each national securities exchange or automated quotation
system, as the case may be, and shall use its best efforts to maintain such
listing of any other shares of capital stock of the Company issuable upon the
exercise of this Warrant so long as any shares of the same class shall be listed
on such national securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by amendment of
--------------------------
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such actions as may reasonably be requested by the Holder of this
Warrant in order to protect the exercise privilege of the Holder of this
Warrant, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
4. Antidilution Provisions. During the Exercise Period, the Exercise
-----------------------
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Section 4. In the event that any adjustment of the
Exercise Price or number of Warrant Shares as required herein results in a
fraction of a cent or fraction of a share, as applicable, such Exercise Price or
number of Warrant Shares shall be rounded up or down to the nearest cent or
share, as applicable.
(a) Adjustment of Exercise Price and Number of Shares upon Issuance of
------------------------------------------------------------------
Common Stock. Except as otherwise provided in Section 4(c) and 4(e) hereof, if
- ------------
and whenever after the initial issuance of this Warrant, the Company issues or
sells, or in accordance with Section 4(b) hereof is deemed to have issued or
sold, any shares of Common Stock for no consideration or for a consideration per
share less than the Exercise Price (as then in effect) (a "Dilutive Issuance"),
-----------------
then effective immediately upon the Dilutive Issuance, the Exercise Price will
be adjusted in accordance with the following formula:
E' = (E) (O + P/M) / (CSDO)
where:
4
<PAGE>
E' = the adjusted Exercise Price
E = the then current Exercise Price;
M = the greater of the then current Market Price and the then
Current Exercise Price;
O = the number of shares of Common Stock outstanding immediately
prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in
Section 4(b) hereof, received by the Company upon such
Dilutive Issuance; and
CSDO = the total number of shares of Common Stock Deemed
Outstanding (as herein defined) immediately after the
Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 4(a) hereof, the following
will be applicable:
(i) Issuance of Rights or Options. If, after the date hereof, the
-----------------------------
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock or
other securities exercisable, convertible into or exchangeable for Common Stock
("Convertible Securities"), but not to include the issuance, grant or exercise
----------------------
of any stock or options which may hereafter be issued, granted or exercised
under any service provider benefit plan of the Company now existing or to be
implemented in the future, so long as the issuance of such stock or options is
approved by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of non-employee
directors established for such purpose (such warrants, rights and options to
purchase Common Stock or Convertible Securities are hereinafter referred to as
"Options"), and the price per share for which Common Stock is purchasable or
- --------
issuable upon the exercise of such Options is less than the Exercise Price (as
then in effect) on the date of issuance of such Option or direct stock grant
("Below Market Options"), then the maximum total number of shares of Common
- ----------------------
Stock issuable upon the exercise of all such Below Market Options (assuming full
exercise, conversion or exchange of Convertible Securities, if applicable) will,
as of the date of the issuance or grant of such Below Market Options, be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the price per share for
which Common Stock is issuable upon the exercise of such Below Market Options is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or granting of such Below Market
Options, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such Below Market Options, plus,
in the case of Convertible Securities issuable upon the exercise of such Below
Market Options, the minimum aggregate amount of additional consideration payable
upon the exercise, conversion or exchange thereof at the time such Convertible
Securities first become exercisable, convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the exercise of all
such Below Market Options (assuming full conversion of Convertible Securities,
if applicable). No further adjustment to the Exercise Price will be made upon
the actual issuance of such Common Stock upon the exercise of such Below Market
5
<PAGE>
Options or upon the exercise, conversion or exchange of Convertible Securities
issuable upon exercise of such Below Market Options.
(ii) Issuance of Convertible Securities.
----------------------------------
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than
where the same are issuable upon the exercise of Options) and the price per
share for which Common Stock is issuable upon such exercise, conversion or
exchange (as determined pursuant to Section 4(b)(ii)(B) if applicable) is less
than the Exercise Price (as then in effect) on the date of issuance of such
Convertible Security, then the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities will, as of the date of the issuance of such Convertible
Securities, be deemed to be outstanding and to have been issued and sold by
the Company for such price per share. For the purposes of the preceding
sentence, the price per share for which Common Stock is issuable upon such
exercise, conversion or exchange is determined by dividing (i) the total
amount, if any, received or receivable by the Company as consideration for the
issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Company
upon the exercise, conversion or exchange thereof at the time such Convertible
Securities first become exercisable, convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of all such Convertible Securities. No further
adjustment to the Exercise Price will be made upon the actual issuances of
such Common Stock upon exercise, conversion or exchange of such Convertible
Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating or re-setting conversion or exercise
price or exchange ratio (a "Variable Rate Convertible Security"), then the
----------------------------------
price per share for which Common Stock is issuable upon such exercise,
conversion or exchange for purposes of the calculation contemplated by Section
4(b)(ii)(A) shall be deemed to be the lowest price per share which would be
applicable assuming that (1) all holding period and other conditions to any
discounts contained in such Convertible Security have been satisfied, and (2)
the Market Price on the date of exercise, conversion or exchange of such
Convertible Security was 80% of the Market Price on the date of issuance of
such Convertible Security (the "Assumed Variable Market Price").
-----------------------------
(iii) Change in Option Price or Conversion Rate. Except for the
-----------------------------------------
issuance, grant or exercise of any stock or options which may hereafter be
granted or exercised under any service provider benefit plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, if there is a change at any
time in (i) the amount of additional consideration payable to the Company upon
the exercise of any Options; (ii) the amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange of any
Convertible Securities; or (iii) the rate at which any Convertible
6
<PAGE>
Securities are convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such Options
or Convertible Securities still outstanding provided for such changed
additional consideration or changed conversion rate, as the case may be, at
the time initially granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. If, in any case, the total number of shares of Common Stock
- ----------
issuable upon exercise of any Options or upon exercise, conversion or exchange
of any Convertible Securities is not, in fact, issued and the rights to exercise
such Option or to exercise, convert or exchange such Convertible Securities
shall have expired or terminated, the Exercise Price then in effect will be
readjusted to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Options or Convertible Securities, to
the extent outstanding immediately prior to such expiration or termination
(other than in respect of the actual number of shares of Common Stock issued
upon exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any Common Stock,
-------------------------------------
Options or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Warrant will be the amount
received by the Company therefor, before deduction of reasonable commissions,
underwriting discounts or allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant or sale. In
case any Common Stock, Options or Convertible Securities are issued or sold for
a consideration part or all of which shall be other than cash, the amount of the
consideration other than cash received by the Company will be the fair market
value of such consideration except where such consideration consists of freely-
tradeable securities, in which case the amount of consideration received by the
Company will be the Market Price thereof as of the date of receipt. In case any
Common Stock, Options or Convertible Securities are issued in connection with
any merger or consolidation in which the Company is the surviving corporation,
the amount of consideration therefor will be deemed to be the fair market value
of such portion of the net assets and business of the non-surviving corporation
as is attributable to such Common Stock, Options or Convertible Securities, as
the case may be. The fair market value of any consideration other than cash or
securities will be determined in the good faith reasonable business judgment of
the Board of Directors.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment
------------------------------------------
to the Exercise Price will be made (i) upon the exercise of any warrants,
options or convertible securities issued and outstanding on the date hereof in
accordance with the terms of such securities as of such date; (ii) upon the
grant or exercise of any stock or options which may hereafter be granted or
exercised under any employee, consultant or director benefit plan of the
Company now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the non-
employee members of the Board of Directors of the Company or a majority of the
members of a committee of non-employee directors established for such purpose;
(iii) upon the issuance of the Common Shares (as defined in the Securities
Purchase Agreement) in accordance
7
<PAGE>
with terms of the Certificate of Designations with respect to the Company's
shares of Series B Preferred Stock (the "Preferred Stock"); (iv) upon the
---------------
exercise of the Warrants; or (v) issuances of any equity securities pursuant
to the Stockholders Rights Plan and the Series A Preferred Stock, as amended.
(c) Subdivision or Combination of Common Stock. If the Company, at
------------------------------------------
any time after the initial issuance of this Warrant, subdivides (by any stock
split, stock dividend, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a greater number of shares, then,
after the date of record for effecting such subdivision, the Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced.
If the Company, at any time after the initial issuance of this Warrant, combines
(by reverse stock split, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a smaller number of shares, then,
after the date of record for effecting such combination, the Exercise Price in
effect immediately prior to such combination will be proportionately increased.
(d) Adjustment in Number of Shares.
------------------------------
(i) With respect to the first twenty million dollars of
proceeds received by the Company as consideration for the issuance of
securities after the date of this Warrant, if the imputed valuation per share
of the securities issued by the Company (with such valuation to be determined
by an investment banking firm acceptable to the Company and the holder) (the
"Actual Price") implies a discount to the purchaser of more than fifteen
------------
percent (15%) below the valuation per share equal to the average of the
Closing Trade Prices for the fifteen (15) consecutive trading days ending on
the date of such issuance (the "Average Price"), then the number of shares
-------------
issuable upon exercise of this Warrant shall be increased as follows:
(A) for each percentage point above fifteen percent (15%)
but less than or equal to twenty percent (20%) by which the Actual Price is
below the Average Price, the number of shares issuable upon exercise of this
Warrant shall be increased by ten thousand (10,000) shares; and
(B) in addition to the increase required by Section
4(d)(i)(A), for each percentage point above twenty percent (20%) but less than
or equal to twenty-five percent (25%) by which the Actual Price is below the
Average Price, the number of shares issuable upon exercise of this Warrant
shall be increased by fifteen thousand (15,000) shares; and
(C) in addition to the increases required by Section
4(d)(i)(A) and (B), for each percentage point above twenty-five percent (25%)
by which the Actual Price is below the Average Price, the number of shares
issuable upon exercise of this Warrant shall be increased by twenty thousand
(20,000) shares.
(ii) Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 4, the number of shares of Common Stock issuable
upon exercise of this Warrant
8
<PAGE>
shall be adjusted by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise
Price.
(e) Major Transactions. Except in the case of a Common Stock Major
------------------
Transaction (as defined below), if the Company shall consolidate or merge with
any other corporation or entity (other than a merger in which the Company is the
surviving or continuing entity and its capital stock is unchanged and unissued
in such transaction (except for Common Stock constituting less than twenty
percent (20%) of the Company's Common Stock then outstanding)) or there shall
occur any share exchange pursuant to which all of the outstanding shares of
Common Stock are converted into other securities or property or any
reclassification or change of the outstanding shares of Common Stock (each of
the foregoing being a "Major Transaction"), then each holder of a Warrant shall
thereafter be entitled to (a) in the event that the Common Stock remains
outstanding or holders of Common Stock receive any common stock or substantially
similar equity interest, in each of the foregoing cases which is publicly
traded, retain its Warrant and such Warrant shall continue to apply to such
Common Stock or shall apply, as nearly as practicable, to such other common
stock or equity interest, as the case may be, or (b) regardless or whether (a)
applies, receive consideration, in exchange for such Warrant, equal to the
greater of, as determined in the sole discretion of such holder, (i) the number
of shares of stock or securities or property of the Company, or of the entity
resulting from such Major Transaction (the "Major Transaction Consideration"),
-------------------------------
to which a holder of the number of shares of Common Stock delivered upon the
exercise of such Warrant would have been entitled upon such Major Transaction
had such holder exercised the Warrant (without regard to any limitations on
conversion or elsewhere contained) on the trading date immediately preceding the
public announcement of the transaction resulting in such Major Transaction and
had such Common Stock been issued and outstanding and had such Holder been the
holder of record of such Common Stock at the time of the consummation of such
Major Transaction, and (ii) cash paid by the Company in immediately available
funds, in an amount equal to one hundred and twenty five percent (125%) of the
Black-Scholes Amount (as defined herein) times the number of shares of Common
Stock for which this Warrant was exercisable (without regard to any limitations
on exercise herein contained); and the Company shall make lawful provision for
the foregoing as a part of such Major Transaction and shall cause the issuer of
any security in such transaction which constitutes Registrable Securities under
that certain Registration Rights Agreement dated December 21, 1998 among the
Company and the signatories thereto (the "Registration Rights Agreement") to
-----------------------------
assume all of the Company's obligations under the Registration Rights Agreement.
In the event that the Company shall consolidate or merge with any corporation in
a transaction in which common stock of the surviving corporation or the parent
thereof (the "Exchange Securities") is issued to the holders of Common Stock in
-------------------
such transaction in exchange for all such Common Stock, and (a) the Exchange
Securities are publicly traded, (b) the average daily trading volume of the
Exchange Securities reported by Bloomberg during the ninety (90) day period
ending on the date on which such transaction is publicly disclosed is greater
than two million dollars ($2,000,000) per day, (c) the historical one hundred
(100) day volatility of the Exchange Securities reported by Bloomberg during the
period ending on the date on which such transaction
9
<PAGE>
is publicly disclosed is greater than fifty percent (50%) and (d) the last
sale price of the Exchange Securities on the date immediately before the date
on which such transaction is publicly disclosed is not less than sixty five
percent (65%) of the last sale price of the Exchange Securities on any day
during the twenty (20) trading day period ending on such date (in each case as
reported by Bloomberg) (a "Common Stock Major Transaction"), then each holder
------------------------------
of a Warrant shall following consummation of such transaction have the right
to receive solely, in exchange for such Warrant, consideration equal to the
number of shares of stock or securities or property issued or paid in such
Common Stock Major Transaction to which a holder of the number of shares of
Common Stock which would have been delivered upon exercise of such Warrant
would have been entitled upon such Common Stock Major Transaction had the
holder of such Warrant exercised (without regard to any limitations on
conversion herein or elsewhere contained) the Warrant on the trading date
immediately preceding the public announcement of the transaction resulting in
such Common Stock Major Transaction and had such Common Stock been issued and
outstanding and had such holder been the holder of record of such Common Stock
at the time of the consummation of such Common Stock Major Transaction; and
the Company shall make lawful provision for the foregoing as a part of such
Common Stock Major Transaction and shall cause the issuer of any security in
such transaction which constitutes Registrable Securities under that certain
Registration Rights Agreement dated December 21, 1998 among the Company and
the signatories thereto (the "Registration Rights Agreement") to assume all
-----------------------------
of the Company's obligations under the Registration Rights Agreement. No sooner
than ten (10) business days nor later than five (5) business days prior to the
consummation of the Major Transaction or Common Stock Major Transaction, as the
case may be, (each, a "Transaction") but not prior to the public announcement of
-----------
such Transaction, the Company shall deliver written notice ("Notice of
---------
Transaction") to each holder of a Warrant, which Notice of Transaction shall be
- -----------
deemed to have been delivered one (1) business day after the Company's sending
such notice by telecopy (provided that the Company sends a confirming copy of
such notice on the same day by overnight courier) of such Notice of Transaction.
Such Notice of Transaction shall indicate the amount and type of the Transaction
consideration which such holder of a Warrant would receive under this Section.
If the Major Transaction Consideration does not consist entirely of United
States currency, such holder may elect to receive United States currency in an
amount equal to the value of the Major Transaction Consideration in lieu of the
Major Transaction Consideration by delivering notice of such election to the
Company within five (5) business days of such holder's receipt of the Notice of
Transaction.
The "Black-Scholes Amount" shall be an amount determined by calculating the
--------------------
"Black-Scholes" value of an option to purchase one share of Common Stock on the
applicable page on the Bloomberg online page, using the following variable
values: (i) the current market price of the Common Stock equal to the closing
trade price on the last trading day before the date of the Notice of the Major
Transaction; (ii) volatility of the Common Stock equal to the volatility of the
Common Stock during the 100 trading day period preceding the date of the Notice
of the Major Transaction; (iii) a risk free rate equal to the interest rate on
the United States treasury bill or treasury note with a maturity corresponding
to the remaining term of this Warrant on the date of the Notice of the Major
Transaction; and (iv) an exercise price equal to the Exercise Price on the date
of the Notice of the Major Transaction. In the event such calculation function
is no longer available utilizing the
10
<PAGE>
Bloomberg online page, the Holder shall calculate such amount in its sole
discretion using the closest available alternative mechanism and variable
values to those available utilizing the Bloomberg online page for such
calculation function.
(f) Distribution of Assets. In case the Company shall declare or make
----------------------
any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
like events (including any dividend or distribution to the Company's
shareholders of cash or shares (or rights to acquire shares) of capital stock of
a subsidiary) (a "Distribution"), at any time after the initial issuance of this
------------
Warrant, then the Holder shall be entitled upon exercise of this Warrant for the
purchase of any or all of the shares of Common Stock subject hereto, to receive
the amount of such assets (or rights) which would have been payable to the
Holder had such Holder been the holder of such shares of Common Stock on the
record date for the determination of shareholders entitled to such Distribution.
(g) Notices of Adjustment. Upon the occurrence of any event which
---------------------
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the Holder, which notice shall state the
Exercise Price resulting from such adjustment and the increase or decrease in
the number of Warrant Shares purchasable at such price upon exercise, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. Such calculation shall be certified by the chief
financial officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of the
------------------------------------
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(i) No Fractional Shares. No fractional shares of Common Stock are to
--------------------
be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock; provided that in the event that sufficient funds are not legally
available for the payment of such cash adjustment any fractional shares of
Common Stock shall be rounded up to the next whole number.
(j) Other Notices. In case at any time:
-------------
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution to all
(or substantially all) of the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or
other rights;
11
<PAGE>
(iii) there shall be any capital reorganization of the Company, or
reclassification of the Common Stock, or consolidation or merger of the Company
with or into, or sale of all or substantially all of its assets to, another
corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in each such case, the Company
shall give to the Holder (a) notice of the date on which the books of the
Company shall close or a record shall be taken for determining the holders of
Common Stock entitled to receive any such dividend, distribution, or
subscription rights or for determining the holders of Common Stock entitled to
vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up and (b) in the case of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take place.
Such notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution, or subscription rights
or to exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least 30 days prior to the record date or the date on which
the Company's books are closed in respect thereto, but in no event earlier than
public announcement of such proposed transaction or event. Failure to give any
such notice or any defect therein shall not affect the validity of the
proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
(k) Certain Definitions.
-------------------
(i) "Common Stock Deemed Outstanding" shall mean the number of
-------------------------------
shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) in case of any adjustment
required by Section 4(a) resulting from the issuance of any Options, the
maximum total number of shares of Common Stock issuable upon the exercise of
the Options for which the adjustment is required (including any Common Stock
issuable upon the conversion of Convertible Securities issuable upon the
exercise of such Options), and (y) in the case of any adjustment required by
Section 4(a) resulting from the issuance of any Convertible Securities, the
maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of the Convertible Securities for which the adjustment
is required, as of the date of issuance of such Convertible Securities, if
any.
(ii) "Market Price," as of any date, (i) means the Closing Bid
------------
Price for the shares of Common Stock as reported to Nasdaq National Market
System for the trading day immediately preceding such date, or (ii) if the
Nasdaq National Market System is not the principal trading market for the
Common Stock, the last reported bid price on the principal trading market for
the Common Stock during the same period, or, if there is no bid price for such
period, the last reported sales price for such period, or (iii) if market
value cannot be calculated as of such date on any of the foregoing bases, the
Market Price shall be the fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to
each initial
12
<PAGE>
holder and the Holders of a majority in interest of the Warrants, with the
costs of the appraisal to be borne by the Company. The manner of determining
the Market Price of the Common Stock set forth in the foregoing definition
shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
(iii) "Common Stock," for purposes of this Section 4, includes the
------------
Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only Common Stock in
respect of which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
5. Cap Amount. Prior to Stockholder Approval (as defined in the Securities
----------
Purchase Agreement), unless otherwise permitted by the Nasdaq National Market
System or unless the rules thereof do not apply to the Warrants, in no event
shall the total number of shares of Common Stock issued upon exercise of the
Warrants exceed the maximum number of shares of Common Stock that the Company
can without stockholder approval so issue pursuant to Nasdaq Rule 4460(i) (or
any successor rule) (the "Cap Amount") upon exercise of the Warrants and
----------
conversion of the Preferred Stock, which, as of the date of initial issuance of
the shares of Preferred Stock and Warrants, shall be eight million seven hundred
and six thousand four hundred and eighty three (8,706,483) shares (or such
higher number as such rules permit). The Cap Amount shall be allocated pro-rata
to the Holders. A Holder's allocable portion of the Cap Amount shall be
applicable to both shares of Preferred Stock and Warrants held by it and shall
be applied to such Preferred Stock and Warrants on the basis of the time of
conversion or exercise, as the case may be, thereof.
6. Issue Tax. The issuance of certificates for Warrant Shares upon the
---------
exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than the Holder.
7. No Rights or Liabilities as a Stockholder. This Warrant shall not
-----------------------------------------
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the Holder to purchase Warrant Shares, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Exercise Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
13
<PAGE>
8. Transfer, Exchange, Redemption and Replacement of Warrant.
---------------------------------------------------------
(a) Restriction on Transfer. This Warrant and the rights granted to
-----------------------
the Holder are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the Form of Assignment
attached hereto as Exhibit 2, at the office or agency of the Company referred to
in Section 8(e) below, provided, however, that any transfer or assignment shall
be subject to the provisions of Sections 5.1 and 5.2 of the Securities Purchase
Agreement. Until due presentment for registration of transfer on the books of
the Company, the Company may treat the registered holder hereof as the owner and
holder hereof for all purposes, and the Company shall not be affected by any
notice to the contrary. Notwithstanding anything to the contrary contained
herein, the registration rights described in Section 9 hereof are assignable
only in accordance with the provisions of that certain Registration Rights
Agreement, dated as of December 21, 1998, by and among the Company and the other
signatories thereto (the "Registration Rights Agreement"). Holders shall not
-----------------------------
knowingly transfer or otherwise dispose of, in any private off-market offering,
any Warrants (or shares of Common Stock issuable upon exercise of any Warrant)
to any Competitor (as defined in the Securities Purchase Agreement) of the
Company (or any of its subsidiaries).
(b) Warrant Exchangeable for Different Denominations. This Warrant is
------------------------------------------------
exchangeable, upon the surrender hereof by the Holder at the office or agency of
the Company referred to in Section 8(e) below, for new Warrants, in the form
hereof, of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as shall be designated by the Holder of at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant or, in the case of any such loss, theft, or destruction, upon
delivery, of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, new Warrants, in the form hereof, in such
denominations as Holder may request.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
---------------------------------
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 8, this Warrant shall be promptly canceled by the Company. The
Company shall pay all issuance taxes (other than securities transfer taxes) and
charges payable in connection with the preparation, execution, and delivery of
Warrants pursuant to this Section 8.
(e) Warrant Register. The Company shall maintain, at its principal
----------------
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder), a register for this Warrant, in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
14
<PAGE>
(f) Additional Restriction on Exercise or Transfer. Notwithstanding
----------------------------------------------
anything to the contrary contained herein, the Warrants shall not be exercisable
by the Holder to the extent (but only to the extent) that, if exercisable by
Holder, Holder would beneficially own in excess of 4.9% (the "Applicable
----------
Percentage") of the shares of Common Stock. To the extent the above limitation
- ----------
applies, the determination of whether the Warrants shall be exercisable (vis-a-
vis other securities owned by Holder) and of which Warrants shall be exercisable
(as among Warrants) shall be made by Holder and submission of the Warrants for
exercise shall be deemed to be the Holder's determination of whether such
Warrants are exercisable (vis-a-vis other securities owned by Holder) and of
which Warrants are exercisable (among Warrants), in each case subject to such
aggregate percentage limitation. No prior inability to exercise Warrants
pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of
exercisability. For the purposes of this paragraph, beneficial ownership and
all determinations and calculations, including without limitation, with respect
to calculations of percentage ownership, shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulations 13D and G thereunder. The provisions of this paragraph may be
implemented in a manner otherwise than in strict conformity with the terms this
Section (f) with the approval of the Board of Directors of the Company and the
- -------
Holder: (i) with respect to any matter to cure any ambiguity herein, to correct
this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Applicable Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly
give effect to such Applicable Percentage limitation; and (ii) with respect to
any other matter only with the further consent of the holders of a majority of
the then outstanding shares of Common Stock. For clarification, it is expressly
a term of this security that the limitations contained in this paragraph shall
apply to each successor holder of Warrants.
9. Registration Rights. The initial holder of this Warrant (and certain
-------------------
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement.
10. Notices. Any notice herein required or permitted to be given shall
-------
be in writing and may be personally served or delivered by courier or by
confirmed telecopy, and shall be deemed delivered at the time and date of
receipt (which shall include telephone line facsimile transmission). The
addresses for such communications shall be:
If to the Company:
P-Com, Inc.
3175 S. Winchester Blvd.
Campbell, California 95008
Telecopy: (408) 866-3678
Attention: Chief Financial Officer and
Chief Executive Officer
15
<PAGE>
with a copy to:
Brobeck, Phleger & Harrison LLP
2200 Geng Road
Palo Alto, California 94303-0913
Telecopy: (650) 496-2733
Attention: Warren T. Lazarow, Esq.
and if to the Holder, at such address as Holder shall have provided in writing
to the Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 10.
11. Governing Law; Jurisdiction. This Warrant shall be governed by and
---------------------------
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The Company
irrevocably consents to the jurisdiction of the United States federal courts
located in the County of New Castle in the State of Delaware in any suit or
proceeding based on or arising under this Warrant and irrevocably agrees that
all claims in respect of such suit or proceeding may be determined in such
courts. The Company irrevocably waives the defense of an inconvenient forum to
the maintenance of such suit or proceeding. The Company agrees that a final
nonappealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
12. Miscellaneous.
-------------
(a) Amendments. This Warrant and any provision hereof may only be
----------
amended by an instrument in writing signed by the Company and each initial
Holder and the Holders of a majority of the Warrant Shares remaining subject to
the Warrants.
(b) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(c) Cashless Exercise. Notwithstanding anything to the contrary
-----------------
contained in this Warrant, this Warrant may be exercised by presentation and
surrender of this Warrant to the Company at its principal executive offices with
a written notice of the Holder's intention to effect a cashless exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
-----------------
In the event of a Cashless Exercise, in lieu of paying the Exercise Price in
cash, the Holder shall surrender this Warrant for the number of shares of Common
Stock determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price per share of the Common Stock
and the Exercise Price, and the denominator of which shall be such then current
Market Price per share of Common Stock.
16
<PAGE>
(d) Assignability. This Warrant shall be binding upon the Company and
-------------
its successors and assigns and shall inure to the benefit of Holder and its
successors and assigns. The Holder shall notify the Company upon the assignment
of this Warrant.
(e) Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt
-------------------------------------------------
by the Company of evidence of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of indemnity or
security reasonably satisfactory to the Company, and upon surrender of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.
* * *
17
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
their duly authorized officers.
P-Com, Inc.
By:
--------------------------------------
Name: Robert E. Collins
Title: Chief Financial Officer
18
<PAGE>
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of common stock of P-Com, Inc., a Delaware
corporation (the "Company"), evidenced by the attached Warrant, and [herewith
-------
makes payment of the Exercise Price with respect to such shares in full/ elects
to effect a Cashless Exercise pursuant to the terms of the Warrant], all in
accordance with the conditions and provisions of said Warrant.
(i) [If a cash exercise -- The undersigned makes the representations and
warranties contained in Sections 2.1 through 2.7 of the Securities Purchase
Agreement as of the date of the exercise.] The undersigned agrees not to offer,
sell, transfer or otherwise dispose of any Common Stock obtained on exercise of
the Warrant, except under circumstances that will not result in a violation of
the Securities Act of 1933, as amended, or any state securities laws.
(ii) The undersigned requests that stock certificates for such shares be
issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Holder (or such other person or
persons indicated below) and delivered to the undersigned (or designee(s) at the
address (or addresses) set forth below:
Date:_______________________________ _____________________________________
Signature of Holder
_____________________________________
Name of Holder (Print)
Address:
_____________________________________
_____________________________________
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
and hereby irrevocably constitutes and appoints ______________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Date:____________, _____,
In the presence of
Name:________________________________________________
Signature:___________________________________________
Title of Signing Officer or Agent (if any):
____________________________________
Address: _________________________________
_________________________________
Note: The above signature should
correspond exactly with the name
on the face of the within
Warrant.
<PAGE>
Exhibit 10.49B
VOID AFTER 5:00 P.M. Eastern Standard
TIME ON December 22, 2003
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
Right to Purchase Shares of
Common Stock, par value $0.0001 per share
Date: June 4, 1999
P-COM, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, CASTLE CREEK TECHNOLOGY PARTNERS
LLC or its registered assigns, is entitled to purchase from P-Com, Inc., a
Delaware corporation (the "Company"), at any time or from time to time during
-------
the period specified in Section 2 hereof, 455,494 fully paid and nonassessable
shares of the Company's common stock, par value $0.0001 per share (the "Common
------
Stock"), which number of shares was calculated as follows:
- -----
<TABLE>
<S> <C> <C> <C>
Dollar Amount of Holder's the average Closing Bid Price (as
Investment Pursuant to the (divided by) defined herein) over the fifteen (15) x .25
Securities Purchase Agreement trading day period immediately
(as defined below) preceding December 22, 1998
(the "Closing Date")
</TABLE>
The Warrant exercise price per share of Common Stock (the "Exercise Price")
--------------
shall be equal to $3.00; provided, however, that the Exercise Price shall be
adjusted downward as of June 4, 2000 to the average of the Closing Bid Prices of
the Common Stock for the ten consecutive trading days ending on June 4, 2000 if
such average is less than the Exercise Price otherwise in effect on such date.
This Warrant is being issued pursuant to that certain Securities Purchase
Agreement dated December 21, 1998 among the Company and the signatories thereto
(the "Securities Purchase Agreement"). The number of shares of Common Stock
-----------------------------
purchasable hereunder (the "Warrant Shares") and the Exercise Price are subject
--------------
to adjustment as provided in Section 4 hereof. The term
<PAGE>
"Warrants" means this Warrant and the other warrants of the Company issued
--------
pursuant to the terms of the Securities Purchase Agreement.
The term "Closing Bid Price" and "Closing Trade Price" mean, for any
----------------- -------------------
security as of any date, the closing bid price and the closing trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to the holder hereof (the
"Holder") if Bloomberg Financial Markets is not then reporting closing bid
------
prices or closing sale prices, as applicable, of such security (collectively,
"Bloomberg"), or if the foregoing does not apply, the last reported sale price
---------
of such security in the over-the-counter market on the electronic bulletin board
of such security as reported by Bloomberg, or, if no sale price is reported for
such security by Bloomberg, the average of the bid prices of any market makers
for such security as reported in the "pink sheets" by the National Quotation
Bureau, Inc. If the Closing Bid Price or Closing Trade Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Bid Price or Closing Trade Price, as applicable, of such security on
such date shall be the fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to the
Holder with the costs of such appraisal to be borne by the Company.
This Warrant is subject to the following terms, provisions, and conditions:
1. Mechanics of Exercise. Subject to the provisions hereof, including,
---------------------
without limitation, the limitations contained in Section 8(f) hereof, this
Warrant may be exercised as follows:
(a) Manner of Exercise. This Warrant may be exercised by the Holder, in
------------------
whole or in part, by the surrender of this Warrant (or evidence of loss, theft,
destruction or mutilation thereof in accordance with Section 12(e) hereof),
together with a completed exercise agreement in the form of Exercise Agreement
attached hereto as Exhibit 1 (the "Exercise Agreement"), to the Company at the
------------------
Company's principal executive offices (or such other office or agency of the
Company as it may designate by notice to the Holder), and upon (i) payment to
the Company in cash, by certified or official bank check or by wire transfer for
the account of the Company, of the Exercise Price for the Warrant Shares
specified in the Exercise Agreement or (ii) if the Holder elects to effect a
Cashless Exercise (as defined in Section 12(c) below), delivery to the principal
executive office of the Company ("Attention: Corporate Secretary") of a written
notice of an election to effect a Cashless Exercise for the Warrant Shares
specified in the Exercise Agreement. The Warrant Shares so purchased shall be
deemed to be issued to the Holder or Holder's designees, as the record owner of
such shares, as of the date on which this Warrant shall have been surrendered,
the completed Exercise Agreement shall have been delivered, and payment (or
notice of an election to effect a Cashless Exercise) shall have been made for
such shares as set forth above.
(b) Issuance of Certificates. Subject to Section 1(c), certificates for
------------------------
the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the Holder within a
reasonable time, not exceeding three (3)
2
<PAGE>
business days, after this Warrant shall have been so exercised (the "Delivery
--------
Period"). The certificates so delivered shall be in such denominations as may be
- ------
requested by the Holder upon exercise and shall be registered in the name of
Holder or such other name as shall be designated by such Holder upon exercise.
If this Warrant shall have been exercised only in part, then, unless this
Warrant has expired, the Company shall, at its expense, at the time of delivery
of such certificates, deliver to the Holder a new Warrant representing the
number of shares with respect to which this Warrant shall not then have been
exercised.
(c) Exercise Disputes. In the case of any dispute with respect to an
-----------------
exercise, the Company shall promptly issue such number of shares of Common Stock
as are not disputed in accordance with this Section. If such dispute involves
the calculation of the Exercise Price, the Company shall submit the disputed
calculations to a nationally recognized independent accounting firm (selected by
the Company) via facsimile within three (3) business days of receipt of the
Exercise Agreement. The accounting firm shall audit the calculations and notify
the Company and the converting Holder of the results no later than ten (10)
business days from the date it receives the disputed calculations. The
accounting firm's calculation shall be deemed conclusive, absent manifest error.
The Company shall then issue the appropriate number of shares of Common Stock in
accordance with this Section.
(d) Fractional Shares. No fractional shares of Common Stock are to be
-----------------
issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Exercise Price of a share of
Common Stock (as determined for exercise of this Warrant into whole shares of
Common Stock); provided that in the event that sufficient funds are not legally
available for the payment of such cash adjustment any fractional shares of
Common Stock shall be rounded up to the next whole number.
2. Period of Exercise. This Warrant is exercisable at any time or from
------------------
time to time on or after the date hereof and before 5:00 P.M., Eastern Standard
time on the fifth (5th) anniversary of the date hereof (the "Exercise Period").
---------------
3. Certain Agreements of the Company. The Company hereby covenants and
---------------------------------
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance
-----------------------
in accordance with the terms of this Warrant, be validly issued, fully paid, and
non-assessable and free from all taxes, liens, claims and encumbrances, except
such as are caused by the Holder.
(b) Reservation of Shares. During the Exercise Period, the Company
---------------------
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
3
<PAGE>
(c) Listing. The Company shall use its best efforts to secure the
-------
listing of the shares of Common Stock issuable upon exercise of this Warrant
upon The Nasdaq National Market System, the New York Stock Exchange or the
American Stock Exchange and upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed or
become listed and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all shares of Common Stock from time to time
issuable upon the exercise of this Warrant; and the Company shall use its best
efforts to so list on each national securities exchange or automated quotation
system, as the case may be, and shall use its best efforts to maintain such
listing of any other shares of capital stock of the Company issuable upon the
exercise of this Warrant so long as any shares of the same class shall be listed
on such national securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by amendment of
--------------------------
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such actions as may reasonably be requested by the Holder of this
Warrant in order to protect the exercise privilege of the Holder of this
Warrant, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
4. Antidilution Provisions. During the Exercise Period, the Exercise
-----------------------
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Section 4. In the event that any adjustment of the
Exercise Price or number of Warrant Shares as required herein results in a
fraction of a cent or fraction of a share, as applicable, such Exercise Price or
number of Warrant Shares shall be rounded up or down to the nearest cent or
share, as applicable.
(a) Adjustment of Exercise Price and Number of Shares upon Issuance of
------------------------------------------------------------------
Common Stock. Except as otherwise provided in Section 4(c) and 4(e) hereof, if
- ------------
and whenever after the initial issuance of this Warrant, the Company issues or
sells, or in accordance with Section 4(b) hereof is deemed to have issued or
sold, any shares of Common Stock for no consideration or for a consideration per
share less than the Exercise Price (as then in effect) (a "Dilutive Issuance"),
-----------------
then effective immediately upon the Dilutive Issuance, the Exercise Price will
be adjusted in accordance with the following formula:
E' = (E) (O + P/M) / (CSDO)
where:
4
<PAGE>
E' = the adjusted Exercise Price
E = the then current Exercise Price;
M = the greater of the then current Market Price and
the then Current Exercise Price;
O = the number of shares of Common Stock outstanding
immediately prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set
forth in Section 4(b) hereof, received by the
Company upon such Dilutive Issuance; and
CSDO = the total number of shares of Common Stock Deemed
Outstanding (as herein defined) immediately after
the Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 4(a) hereof, the following
will be applicable:
(i) Issuance of Rights or Options. If, after the date hereof, the
-----------------------------
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock or
other securities exercisable, convertible into or exchangeable for Common Stock
("Convertible Securities"), but not to include the issuance, grant or exercise
----------------------
of any stock or options which may hereafter be issued, granted or exercised
under any service provider benefit plan of the Company now existing or to be
implemented in the future, so long as the issuance of such stock or options is
approved by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of non-employee
directors established for such purpose (such warrants, rights and options to
purchase Common Stock or Convertible Securities are hereinafter referred to as
"Options"), and the price per share for which Common Stock is purchasable or
- --------
issuable upon the exercise of such Options is less than the Exercise Price (as
then in effect) on the date of issuance of such Option or direct stock grant
("Below Market Options"), then the maximum total number of shares of Common
- ----------------------
Stock issuable upon the exercise of all such Below Market Options (assuming full
exercise, conversion or exchange of Convertible Securities, if applicable) will,
as of the date of the issuance or grant of such Below Market Options, be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the price per share for
which Common Stock is issuable upon the exercise of such Below Market Options is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or granting of such Below Market
Options, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such Below Market Options, plus,
in the case of Convertible Securities issuable upon the exercise of such Below
Market Options, the minimum aggregate amount of additional consideration payable
upon the exercise, conversion or exchange thereof at the time such Convertible
Securities first become exercisable, convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the exercise of all
such Below Market Options (assuming full conversion of Convertible Securities,
if applicable). No further adjustment to the Exercise Price will be made upon
the actual issuance of such Common Stock upon the exercise of such Below Market
5
<PAGE>
Options or upon the exercise, conversion or exchange of Convertible Securities
issuable upon exercise of such Below Market Options.
(ii) Issuance of Convertible Securities.
----------------------------------
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than where
the same are issuable upon the exercise of Options) and the price per share for
which Common Stock is issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 4(b)(ii)(B) if applicable) is less than the
Exercise Price (as then in effect) on the date of issuance of such Convertible
Security, then the maximum total number of shares of Common Stock issuable upon
the exercise, conversion or exchange of all such Convertible Securities will, as
of the date of the issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of the preceding sentence, the price per share for which
Common Stock is issuable upon such exercise, conversion or exchange is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange thereof at
the time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price will be made upon the
actual issuances of such Common Stock upon exercise, conversion or exchange of
such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating or re-setting conversion or exercise
price or exchange ratio (a "Variable Rate Convertible Security"), then the price
----------------------------------
per share for which Common Stock is issuable upon such exercise, conversion or
exchange for purposes of the calculation contemplated by Section 4(b)(ii)(A)
shall be deemed to be the lowest price per share which would be applicable
assuming that (1) all holding period and other conditions to any discounts
contained in such Convertible Security have been satisfied, and (2) the Market
Price on the date of exercise, conversion or exchange of such Convertible
Security was 80% of the Market Price on the date of issuance of such Convertible
Security (the "Assumed Variable Market Price").
-----------------------------
(iii) Change in Option Price or Conversion Rate. Except for the
-----------------------------------------
issuance, grant or exercise of any stock or options which may hereafter be
granted or exercised under any service provider benefit plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, if there is a change at any
time in (i) the amount of additional consideration payable to the Company upon
the exercise of any Options; (ii) the amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange of any
Convertible Securities; or (iii) the rate at which any Convertible
6
<PAGE>
Securities are convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed additional
consideration or changed conversion rate, as the case may be, at the time
initially granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. If, in any case, the total number of shares of Common Stock
- ----------
issuable upon exercise of any Options or upon exercise, conversion or exchange
of any Convertible Securities is not, in fact, issued and the rights to exercise
such Option or to exercise, convert or exchange such Convertible Securities
shall have expired or terminated, the Exercise Price then in effect will be
readjusted to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Options or Convertible Securities, to
the extent outstanding immediately prior to such expiration or termination
(other than in respect of the actual number of shares of Common Stock issued
upon exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any Common Stock,
-------------------------------------
Options or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Warrant will be the amount
received by the Company therefor, before deduction of reasonable commissions,
underwriting discounts or allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant or sale. In
case any Common Stock, Options or Convertible Securities are issued or sold for
a consideration part or all of which shall be other than cash, the amount of the
consideration other than cash received by the Company will be the fair market
value of such consideration except where such consideration consists of freely-
tradeable securities, in which case the amount of consideration received by the
Company will be the Market Price thereof as of the date of receipt. In case any
Common Stock, Options or Convertible Securities are issued in connection with
any merger or consolidation in which the Company is the surviving corporation,
the amount of consideration therefor will be deemed to be the fair market value
of such portion of the net assets and business of the non-surviving corporation
as is attributable to such Common Stock, Options or Convertible Securities, as
the case may be. The fair market value of any consideration other than cash or
securities will be determined in the good faith reasonable business judgment of
the Board of Directors.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment to
------------------------------------------
the Exercise Price will be made (i) upon the exercise of any warrants, options
or convertible securities issued and outstanding on the date hereof in
accordance with the terms of such securities as of such date; (ii) upon the
grant or exercise of any stock or options which may hereafter be granted or
exercised under any employee, consultant or director benefit plan of the Company
now existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose; (iii) upon the issuance of
the Common Shares (as defined in the Securities Purchase Agreement) in
accordance
7
<PAGE>
with terms of the Certificate of Designations with respect to the Company's
shares of Series B Preferred Stock (the "Preferred Stock"); (iv) upon the
---------------
exercise of the Warrants; or (v) issuances of any equity securities pursuant to
the Stockholders Rights Plan and the Series A Preferred Stock, as amended.
(c) Subdivision or Combination of Common Stock. If the Company, at
------------------------------------------
any time after the initial issuance of this Warrant, subdivides (by any stock
split, stock dividend, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a greater number of shares, then,
after the date of record for effecting such subdivision, the Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced.
If the Company, at any time after the initial issuance of this Warrant, combines
(by reverse stock split, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a smaller number of shares, then,
after the date of record for effecting such combination, the Exercise Price in
effect immediately prior to such combination will be proportionately increased.
(d) Adjustment in Number of Shares.
------------------------------
(i) With respect to the first twenty million dollars of
proceeds received by the Company as consideration for the issuance of securities
after the date of this Warrant, if the imputed valuation per share of the
securities issued by the Company (with such valuation to be determined by an
investment banking firm acceptable to the Company and the holder) (the "Actual
------
Price") implies a discount to the purchaser of more than fifteen percent (15%)
- -----
below the valuation per share equal to the average of the Closing Trade Prices
for the fifteen (15) consecutive trading days ending on the date of such
issuance (the "Average Price"), then the number of shares issuable upon exercise
-------------
of this Warrant shall be increased as follows:
(A) for each percentage point above fifteen percent (15%)
but less than or equal to twenty percent (20%) by which the Actual Price is
below the Average Price, the number of shares issuable upon exercise of this
Warrant shall be increased by ten thousand (10,000) shares; and
(B) in addition to the increase required by Section
4(d)(i)(A), for each percentage point above twenty percent (20%) but less than
or equal to twenty-five percent (25%) by which the Actual Price is below the
Average Price, the number of shares issuable upon exercise of this Warrant shall
be increased by fifteen thousand (15,000) shares; and
(C) in addition to the increases required by Section
4(d)(i)(A) and (B), for each percentage point above twenty-five percent (25%) by
which the Actual Price is below the Average Price, the number of shares issuable
upon exercise of this Warrant shall be increased by twenty thousand (20,000)
shares.
(ii) Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 4, the number of shares of Common Stock issuable upon
exercise of this Warrant
8
<PAGE>
shall be adjusted by multiplying a number equal to the Exercise Price in effect
immediately prior to such adjustment by the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such adjustment and
dividing the product so obtained by the adjusted Exercise Price.
(e) Major Transactions. Except in the case of a Common Stock Major
------------------
Transaction (as defined below), if the Company shall consolidate or merge with
any other corporation or entity (other than a merger in which the Company is the
surviving or continuing entity and its capital stock is unchanged and unissued
in such transaction (except for Common Stock constituting less than twenty
percent (20%) of the Company's Common Stock then outstanding)) or there shall
occur any share exchange pursuant to which all of the outstanding shares of
Common Stock are converted into other securities or property or any
reclassification or change of the outstanding shares of Common Stock (each of
the foregoing being a "Major Transaction"), then each holder of a Warrant shall
thereafter be entitled to (a) in the event that the Common Stock remains
outstanding or holders of Common Stock receive any common stock or substantially
similar equity interest, in each of the foregoing cases which is publicly
traded, retain its Warrant and such Warrant shall continue to apply to such
Common Stock or shall apply, as nearly as practicable, to such other common
stock or equity interest, as the case may be, or (b) regardless or whether (a)
applies, receive consideration, in exchange for such Warrant, equal to the
greater of, as determined in the sole discretion of such holder, (i) the number
of shares of stock or securities or property of the Company, or of the entity
resulting from such Major Transaction (the "Major Transaction Consideration"),
-------------------------------
to which a holder of the number of shares of Common Stock delivered upon the
exercise of such Warrant would have been entitled upon such Major Transaction
had such holder exercised the Warrant (without regard to any limitations on
conversion or elsewhere contained) on the trading date immediately preceding the
public announcement of the transaction resulting in such Major Transaction and
had such Common Stock been issued and outstanding and had such Holder been the
holder of record of such Common Stock at the time of the consummation of such
Major Transaction, and (ii) cash paid by the Company in immediately available
funds, in an amount equal to one hundred and twenty five percent (125%) of the
Black-Scholes Amount (as defined herein) times the number of shares of Common
Stock for which this Warrant was exercisable (without regard to any limitations
on exercise herein contained); and the Company shall make lawful provision for
the foregoing as a part of such Major Transaction and shall cause the issuer of
any security in such transaction which constitutes Registrable Securities under
that certain Registration Rights Agreement dated December 21, 1998 among the
Company and the signatories thereto (the "Registration Rights Agreement") to
-----------------------------
assume all of the Company's obligations under the Registration Rights Agreement.
In the event that the Company shall consolidate or merge with any corporation in
a transaction in which common stock of the surviving corporation or the parent
thereof (the "Exchange Securities") is issued to the holders of Common Stock in
-------------------
such transaction in exchange for all such Common Stock, and (a) the Exchange
Securities are publicly traded, (b) the average daily trading volume of the
Exchange Securities reported by Bloomberg during the ninety (90) day period
ending on the date on which such transaction is publicly disclosed is greater
than two million dollars ($2,000,000) per day, (c) the historical one hundred
(100) day volatility of the Exchange Securities reported by Bloomberg during the
period ending on the date on which such transaction
9
<PAGE>
is publicly disclosed is greater than fifty percent (50%) and (d) the last sale
price of the Exchange Securities on the date immediately before the date on
which such transaction is publicly disclosed is not less than sixty five percent
(65%) of the last sale price of the Exchange Securities on any day during the
twenty (20) trading day period ending on such date (in each case as reported by
Bloomberg) (a "Common Stock Major Transaction"), then each holder of a Warrant
------------------------------
shall following consummation of such transaction have the right to receive
solely, in exchange for such Warrant, consideration equal to the number of
shares of stock or securities or property issued or paid in such Common Stock
Major Transaction to which a holder of the number of shares of Common Stock
which would have been delivered upon exercise of such Warrant would have been
entitled upon such Common Stock Major Transaction had the holder of such Warrant
exercised (without regard to any limitations on conversion herein or elsewhere
contained) the Warrant on the trading date immediately preceding the public
announcement of the transaction resulting in such Common Stock Major Transaction
and had such Common Stock been issued and outstanding and had such holder been
the holder of record of such Common Stock at the time of the consummation of
such Common Stock Major Transaction; and the Company shall make lawful provision
for the foregoing as a part of such Common Stock Major Transaction and shall
cause the issuer of any security in such transaction which constitutes
Registrable Securities under that certain Registration Rights Agreement dated
December 21, 1998 among the Company and the signatories thereto (the
"Registration Rights Agreement") to assume all of the Company's obligations
-----------------------------
under the Registration Rights Agreement. No sooner than ten (10) business days
nor later than five (5) business days prior to the consummation of the Major
Transaction or Common Stock Major Transaction, as the case may be, (each, a
"Transaction") but not prior to the public announcement of such Transaction, the
-----------
Company shall deliver written notice ("Notice of Transaction") to each holder of
---------------------
a Warrant, which Notice of Transaction shall be deemed to have been delivered
one (1) business day after the Company's sending such notice by telecopy
(provided that the Company sends a confirming copy of such notice on the same
day by overnight courier) of such Notice of Transaction. Such Notice of
Transaction shall indicate the amount and type of the Transaction consideration
which such holder of a Warrant would receive under this Section. If the Major
Transaction Consideration does not consist entirely of United States currency,
such holder may elect to receive United States currency in an amount equal to
the value of the Major Transaction Consideration in lieu of the Major
Transaction Consideration by delivering notice of such election to the Company
within five (5) business days of such holder's receipt of the Notice of
Transaction.
The "Black-Scholes Amount" shall be an amount determined by calculating the
--------------------
"Black-Scholes" value of an option to purchase one share of Common Stock on the
applicable page on the Bloomberg online page, using the following variable
values: (i) the current market price of the Common Stock equal to the closing
trade price on the last trading day before the date of the Notice of the Major
Transaction; (ii) volatility of the Common Stock equal to the volatility of the
Common Stock during the 100 trading day period preceding the date of the Notice
of the Major Transaction; (iii) a risk free rate equal to the interest rate on
the United States treasury bill or treasury note with a maturity corresponding
to the remaining term of this Warrant on the date of the Notice of the Major
Transaction; and (iv) an exercise price equal to the Exercise Price on the date
of the Notice of the Major Transaction. In the event such calculation function
is no longer available utilizing the
10
<PAGE>
Bloomberg online page, the Holder shall calculate such amount in its sole
discretion using the closest available alternative mechanism and variable values
to those available utilizing the Bloomberg online page for such calculation
function.
(f) Distribution of Assets. In case the Company shall declare or
----------------------
make any distribution of its assets (or rights to acquire its assets) to holders
of Common Stock as a partial liquidating dividend, by way of return of capital
or like events (including any dividend or distribution to the Company's
shareholders of cash or shares (or rights to acquire shares) of capital stock of
a subsidiary) (a "Distribution"), at any time after the initial issuance of this
------------
Warrant, then the Holder shall be entitled upon exercise of this Warrant for the
purchase of any or all of the shares of Common Stock subject hereto, to receive
the amount of such assets (or rights) which would have been payable to the
Holder had such Holder been the holder of such shares of Common Stock on the
record date for the determination of shareholders entitled to such Distribution.
(g) Notices of Adjustment. Upon the occurrence of any event which
---------------------
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the Holder, which notice shall state the
Exercise Price resulting from such adjustment and the increase or decrease in
the number of Warrant Shares purchasable at such price upon exercise, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. Such calculation shall be certified by the chief
financial officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of the
------------------------------------
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(i) No Fractional Shares. No fractional shares of Common Stock are
--------------------
to be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock; provided that in the event that sufficient funds are not legally
available for the payment of such cash adjustment any fractional shares of
Common Stock shall be rounded up to the next whole number.
(j) Other Notices. In case at any time:
-------------
(i) the Company shall declare any dividend upon the Common
Stock payable in shares of stock of any class or make any other distribution to
all (or substantially all) of the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or other
rights;
11
<PAGE>
(iii) there shall be any capital reorganization of the Company,
or reclassification of the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substantially all of its assets to,
another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in each such case, the Company
shall give to the Holder (a) notice of the date on which the books of the
Company shall close or a record shall be taken for determining the holders of
Common Stock entitled to receive any such dividend, distribution, or
subscription rights or for determining the holders of Common Stock entitled to
vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up and (b) in the case of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take place.
Such notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution, or subscription rights
or to exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least 30 days prior to the record date or the date on which
the Company's books are closed in respect thereto, but in no event earlier than
public announcement of such proposed transaction or event. Failure to give any
such notice or any defect therein shall not affect the validity of the
proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
(k) Certain Definitions.
-------------------
(i) "Common Stock Deemed Outstanding" shall mean the number of
-------------------------------
shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) in case of any adjustment
required by Section 4(a) resulting from the issuance of any Options, the maximum
total number of shares of Common Stock issuable upon the exercise of the Options
for which the adjustment is required (including any Common Stock issuable upon
the conversion of Convertible Securities issuable upon the exercise of such
Options), and (y) in the case of any adjustment required by Section 4(a)
resulting from the issuance of any Convertible Securities, the maximum total
number of shares of Common Stock issuable upon the exercise, conversion or
exchange of the Convertible Securities for which the adjustment is required, as
of the date of issuance of such Convertible Securities, if any.
(ii) "Market Price," as of any date, (i) means the Closing Bid
------------
Price for the shares of Common Stock as reported to Nasdaq National Market
System for the trading day immediately preceding such date, or (ii) if the
Nasdaq National Market System is not the principal trading market for the Common
Stock, the last reported bid price on the principal trading market for the
Common Stock during the same period, or, if there is no bid price for such
period, the last reported sales price for such period, or (iii) if market value
cannot be calculated as of such date on any of the foregoing bases, the Market
Price shall be the fair market value as reasonably determined by an investment
banking firm selected by the Company and reasonably acceptable to each initial
12
<PAGE>
holder and the Holders of a majority in interest of the Warrants, with the costs
of the appraisal to be borne by the Company. The manner of determining the
Market Price of the Common Stock set forth in the foregoing definition shall
apply with respect to any other security in respect of which a determination as
to market value must be made hereunder.
(iii) "Common Stock," for purposes of this Section 4, includes
------------
the Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only Common Stock in
respect of which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
5. Cap Amount. Prior to Stockholder Approval (as defined in the Securities
----------
Purchase Agreement), unless otherwise permitted by the Nasdaq National Market
System or unless the rules thereof do not apply to the Warrants, in no event
shall the total number of shares of Common Stock issued upon exercise of the
Warrants exceed the maximum number of shares of Common Stock that the Company
can without stockholder approval so issue pursuant to Nasdaq Rule 4460(i) (or
any successor rule) (the "Cap Amount") upon exercise of the Warrants and
----------
conversion of the Preferred Stock, which, as of the date of initial issuance of
the shares of Preferred Stock and Warrants, shall be eight million seven hundred
and six thousand four hundred and eighty three (8,706,483) shares (or such
higher number as such rules permit). The Cap Amount shall be allocated pro-rata
to the Holders. A Holder's allocable portion of the Cap Amount shall be
applicable to both shares of Preferred Stock and Warrants held by it and shall
be applied to such Preferred Stock and Warrants on the basis of the time of
conversion or exercise, as the case may be, thereof.
6. Issue Tax. The issuance of certificates for Warrant Shares upon the
---------
exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than the Holder.
7. No Rights or Liabilities as a Stockholder. This Warrant shall not
-----------------------------------------
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the Holder to purchase Warrant Shares, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Exercise Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
13
<PAGE>
8. Transfer, Exchange, Redemption and Replacement of Warrant.
---------------------------------------------------------
(a) Restriction on Transfer. This Warrant and the rights granted to
-----------------------
the Holder are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the Form of Assignment
attached hereto as Exhibit 2, at the office or agency of the Company referred to
in Section 8(e) below, provided, however, that any transfer or assignment shall
be subject to the provisions of Sections 5.1 and 5.2 of the Securities Purchase
Agreement. Until due presentment for registration of transfer on the books of
the Company, the Company may treat the registered holder hereof as the owner and
holder hereof for all purposes, and the Company shall not be affected by any
notice to the contrary. Notwithstanding anything to the contrary contained
herein, the registration rights described in Section 9 hereof are assignable
only in accordance with the provisions of that certain Registration Rights
Agreement, dated as of December 21, 1998, by and among the Company and the other
signatories thereto (the "Registration Rights Agreement"). Holders shall not
-----------------------------
knowingly transfer or otherwise dispose of, in any private off-market offering,
any Warrants (or shares of Common Stock issuable upon exercise of any Warrant)
to any Competitor (as defined in the Securities Purchase Agreement) of the
Company (or any of its subsidiaries).
(b) Warrant Exchangeable for Different Denominations. This Warrant is
------------------------------------------------
exchangeable, upon the surrender hereof by the Holder at the office or agency of
the Company referred to in Section 8(e) below, for new Warrants, in the form
hereof, of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as shall be designated by the Holder of at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant or, in the case of any such loss, theft, or destruction, upon
delivery, of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, new Warrants, in the form hereof, in such
denominations as Holder may request.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
---------------------------------
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 8, this Warrant shall be promptly canceled by the Company. The
Company shall pay all issuance taxes (other than securities transfer taxes) and
charges payable in connection with the preparation, execution, and delivery of
Warrants pursuant to this Section 8.
(e) Warrant Register. The Company shall maintain, at its principal
----------------
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder), a register for this Warrant, in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
14
<PAGE>
(f) Additional Restriction on Exercise or Transfer. Notwithstanding
----------------------------------------------
anything to the contrary contained herein, the Warrants shall not be exercisable
by the Holder to the extent (but only to the extent) that, if exercisable by
Holder, Holder would beneficially own in excess of 4.9% (the "Applicable
----------
Percentage") of the shares of Common Stock. To the extent the above limitation
- ----------
applies, the determination of whether the Warrants shall be exercisable (vis-a-
vis other securities owned by Holder) and of which Warrants shall be exercisable
(as among Warrants) shall be made by Holder and submission of the Warrants for
exercise shall be deemed to be the Holder's determination of whether such
Warrants are exercisable (vis-a-vis other securities owned by Holder) and of
which Warrants are exercisable (among Warrants), in each case subject to such
aggregate percentage limitation. No prior inability to exercise Warrants
pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of
exercisability. For the purposes of this paragraph, beneficial ownership and
all determinations and calculations, including without limitation, with respect
to calculations of percentage ownership, shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulations 13D and G thereunder. The provisions of this paragraph may be
implemented in a manner otherwise than in strict conformity with the terms this
Section (f) with the approval of the Board of Directors of the Company and the
- -------
Holder: (i) with respect to any matter to cure any ambiguity herein, to correct
this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Applicable Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly
give effect to such Applicable Percentage limitation; and (ii) with respect to
any other matter only with the further consent of the holders of a majority of
the then outstanding shares of Common Stock. For clarification, it is expressly
a term of this security that the limitations contained in this paragraph shall
apply to each successor holder of Warrants.
9. Registration Rights. The initial holder of this Warrant (and certain
-------------------
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement.
10. Notices. Any notice herein required or permitted to be given shall
-------
be in writing and may be personally served or delivered by courier or by
confirmed telecopy, and shall be deemed delivered at the time and date of
receipt (which shall include telephone line facsimile transmission). The
addresses for such communications shall be:
If to the Company:
P-Com, Inc.
3175 S. Winchester Blvd.
Campbell, California 95008
Telecopy: (408) 866-3678
Attention: Chief Financial Officer and
Chief Executive Officer
15
<PAGE>
with a copy to:
Brobeck, Phleger & Harrison LLP
2200 Geng Road
Palo Alto, California 94303-0913
Telecopy: (650) 496-2733
Attention: Warren T. Lazarow, Esq.
and if to the Holder, at such address as Holder shall have provided in writing
to the Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 10.
11. Governing Law; Jurisdiction. This Warrant shall be governed by and
---------------------------
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The Company
irrevocably consents to the jurisdiction of the United States federal courts
located in the County of New Castle in the State of Delaware in any suit or
proceeding based on or arising under this Warrant and irrevocably agrees that
all claims in respect of such suit or proceeding may be determined in such
courts. The Company irrevocably waives the defense of an inconvenient forum to
the maintenance of such suit or proceeding. The Company agrees that a final
nonappealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
12. Miscellaneous.
-------------
(a) Amendments. This Warrant and any provision hereof may only be
----------
amended by an instrument in writing signed by the Company and each initial
Holder and the Holders of a majority of the Warrant Shares remaining subject to
the Warrants.
(b) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(c) Cashless Exercise. Notwithstanding anything to the contrary
-----------------
contained in this Warrant, this Warrant may be exercised by presentation and
surrender of this Warrant to the Company at its principal executive offices with
a written notice of the Holder's intention to effect a cashless exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
-----------------
In the event of a Cashless Exercise, in lieu of paying the Exercise Price in
cash, the Holder shall surrender this Warrant for the number of shares of Common
Stock determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price per share of the Common Stock
and the Exercise Price, and the denominator of which shall be such then current
Market Price per share of Common Stock.
16
<PAGE>
(d) Assignability. This Warrant shall be binding upon the Company and
-------------
its successors and assigns and shall inure to the benefit of Holder and its
successors and assigns. The Holder shall notify the Company upon the assignment
of this Warrant.
(e) Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt
-------------------------------------------------
by the Company of evidence of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of indemnity or
security reasonably satisfactory to the Company, and upon surrender of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.
* * *
17
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
their duly authorized officers.
P-Com, Inc.
By:_________________________________________
Name: Robert E. Collins
Title: Chief Financial Officer
18
<PAGE>
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of common stock of P-Com, Inc., a Delaware
corporation (the "Company"), evidenced by the attached Warrant, and [herewith
-------
makes payment of the Exercise Price with respect to such shares in full/ elects
to effect a Cashless Exercise pursuant to the terms of the Warrant], all in
accordance with the conditions and provisions of said Warrant.
(i) [If a cash exercise -- The undersigned makes the representations and
warranties contained in Sections 2.1 through 2.7 of the Securities Purchase
Agreement as of the date of the exercise.] The undersigned agrees not to offer,
sell, transfer or otherwise dispose of any Common Stock obtained on exercise of
the Warrant, except under circumstances that will not result in a violation of
the Securities Act of 1933, as amended, or any state securities laws.
(ii) The undersigned requests that stock certificates for such shares be
issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Holder (or such other person or
persons indicated below) and delivered to the undersigned (or designee(s) at the
address (or addresses) set forth below:
Date:________________ ______________________________________________
Signature of Holder
______________________________________________
Name of Holder (Print)
Address:
______________________________________________
______________________________________________
19
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
and hereby irrevocably constitutes and appoints ______________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Date:____________, _____,
In the presence of
Name:________________________________________________
Signature:___________________________________________
Title of Signing Officer or Agent (if any):
_________________________________________
Address: _________________________________
_________________________________
Note: The above signature should
correspond exactly with the name on
the face of the within Warrant.
20
<PAGE>
Exhibit 10.49C
VOID AFTER 5:00 P.M. Eastern Standard
TIME ON December 22, 2003
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
Right to Purchase Shares of
Common Stock, par value $0.0001 per share
Date: June 4, 1999
P-COM, INC.
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, CAPITAL VENTURES INTERNATIONAL or
its registered assigns, is entitled to purchase from P-Com, Inc., a Delaware
corporation (the "Company"), at any time or from time to time during the period
-------
specified in Section 2 hereof, 414,086 fully paid and nonassessable shares of
the Company's common stock, par value $0.0001 per share (the "Common Stock"),
------------
which number of shares was calculated as follows:
<TABLE>
<S> <C> <C> <C>
Dollar Amount of Holder's the average Closing Bid Price
Investment Pursuant to the (as defined herein) over the
Securities Purchase Agreement (divided fifteen (15) trading day period x .25
(as defined below) by) immediately preceding
December 22, 1998 (the "Closing
-------
Date")
----
</TABLE>
The Warrant exercise price per share of Common Stock (the "Exercise Price")
--------------
shall be equal to $3.00; provided, however, that the Exercise Price shall be
adjusted downward as of June 4, 2000 to the average of the Closing Bid Prices of
the Common Stock for the ten consecutive trading days ending on June 4, 2000 if
such average is less than the Exercise Price otherwise in effect on such date.
This Warrant is being issued pursuant to that certain Securities Purchase
Agreement dated December 21, 1998 among the Company and the signatories thereto
(the "Securities Purchase Agreement"). The number of shares of Common Stock
-----------------------------
purchasable hereunder (the "Warrant Shares") and the Exercise Price are subject
--------------
to adjustment as provided in Section 4 hereof. The term
<PAGE>
"Warrants" means this Warrant and the other warrants of the Company issued
--------
pursuant to the terms of the Securities Purchase Agreement.
The term "Closing Bid Price" and "Closing Trade Price" mean, for any
----------------- -------------------
security as of any date, the closing bid price and the closing trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to the holder hereof (the
"Holder") if Bloomberg Financial Markets is not then reporting closing bid
------
prices or closing sale prices, as applicable, of such security (collectively,
"Bloomberg"), or if the foregoing does not apply, the last reported sale price
---------
of such security in the over-the-counter market on the electronic bulletin board
of such security as reported by Bloomberg, or, if no sale price is reported for
such security by Bloomberg, the average of the bid prices of any market makers
for such security as reported in the "pink sheets" by the National Quotation
Bureau, Inc. If the Closing Bid Price or Closing Trade Price cannot be
calculated for such security on such date on any of the foregoing bases, the
Closing Bid Price or Closing Trade Price, as applicable, of such security on
such date shall be the fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to the
Holder with the costs of such appraisal to be borne by the Company.
This Warrant is subject to the following terms, provisions, and conditions:
1. Mechanics of Exercise. Subject to the provisions hereof, including,
---------------------
without limitation, the limitations contained in Section 8(f) hereof, this
Warrant may be exercised as follows:
(a) Manner of Exercise. This Warrant may be exercised by the Holder,
------------------
in whole or in part, by the surrender of this Warrant (or evidence of loss,
theft, destruction or mutilation thereof in accordance with Section 12(e)
hereof), together with a completed exercise agreement in the form of Exercise
Agreement attached hereto as Exhibit 1 (the "Exercise Agreement"), to the
------------------
Company at the Company's principal executive offices (or such other office or
agency of the Company as it may designate by notice to the Holder), and upon
(i) payment to the Company in cash, by certified or official bank check or by
wire transfer for the account of the Company, of the Exercise Price for the
Warrant Shares specified in the Exercise Agreement or (ii) if the Holder
elects to effect a Cashless Exercise (as defined in Section 12(c) below),
delivery to the principal executive office of the Company ("Attention:
Corporate Secretary") of a written notice of an election to effect a Cashless
Exercise for the Warrant Shares specified in the Exercise Agreement. The
Warrant Shares so purchased shall be deemed to be issued to the Holder or
Holder's designees, as the record owner of such shares, as of the date on
which this Warrant shall have been surrendered, the completed Exercise
Agreement shall have been delivered, and payment (or notice of an election to
effect a Cashless Exercise) shall have been made for such shares as set forth
above.
(b) Issuance of Certificates. Subject to Section 1(c), certificates
------------------------
for the Warrant Shares so purchased, representing the aggregate number of shares
specified in the Exercise Agreement, shall be delivered to the Holder within a
reasonable time, not exceeding three (3)
2
<PAGE>
business days, after this Warrant shall have been so exercised (the
"Delivery Period"). The certificates so delivered shall be in such
---------------
denominations as may be requested by the Holder upon exercise and shall be
registered in the name of Holder or such other name as shall be designated by
such Holder upon exercise. If this Warrant shall have been exercised only in
part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the Holder a
new Warrant representing the number of shares with respect to which this
Warrant shall not then have been exercised.
(c) Exercise Disputes. In the case of any dispute with respect to an
-----------------
exercise, the Company shall promptly issue such number of shares of Common Stock
as are not disputed in accordance with this Section. If such dispute involves
the calculation of the Exercise Price, the Company shall submit the disputed
calculations to a nationally recognized independent accounting firm (selected by
the Company) via facsimile within three (3) business days of receipt of the
Exercise Agreement. The accounting firm shall audit the calculations and notify
the Company and the converting Holder of the results no later than ten (10)
business days from the date it receives the disputed calculations. The
accounting firm's calculation shall be deemed conclusive, absent manifest error.
The Company shall then issue the appropriate number of shares of Common Stock in
accordance with this Section.
(d) Fractional Shares. No fractional shares of Common Stock are to be
-----------------
issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Exercise Price of a share of
Common Stock (as determined for exercise of this Warrant into whole shares of
Common Stock); provided that in the event that sufficient funds are not legally
available for the payment of such cash adjustment any fractional shares of
Common Stock shall be rounded up to the next whole number.
2. Period of Exercise. This Warrant is exercisable at any time or from
------------------
time to time on or after the date hereof and before 5:00 P.M., Eastern Standard
time on the fifth (5th) anniversary of the date hereof (the "Exercise Period").
---------------
3. Certain Agreements of the Company. The Company hereby covenants and
---------------------------------
agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance
-----------------------
in accordance with the terms of this Warrant, be validly issued, fully paid, and
non-assessable and free from all taxes, liens, claims and encumbrances, except
such as are caused by the Holder.
(b) Reservation of Shares. During the Exercise Period, the Company
---------------------
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise of this Warrant.
3
<PAGE>
(c) Listing. The Company shall use its best efforts to secure the
-------
listing of the shares of Common Stock issuable upon exercise of this Warrant
upon The Nasdaq National Market System, the New York Stock Exchange or the
American Stock Exchange and upon each national securities exchange or automated
quotation system, if any, upon which shares of Common Stock are then listed or
become listed and shall maintain, so long as any other shares of Common Stock
shall be so listed, such listing of all shares of Common Stock from time to time
issuable upon the exercise of this Warrant; and the Company shall use its best
efforts to so list on each national securities exchange or automated quotation
system, as the case may be, and shall use its best efforts to maintain such
listing of any other shares of capital stock of the Company issuable upon the
exercise of this Warrant so long as any shares of the same class shall be listed
on such national securities exchange or automated quotation system.
(d) Certain Actions Prohibited. The Company will not, by amendment of
--------------------------
its charter or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such actions as may reasonably be requested by the Holder of this
Warrant in order to protect the exercise privilege of the Holder of this
Warrant, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, and (ii) will take all such
actions as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant.
4. Antidilution Provisions. During the Exercise Period, the Exercise
-----------------------
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Section 4. In the event that any adjustment of the
Exercise Price or number of Warrant Shares as required herein results in a
fraction of a cent or fraction of a share, as applicable, such Exercise Price or
number of Warrant Shares shall be rounded up or down to the nearest cent or
share, as applicable.
(a) Adjustment of Exercise Price and Number of Shares upon Issuance of
------------------------------------------------------------------
Common Stock. Except as otherwise provided in Section 4(c) and 4(e) hereof, if
- ------------
and whenever after the initial issuance of this Warrant, the Company issues or
sells, or in accordance with Section 4(b) hereof is deemed to have issued or
sold, any shares of Common Stock for no consideration or for a consideration per
share less than the Exercise Price (as then in effect) (a "Dilutive Issuance"),
-----------------
then effective immediately upon the Dilutive Issuance, the Exercise Price will
be adjusted in accordance with the following formula:
E' = (E) (O + P/M) / (CSDO)
where:
4
<PAGE>
E' = the adjusted Exercise Price
E = the then current Exercise Price;
M = the greater of the then current Market Price and the then
Current Exercise Price;
O = the number of shares of Common Stock outstanding
immediately prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in
Section 4(b) hereof, received by the Company upon such
Dilutive Issuance; and
CSDO = the total number of shares of Common Stock Deemed
Outstanding (as herein defined) immediately after the
Dilutive Issuance.
(b) Effect on Exercise Price of Certain Events. For purposes of
------------------------------------------
determining the adjusted Exercise Price under Section 4(a) hereof, the following
will be applicable:
(i) Issuance of Rights or Options. If, after the date hereof, the
-----------------------------
Company in any manner issues or grants any warrants, rights or options, whether
or not immediately exercisable, to subscribe for or to purchase Common Stock or
other securities exercisable, convertible into or exchangeable for Common Stock
("Convertible Securities"), but not to include the issuance, grant or exercise
----------------------
of any stock or options which may hereafter be issued, granted or exercised
under any service provider benefit plan of the Company now existing or to be
implemented in the future, so long as the issuance of such stock or options is
approved by a majority of the non-employee members of the Board of Directors of
the Company or a majority of the members of a committee of non-employee
directors established for such purpose (such warrants, rights and options to
purchase Common Stock or Convertible Securities are hereinafter referred to as
"Options"), and the price per share for which Common Stock is purchasable or
-------
issuable upon the exercise of such Options is less than the Exercise Price (as
then in effect) on the date of issuance of such Option or direct stock grant
("Below Market Options"), then the maximum total number of shares of Common
---------------------
Stock issuable upon the exercise of all such Below Market Options (assuming full
exercise, conversion or exchange of Convertible Securities, if applicable) will,
as of the date of the issuance or grant of such Below Market Options, be deemed
to be outstanding and to have been issued and sold by the Company for such price
per share. For purposes of the preceding sentence, the price per share for
which Common Stock is issuable upon the exercise of such Below Market Options is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or granting of such Below Market
Options, plus the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the exercise of all such Below Market Options, plus,
in the case of Convertible Securities issuable upon the exercise of such Below
Market Options, the minimum aggregate amount of additional consideration payable
upon the exercise, conversion or exchange thereof at the time such Convertible
Securities first become exercisable, convertible or exchangeable, by (ii) the
maximum total number of shares of Common Stock issuable upon the exercise of all
such Below Market Options (assuming full conversion of Convertible Securities,
if applicable). No further adjustment to the Exercise Price will be made upon
the actual issuance of such Common Stock upon the exercise of such Below Market
5
<PAGE>
Options or upon the exercise, conversion or exchange of Convertible Securities
issuable upon exercise of such Below Market Options.
(ii) Issuance of Convertible Securities.
----------------------------------
(A) If the Company in any manner issues or sells any Convertible
Securities, whether or not immediately convertible (other than where the same
are issuable upon the exercise of Options) and the price per share for which
Common Stock is issuable upon such exercise, conversion or exchange (as
determined pursuant to Section 4(b)(ii)(B) if applicable) is less than the
Exercise Price (as then in effect) on the date of issuance of such Convertible
Security, then the maximum total number of shares of Common Stock issuable upon
the exercise, conversion or exchange of all such Convertible Securities will, as
of the date of the issuance of such Convertible Securities, be deemed to be
outstanding and to have been issued and sold by the Company for such price per
share. For the purposes of the preceding sentence, the price per share for
which Common Stock is issuable upon such exercise, conversion or exchange is
determined by dividing (i) the total amount, if any, received or receivable by
the Company as consideration for the issuance or sale of all such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange thereof at
the time such Convertible Securities first become exercisable, convertible or
exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the exercise, conversion or exchange of all such Convertible
Securities. No further adjustment to the Exercise Price will be made upon the
actual issuances of such Common Stock upon exercise, conversion or exchange of
such Convertible Securities.
(B) If the Company in any manner issues or sells any Convertible
Securities with a fluctuating or re-setting conversion or exercise price or
exchange ratio (a "Variable Rate Convertible Security"), then the price per
----------------------------------
share for which Common Stock is issuable upon such exercise, conversion or
exchange for purposes of the calculation contemplated by Section 4(b)(ii)(A)
shall be deemed to be the lowest price per share which would be applicable
assuming that (1) all holding period and other conditions to any discounts
contained in such Convertible Security have been satisfied, and (2) the Market
Price on the date of exercise, conversion or exchange of such Convertible
Security was 80% of the Market Price on the date of issuance of such Convertible
Security (the "Assumed Variable Market Price").
-----------------------------
(iii) Change in Option Price or Conversion Rate. Except for the
-----------------------------------------
issuance, grant or exercise of any stock or options which may hereafter be
granted or exercised under any service provider benefit plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, if there is a change at any
time in (i) the amount of additional consideration payable to the Company upon
the exercise of any Options; (ii) the amount of additional consideration, if
any, payable to the Company upon the exercise, conversion or exchange of any
Convertible Securities; or (iii) the rate at which any Convertible
6
<PAGE>
Securities are convertible into or exchangeable for Common Stock (other than
under or by reason of provisions designed to protect against dilution), the
Exercise Price in effect at the time of such change will be readjusted to the
Exercise Price which would have been in effect at such time had such Options
or Convertible Securities still outstanding provided for such changed
additional consideration or changed conversion rate, as the case may be, at
the time initially granted, issued or sold.
(iv) Treatment of Expired Options and Unexercised Convertible
--------------------------------------------------------
Securities. If, in any case, the total number of shares of Common Stock
- ----------
issuable upon exercise of any Options or upon exercise, conversion or exchange
of any Convertible Securities is not, in fact, issued and the rights to exercise
such Option or to exercise, convert or exchange such Convertible Securities
shall have expired or terminated, the Exercise Price then in effect will be
readjusted to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Options or Convertible Securities, to
the extent outstanding immediately prior to such expiration or termination
(other than in respect of the actual number of shares of Common Stock issued
upon exercise or conversion thereof), never been issued.
(v) Calculation of Consideration Received. If any Common Stock,
-------------------------------------
Options or Convertible Securities are issued, granted or sold for cash, the
consideration received therefor for purposes of this Warrant will be the amount
received by the Company therefor, before deduction of reasonable commissions,
underwriting discounts or allowances or other reasonable expenses paid or
incurred by the Company in connection with such issuance, grant or sale. In
case any Common Stock, Options or Convertible Securities are issued or sold for
a consideration part or all of which shall be other than cash, the amount of the
consideration other than cash received by the Company will be the fair market
value of such consideration except where such consideration consists of freely-
tradeable securities, in which case the amount of consideration received by the
Company will be the Market Price thereof as of the date of receipt. In case any
Common Stock, Options or Convertible Securities are issued in connection with
any merger or consolidation in which the Company is the surviving corporation,
the amount of consideration therefor will be deemed to be the fair market value
of such portion of the net assets and business of the non-surviving corporation
as is attributable to such Common Stock, Options or Convertible Securities, as
the case may be. The fair market value of any consideration other than cash or
securities will be determined in the good faith reasonable business judgment of
the Board of Directors.
(vi) Exceptions to Adjustment of Exercise Price. No adjustment to the
------------------------------------------
Exercise Price will be made (i) upon the exercise of any warrants, options or
convertible securities issued and outstanding on the date hereof in accordance
with the terms of such securities as of such date; (ii) upon the grant or
exercise of any stock or options which may hereafter be granted or exercised
under any employee, consultant or director benefit plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose; (iii) upon the issuance of
the Common Shares (as defined in the Securities Purchase Agreement) in
accordance
7
<PAGE>
with terms of the Certificate of Designations with respect to the
Company's shares of Series B Preferred Stock (the "Preferred Stock"); (iv) upon
---------------
the exercise of the Warrants; or (v) issuances of any equity securities pursuant
to the Stockholders Rights Plan and the Series A Preferred Stock, as amended.
(c) Subdivision or Combination of Common Stock. If the Company, at
------------------------------------------
any time after the initial issuance of this Warrant, subdivides (by any stock
split, stock dividend, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a greater number of shares, then,
after the date of record for effecting such subdivision, the Exercise Price in
effect immediately prior to such subdivision will be proportionately reduced.
If the Company, at any time after the initial issuance of this Warrant, combines
(by reverse stock split, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a smaller number of shares, then,
after the date of record for effecting such combination, the Exercise Price in
effect immediately prior to such combination will be proportionately increased.
(d) Adjustment in Number of Shares.
------------------------------
(i) With respect to the first twenty million dollars of
proceeds received by the Company as consideration for the issuance of
securities after the date of this Warrant, if the imputed valuation per share
of the securities issued by the Company (with such valuation to be determined
by an investment banking firm acceptable to the Company and the holder) (the
"Actual Price") implies a discount to the purchaser of more than fifteen
------------
percent (15%) below the valuation per share equal to the average of the
Closing Trade Prices for the fifteen (15) consecutive trading days ending on
the date of such issuance (the "Average Price"), then the number of shares
-------------
issuable upon exercise of this Warrant shall be increased as follows:
(A) for each percentage point above fifteen percent (15%)
but less than or equal to twenty percent (20%) by which the Actual Price is
below the Average Price, the number of shares issuable upon exercise of this
Warrant shall be increased by ten thousand (10,000) shares; and
(B) in addition to the increase required by Section
4(d)(i)(A), for each percentage point above twenty percent (20%) but less than
or equal to twenty-five percent (25%) by which the Actual Price is below the
Average Price, the number of shares issuable upon exercise of this Warrant
shall be increased by fifteen thousand (15,000) shares; and
(C) in addition to the increases required by Section
4(d)(i)(A) and (B), for each percentage point above twenty-five percent (25%)
by which the Actual Price is below the Average Price, the number of shares
issuable upon exercise of this Warrant shall be increased by twenty thousand
(20,000) shares.
(ii) Upon each adjustment of the Exercise Price pursuant to the
provisions of this Section 4, the number of shares of Common Stock issuable
upon exercise of this Warrant
8
<PAGE>
shall be adjusted by multiplying a number equal to the Exercise Price in
effect immediately prior to such adjustment by the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
adjustment and dividing the product so obtained by the adjusted Exercise
Price.
(e) Major Transactions. Except in the case of a Common Stock Major
------------------
Transaction (as defined below), if the Company shall consolidate or merge with
any other corporation or entity (other than a merger in which the Company is the
surviving or continuing entity and its capital stock is unchanged and unissued
in such transaction (except for Common Stock constituting less than twenty
percent (20%) of the Company's Common Stock then outstanding)) or there shall
occur any share exchange pursuant to which all of the outstanding shares of
Common Stock are converted into other securities or property or any
reclassification or change of the outstanding shares of Common Stock (each of
the foregoing being a "Major Transaction"), then each holder of a Warrant shall
thereafter be entitled to (a) in the event that the Common Stock remains
outstanding or holders of Common Stock receive any common stock or substantially
similar equity interest, in each of the foregoing cases which is publicly
traded, retain its Warrant and such Warrant shall continue to apply to such
Common Stock or shall apply, as nearly as practicable, to such other common
stock or equity interest, as the case may be, or (b) regardless or whether (a)
applies, receive consideration, in exchange for such Warrant, equal to the
greater of, as determined in the sole discretion of such holder, (i) the number
of shares of stock or securities or property of the Company, or of the entity
resulting from such Major Transaction (the "Major Transaction Consideration"),
-------------------------------
to which a holder of the number of shares of Common Stock delivered upon the
exercise of such Warrant would have been entitled upon such Major Transaction
had such holder exercised the Warrant (without regard to any limitations on
conversion or elsewhere contained) on the trading date immediately preceding the
public announcement of the transaction resulting in such Major Transaction and
had such Common Stock been issued and outstanding and had such Holder been the
holder of record of such Common Stock at the time of the consummation of such
Major Transaction, and (ii) cash paid by the Company in immediately available
funds, in an amount equal to one hundred and twenty five percent (125%) of the
Black-Scholes Amount (as defined herein) times the number of shares of Common
Stock for which this Warrant was exercisable (without regard to any limitations
on exercise herein contained); and the Company shall make lawful provision for
the foregoing as a part of such Major Transaction and shall cause the issuer of
any security in such transaction which constitutes Registrable Securities under
that certain Registration Rights Agreement dated December 21, 1998 among the
Company and the signatories thereto (the "Registration Rights Agreement") to
-----------------------------
assume all of the Company's obligations under the Registration Rights Agreement.
In the event that the Company shall consolidate or merge with any corporation in
a transaction in which common stock of the surviving corporation or the parent
thereof (the "Exchange Securities") is issued to the holders of Common Stock in
-------------------
such transaction in exchange for all such Common Stock, and (a) the Exchange
Securities are publicly traded, (b) the average daily trading volume of the
Exchange Securities reported by Bloomberg during the ninety (90) day period
ending on the date on which such transaction is publicly disclosed is greater
than two million dollars ($2,000,000) per day, (c) the historical one hundred
(100) day volatility of the Exchange Securities reported by Bloomberg during the
period ending on the date on which such transaction
9
<PAGE>
is publicly disclosed is greater than fifty percent (50%) and (d) the last
sale price of the Exchange Securities on the date immediately before the date
on which such transaction is publicly disclosed is not less than sixty five
percent (65%) of the last sale price of the Exchange Securities on any day
during the twenty (20) trading day period ending on such date (in each case as
reported by Bloomberg) (a "Common Stock Major Transaction"), then each holder
------------------------------
of a Warrant shall following consummation of such transaction have the right
to receive solely, in exchange for such Warrant, consideration equal to the
number of shares of stock or securities or property issued or paid in such
Common Stock Major Transaction to which a holder of the number of shares of
Common Stock which would have been delivered upon exercise of such Warrant
would have been entitled upon such Common Stock Major Transaction had the
holder of such Warrant exercised (without regard to any limitations on
conversion herein or elsewhere contained) the Warrant on the trading date
immediately preceding the public announcement of the transaction resulting in
such Common Stock Major Transaction and had such Common Stock been issued and
outstanding and had such holder been the holder of record of such Common Stock
at the time of the consummation of such Common Stock Major Transaction; and
the Company shall make lawful provision for the foregoing as a part of such
Common Stock Major Transaction and shall cause the issuer of any security in
such transaction which constitutes Registrable Securities under that certain
Registration Rights Agreement dated December 21, 1998 among the Company and
the signatories thereto (the "Registration Rights Agreement") to assume all
-----------------------------
of the Company's obligations under the Registration Rights Agreement. No sooner
than ten (10) business days nor later than five (5) business days prior to the
consummation of the Major Transaction or Common Stock Major Transaction, as the
case may be, (each, a "Transaction") but not prior to the public announcement of
-----------
such Transaction, the Company shall deliver written notice ("Notice of
---------
Transaction") to each holder of a Warrant, which Notice of Transaction shall be
- -----------
deemed to have been delivered one (1) business day after the Company's sending
such notice by telecopy (provided that the Company sends a confirming copy of
such notice on the same day by overnight courier) of such Notice of Transaction.
Such Notice of Transaction shall indicate the amount and type of the Transaction
consideration which such holder of a Warrant would receive under this Section.
If the Major Transaction Consideration does not consist entirely of United
States currency, such holder may elect to receive United States currency in an
amount equal to the value of the Major Transaction Consideration in lieu of the
Major Transaction Consideration by delivering notice of such election to the
Company within five (5) business days of such holder's receipt of the Notice of
Transaction.
The "Black-Scholes Amount" shall be an amount determined by calculating the
--------------------
"Black-Scholes" value of an option to purchase one share of Common Stock on the
applicable page on the Bloomberg online page, using the following variable
values: (i) the current market price of the Common Stock equal to the closing
trade price on the last trading day before the date of the Notice of the Major
Transaction; (ii) volatility of the Common Stock equal to the volatility of the
Common Stock during the 100 trading day period preceding the date of the Notice
of the Major Transaction; (iii) a risk free rate equal to the interest rate on
the United States treasury bill or treasury note with a maturity corresponding
to the remaining term of this Warrant on the date of the Notice of the Major
Transaction; and (iv) an exercise price equal to the Exercise Price on the date
of the Notice of the Major Transaction. In the event such calculation function
is no longer available utilizing the
10
<PAGE>
Bloomberg online page, the Holder shall calculate such amount in its sole
discretion using the closest available alternative mechanism and variable
values to those available utilizing the Bloomberg online page for such
calculation function.
(f) Distribution of Assets. In case the Company shall declare or make
----------------------
any distribution of its assets (or rights to acquire its assets) to holders of
Common Stock as a partial liquidating dividend, by way of return of capital or
like events (including any dividend or distribution to the Company's
shareholders of cash or shares (or rights to acquire shares) of capital stock of
a subsidiary) (a "Distribution"), at any time after the initial issuance of this
------------
Warrant, then the Holder shall be entitled upon exercise of this Warrant for the
purchase of any or all of the shares of Common Stock subject hereto, to receive
the amount of such assets (or rights) which would have been payable to the
Holder had such Holder been the holder of such shares of Common Stock on the
record date for the determination of shareholders entitled to such Distribution.
(g) Notices of Adjustment. Upon the occurrence of any event which
---------------------
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the Holder, which notice shall state the
Exercise Price resulting from such adjustment and the increase or decrease in
the number of Warrant Shares purchasable at such price upon exercise, setting
forth in reasonable detail the method of calculation and the facts upon which
such calculation is based. Such calculation shall be certified by the chief
financial officer of the Company.
(h) Minimum Adjustment of Exercise Price. No adjustment of the
------------------------------------
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(i) No Fractional Shares. No fractional shares of Common Stock are to
--------------------
be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the Market Price of a share of Common
Stock; provided that in the event that sufficient funds are not legally
available for the payment of such cash adjustment any fractional shares of
Common Stock shall be rounded up to the next whole number.
(j) Other Notices. In case at any time:
-------------
(i) the Company shall declare any dividend upon the Common Stock
payable in shares of stock of any class or make any other distribution to all
(or substantially all) of the holders of the Common Stock;
(ii) the Company shall offer for subscription pro rata to the
holders of the Common Stock any additional shares of stock of any class or
other rights;
11
<PAGE>
(iii) there shall be any capital reorganization of the Company,
or reclassification of the Common Stock, or consolidation or merger of the
Company with or into, or sale of all or substantially all of its assets to,
another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, in each such case, the Company
shall give to the Holder (a) notice of the date on which the books of the
Company shall close or a record shall be taken for determining the holders of
Common Stock entitled to receive any such dividend, distribution, or
subscription rights or for determining the holders of Common Stock entitled to
vote in respect of any such reorganization, reclassification, consolidation,
merger, sale, dissolution, liquidation or winding-up and (b) in the case of any
such reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take place.
Such notice shall also specify the date on which the holders of Common Stock
shall be entitled to receive such dividend, distribution, or subscription rights
or to exchange their Common Stock for stock or other securities or property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least 30 days prior to the record date or the date on which
the Company's books are closed in respect thereto, but in no event earlier than
public announcement of such proposed transaction or event. Failure to give any
such notice or any defect therein shall not affect the validity of the
proceedings referred to in clauses (i), (ii), (iii) and (iv) above.
(k) Certain Definitions.
-------------------
(i) "Common Stock Deemed Outstanding" shall mean the number of
-------------------------------
shares of Common Stock actually outstanding (not including shares of Common
Stock held in the treasury of the Company), plus (x) in case of any adjustment
required by Section 4(a) resulting from the issuance of any Options, the
maximum total number of shares of Common Stock issuable upon the exercise of
the Options for which the adjustment is required (including any Common Stock
issuable upon the conversion of Convertible Securities issuable upon the
exercise of such Options), and (y) in the case of any adjustment required by
Section 4(a) resulting from the issuance of any Convertible Securities, the
maximum total number of shares of Common Stock issuable upon the exercise,
conversion or exchange of the Convertible Securities for which the adjustment
is required, as of the date of issuance of such Convertible Securities, if
any.
(ii) "Market Price," as of any date, (i) means the Closing Bid
------------
Price for the shares of Common Stock as reported to Nasdaq National Market
System for the trading day immediately preceding such date, or (ii) if the
Nasdaq National Market System is not the principal trading market for the
Common Stock, the last reported bid price on the principal trading market for
the Common Stock during the same period, or, if there is no bid price for such
period, the last reported sales price for such period, or (iii) if market
value cannot be calculated as of such date on any of the foregoing bases, the
Market Price shall be the fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to
each initial
12
<PAGE>
holder and the Holders of a majority in interest of the Warrants, with the
costs of the appraisal to be borne by the Company. The manner of determining
the Market Price of the Common Stock set forth in the foregoing definition
shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
(iii) "Common Stock," for purposes of this Section 4, includes the
------------
Common Stock and any additional class of stock of the Company having no
preference as to dividends or distributions on liquidation, provided that the
shares purchasable pursuant to this Warrant shall include only Common Stock in
respect of which this Warrant is exercisable, or shares resulting from any
subdivision or combination of such Common Stock, or in the case of any
reorganization, reclassification, consolidation, merger, or sale of the
character referred to in Section 4(e) hereof, the stock or other securities or
property provided for in such Section.
5. Cap Amount. Prior to Stockholder Approval (as defined in the Securities
----------
Purchase Agreement), unless otherwise permitted by the Nasdaq National Market
System or unless the rules thereof do not apply to the Warrants, in no event
shall the total number of shares of Common Stock issued upon exercise of the
Warrants exceed the maximum number of shares of Common Stock that the Company
can without stockholder approval so issue pursuant to Nasdaq Rule 4460(i) (or
any successor rule) (the "Cap Amount") upon exercise of the Warrants and
----------
conversion of the Preferred Stock, which, as of the date of initial issuance of
the shares of Preferred Stock and Warrants, shall be eight million seven hundred
and six thousand four hundred and eighty three (8,706,483) shares (or such
higher number as such rules permit). The Cap Amount shall be allocated pro-rata
to the Holders. A Holder's allocable portion of the Cap Amount shall be
applicable to both shares of Preferred Stock and Warrants held by it and shall
be applied to such Preferred Stock and Warrants on the basis of the time of
conversion or exercise, as the case may be, thereof.
6. Issue Tax. The issuance of certificates for Warrant Shares upon the
---------
exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than the Holder.
7. No Rights or Liabilities as a Stockholder. This Warrant shall not
-----------------------------------------
entitle the Holder to any voting rights or other rights as a stockholder of the
Company. No provision of this Warrant, in the absence of affirmative action by
the Holder to purchase Warrant Shares, and no mere enumeration herein of the
rights or privileges of the Holder, shall give rise to any liability of the
Holder for the Exercise Price or as a shareholder of the Company, whether such
liability is asserted by the Company or by creditors of the Company.
13
<PAGE>
8. Transfer, Exchange, Redemption and Replacement of Warrant.
---------------------------------------------------------
(a) Restriction on Transfer. This Warrant and the rights granted to
-----------------------
the Holder are transferable, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the Form of Assignment
attached hereto as Exhibit 2, at the office or agency of the Company referred to
in Section 8(e) below, provided, however, that any transfer or assignment shall
be subject to the provisions of Sections 5.1 and 5.2 of the Securities Purchase
Agreement. Until due presentment for registration of transfer on the books of
the Company, the Company may treat the registered holder hereof as the owner and
holder hereof for all purposes, and the Company shall not be affected by any
notice to the contrary. Notwithstanding anything to the contrary contained
herein, the registration rights described in Section 9 hereof are assignable
only in accordance with the provisions of that certain Registration Rights
Agreement, dated as of December 21, 1998, by and among the Company and the other
signatories thereto (the "Registration Rights Agreement"). Holders shall not
-----------------------------
knowingly transfer or otherwise dispose of, in any private off-market offering,
any Warrants (or shares of Common Stock issuable upon exercise of any Warrant)
to any Competitor (as defined in the Securities Purchase Agreement) of the
Company (or any of its subsidiaries).
(b) Warrant Exchangeable for Different Denominations. This Warrant is
------------------------------------------------
exchangeable, upon the surrender hereof by the Holder at the office or agency of
the Company referred to in Section 8(e) below, for new Warrants, in the form
hereof, of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrants to represent the right to purchase such number of
shares as shall be designated by the Holder of at the time of such surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
----------------------
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant or, in the case of any such loss, theft, or destruction, upon
delivery, of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, new Warrants, in the form hereof, in such
denominations as Holder may request.
(d) Cancellation; Payment of Expenses. Upon the surrender of this
---------------------------------
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 8, this Warrant shall be promptly canceled by the Company. The
Company shall pay all issuance taxes (other than securities transfer taxes) and
charges payable in connection with the preparation, execution, and delivery of
Warrants pursuant to this Section 8.
(e) Warrant Register. The Company shall maintain, at its principal
----------------
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder), a register for this Warrant, in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
14
<PAGE>
(f) Additional Restriction on Exercise or Transfer. Notwithstanding
----------------------------------------------
anything to the contrary contained herein, the Warrants shall not be exercisable
by the Holder to the extent (but only to the extent) that, if exercisable by
Holder, Holder would beneficially own in excess of 4.9% (the "Applicable
----------
Percentage") of the shares of Common Stock. To the extent the above limitation
- ----------
applies, the determination of whether the Warrants shall be exercisable (vis-a-
vis other securities owned by Holder) and of which Warrants shall be exercisable
(as among Warrants) shall be made by Holder and submission of the Warrants for
exercise shall be deemed to be the Holder's determination of whether such
Warrants are exercisable (vis-a-vis other securities owned by Holder) and of
which Warrants are exercisable (among Warrants), in each case subject to such
aggregate percentage limitation. No prior inability to exercise Warrants
pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of
exercisability. For the purposes of this paragraph, beneficial ownership and
all determinations and calculations, including without limitation, with respect
to calculations of percentage ownership, shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and
Regulations 13D and G thereunder. The provisions of this paragraph may be
implemented in a manner otherwise than in strict conformity with the terms this
Section (f) with the approval of the Board of Directors of the Company and the
- -------
Holder: (i) with respect to any matter to cure any ambiguity herein, to correct
this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Applicable Percentage beneficial ownership limitation herein
contained or to make changes or supplements necessary or desirable to properly
give effect to such Applicable Percentage limitation; and (ii) with respect to
any other matter only with the further consent of the holders of a majority of
the then outstanding shares of Common Stock. For clarification, it is expressly
a term of this security that the limitations contained in this paragraph shall
apply to each successor holder of Warrants.
9. Registration Rights. The initial holder of this Warrant (and certain
-------------------
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement.
10. Notices. Any notice herein required or permitted to be given shall
-------
be in writing and may be personally served or delivered by courier or by
confirmed telecopy, and shall be deemed delivered at the time and date of
receipt (which shall include telephone line facsimile transmission). The
addresses for such communications shall be:
If to the Company:
P-Com, Inc.
3175 S. Winchester Blvd.
Campbell, California 95008
Telecopy: (408) 866-3678
Attention: Chief Financial Officer and
Chief Executive Officer
15
<PAGE>
with a copy to:
Brobeck, Phleger & Harrison LLP
2200 Geng Road
Palo Alto, California 94303-0913
Telecopy: (650) 496-2733
Attention: Warren T. Lazarow, Esq.
and if to the Holder, at such address as Holder shall have provided in writing
to the Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 10.
11. Governing Law; Jurisdiction. This Warrant shall be governed by and
---------------------------
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed in the State of Delaware. The Company
irrevocably consents to the jurisdiction of the United States federal courts
located in the County of New Castle in the State of Delaware in any suit or
proceeding based on or arising under this Warrant and irrevocably agrees that
all claims in respect of such suit or proceeding may be determined in such
courts. The Company irrevocably waives the defense of an inconvenient forum to
the maintenance of such suit or proceeding. The Company agrees that a final
nonappealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
12. Miscellaneous.
-------------
(a) Amendments. This Warrant and any provision hereof may only be
----------
amended by an instrument in writing signed by the Company and each initial
Holder and the Holders of a majority of the Warrant Shares remaining subject to
the Warrants.
(b) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(c) Cashless Exercise. Notwithstanding anything to the contrary
-----------------
contained in this Warrant, this Warrant may be exercised by presentation and
surrender of this Warrant to the Company at its principal executive offices with
a written notice of the Holder's intention to effect a cashless exercise,
including a calculation of the number of shares of Common Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless Exercise").
-----------------
In the event of a Cashless Exercise, in lieu of paying the Exercise Price in
cash, the Holder shall surrender this Warrant for the number of shares of Common
Stock determined by multiplying the number of Warrant Shares to which it would
otherwise be entitled by a fraction, the numerator of which shall be the
difference between the then current Market Price per share of the Common Stock
and the Exercise Price, and the denominator of which shall be such then current
Market Price per share of Common Stock.
16
<PAGE>
(d) Assignability. This Warrant shall be binding upon the Company and
-------------
its successors and assigns and shall inure to the benefit of Holder and its
successors and assigns. The Holder shall notify the Company upon the assignment
of this Warrant.
(e) Loss, Theft, Destruction or Mutilation of Warrant. Upon receipt
-------------------------------------------------
by the Company of evidence of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of indemnity or
security reasonably satisfactory to the Company, and upon surrender of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.
* * *
17
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
their duly authorized officers.
P-Com, Inc.
By:________________________________
Name: Robert E. Collins
Title: Chief Financial Officer
18
<PAGE>
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to purchase
____________ of the shares of common stock of P-Com, Inc., a Delaware
corporation (the "Company"), evidenced by the attached Warrant, and [herewith
-------
makes payment of the Exercise Price with respect to such shares in full/ elects
to effect a Cashless Exercise pursuant to the terms of the Warrant], all in
accordance with the conditions and provisions of said Warrant.
(i) [If a cash exercise -- The undersigned makes the representations and
warranties contained in Sections 2.1 through 2.7 of the Securities Purchase
Agreement as of the date of the exercise.] The undersigned agrees not to offer,
sell, transfer or otherwise dispose of any Common Stock obtained on exercise of
the Warrant, except under circumstances that will not result in a violation of
the Securities Act of 1933, as amended, or any state securities laws.
(ii) The undersigned requests that stock certificates for such shares be
issued, and a Warrant representing any unexercised portion hereof be issued,
pursuant to the Warrant in the name of the Holder (or such other person or
persons indicated below) and delivered to the undersigned (or designee(s) at the
address (or addresses) set forth below:
Date:_____________________ _______________________________________________
Signature of Holder
_______________________________________________
Name of Holder (Print)
_______________________________________________
Address:
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all rights of the undersigned under the within Warrant, with respect to the
number of shares of Common Stock covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
- ---------------- ------- -------------
and hereby irrevocably constitutes and appoints ______________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Date:____________, _____,
In the presence of
Name:_______________________________________________
Signature:__________________________________________
Title of Signing Officer or Agent (if any):
__________________________________________
Address: ____________________________________
____________________________________
Note: The above signature should correspond
exactly with the name on the face of
the within Warrant.
<PAGE>
Exhibit 99.3
FOR IMMEDIATE RELEASE Draft #6
Page 1 of 2
COMPANY CONTACTS:
Robert Collins, Vice President of Finance, CFO
P-COM, INC. ENTERS INTO AN AGREEMENT TO EXCHANGE ALL OUTSTANDING
SHARES OF SERIES B PREFERRED STOCK FOR COMMON STOCK
---------------------------------------------------
CAMPBELL, CA - June 7, 1999 - P-Com, Inc. (NASDAQ National Market: PCMS)
announced today that it has separately negotiated and entered into separate
agreements with each of the holders of the Series B convertible preferred stock
("Series B"), as a result of which the Company shall exchange all 15,000 shares
of Series B for 5,134,795 shares of common stock.
The Company also exchanged outstanding warrants to purchase 1,242,257
shares of common stock, which were held by the holders of Series B, for new
warrants with an exercise price of $3.00 per share rather than $3.47 per share.
In connection with the exchange agreements, each holder of the Series B
agreed to waive all premiums accrued and penalties incurred in connection with
the Series B.
The Company will record a charge to stockholders' equity in the second
quarter of approximately $11.5 million resulting from this exchange, increasing
the loss applicable to common shareholders when computing earnings per share.
In connection with the exchange, the Company agreed to register the
5,134,795 shares of common stock exchanged for the Series B and the 1,242,257
shares of common stock subject to the warrants. An amendment to the
registration statement on Form S-3 originally filed on January 21, 1999 will be
filed by June 11, 1999 to get the registration statement declared effective by
July 19, 1999.
"This transaction is a positive accomplishment in that it provides a more
traditional form of investment for P-Com," said Robert E. Collins, P-Com's Vice
President of Finance and CFO.
--more--
<PAGE>
P-COM, INC., ENTERS INTO AN AGREEMENT
- --------------------------------------------------------------------------------
Page 2 of 2
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. In
addition, P-Com provides comprehensive network services including system
planning, program planning, and management, path design, and installation.
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, introduction of new products, commercial acceptance
and viability of new products and expenses associated therewith, cancellations
of orders without penalties, pricing and competition, 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, the risk of early obsolescence, and the pending stockholder class
action lawsuits. 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, such as announcements by competitors
and service providers. 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,
Poland, Mexico, Dubai and China, 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
www.p-com.com
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