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As filed with the Securities and Exchange Commission on May 4, 2000
Registration No. 333-70937
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 7 TO
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933, as amended
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P-COM, INC.
(Exact name of Registrant as specified in its charter)
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Delaware 77-0289371
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
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3175 S. Winchester Boulevard, Campbell, CA 95008
(408) 866-3666
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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George P. Roberts
Chairman of the Board and Chief Executive Officer
P-Com, Inc.
3175 S. Winchester Boulevard
Campbell, CA 95008
(408) 866-3666
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
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Copy to:
Hayden J. Trubitt, Esq.
Brobeck, Phleger & Harrison LLP
12390 El Camino Real
San Diego, California 92130
(858) 720-2500
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Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the
following box and list the Securities Act of 1933, as amended, registration
statement number of the earlier effective registration statement for the same
offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, as amended, check the following box and list
the Securities Act of 1933, as amended, registration statement number of the
earlier effective registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment that specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this registration statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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PRELIMINARY PROSPECTUS
(SUBJECT TO COMPLETION, DATED MAY 4, 2000)
5,000,000 Shares
P-COM, INC.
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COMMON STOCK
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The stockholders of P-COM, Inc. listed on page 2 below are offering
for resale and selling under this prospectus up to 5,000,000 shares of our
common stock.
Our common stock is traded on the Nasdaq National Market (Nasdaq
Symbol: PCMS). On April 25, 2000, the closing price of the common stock was
$10.0781 per share.
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You should carefully consider the risk factors commencing on page 3
before purchasing any of the common stock offered by the selling stockholders.
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the
contrary is a criminal offense.
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The date of this prospectus is _____________, 2000.
The information in this prospectus is not complete and may be
changed. The selling stockholders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
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SUMMARY
The common stock to be resold by the selling stockholders pursuant
to this prospectus was issued by us to the selling stockholders in exchange for
all outstanding shares of our Series B preferred stock and will be issued upon
exercise of warrants held by the selling stockholders. The name of each selling
stockholder and the number of shares of common stock and warrants to be
registered for resale under this registration statement are set forth in the
following table:
<TABLE>
<CAPTION>
Warrants to Purchase the
Number of Shares of Following Number of shares of
Outstanding Common Common Stock Beneficially Owned
Name of Selling Stockholder Stock to be Registered to be Registered
- --------------------------------------- ---------------------- -------------------------------
<S> <C> <C>
Marshall Capital Management, Inc....... 1,140,438 372,677
Castle Creek Technology Partners LLC... 117,658 455,494
Capital Ventures International......... 939,918 414,086
</TABLE>
We develop, manufacture and market systems for the transport of
voice and data between the end user and a location where the information is
transferred onto the broader telecommunications network. Our systems are sold to
the worldwide wireless telecommunications market. Our systems are designed to
satisfy the network requirements of cellular telephone service providers and
digital wireless communications service providers, corporate communications,
public utilities and local governments. We also provide comprehensive network
services to assist customers in designing, building and optimizing the
performance of their wireless communications networks. Our radio systems are
sold internationally through strategic partners, providers of bundled consulting
services and telecommunications equipment, manufacturers who resell our products
under their brand names, distributors and directly to end-users. Our executive
offices are located at 3175 S. Winchester Boulevard, Campbell, California 95008,
and our telephone number is (408) 866-3666.
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RISK FACTORS
You should carefully consider the risks described below before
making an investment decision.
Due to our stage of development and industry, an investment in our stock is very
risky
We do not have the customer base or other resources of more
established companies, which makes it more difficult for us to
address challenges we may face
We have not developed a large installed base of our equipment or the
kind of close relationships with a broad base of customers of a type enjoyed by
older, more developed companies, which would provide a base of financial
performance from which to launch strategic initiatives and withstand business
reversals. In addition, we have not built up the level of capital often enjoyed
by more established companies, so from time to time we may face challenges in
financing our continued operation. We may not be able to successfully address
these risks, which would adversely affect our results of operations and,
ultimately, our stock price.
Our stock price is volatile, so you may not be able to sell our
stock at any particular time at a favorable price
The stock market in general, and the market for shares of small
capitalization and technology stocks in particular, have experienced extreme
price fluctuations in recent years. These fluctuations have often been unrelated
to the operating performance of affected companies. The market price of our
common stock may continue to decline substantially, or otherwise continue to
experience significant fluctuations in the future, sometimes reaching extreme
and unexpected lows, including fluctuations that are unrelated to our
performance. During the 52 week period ending April 25, 2000, the market price
of a share of our common stock was as low as $3.8125 and as high as $23.718.
These fluctuations may mean that investors may not be able to sell our common
stock at a favorable price at any given time.
We do not pay dividends, so appreciation of our stock price is the
only way in which you will realize a return on your investment
Our bank line-of-credit agreement prohibits us from paying any
dividends on our common stock except dividends paid in shares of our common
stock. Since our incorporation in 1991, we have not declared or paid cash
dividends on our common stock, and we anticipate that any future earnings will
be retained for investment in our business. Thus, the return on an investment in
our common stock will likely be through resale of shares at a price higher than
the price paid for those shares. As indicated above, the market for our shares
may not provide an opportunity to sell our shares at a favorable price at any
given time.
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We rely on our existing customers, and it will materially adversely affect our
operating results and financial condition if they do not support us
A substantial amount of our products and services are purchased by a
limited number of customers, so the loss of a large customer would
significantly affect our results of operations
If any of our important customers significantly reduce their
purchases from us, which has been the case during the last twelve months, then
this may materially adversely affect the profitability of our business and our
ability to remain in business. During 1999, we had three different customers
that individually accounted for over 10% of our sales. During 1998 and 1999, one
customer, Orange Personal Communications Ltd., accounted for 27.9% and 20%,
respectively, of our sales.
Our customers may cancel orders leaving us with unsaleable equipment
or idle capacity
Our customers often enter into purchase orders with us far in
advance of manufacture of the equipment ordered. We have recently experienced
several purchase order cancellations and deferrals. Historically, we have chosen
not to harm our relationships with our customers by enforcing their obligations
under purchase orders when the customer wishes to cancel an order. Cancellations
of orders by customers may, depending upon the timing of the cancellation, leave
us with unsaleable equipment or idle capacity, which would adversely affect our
operating results and financial condition.
We may be unable to obtain additional capital needed to operate and grow our
business, which could damage our financial condition and further erode our stock
price
Our future capital requirements will depend upon many factors,
including development of new products and related software tools, potential
acquisitions, maintenance of adequate manufacturing facilities and contract
manufacturing agreements, progress of research and development efforts,
expansion of marketing and sales efforts, and status of competitive products.
Additional financing may not be available in the future on acceptable terms or
at all. The continued existence of a substantial amount of debt could also
severely limit our ability to raise additional financing. In addition, given the
recent price for our common stock, if we raise additional funds by issuing
equity securities, significant dilution to our stockholders could result.
If adequate funds are not available, we may be required to
restructure or refinance our debt or delay, scale back or eliminate our research
and development, acquisition or manufacturing programs. We may also need to
obtain funds through arrangements with partners or others that may require us to
relinquish rights to certain of our technologies or potential products or other
assets. Our inability to obtain capital, or our ability to obtain additional
capital only upon onerous terms, could materially adversely affect our business,
operating results and financial condition and further erode our stock price.
The common stock sold in this offering will significantly increase the supply of
our common stock on the public market, which may cause our stock price to
decline
The sale into the public market of the common stock issued upon
exercise of the new warrants and in the exchange could materially adversely
affect the market price of our common stock. Most of the shares of our common
stock are eligible for immediate and
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unrestricted sale in the public market at any time. Once the registration
statement of which this prospectus forms a part is declared effective, all
shares of common stock issuable upon exercise of the warrants will be eligible
for immediate and unrestricted resale into the public market. Because the
exercise price of the new warrants is below the current market price of our
common stock, the sale of the common stock issued upon exercise of the warrants
will be dilutive to our stockholders. Further, the new warrants contain
adjustment features that may significantly decrease the exercise price of the
new warrants and result in additional shares of common stock being issued upon
their exercise, which would create additional dilution. The presence of these
additional shares of common stock in the public market may further depress our
stock price.
We may issue stock at a discount to the current market price, which would dilute
our existing stockholders
In order to raise the funds we need to execute our business plan and
fund operations generally, we may continue to issue stock at a discount to the
current market price. Transactions of that kind would result in dilution to our
existing stockholders.
We may be forced to incur costs to restructure our business to reduce our
expenses, which could materially adversely affect our results of operations and
stock price
During 1998 and 1999, we generated net losses of approximately $55.3
million and $103.0 million, respectively. During 1998 and 1999, operating
expenses increased more rapidly than we had anticipated and these increases also
contributed to net losses. Should current market conditions continue to
deteriorate, we may also incur net losses in subsequent periods. In response to
market declines and poor performance in our sector generally and our lower than
expected performance over the last several quarters, we introduced measures to
reduce operating expenses. These measures included reductions in our workforce
in July, September and November of 1998. Additionally, management continues to
evaluate market conditions to assess the need to take further action to more
closely align our cost structure with anticipated revenues. Any subsequent
actions could result in additional restructuring charges, reductions of
inventory valuations and provisions for the impairment of long-lived assets,
which could materially adversely affect our results of operations and stock
price.
When our large fixed costs combine with significant fluctuations in our sales,
large fluctuations in our results of operations may occur which could adversely
affect our stock price
A material portion of our expenses are fixed and difficult to
reduce, which magnifies the effects of any revenue shortfall. In addition, to
prepare for the future, we may continue to heavily invest resources in:
o our acquired and new businesses,
o the development of new products and technologies,
o the evaluation of these products,
o expansion into new geographic markets, and
o our plant and equipment, inventory, personnel and other items,
in order to efficiently produce these products and to provide
necessary marketing and administrative service and support.
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As such, in addition to our fixed costs, our expenses will be increased by
start-up costs associated with the initial production and installation of new
products and technologies.
We experience significant fluctuations in sales, gross margins and
operating results. Our results of operations have also been and will continue to
be influenced by competitive factors, including pricing, availability and demand
for competitive products and services. These factors are difficult for us to
forecast, and have materially adversely affected our results of operations and
financial condition and may continue to do so. Because of our inability to
predict customer orders, delays, deferrals and cancellations, we may not be able
to achieve or maintain our current sales levels. We believe that
period-to-period comparisons are thus not necessarily meaningful and should not
be relied upon as indications of future performance. Because of all of the
foregoing factors, in some future quarter or quarters, revenues will be lower
than expected and our operating results and financial condition will be
materially adversely affected. In addition, to the extent our results of
operations are below those projected by public market analysts, the price of our
common stock may continue to be materially adversely affected by this
discrepancy.
We may be unable to become profitable if the selling prices of our products and
services decline over time
We believe that average selling prices and possibly gross margins
for our systems and services will decline over time. If we are unable to offset
declining average selling prices by comparable cost savings, our gross margins
will decline, and our results or operations and financial condition would be
adversely affected. Reasons for that decline in average selling prices include
the maturation of our systems, the effect of volume price discounts in existing
and future contracts and the intensification of competition. To offset declining
average selling prices, we believe we must take a number of steps, including:
o successfully introducing and selling new systems on a timely basis;
o developing new products that incorporate advanced software and other
features that can be sold at higher average selling prices; and
o reducing the costs of our systems through contract manufacturing,
design improvements and component cost reduction, among other
actions.
If we cannot develop new products in a timely manner, or if our new
products fail to achieve customer acceptance or do not generate higher average
selling prices, then we would be unable to offset declining average selling
prices.
We depend on contract manufacturers and limited sources of supply and, if they
fail us, production delays could damage our customer relationships
Our internal manufacturing capacity is very limited, and certain
components, subassemblies and services necessary for the manufacture and
production of our systems are obtained from a sole supplier or a small group of
suppliers. As a result, we have reduced control over the price, timely delivery,
reliability and quality of finished products, components and subassemblies. We
have experienced problems in the timely delivery and quantity of products and
certain components and subassemblies from vendors. We expect to rely
increasingly on these contract manufacturers and outside vendors in the future,
and they may prove undependable, stop doing business with us, or go out of
business. Due to the complexity of our products, finding and educating
additional or replacement vendors may be expensive and take
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considerable time. Our internal manufacturing capacity and that of our contract
manufacturers may be insufficient to fulfill our orders, and we may be unable to
obtain timely deliveries of components and subassemblies of acceptable quality.
Our failure to manufacture, assemble and ship systems and meet customer demands
on a timely and cost-effective basis could damage relationships with customers
and our business.
If we are successful in growing our business, we may be unable to manage and
integrate the expanded operations associated with revenue growth, which may
increase costs and hurt profitability
Our prior expansion has strained and continues to strain our
management, financial resources, manufacturing capacity and other resources and
has disrupted our normal business operations. Our ability to manage any possible
future growth may depend upon significant expansion of our manufacturing,
accounting and other internal management systems and the implementation of a
variety of systems, procedures and controls, all of which would involve
expenditures in advance of increased sales. In particular, if our business
grows, we must successfully manage overhead expenses and inventories, develop,
introduce and market new products, manage and train our employee base, integrate
and coordinate our geographically and ethnically diverse workforce and monitor
third party manufacturers and suppliers. We have in the past and may continue to
experience significant problems in these areas.
If our business grows, any failure to efficiently coordinate and
improve systems, procedures and controls, including improved inventory control
and coordination with our subsidiaries, could cause continued inefficiencies,
additional operational complexities and expenses, greater risk of billing
delays, inventory write-downs and financial reporting difficulties. Those
problems could impact our profitability and our ability to effectively manage
our business.
We may have difficulty integrating and managing the businesses we have acquired,
which may increase our costs and divert resources from our business
Since April 1996, we have acquired nine complementary companies and
businesses. We have encountered or expect to encounter the following problems
relating to integration and management of these companies:
o difficulty of combining operations and assimilating and retaining
personnel of acquired companies;
o inability of management to maximize financial and strategic position
through integration of acquired businesses;
o impairment of relationships with customers as a result of integration of
new personnel; and
o risks of entering markets in which we have no or limited direct prior
experience.
Overcoming existing and potential problems may entail increased
costs, additional investment and diversion of management attention and other
resources, or require divestment of one or more business units, which may
adversely affect our business, financial condition and operating results. In
this regard, we have recently divested three business units. Several of our
acquisitions have not worked out as originally anticipated and, as a result, we
have written off assets of several acquired companies.
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We may be unable to successfully acquire new businesses needed to effectively
compete, or to make those businesses pay off once acquired which could impact
our customer base or workforce and hurt our business
As part of our overall strategy, we plan to continue acquisitions of
or investments in complementary companies, products or technologies and to
continue entering into joint ventures and strategic alliances with other
companies. We compete for acquisition and expansion opportunities against many
entities that have substantially greater resources. Our success in future
acquisition transactions may, therefore, be limited. We also may not be able to
successfully identify suitable candidates, pay for or complete acquisitions, or
expand into new markets. Once integrated, acquired businesses may not achieve
levels of revenues, profitability, or productivity comparable to our existing
business, or the stand alone acquired company, or otherwise perform as expected.
Also, as commonly occurs with mergers of technology companies during
the pre-merger and integration phases, aggressive competitors may try to attract
our customers and to recruit key employees. If we proceed with acquiring
companies through the payment of cash as consideration, a substantial portion of
our available cash could be used to consummate those acquisitions, as was the
case with our acquisition of the Cylink Wireless Group. The occurrence of any of
these events could impact our customer base or workforce and hurt our business.
Accounting charges related to acquisitions may decrease future earnings
Many business acquisitions must be accounted for as purchase
business combinations for financial reporting purposes. Attractive acquisition
candidates are high technology companies which tend to have small amounts of
tangible assets and, as a result, our acquisition of such companies would result
in significant goodwill. If acquired, these businesses would typically result in
substantial future charges related to the amortization of that goodwill. All of
our past acquisitions to date, except the acquisitions of Control Resources
Corporation, RT Masts Limited and Telematics, Inc., have been accounted for as
purchase business combinations, resulting in a significant amount of goodwill
being amortized. Amortization expenses adversely affect our financial results.
If our results of operations are inadequate, we may have difficulty servicing
our debt, which could cause a default and acceleration of repayment of our debts
As of December 31, 1999, our total indebtedness including current
liabilities was approximately $124.4 million and our stockholders' equity was
approximately $89.2 million. Our ability to make scheduled payments of the
principal and interest on our indebtedness will depend on our future
performance, which is subject in part to economic, financial, competitive and
other factors beyond our control. We may be unable to make payments on or
restructure or refinance our debt in the future, if necessary, which could lead
to a default under our credit agreement and note indenture and acceleration of
repayments of the debts thereunder.
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Our customers may not pay us on time, leaving us short of funds needed to
operate our business
We may be unable to enforce a policy of receiving payment within a
limited number of days of issuing bills. We have had difficulties in the past in
receiving payment in accordance with our policies, particularly from customers
in the early phases of business development which are awaiting financing to fund
their expansion and from customers outside of the United States. We may not be
able to locate parties to purchase our receivables on acceptable terms or at
all. Any inability to timely collect or sell our receivables could cause us to
be short of cash to fund operations and could have a material adverse effect on
our business, financial condition and results of operations.
We may experience problems with product quality, performance and
reliability, which may damage our customer relationships
We have limited experience in producing and manufacturing systems
and contracting for this manufacture. Our customers also require very demanding
specifications for quality, performance and reliability. As a consequence,
problems may occur with respect to the specifications for our systems or related
software tools. If those problems occur, we could experience increased costs,
delays, cancellations or reschedulings of orders or shipments, delays in
collections of accounts receivable and product returns and discounts. In
addition, the failure of any of our facilities to maintain or attain quality
certification by the International Standards Organization could adversely affect
our sales and sales growth. If any of these events occur, they might erode
customer confidence and cause them to reduce their purchases from us, which
would adversely impact our business and results of operations.
The market for our products may not grow fast enough to support our level of
investment, adversely affecting our results of operations
Our future operating results depend upon the continued growth and
increased availability and acceptance of advanced radio-based wireless
telecommunications systems and services in the United States and
internationally. The volume and variety of and the markets for and acceptance of
wireless telecommunications systems and services may not continue to grow as
anticipated. Because these markets are relatively new, predicting which market
segments will develop and at what rate they will grow is difficult. We have
recently invested additional significant time and resources in the development
of new products. If the market for these new products and the market for related
services for our systems fail to grow, or grow more slowly than anticipated,
revenue will also fail to grow, adversely affecting our results of operations.
We may be unable to compete successfully for customers with either competitors
offering technologies similar to ours or with alternative technologies, which
could adversely affect our business and results of operations
Our wireless-based radio systems compete with other wireless
telecommunications products and alternative telecommunications transmission
media, including copper and fiber optic cable. We are experiencing intense
competition worldwide from a
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number of leading telecommunications companies. Those companies offer a variety
of competitive products and services and broader telecommunications product
lines, which makes us more vulnerable to shifts in technology and customer
preferences. Many of these companies have greater installed bases, financial
resources and production, marketing, manufacturing, engineering and other
capabilities than we do. We face actual and potential competition not only from
these established companies, but also from start-up companies that are
developing and marketing new commercial products and services.
Two of our primary competitors are Ericsson and Digital Microwave.
Ericsson is a formidable competitor for us because they provide both consulting
services and equipment they manufacture to customers as complete
telecommunications solutions. Ericsson's combined consulting and product
approach insulates them from competition for sales of products because, in order
for customers to obtain the complete solution, Ericsson requires them to
purchase the product from Ericsson, which completely forecloses our opportunity
to sell products to the customer. In contrast, Digital Microwave is a product
manufacturer like us, and competes directly against us for product sales to
customers, which leads to downward pressure on prices we can charge for our
products. If we are unable to successfully compete for customers, future growth,
revenues and profitability would be adversely affected.
Failure to respond to rapid technological change or introduce new products in a
timely manner may limit our revenue growth and adversely impact our results of
operations
Rapid technological change, frequent new product introductions and
enhancements, product obsolescence, changes in end-user requirements and
evolving industry standards characterize the communications market. Our ability
to compete in this market will depend upon our successful development,
introduction and sale of new systems and enhancements and related software
tools, on a timely and cost-effective basis, in response to changing customer
requirements. We have experienced and continue to experience delays in customer
procurement and in completing development and introduction of new systems and
related software tools, including products acquired in acquisitions. Moreover,
we may not be successful in selecting, developing, manufacturing and marketing
new systems or enhancements or related software tools. Any inability to rapidly
introduce, in a timely manner, new systems, enhancements or related software
tools could have a material adverse effect on our results of operations and
limit future growth.
We have extensive international operations, in more volatile markets than the
United States, and changes in these markets may undermine our business there
In doing business in international markets, we face economic,
political, regulatory, logistical, legal, financial and business environments
and foreign currency fluctuations that are more volatile than those commonly
experienced in the United States. Most of our sales to date have been made to
customers located outside of the United States. We anticipate that international
sales will continue to account for a majority of our sales for the foreseeable
future. Because of the more volatile nature of these markets, the basis for our
business in these markets may be frequently jeopardized, materially and
adversely affecting our operations in these countries and our overall results of
operations and growth.
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We are subject to extensive government regulation, which may change and harm our
business
We operate in a constantly changing regulatory environment. Radio
communications are extensively regulated by the United States government, and we
also are subject to foreign laws and international treaties. Our systems must
conform to a variety of domestic and international requirements established to,
among other things, avoid interference among users of radio frequencies and to
permit interconnection of equipment. Regulatory changes, which are affected by
political, economic and technical factors, could significantly impact our
operations by restricting our development efforts and those of our customers.
Many of our competitors have broader telecommunications product lines, which
makes us more vulnerable than they are to regulatory changes that shift business
from one product to another. As a result, those regulatory changes could make
current systems obsolete, favor our competitors or increase competition. Any of
those regulatory changes, including changes in the allocation of available
spectrum or changes that require us to modify our systems and services, could
prove costly and thus materially adversely affect our business and results of
operations.
We are the subject of, and may be the subject of additional, class action suits,
which would divert significant resources away from our business
We are a defendant in a consolidated class action lawsuit in state
court. An unfavorable outcome could have a material adverse effect on our
prospects and financial condition. Even if the litigation is resolved in our
favor, the defense of that litigation will entail considerable cost and
diversion of efforts of management, either of which are likely to adversely
affect our results of operations.
We may be unable to protect our proprietary rights, permitting competitors to
duplicate our products and services or preventing us from selling our products
We rely on a combination of patents, trademarks, trade secrets,
copyrights and other measures to protect our intellectual property rights.
However, these measures may not provide adequate protection for our trade
secrets or other proprietary information. Any of our patents could be
invalidated, circumvented or challenged, or may not provide competitive
advantages to us. In addition, foreign intellectual property laws may not
adequately protect our intellectual property rights abroad. Any failure or
inability to protect proprietary rights could have a material adverse effect on
our competitive market position and business.
Litigation may also be necessary to enforce our intellectual
property rights, to protect our trade secrets, to determine the validity and
scope of proprietary rights of others or to defend against claims of
infringement. A variety of third parties have sent correspondence to the former
owner of the Cylink Wireless Group in which they allege that the Cylink Wireless
Group's products may be infringing their intellectual property rights. We
acquired Cylink in 1998. Therefore, any intellectual property litigation based
upon those allegations could result in substantial costs and diversion of
management attention and resources, and could prevent us from selling certain
products or require us to license technology to continue selling those products.
Licenses to any of that technology may not be available on acceptable terms or
at all. If we are unable to sell those products or can do so only by incurring
high licensing costs,
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our business, financial condition and results of operations would be materially
adversely affected.
Our results may suffer if we are unable to attract and retain qualified
management and technical personnel
Our highly technical business depends upon the continued
contributions of key technical and senior management personnel, many of whom
would be difficult to replace. Competition for qualified management,
manufacturing, quality assurance, engineering, marketing, sales and support
personnel is intense in our industry and geographic areas, and we may not be
successful in attracting or retaining those personnel. We experience high
employee turnover which is disruptive and could adversely impact our business.
The loss, or failure to perform, of any key employee could materially adversely
affect our customer relations and results of operations.
Our board has the power to reject offers to acquire shares of our common stock
in a change of control transaction, which may prevent our stockholders from
having the opportunity to accept those offers and discourage certain offers for
shares of our common stock
The following factors give our board of directors the power to
reject acquisition proposals without any input or consideration of these
proposals by our stockholders:
o concentration of share ownership in our board of directors and
officers,
o our stockholder rights agreement,
o our certificate of incorporation and bylaws,
o our equity incentive plans, and
o Delaware law.
As a result of these factors, our board of directors could
significantly delay, defer or prevent a change in control transaction involving
P-Com, even if holders of our common stock might want the transaction to occur.
These factors may adversely affect the voting and other rights of other holders
of common stock, and prevent stockholders from receiving and accepting offers to
acquire their shares that the board deems not to be in the best interest of our
stockholders. In addition, the power of the board to reject those offers may
discourage certain third parties from making these offers.
Relying on forward-looking statements could cause you to incorrectly assess the
risks and uncertainties in investing in our stock because our actual results
could differ materially from those anticipated in forward-looking statements
contained in this prospectus
This prospectus contains "forward-looking" statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described above and elsewhere in this
prospectus.
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We may face other risks not described in the foregoing risk factors which may
impair our business operations
The risks and uncertainties described in the foregoing risk factors
may not be the only ones facing us. Additional risks and uncertainties not
presently known to us may also impair our business operations. If any of the
following risks actually occur, our business, financial condition and results of
operations could be materially adversely affected. In this case, the trading
price of our common stock could decline, and you may lose all or part of your
investment.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from our web site at http://p-com.com or at the SEC's web site at
http://www.sec.gov.
This prospectus is part of a registration statement (Registration
No. 333-70937) we filed with the SEC. The SEC allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and later information filed with the SEC will update and supersede
this information.
We incorporate by reference the documents listed below and any
future filings made with the SEC under Section 13a, 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, until the selling stockholders sell
all of the shares of common stock being registered for resale by the selling
stockholders or until the shares can be sold without being so registered:
(1) our Annual Report on Form 10-K for the year ended December 31, 1999,
filed as of April 5, 2000;
(2) our current reports on Form 8-K filed as of January 6, 2000 and
January 25, 2000;
(3) the description of our common stock and Series A preferred stock
contained in our registration statements on Form 8-A filed as of January 12,
1995 and on Form 8-A/A filed as of February 16, 1995, October 9, 1997, December
22, 1998, December 24, 1998 and August 25, 1999; and
(4) all future reports and other documents filed by us pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act shall be deemed to be incorporated
by reference herein and to be a part of this prospectus from the date of filing
of each of the reports and documents. Any statement incorporated herein may
modify or supersede information or statements in this prospectus.
Upon request, we will provide without charge a copy of this
prospectus, and a copy of any and all of the information that has been or may be
incorporated by reference in this prospectus. Requests for these copies should
be directed to Corporate Secretary, P-Com, Inc., 3175 S. Winchester Boulevard,
Campbell, California 95008 (telephone (408) 866-3666).
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have authorized no
one to provide you with different information. We are not making an offer of
these securities in any state where the offer is not permitted.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the common
stock by the selling stockholders.
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<PAGE>
DIVIDEND POLICY
Our credit agreement prohibits us from paying any dividend on our
common stock other than dividends paid in shares of our common stock. We
currently anticipate that we will retain any available funds for use in the
operation of its business, and we do not anticipate paying any cash dividends in
the foreseeable future.
THE EXCHANGE OF COMMON STOCK FOR SERIES B PREFERRED STOCK
AND PENALTY SETTLEMENT AGREEMENTS
On December 23, 1998, we issued 15,000 shares or our Series B
preferred stock and warrants to purchase 1,242,257 shares of common stock to the
selling stockholders for gross proceeds of $15 million, and agreed to register
for resale by the selling stockholders the shares of our common stock issuable
upon conversion of the Series B preferred stock and exercise of the warrants. On
January 21, 1999, we filed this registration statement for the purpose of
registering those shares of common stock.
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, such that no
shares of Series B preferred stock remain outstanding. We also exchanged
outstanding warrants to purchase 1,242,257 shares of common stock, which were
held by the selling stockholders, for new warrants to purchase 1,242,257 shares
of common stock having the terms set forth below. In connection with the
exchange, we and the holders agreed to other matters described below. We agreed
to register the 5,134,795 shares of common stock exchanged for the Series B
preferred stock held by holders and the 1,242,257 shares of common stock subject
to the warrants by amending the registration statement on Form S-3 that we
originally filed on January 21, 1999.
In return for the waiver by the selling stockholders of their rights
to cash payments and restrictions on our ability to issue securities, we agreed
to redeem the common stock received by the selling stockholder in exchange for
their Series B preferred stock if any of the following events occur:
o we fail to remove a restrictive legend from the stock
certificates representing the common stock owned by a selling
stockholder;
o the registration statement registering for resale the common
stock received by a holder in exchange for its preferred stock
was not declared effective by a specified date in August 1999;
or
o the resale registration statement cannot be used by a holder
to resell its common stock for 10 consecutive business days or
more than 20 days in a two month period.
The Company also agreed to make cash payments to the selling stockholders if the
resale registration statement was not declared effective by a specified date in
August 1999.
The resale registration statement was not declared effective by this
deadline and, as a result, we were obligated to make cash payments to the
selling stockholders and were
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<PAGE>
subject to their right to have us redeem at their election the common stock
issued to them in the exchange. On August 11, 1999, we issued warrants to
purchase an additional 180,000 shares of our common stock having the terms set
forth below to the selling shareholders in order to gain their consent not to
exercise rights or pursue remedies available to them under the Series B
agreements and the Exchange Agreements. On November 16, 1999, each of the
selling stockholders entered into a Penalty Settlement Agreement with us. Under
these agreements, the selling stockholders waived their redemption rights and
their right to receive cash payments in exchange for the following aggregate
consideration:
o 219,605 shares of our common stock with the right to register
these shares for resale by participating in future
registration statements filed by us;
o a warrant to purchase 443,000 shares of our common stock
having the terms set forth below ; and
o a promissory note that:
o is due and payable on November 15, 2000;
o has a principal amount of $400,000;
o accrues interest at a rate of 12% per year; and
o is convertible at the election of the holder into a
number of shares of common stock equal to the principal
plus interest divided by $4.71265.
Notwithstanding these agreements, we remained subject to the following material
obligations and restrictions contained in our earlier agreements with the
selling stockholders. First, we remain obligated to use our best efforts to have
the resale registration statement declared effective as soon as possible.
Second, we remain subject to our agreement in the Exchange Agreements that we
will neither agree to file nor actually file a registration statement for any
securities other than the common stock held by the selling stockholders on any
date that is not at least twenty days after this registration statement is
declared effective.
ANTI-DILUTION PROVISIONS IN OUR CONVERTIBLE NOTES
The exchange, the shares and warrants issued in connection with the
Penalty Settlement Agreements and other unrelated stock issuance by us have
resulted in an anti-dilution adjustment to our 4 1/4% convertible promissory
notes that reduced the conversion price to $24.97. As a result of this
adjustment, 1,173,368 shares of common stock are presently issuable upon
conversion of the notes.
WARRANTS
The warrant issued in connection with the Penalty Settlement Agreement
The warrant issued pursuant to the Penalty Settlement Agreements is
immediately exercisable at all times prior to January 19, 2003, when it expires.
The warrant may be exercised either by payment of the exercise price or by net
exercise. In a net exercise of a warrant, shares of our common stock having a
market value equal to the exercise price are deducted from the shares issued to
the warrant holder upon exercise of the warrant and instead are withheld by us
to
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<PAGE>
pay the exercise price. The exercise price for the common stock underlying the
warrant is $8.50 per share, which is below the closing bid price for our common
stock on April 25, 2000 of $10.0781 per share. The exercise price of this
warrant is not subject to adjustment to protect against dilution. The shares
issuable upon exercise of this warrant are not being registered for resale under
this registration statement. However, the holder does have the right to register
these shares for resale in connection with future registration statements filed
by us.
The warrants issued in connection with the Exchange Agreements
The new warrants issued on June 4, 1999 pursuant to the Exchange
Agreements are immediately exercisable at all times prior to December 22, 2003,
when they expire. The warrants may be exercised either by payment of the
exercise price or by net exercise. The exercise price for the common stock
underlying the warrant is $3.00 per share, which is below the closing bid price
for our common stock on April 25, 2000 of $10.0781 per share. The warrants
issued to the selling stockholders on August 11, 1999 are immediately
exercisable at all times prior to August 11, 2004, when they expire. The
warrants may be exercised either by payment of the exercise price or by net
exercise. The exercise price for the common stock underlying the warrant is
$5.00 per share, which is below the closing bid price for our common stock on
April 25, 2000 of $10.0781 per share. The exercise price of all of the warrants
described in this paragraph is subject to adjustment to protect against dilution
as described below. In addition, the exercise price of the warrants issued on
June 4, 1999 is subject to re-set on June 4, 2000 to the average of the closing
bid prices for our common stock on the ten consecutive trading days immediately
preceding June 4, 2000, if that re-set will result in a lower exercise price.
The exercise price of the warrants issued on June 4, 1999 and August
11, 1999 is subject to anti-dilution adjustment if we issue common stock or
securities convertible into or exercisable for common stock at a price per share
less than the greater of the exercise price then in effect and the market price
per share of our common stock on the day prior to the issuance. Issuances of
securities in the ordinary course of our business, such as issuances of common
stock issued under employee, director or consultant benefit plans, do not lead
to an anti-dilution adjustment. If an anti-dilution adjustment occurs, the
adjusted exercise price will be equal to:
o the exercise price in effect immediately prior to the
issuance, multiplied by
o the sum of
o the number of outstanding shares of our common
stock immediately prior to the issuance, and
o the number obtained when the total consideration
received by us in exchange for the stock issued is
divided by the greater of the exercise price then
in effect or the market price on the day prior to
the issuance,
divided by
o the number of shares of our common stock outstanding
after the issuance; this number will include the number
of shares deemed outstanding by reason of our issuance
of options or convertible securities exercisable or
convertible at less than the greater of the conversion
price in effect at the time of issuance of those options
or convertible securities and the market price per share
of our common stock on the day preceding the issuance.
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<PAGE>
For example, assume we had 65,000,000 shares outstanding immediately prior to
issuing 5,000,000 shares of common stock at a price of $4.00 per share and that
the market price of our common shares on the day prior to the issuance was $5.00
per share. Also assume that the exercise price immediately prior to such
issuance was $3.00 per share. The total consideration received in the issuance
would be $20 million, which, when divided by the market price of $5.00 per
share, yields 4,000,000 shares. The numerator of the exercise price adjustment
fraction in respect of the issuance would be equal to these 4,000,000 shares
plus the 65,000,000 shares outstanding immediately prior to the issuance, or
69,000,000 shares. The denominator of the exercise price adjustment fraction
would be equal to the 5,000,000 shares actually issued in the issuance plus the
65,000,000 shares outstanding immediately prior to the issuance, or 70,000,000
shares. The conversion price adjustment fraction would be 0.9857, which, when
multiplied by the exercise price of $3.00 in effect prior to the issuance, would
yield an adjusted exercise price of $2.957.
In addition, with respect to any securities we issue that are
convertible into or exercisable for our common stock in accordance with a
fluctuating or re-setting conversion or exercise price or exchange ratio, the
anti-dilution adjustment described above will be made on the date of issuance of
those securities as though:
o all holding periods and other conditions to the discounts
contained in the securities have been satisfied, and
o the market price of our common stock on the date of exercise,
conversion or exchange of the securities was 80% of the market
price of our common stock on the date the securities were
issued.
For example, assume that on April 15, 2000, we issued $10 million of convertible
preferred stock that converts into common stock at a conversion price equal to
the lower of $4.00 and the market price on the conversion date. Also assume we
had 65,000,000 shares outstanding immediately prior to issuing the preferred
stock, that the market price of our common shares on the day prior to the
issuance was $4.00 per share, and that the exercise price of the warrant
immediately prior to such issuance was $3.00 per share. The total consideration
received upon the issuance would be $10 million, which, when divided by the
current market price of $4.00 per share, yields 2,500,000 shares. The numerator
of the exercise price adjustment fraction in respect of the issuance would equal
these 2,500,000 shares plus the 65,000,000 shares outstanding immediately prior
to the issuance, or 67,500,000 shares. The denominator of the exercise price
adjustment fraction is the 65,000,000 shares outstanding immediately prior to
the issuance plus the number of shares that would be issued upon conversion. On
April 15, 2000, the conversion price would be deemed to be the lower of $4.00
and 80% of the market price on the date of issuance, or $3.20 per share. When
$10 million is divided by $3.20 per share, the result is 3,125,000. The
denominator of the exercise price adjustment fraction is the 3,125,000 shares
deemed issued on September 1, 1999 plus the 65,000,000 shares outstanding
immediately prior to the issuance, or 68,125,000 shares. The conversion price
adjustment fraction is 0.9908, which, when multiplied by the exercise price of
$3.00 in effect prior to the issuance, yields an adjusted exercise price of
$2.972 as of April 15, 2000.
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<PAGE>
If there is a change at any time in:
o the amount of additional consideration payable to us upon
exercise of the securities, or
o the rate at which the securities are convertible into our
common stock, other than changes in such rate by reason of
provisions designed to protect against dilution,
the exercise price of the warrants shall be readjusted to the exercise price
that would have been in effect had such change been in effect at the time the
securities were issued. This adjustments described in this paragraph will not be
made with respect to securities issued under employee, director or consultant
benefit plans so long as the issuance of the securities is approved by a
majority of our non-employee directors.
Under the terms of the warrants, the total number of shares of
common stock issuable upon exercise of the warrants and upon conversion of the
Series B preferred is limited to 8,706,843 shares. As 5,134,795 shares of common
stock were issued to the selling stockholders in exchange for their Series B
preferred stock in the exchange, the total number of shares of common stock
issuable upon exercise of the new warrants is limited to 3,571,688 shares. We
are not obligated to obtain a stockholder vote to remove that limit. In
addition, to the extent the holder of a warrant determines that exercise of its
warrant would cause it to own in excess of 4.9% of our outstanding common stock,
that warrant will not be exercisable.
In the event we merge with any other company, the warrantholders are
entitled to the choices described below as to the consideration they will
receive in the merger or consolidation. If we merge with a public company
meeting the threshold criteria set forth below and our common stock will be
exchanged for common stock of the acquiror or its parent company, the warrant
holders will be entitled to receive in the merger the consideration they would
have received had they exercised their warrants the day before the public
announcement of the merger at the exercise price in effect on that day. The
threshold criteria are:
o the securities the holder would receive are publicly traded,
o the average daily trading volume of the exchange securities
over the 90 day period immediately preceding announcement of
the transaction was greater than $2,000,000,
o the historical 100 day volatility of the exchange securities
during the period ending on the date of announcement of the
transaction is no greater than 50%, and
o the last sale price of the exchange securities on the date
immediately preceding the date on which the transaction is
public disclosed is not less than 65% of last sale price of
the exchange securities on any day during the 20 day period
ending on that date.
If we merge with a private company or a public company not meeting
the threshold criteria, the warrant holders will be entitled, at their option:
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<PAGE>
o to retain their warrants, which will thereafter convert into
common stock of the surviving company, or
o receive either
o the consideration they would have received had
they exercised their warrants the day before the
public announcement of the merger or
o 125% of the Black-Scholes amount.
The Black-Scholes amount is the value of an option to purchase one
share of common stock as calculated on the Bloomberg online page using the
following values:
o the market price on the day prior to the date of notice of the
transaction,
o volatility equal to the historical 100 day volatility of the
our common stock during the period preceding the date of
notice of the transaction,
o a risk free interest rate equal to the rate on U.S. treasury
bill or treasury notes having a maturity similar to the term
of the warrant on the date of the notice of the transaction,
and
o an exercise price equal to the exercise price on the date of
notice of the transaction.
If we declare or make a distribution of assets to our common
stockholders, then the warrant holders will be entitled to exercise their
warrants and receive the amount of those assets that the holder would have been
entitled to had it been a common stockholder on the record date for determining
shares entitled to the distribution. We have agreed to use our best efforts to
list the common stock issuable upon exercise of the warrants on a major
securities exchange so long as our other common stock is so listed.
SELLING STOCKHOLDERS
The selling stockholders, Marshall Capital Management, Inc., Castle
Creek Technology Partners LLC and Capital Ventures International, acquired
shares of Series B preferred stock and warrants on December 22, 1998 pursuant to
set of financing agreements. These shares and warrants were acquired in the
ordinary course of each selling stockholder's business. At the time of its
acquisition of these shares and warrants, each selling stockholder had no
agreements or understandings, directly or indirectly, with any person to
distribute the securities. The selling stockholders acquired shares of our
common stock and new warrants on June 4, 1999 pursuant to exchange agreements
between us and each of them. On August 11, 1999 and November 16, 1999, the
selling stockholders acquired various additional shares of our common stock,
additional warrants to purchase shares of our common stock and a promissory note
that is convertible into shares of our common stock; none of these securities,
or the securities issuable upon exercise or conversion of these securities, are
being registered for resale pursuant to this registration statement. None of the
selling stockholders own any other shares of preferred stock of P-Com, and no
selling stockholder has held any office or position, or had any other material
relationship with P-Com within the past three years. The number of shares of
common stock and warrants owned by each selling stockholder is set forth in the
following table:
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<PAGE>
<TABLE>
<CAPTION>
Number of
Number of Shares of
Shares of Common Stock Percentage of
Common Stock Issuable Upon Total Number Outstanding
Beneficially Exercise of of Shares of Common
Owned Warrants or Common Stock as of
as of April 25, Conversion of Stock held by April 25,
Name of Holder 2000 Note(1) Holder(2) 2000
- --------------------------- --------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Marshall Capital
Management, Inc. .......... 1,198,701 855,677 2,054,378 2.63%
Castle Creek
Technology Partners LLC ... 187,708 640,372 828,080 1.06%
Capital Ventures
International ............. 1,031,210 454,086 1,485,296 1.90%
</TABLE>
(1) The number of shares issuable upon exercise of the warrants and
convertible note set forth above assumes that no anti-dilution adjustment is
made.
(2) This number assumes exercise of the all outstanding warrants and
the conversion of the convertible note on April 25, 2000.
To help ensure our compliance with the registration rights agreement
and the exchange agreements, we have chosen to register for resale by the
selling stockholders five million shares of common stock on behalf of the
selling stockholders. If the warrants were exercised as of April 25, 2000, only
3,440,271 shares of common stock would be issued and available for resale under
this prospectus. However, we cannot determine the exact number of shares of
common stock that we will ultimately issue upon exercise of the warrants.
Additional shares of common stock may be issued upon exercise of the new
warrants if an anti-dilution adjustment occurs with respect to the new warrants.
See "Warrants." For this reason, we may not issue the entire five million shares
of common stock covered by this prospectus. The five million shares covered by
this prospectus represent approximately 6.49% of our outstanding shares of
common stock as of April 25, 2000.
The following table sets forth the aggregate number of shares of
common stock beneficially owned by each selling stockholder as of April 25, 2000
and the percentage of all shares of common stock held by that selling
stockholder before and after giving effect to the offering based on 77,058,535
shares of common stock outstanding as of April 25, 2000. We considered the
following factors and made the following assumptions regarding the table:
o beneficial ownership is determined in accordance with the
rules of the SEC and generally includes voting or investment
power with respect to securities and including any securities
that grant the selling securityholders the right to acquire
common stock within 60 days of April 25, 2000; and
o the selling stockholders will sell all of the securities
offered by this prospectus.
Notwithstanding these assumptions, the selling stockholders may sell
less than all of the shares listed on the table. Each selling stockholder will
determine the number of shares of common stock that they will sell. In addition,
the shares listed below may be sold pursuant to this prospectus or in privately
negotiated transactions. Lastly, anti-dilution adjustments with respect to the
new warrants may occur that cause the number of shares of our common stock to be
issued upon exercise of the new warrants to increase, which would cause the
number of shares to be resold under this prospectus to increase. See "Warrants."
Accordingly, we cannot
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<PAGE>
determine with certainty the number of shares of common stock that the selling
stockholders will sell under this prospectus.
<TABLE>
<CAPTION>
Number of Shares Percent of Percent of
of Common Stock Outstanding Shares Number of Shares Outstanding Shares
Beneficially Owned Beneficially Owned Beneficially Owned Beneficially Owned
Name of Selling Stockholder Prior to Offering Before the Offering After the Offering After the Offering
- ------------------------------------------ ----------------- ------------------- ------------------ ------------------
<S> <C> <C> <C> <C>
Marshall Capital Management, Inc. ........ 2,054,378(1) 2.63% 541,263 0.69%
Castle Creek Technology Partners LLC ..... 828,080(2) 1.06% 254,928 0.33%
Capital Ventures International ........... 1,485,296(3) 1.90% 131,292 0.17%
</TABLE>
- ----------
1. Consists of 1,198,701 shares of common stock and 855,677 shares of common
stock issuable upon the exercise of warrants. Marshall Capital Management,
Inc. is an indirect, wholly owned subsidiary of Credit Suisse First Boston
Group, which is a publicly held Swiss financial services company. The
direct and indirect parent companies of Marshall Capital Management, Inc.
may be deemed to be beneficial owners of the securities. The direct and
indirect parent companies of Marshall Capital Management, Inc. disclaim
that beneficial ownership.
2. Consists of 187,708 shares of common stock and 640,372 shares of common
stock issuable upon the exercise of warrants and the conversion of a
convertible note. Pursuant to a management agreement, Castle Creek
Partners LLC may be deemed to beneficially own the securities held by
Castle Creek Technology Partners LLC. Castle Creek Partners LLC disclaims
that beneficial ownership. John Ziegelman and Daniel Asher, as managing
members of Castle Creek Partners LLC, may be deemed to be beneficial
owners of the securities. Messrs. Asher and Ziegelman disclaim that
beneficial ownership.
3. Consists of 1,031,210 shares of common stock issued in the exchange and
454,086 shares of common stock issuable upon the exercise of warrants.
Heights Capital Management, Inc., a Delaware corporation, the investment
manager for Capital Ventures International, has voting control and
investment discretion over transactions by Capital Ventures International.
The shares of common stock underlying the warrants presented in the
table is based on the number of shares of common stock issuable upon exercise of
the warrants that are in effect on the date of this prospectus. The actual
number of shares of common stock will we issue is indeterminable as of the date
of this prospectus and is subject to future adjustments.
PLAN OF DISTRIBUTION
We will not receive any proceeds from the sale of the common stock
through this prospectus. We have agreed to pay the expenses of registration of
the common stock offered hereby, including legal and accounting fees, but
excluding underwriter's discounts and commissions, if any.
The offered shares may be sold from time to time at
o negotiated prices,
o fixed prices which may be changed,
o market prices prevailing at the time of sale or
o prices related to prevailing market prices.
The selling stockholders may effect those transactions
o in privately negotiated sales in the over-the-counter market
or any exchange on which the securities are listed,
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<PAGE>
o by selling the shares through broker-dealers, including
circumstances in which brokers or dealers attempt to sell the
shares to third parties, but, if they are initially unable to
do so, they may purchase the shares themselves and resell the
shares as principal, and
o in one or more underwritten offerings on a firm commitment or
best effort basis.
Sales of selling stockholders' shares may also be made pursuant to
Rule 144 under the Securities Act, where applicable.
To the extent required under the Securities Act, the following
information will be set forth in a post-effective amendment to this prospectus:
o the aggregate amount of selling stockholders' shares being
offered and the terms of the offering,
o the names of any agents, brokers, dealers, transferees or
underwriters, and
o any applicable fee or commission with respect to a particular
offer.
Each selling stockholder will be responsible for paying compensation
owed by it to any underwriters, dealers, brokers or agents participating in the
distribution of its shares, regardless of whether that compensation is in the
form of underwriting discounts, concessions, commission or fees. This
compensation might be in excess of customary commissions. The aggregate proceeds
to a selling stockholder from the sale of its shares offered by this prospectus
will be the purchase price of those shares less any discounts or commissions.
If selling stockholders pledge, hypothecate or grant a security
interest in some or all of the shares, then the pledgees, secured parties or
persons to whom those securities have been hypothecated shall, upon foreclosure
in the event of default, shall be named as selling stockholders in a supplement
or post-effective amendment to this prospectus. Similarly, if the selling
stockholders transfer, pledge, donate or assign shares to lenders or others,
then each of those persons will be named as a selling stockholder in a
supplement or post-effective amendment to this prospectus. The number of shares
beneficially owned by the selling stockholders will decrease if and when a
selling stockholder transfers, pledges, donates or assigns shares. The plan of
distribution for selling stockholders' shares sold by this prospectus will
otherwise remain unchanged, except that the transferees, pledgees, donees or
other successors will be selling stockholders under this prospectus. There is,
however, no assurance that any selling stockholder will sell any or all of the
shares described in this prospectus.
A selling stockholder may also use this prospectus in the following
ways:
o to sell short, from time to time, shares of our common stock
and, in those instances, this prospectus may be delivered in
connection with those short sales and the shares offered by
this registration statement may be used to cover those short
sales,
o to enter into hedging transactions with broker-dealers, and
the broker-dealers may engage in short sales of the shares in
the course of holding the positions
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<PAGE>
they assume with that selling stockholder, including, without
limitation, in connection with distribution of the shares by
those broker-dealers,
o to enter into option or other transactions with broker-dealers
that involve the delivery of the shares to the broker-dealers,
who may then resell or otherwise transfer those shares, and
o to loan or pledge the shares to a broker-dealer and the
broker-dealer may sell the shares as loaned or upon a default
may sell or otherwise transfer the pledge shares.
The rules and regulations in Regulation M under the Securities Exchange Act of
1934, provide that during the period that any person is engaged in the
distribution, as so defined in Regulation M of our common stock, such person
generally may not purchase shares of our common stock. The selling shareholders
are subject to applicable provisions of the Securities Act of 1933 and
Securities Exchange Act of 1934 and the rules and regulations thereunder,
including, without limitation, Regulation M, which provisions may limit the
timing of purchases and sales of shares of the common stock by the selling
shareholders. The foregoing may affect the marketability of the common stock.
The selling stockholders, any underwriter, any broker-dealer or any
agent that participates with the selling stockholders in the distribution of the
shares may be deemed to be "underwriter" within the meaning of the Securities
Act. As a result thereof, any discounts, commissions or concessions received by
them and any profit on the resales of the shares purchased by them may be deemed
to be underwriting commissions under the Securities Act.
To comply with securities laws of certain states, if applicable, the
shares will be sold in those jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the shares may not be sold
unless they have been registered or qualified for sale in the applicable state
or an exemption from the registration or qualification requirement is available.
Pursuant to a registration rights agreement entered into in
connection with the Series B preferred stock financing, as impacted by the
exchange agreement, we have agreed to keep the registration statement of which
this prospectus is a part continuously effective until the earlier of the date
that all of the shares issued in the exchange or upon exercise of the new
warrants have been resold or until all those shares are immediately freely
saleable under Rule 144. In this regard, we are required to supplement and/or
amend the registration statement of which this prospectus is a part if more
shares than are registered for resale hereby are issued or issuable upon
exercise of the new warrants or to supplement or change the selling stockholders
hereunder.
The registration rights agreement requires us to indemnify the
selling stockholders, any underwriter and the respective directors, officers,
partners, members, employees, agents and controlling persons of each selling
stockholder against certain liabilities in connection with the offer and sale of
the shares hereunder, including under the Securities Act. Similarly, each
selling stockholder is required to indemnify us and our directors, the officers
who sign the registration statement of which this prospectus is a part, our
employees, agents and controlling persons against certain liabilities in
connection with the offer and sale of the shares
24
<PAGE>
hereunder, including the Securities Act, to the extent that liability occurs as
a result of reliance with written information furnished to us by that selling
stockholder expressly for use in connection with the registration statement of
which this prospectus is a part. To the extent this indemnification is
prohibited, the selling stockholders and we are required to contribute to
payments the parties may be required to make in respect of otherwise
indemnifiable claims.
CERTAIN TRANSACTIONS
In connection with certain relocation expenses a promissory note in the
amount of $250,000 was issued to Mr. James Sobezak interest free and payable one
year after Mr. Sobczak leaves the company. In addition, P-Com has agreed to pay
for certain fees and services in connection with the sale of Mr. Sobczak's home
in Pennsylvania so that he may complete his relocation to California. We
anticipate these fees and services to amount to approximately $55,000.
LEGAL MATTERS
The validity of the common stock offered in this prospectus and
certain other legal matters will be passed upon for us by Brobeck, Phleger &
Harrison LLP, Palo Alto, California. As of the date of this prospectus,
attorneys of Brobeck, Phleger & Harrison LLP and family members thereof
beneficially owned an aggregate of approximately 64,000 shares of our common
stock.
EXPERTS
The consolidated financial statements of P-Com, Inc. as of December
31, 1999 and 1998 and for each of the three years in the period ended December
31, 1999 incorporated by reference in this prospectus have been so incorporated
in reliance on the report of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
25
<PAGE>
================================================================================
TABLE OF CONTENTS
Page
----
Prospectus Cover Page..........................................................1
Summary........................................................................2
Risk Factors...................................................................3
Where You Can Find More Information...........................................14
Use of Proceeds...............................................................14
Dividend Policy...............................................................15
The Exchange of Common Stock for Series
B Preferred Stock and Penalty Settlement Agreements.........................15
Warrants......................................................................16
Selling Stockholders..........................................................20
Plan of Distribution..........................................................22
Certain Transactions..........................................................25
Legal Matters.................................................................25
Experts.......................................................................25
================================================================================
================================================================================
5,000,000 Shares
P-COM, INC.
common stock
----------------------
PROSPECTUS
----------------------
___________, 2000
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14 Other Expenses of Issuance and Distribution.
All expenses incurred in connection with the issuance and
distribution of the securities being registered for resale will be paid by the
Registrant. The following is an itemized statement of these expenses. All
amounts except Securities and Exchange Commission and Nasdaq Stock Market
listing fees and the placement agent fee to PaineWebber Incorporated are
estimates.
Registration Statement-SEC .......................... $ 25,806
Nasdaq listing fee .................................. $ 17,500
Printing and engraving .............................. $ 15,000
Legal fees .......................................... $ 375,000
Accounting fees and expenses ........................ $ 150,000
Placement agent fee to PaineWebber Incorporated ..... $ 657,754
Miscellaneous ....................................... $ 300,000
----------
Total ....................................... $1,541,061
==========
Item 15 Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law ("Section 145")
authorizes a court to award or a corporation's board of directors to grant
indemnification to directors and officers in terms sufficiently broad to permit
that indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. Article
VII of the Registrant's bylaws provides for mandatory indemnification of its
directors and permissible indemnification of its officers, employees and other
agents to the maximum extent permitted by the Delaware General Corporation Law.
The Registrant has entered into Indemnification Agreements with its officers and
directors which are intended to provide the Registrant's officers and directors
with further indemnification to the maximum extent permitted by the Delaware
General Corporation Law. Reference is also made to the underwriting agreements,
the purchase agreements and registration rights agreements entered into in
connection with P-Com's three public offerings, P-Com's nine acquisitions, the
sale of the 4 1/4% convertible promissory notes, the sale of the Series B
preferred stock, the warrants and the exchange agreements, each of which
contains provisions indemnifying officers and directors of P-Com and other
persons against certain liabilities, including, in some cases, those arising
under the Securities Act.
II-1
<PAGE>
Item 16 Exhibits.
Exhibit
No. Description
- ------- -----------
3.2 Restated Certificate of Incorporation, as filed with the Delaware
Secretary of State filed on March 9, 1995*
3.2A Certificate of Amendment of Restated Certificate of Incorporation,
as filed with the Delaware Secretary of State on June 16, 1997*
3.2C Certificate of Designation for the Series A Junior Participating
preferred stock, as filed with the Delaware Secretary of State on
December 21, 1998*
3.2D Certificate of Designation for the Series B Convertible
Participating preferred stock, as filed with the Delaware Secretary
of State on December 21, 1998*
3.2E Certificate of Correction of Certificate of Designations for the
Series B Convertible Participating preferred stock, as filed with
the Delaware Secretary of State on December 23, 1998*
4.1 Specimen of common stock Certificate*
4.8 Amended and Restated Rights Agreement, dated as of December 21,
1998, between P-Com and BankBoston, N.A.*
5.1 Opinion of Brobeck, Phleger & Harrison LLP*
10.22B Low Capacity Digital Radio Agreement dated February 13, 1995 by and
between P-Com and Siemens*
10.38 Securities Purchase Agreement dated as of December 21, 1998 by and
among P-Com and the purchasers listed therein*
10.39 Registration Rights Agreement dated as of December 21, 1998 by and
among P-Com and the purchasers listed therein*
10.54 Agreement between P-Com, Inc. and Marshall Capital Management, Inc.,
dated as of June 4, 1999.**
10.55 Agreement between P-Com, Inc. and Castle Creek Technology Partners
LLC, dated as of June 4, 1999.**
10.56 Agreement between P-Com, Inc. and Capital Ventures International,
dated as of June 4, 1999.**
10.57 Warrant to purchase shares of common stock, dated as of June 4,
1999, issued by P-Com to Marshall Capital Management, Inc.**
II-2
<PAGE>
Exhibit
No. Description
- ------- -----------
10.58 Warrant to purchase shares of common stock, dated as of June 4,
1999, issued by P-Com to Castle Creek Technology Partners LLC**
10.59 Warrant to purchase shares of common stock, dated as of June 4,
1999, issued by P-Com to Capital Ventures International**
10.65 Stock Purchase Warrant Agreement between P-Com, Inc. and Castle
Creek Technology Partners LLC, dated August 11, 1999.***
10.66 Stock Purchase Warrant Agreement between P-Com, Inc. and Capital
Ventures International, dated August 11, 1999.***
10.67 Stock Purchase Warrant Agreement between P-Com, Inc. and Marshall
Capital Management, Inc., dated August 11, 1999.***
10.68 Penalty Settlement Agreement between P-Com, Inc. and Castle Creek
Technology Partners LLC, dated November 16, 1999.****
10.69 Penalty Settlement Agreement between P-Com, Inc. and Marshall
Capital Management, Inc., dated November 16, 1999.****
10.70 Penalty Settlement Agreement between P-Com, Inc. and Capital
Ventures International, dated November 16, 1999.****
10.74 Stock Purchase Warrant between P-Com, Inc. and Marshall Capital
Management, Inc., dated January 20, 2000.
10.75 Promissory Note between P-Com, Inc. and Castle Creek Technology
Partners LLC, dated November 16, 1999.
10.76 Asset Purchase Agreement between Paradyne Networks, Inc., P-Com,
Inc. and Control Resources Corporation, dated April 5, 2000.
10.77 Promissory Note between James Sobczak, and P-Com Inc., dated May 3,
2000.
10.78 Agreement between Relocation, a California Corporation and P-Com,
Inc., dated November 8th, 1999.
23.1 Consent of Independent Accountants (PricewaterhouseCoopers LLP)
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit
5.1)*
24.1 Powers of Attorney (included in the signature page of this
registration statement)*
* Previously filed.
** Incorporated by reference to the Form 8-K filed June 8, 1999.
*** Incorporated by reference to the Form 10-Q filed November 18, 1999.
**** Incorporated by reference to the Form 10-K filed April 5, 2000.
Item 17 Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
II-3
<PAGE>
(a) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which
was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(c) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to that information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of those securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission that sort of indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against those liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by that director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
that indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of the
issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration
II-4
<PAGE>
statement relating to the securities offered therein, and the offering of those
securities at that time shall be deemed to be the initial bona fide offering
thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant, P-Com, Inc., a corporation organized and existing under
the laws of the State of Delaware, certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this amendment no. 7 to this registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Campbell, State of California, on the second day of May, 2000.
P-COM, INC.
By /s/ George P. Roberts
---------------------------------------
George P. Roberts,
Chairman of the Board
and Chief Executive Officer
By /s/ Robert E. Collins
---------------------------------------
Robert E. Collins,
Chief Financial Officer,
Vice President, Finance and Administration
II-6
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: May 2, 2000
By /s/ George P. Roberts
---------------------------------------
George P. Roberts,
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
Date: May 2, 2000
By /s/ Robert E. Collins
---------------------------------------
Robert E. Collins,
Chief Financial Officer,
Vice President, Finance and Administration
(Principal Financial Officer)
Date: May 2, 2000
By /s/ James J. Sobczak
---------------------------------------
James J. Sobczak,
President and Chief Operating Officer,
Director of the Company Date:
Date: May 2, 2000
By /s/ Brian Josling
---------------------------------------
Brian Josling,
Director of the Company
Date: May 2, 2000
By /s/ John A. Hawkins
---------------------------------------
John A. Hawkins,
Director of the Company
/s/ George P. Roberts
George P. Roberts Attorney-in-fact
II-7
<PAGE>
Date: May 2, 2000
By /s/ M. Bernard Puckett
--------------------------------------
M. Bernard Puckett,
Director of the Company
/s/ George P. Roberts
George P. Roberts Attorney-in-fact
II-8
<PAGE>
INDEX TO EXHIBITS
Exhibit
No. Description
- ------- -----------
3.2 Restated Certificate of Incorporation, as filed with the Delaware
Secretary of State filed on March 9, 1995*
3.2A Certificate of Amendment of Restated Certificate of Incorporation,
as filed with the Delaware Secretary of State on June 16, 1997*
3.2C Certificate of Designation for the Series A Junior Participating
preferred stock, as filed with the Delaware Secretary of State on
December 21, 1998*
3.2D Certificate of Designation for the Series B Convertible
Participating preferred stock, as filed with the Delaware Secretary
of State on December 21, 1998*
3.2E Certificate of Correction of Certificate of Designations for the
Series B Convertible Participating preferred stock, as filed with
the Delaware Secretary of State on December 23, 1998*
4.1 Specimen of common stock Certificate*
4.8 Amended and Restated Rights Agreement, dated as of December 21,
1998, between P-Com and BankBoston, N.A.*
5.1 Opinion of Brobeck, Phleger & Harrison LLP*
10.22B Low Capacity Digital Radio Agreement dated February 13, 1995 by and
between P-Com and Siemens*
10.38 Securities Purchase Agreement dated as of December 21, 1998 by and
among P-Com and the purchasers listed therein*
10.39 Registration Rights Agreement dated as of December 21, 1998 by and
among P-Com and the purchasers listed therein*
10.54 Agreement between P-Com, Inc. and Marshall Capital Management, Inc.,
dated as of June 4, 1999.**
10.55 Agreement between P-Com, Inc. and Castle Creek Technology Partners
LLC, dated as of June 4, 1999.**
10.56 Agreement between P-Com, Inc. and Capital Ventures International,
dated as of June 4, 1999.**
10.57 Warrant to purchase shares of common stock, dated as of June 4,
1999, issued by P-Com to Marshall Capital Management, Inc.**
<PAGE>
Exhibit
No. Description
- ------- -----------
10.58 Warrant to purchase shares of common stock, dated as of June 4,
1999, issued by P-Com to Castle Creek Technology Partners LLC**
10.59 Warrant to purchase shares of common stock, dated as of June 4,
1999, issued by P-Com to Capital Ventures International**
10.65 Stock Purchase Warrant Agreement between P-Com, Inc. and Castle
Creek Technology Partners LLC, dated August 11, 1999.***
10.66 Stock Purchase Warrant Agreement between P-Com, Inc. and Capital
Ventures International, dated August 11, 1999.***
10.67 Stock Purchase Warrant Agreement between P-Com, Inc. and Marshall
Capital Management, Inc., dated August 11, 1999.***
10.68 Penalty Settlement Agreement between P-Com, Inc. and Castle Creek
Technology Partners LLC, dated November 16, 1999.****
10.69 Penalty Settlement Agreement between P-Com, Inc. and Marshall
Capital Management, Inc., dated November 16, 1999.****
10.70 Penalty Settlement Agreement between P-Com, Inc. and Capital
Ventures International, dated November 16, 1999.****
10.74 Stock Purchase Warrant between P-Com, Inc. and Marshall Capital
Management, Inc., dated January 20, 2000.
10.75 Promissory Note between P-Com, Inc. and Castle Creek Technology
Partners LLC, dated November 16, 1999.
10.76 Asset Purchase Agreement between Paradyne Networks, Inc., P-Com,
Inc. and Control Resources Corporation, dated April 5, 2000
10.77 Promissory Note between James Sobczak and P-Com, Inc., dated May 3,
2000
10.78 Agreement between Reloaction, a California Corporation and P-Com,
Inc., dated November 8/th/, 1999
23.1 Consent of Independent Accountants (PricewaterhouseCoopers LLP)
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit
5.1)*
24.1 Powers of Attorney (including in the signature page of this
registration statement)*
* Previously filed.
** Incorporated by reference to the Form 8-K filed June 8, 1999.
*** Incorporated by reference to the Form 10-Q filed November 18, 1999.
**** Incorporated by reference to the Form 10-K filed April 5, 2000.
<PAGE>
EXHIBIT 10.74
VOID AFTER 5:00 P.M. Eastern Standard
Time on January 19, 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: January 20, 2000
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, 443,000 fully paid and nonassessable
shares of the Company's common stock, par value $0.0001 per share (the "Common
Stock").
The Warrant exercise price per share of Common Stock (the "Exercise
Price") shall be equal to $8.50. 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 "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
<PAGE>
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 7(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 10(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 10(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) business days, after this Warrant shall
have been so exercised. 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.
2
<PAGE>
(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 January 19, 2003, subject to earlier termination under Section 4(c) (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.
(c) 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) 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
3
<PAGE>
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.
(b) Adjustment in Number of Shares. 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 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.
(c) 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)
could apply, receive consideration, in exchange for the immediate surrender of
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 net-exercise of such Warrant would have been entitled
upon such Major Transaction had such holder net-exercised the Warrant (without
regard to any limitations on exercise herein 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. 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 (c) the Exchange Securities are publicly traded, (d) 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
4
<PAGE>
million dollars ($2,000,000) per day, (e) 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 is publicly disclosed is greater
than fifty percent (50%) and (f) 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 the
immediate surrender of 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 net-exercise of such Warrant would have been
entitled upon such Common Stock Major Transaction had the holder of such Warrant
net-exercised (without regard to any limitations on exercise 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. No 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. Except
in the case specified in Section 4(c)(a), this Warrant shall not be exercisable
after a Major 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 Bloomberg online
page, the Holder shall calculate such amount in its sole discretion using the
closest available alternative mechanism and
5
<PAGE>
variable values to those available utilizing the Bloomberg online page for such
calculation function.
(d) 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 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.
(e) 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.
(f) 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.
(g) 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.
(h) 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;
(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
6
<PAGE>
(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.
(i) Certain Definitions.
(i) "Market Price," as of any date, (i) means the Closing
Trade Price for the shares of Common Stock as reported by the New York Stock
Exchange or the Nasdaq National Market System for the trading day immediately
preceding such date, or (ii) if the New York Stock Exchange or 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 the holders of a majority
in interest of the original Warrant, 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.
(ii) "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. 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
<PAGE>
6. 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.
7. 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 7(e) below. 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.
(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 7(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, a 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 7, 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 7.
(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.
(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
8
<PAGE>
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.
8. 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
with a copy to:
Brobeck, Phleger & Harrison LLP
550 West C Street, Suite 1300
San Diego, California 92101
Telecopy: (619) 236-1403
Attention: Hayden Trubitt
9
<PAGE>
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.
9. 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.
10. Miscellaneous.
(a) Amendments. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company 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.
(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.
* * *
10
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
P-Com, Inc.
By: /s/ Robert E. Collins
----------------------------
Name: Robert E. Collins
Title: Chief Financial Officer
11
<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, dated December 21, 1998 among the Company and Marshall Capital
Management, Inc. and others, 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 10.75
P-Com, Inc.
PROMISSORY NOTE
November 16, 1999 $400,000
P-Com, Inc., a Delaware corporation (the "Company"), hereby promises
to pay to the order of Castle Creek Technology Partners LLC the principal amount
of $400,000 together with interest thereon calculated from the date hereof in
accordance with the provisions of this Note.
This Note was issued pursuant to a Penalty Settlement Agreement,
entered into as of November 16, 1999 (as amended and modified from time to time,
the "Agreement"), between the Company and the original holder of this Note.
1. Payment of Interest. Except as otherwise expressly provided in
paragraph 3(b) hereof, interest shall accrue at the rate of twelve percent (12%)
per annum on the unpaid principal amount of this Note outstanding from time to
time, or (if less) at the highest rate then permitted under applicable law. The
Company shall pay to the holder of this Note all accrued interest on the date
the principal amount of this Note is due (whether at maturity or otherwise).
Unless prohibited under applicable law, any accrued interest which is not paid
on the date on which it is due and payable shall bear interest at the same rate
at which interest is then accruing on the principal amount of this Note until
such interest is paid. Interest shall accrue on any principal payment due under
this Note and, to the extent permitted by applicable law, on any interest which
has not been paid on the date on which it is due and payable until such time as
payment therefore is actually delivered to the holder of this Note.
2. Payment of Principal on Note.
(a) Scheduled Payments. The Company shall pay the principal
amount of $400,000 (or such lesser principal amount then outstanding) to the
holder of this Note on November 15, 2000, together with all accrued and unpaid
interest on the principal amount being repaid.
(b) Prepayments. The Company may not prepay this Note without
the prior written consent of the Holder which may be withheld for any or no
reason. In connection with each prepayment of principal hereunder, the Company
shall also pay all accrued and unpaid interest to the date of prepayment on the
principal amount of this Note being repaid.
3. Events of Default.
(a) Definition. For purposes of this Note, an Event of Default
shall be deemed to have occurred if:
(i) the Company fails to pay when due and payable
(whether at maturity or otherwise) the full amount of interest then accrued on
this Note or the full amount of any principal payment on this Note;
Exhibit A-1
<PAGE>
(ii) the Company fails to perform or observe any other
material provision contained in this Note or in the Agreement, and such failure
is not cured within 5 days after the occurrence hereof;
(iii) any representation, warranty or information
contained in the Agreement is false or misleading in any material respect on the
date made;
(iv) the Company or any subsidiary makes an assignment
for the benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating the Company or any subsidiary bankrupt or insolvent; or any order
for relief with respect to the Company or any subsidiary is entered under the
Federal Bankruptcy Code; or the Company or any subsidiary petitions or applies
to any tribunal for the appointment of a custodian, trustee, receiver or
liquidator of the Company or any subsidiary, or of any substantial part of the
assets of the Company or any subsidiary, or commences any proceeding (other than
a proceeding for the voluntary liquidation and dissolution of any subsidiary)
relating to the Company or any subsidiary under any bankruptcy reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction; or any such petition or application is filed, or any such
proceeding is commenced, against the Company or any subsidiary and either (A)
the Company or any such subsidiary by any act indicates its approval thereof,
consent thereto or acquiescence therein or (B) such petition, application or
proceeding is not dismissed within 60 days;
(v) a judgment in excess of $250,000 is rendered against
the Company or any subsidiary and, within 60 days after entry thereof, such
judgment is not discharged in full or execution thereof stayed pending appeal,
or within 60 days after the expiration of any such stay, such judgment is not
discharged in full; or
(vi) the Company or any subsidiary defaults in the
performance of any obligation if the effect of such default is to cause an
amount exceeding $250,000 to become due prior to its stated maturity or to
permit the holder or holders of such obligation to cause an amount exceeding
$250,000 to become due prior to its stated maturity.
The foregoing shall constitute Events of Default whatever the reason
or cause for any such Event of Default and whether it is voluntary or
involuntary or is effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body.
(b) Consequences of Events of Default.
(i) If any Event of Default has occurred the interest
rate on this Note shall increase immediately to the lesser of 18% or the highest
interest rate permitted by law.
(ii) If an Event of Default of the type described in
subparagraph 3(a)(iv) has occurred, the aggregate principal amount of this Note
(together with all accrued interest thereon and all other amounts due and
payable with respect thereto) shall become immediately due and payable without
any action on the part of the holders of this Note, and the Company shall
immediately pay to the holders of this Note all amounts due and payable with
respect to this Note.
Exhibit A-2
<PAGE>
(iii) If any Event of Default has occurred (other than
under subparagraph 3(a)(iv)), the holder of this Note may declare all or any
portion of the outstanding principal amount of this Note (together with all
accrued interest thereon and all other amounts due and payable with respect
thereto) to be immediately due and payable and may demand immediate payment of
all or any portion of the outstanding principal amount of this Note (together
with all such other amounts then due and payable).
(iv) The holder of this Note shall also have any other
rights which such holder may have been afforded under any contract or agreement
at any time and any other rights which such holder may have pursuant to
applicable law.
(v) The Company hereby waives diligence, presentment,
protest and demand and notice of protest and demand, dishonor and nonpayment of
this Note, and expressly agrees that this Note, or any payment hereunder, may be
extended from time to time and that the holder hereof may accept security for
this Note or release security for this Note, all without in any way affecting
the liability of the Company hereunder.
4. Amendment and Waiver. Except as otherwise expressly provided
herein, the provisions of this Note may be amended and the Company may take any
action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written consent of the
holder of this Note.
5. Payments. All payments to be made to the holder of this Note
shall be made in the lawful money of the United States of America in immediately
available funds.
6. Place of Payment. Payments of principal and interest shall be
paid by wire transfer of immediately available funds to an account designated by
the holder of this Note.
7. Business Days. If any payment is due, or any time period for
giving notice or taking action expires, on a day which is a Saturday, Sunday or
legal holiday in the State of New York, the payment shall be due and payable on,
and the time period shall automatically be extended to, the next business day
immediately following such Saturday, Sunday or legal holiday, and interest shall
continue to accrue at the required rate hereunder until any such payment is
made.
8. Conversion.
(a) The Holder may, at any time and from time to time, convert
all or any part of this Note into fully paid and non-assessable shares of common
stock of the Company by delivery of a conversion notice to the Company. The
effective date of any conversion shall be the date of the conversion notice.
Upon any conversion the Company will within three business days of receipt of
this Note and the conversion notice, issue to the Holder such number of shares
of common stock equal to (i) the principal amount of this Note being converted
plus all accrued and unpaid interest thereon divided by (ii) $4.715625 (the
"Conversion Price"). If the Note is converted for less than the full amount of
principal, the Company shall cancel the original Note and issue to the Holder a
new Note, of like tenor, for the remaining principal balance.
Exhibit A-3
<PAGE>
(b) The Company shall pay any and all taxes (other than
transfer taxes) which may be imposed with respect to the issuance and delivery
of the shares of common stock upon the conversion of this Note.
(c) No fractional shares of common stock are to be issued upon
the conversion of this Note, but the Company shall instead round up to the next
whole number the number of shares of common stock to be issued upon such
conversion.
(d) Notwithstanding anything to the contrary contained herein,
this Note shall not be convertible by a Holder to the extent (but only to the
extent) that, if convertible by such Holder, such 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 this
Note shall be exercisable (vis-a-vis other securities owned by Holder which
contain similar limitations on conversion) shall be made on the basis of the
earliest submission of this Note (vis-a-vis other securities owned by the Holder
which contain similar limitations on conversion), in each case subject to such
aggregate percentage limitation. No prior inability to convert this Note
pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of
convertibility. 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 Regulation
13D and G thereunder. The provisions of this paragraph may be implemented in a
manner otherwise than in strict conformity with the terms of this Section 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, 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 Section shall apply to each
successor Holder.
9. Stock Splits, Stock Dividends, Etc. If at any time on or after
the date of issuance of this Note, the number of outstanding shares of Common
Stock is increased by a stock split, stock dividend, combination,
reclassification or other similar event, Conversion Price shall be
proportionately reduced, or if the number of outstanding shares of common stock
is decreased by a reverse stock split, combination or reclassification of
shares, or other similar event, the Conversion Price shall be proportionately
increased. In such event, the Company shall notify the Company's transfer agent
of such change on or before the effective date thereof.
10. Adjustment Due to Distribution. If 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 otherwise (including any dividend or distribution to the Company's
shareholders in cash or shares (or rights to acquire shares) of capital stock of
a subsidiary) (a "Distribution") at any time, then the Holder shall be entitled,
upon any conversion of this Note after the date of record for determining
shareholders entitled to such Distribution, to receive the amount of such assets
(or rights) which would have been
Exhibit A-4
<PAGE>
payable to the Holder had the Holder with respect to the shares of common stock
issuable upon such conversion (without regard to any limitations on conversion
or exercise herein or elsewhere contained) been the holder of such shares of
common stock on the record date for the determination of shareholders entitled
to such Distribution.
11. Purchase Rights. If the Company issues any securities or rights
to purchase stock, warrants, securities or other property (the "Purchase
Rights") pro rata to the record holders of any class of common stock, then the
Holders will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which each Holder could have acquired if
such Holder had held the number of shares of common stock acquirable upon
complete conversion of this Note (without regard to any limitations on
conversion or exercise herein or elsewhere contained) immediately before the
date on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of common stock are to be determined for the grants, issue or sale of such
Purchase Rights.
12. Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Note shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the State of New York or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of New York.
13. Application of Payments. All payments shall be applied first, to
accrued and unpaid interest on the unpaid principal balance of this Note and
then to the unpaid principal balance of this Note.
14. Late Charge. If a payment of principal or interest to be made
pursuant to this Note becomes past due for a period in excess of 5 days, The
Company shall pay on demand to the Holder a late charge of 2% of the amount of
such overdue payment.
15. Costs of Collection. If any suit or action is instituted or
attorneys are employed to collect this Note or any part hereof, the Company
promises and agrees to pay all costs of collection, including all court costs
and reasonable attorneys' fees based upon customary hourly rates and not a
percentage of the indebtedness outstanding.
16. WAIVER OF JURY TRIAL. THE COMPANY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY WHICH MAY ARISE UNDER THIS NOTE WOULD BE BASED UPON DIFFICULT
AND COMPLEX ISSUES AND THEREFORE, THE COMPANY AGREES THAT ANY COURT PROCEEDING
ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF COMPETENT
JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
The Company has executed and delivered this Note on November 16,
1999.
P-COM, INC.
By: /s/ Robert E. Collins
-------------------------------------
Its: Robert E. Collins
------------------------------------
Exhibit A-5
<PAGE>
EXHIBIT 10.76
================================================================================
ASSET PURCHASE AGREEMENT
by and among
PARADYNE NETWORKS INC.
"PDYN",
PARADYNE CORPORATION
as "Buyer",
P-COM, INC.
"P-COM"
and
CONTROL RESOURCES CORPORATION
as "Seller"
Dated as of April 5, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
1.1 Defined Terms...........................................................1
ARTICLE II
PURCHASE AND SALE OF TRANSFERRED ASSETS
2.1 Transferred Assets......................................................6
2.2 Excluded Assets.........................................................8
2.3 Assumption of Liabilities by the Buyer..................................8
2.4 Purchase Price..........................................................8
ARTICLE III
CLOSING
3.1 Closing................................................................10
3.2 Seller's Deliveries at the Closing.....................................10
3.3 Buyer's Deliveries at the Closing......................................10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND P-COM
4.1 Organization of Seller.................................................10
4.2 Authorization..........................................................10
4.3 Financial Statements...................................................11
4.4 Absence of Certain Changes.............................................11
4.5 Title to Transferred Assets, Right to Convey...........................11
4.6 Contracts and Commitments..............................................12
4.7 No Conflict or Violation...............................................13
4.8 Consents and Approvals.................................................13
4.9 Litigation.............................................................13
4.10 Compliance with Law; Permits and Licenses..............................14
4.11 Brokers................................................................14
4.12 Intellectual Property Rights...........................................14
4.13 Employee Plans.........................................................16
4.14 Taxes..................................................................17
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4.15 Environmental and Other Regulations....................................17
4.16 Labor Matters..........................................................18
4.17 Insurance..............................................................18
4.18 Sufficiency of Transferred Assets......................................18
4.19 Inventory..............................................................18
4.20 Suppliers..............................................................19
4.21 Backlog................................................................19
4.22 Accounts Receivable....................................................19
4.23 Definition of "knowledge"..............................................19
4.24 Employee Stock Options.................................................20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
5.1 Organization of the Buyer..............................................20
5.2 Authorization..........................................................20
5.3 No Conflict or Violation...............................................20
5.4 Consents and Approvals.................................................20
5.5 Litigation.............................................................21
5.6 Brokers................................................................21
5.7 Purchase for Resale....................................................21
5.8 No Breach by the Seller................................................21
5.9 Organizational Documents...............................................21
5.10 Investigation and Evaluation...........................................21
5.11 SEC filings............................................................21
ARTICLE VI
ACTIONS BY SELLER AND BUYER PRIOR TO THE CLOSING
6.1 Conduct of Business....................................................22
6.2 Access to Information..................................................22
6.3 Regulatory and Other Authorizations....................................22
6.4 Bulk Transfer Laws.....................................................23
6.5 Insurance..............................................................23
6.6 Release from Assumed Liabilities.......................................23
6.7 Further Action.........................................................23
6.8 Non-Assignable Leases, Contracts, and Permits..........................23
6.9 Schedules..............................................................24
6.10 Notification of Changes................................................24
6.11 Compliance with New Jersey Industrial Site Recovery Act................24
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of the Seller................................25
7.2 Conditions to Obligations of the Buyer.................................26
ARTICLE VIII
ACTIONS BY SELLER AND BUYER
AFTER THE CLOSING
8.1 Confidentiality........................................................28
8.2 Employment of Seller's Personnel.......................................28
8.3 Books and Records; Access to Information...............................30
8.4 Mail Received After Closing............................................31
8.5 Other Employee Benefits................................................32
8.6 No Solicitation........................................................32
8.7 Discharge of Business Obligations......................................32
8.8 UCC Matters............................................................32
8.9 Tax Matters............................................................32
8.10 Sales and Transfer Taxes...............................................32
8.11 Change of Name.........................................................33
ARTICLE IX
INDEMNIFICATION
9.1 Survival of Certain Representations and Warranties.....................33
9.2 Indemnification by the Buyer...........................................33
9.3 Indemnification by the Seller and P-COM................................35
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Methods of Termination.................................................36
10.2 Procedure Upon Termination.............................................37
10.3 Effect of Termination..................................................37
ARTICLE XI
MISCELLANEOUS
11.1 Specific Performance...................................................37
11.2 Assignment.............................................................37
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11.3 Notices................................................................37
11.4 Choice of Law..........................................................38
11.5 Resolution of Conflicts; Arbitration...................................38
11.6 Entire Agreement; Amendments and Waivers...............................39
11.7 Counterparts...........................................................39
11.8 Invalidity.............................................................39
11.9 Headings...............................................................39
11.10 Expenses...............................................................39
11.11 Publicity..............................................................39
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<PAGE>
SCHEDULES AND EXHIBITS
SELLER'S SCHEDULES
Schedule 2.1(a) - Leases and Leased Real Property
Schedule 2.1(b) - Equipment
Schedule 2.1(c) - Contracts
Schedule 2.1(e) - Intellectual Property Rights
Schedule 2.1(g) - Permits
Schedule 2.1(h) - Receivables
Schedule 2.1(i) - Computer Programs
Schedule 2.2 - Excluded Assets
Schedule 2.3 - Excluded Liabilities
Schedule 4.5 - Title Exceptions
Schedule 4.6(c) - Material Contract or Lease Defaults
Schedule 4.6(d) - Contracts not in the Ordinary Course
Schedule 4.6(e) - Termination or Amendments to Contracts
Schedule 4.7 - Conflict or Violation
Schedule 4.8 - Consents and Approvals
Schedule 4.9 - Litigation
Schedule 4.10(a) - Compliance with Law
Schedule 4.10(b) - Permits and Licenses
Schedule 4.12(a) - Intellectual Property Rights Requiring Third Party Consent
to be Assigned
Schedule 4.12(h) - Royalties
Schedule 4.12(i) - Agreements with Officers and Employees regarding
Intellectual Property Rights
Schedule 4.14 - Taxes
Schedule 4.15(a) - Environmental and Other Regulations
Schedule 4.15(b) - Equal Employment Opportunity and Employee Health and Safety
Schedule 4.16(b) - Labor Matters
Schedule 4.17 - Insurance
Schedule 4.18 - Sufficiency of Transferred Assets
Schedule 4.19 - Inventory
Schedule 4.20 - Suppliers
Schedule 4.21 - Backlog
Schedule 4.22 - Accounts Receivable
Schedule 7.1(c) - Key Employees
Schedule 7.1(e) - Employee Stock Options
Schedule 8.2(a) - Employees
Schedule 8.2(c) - Employees with Additional Severance
EXHIBITS
Exhibit 1.1 - Financial Statements
Exhibit 2.4 - Note
Exhibit 8.1 - Confidentiality Agreement
Exhibit 8.2(b)(i) - Paradyne/CRC Special Severance Plan
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Exhibit 8.2(b)(ii) - Form of Termination Agreement, Waiver and Release
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<PAGE>
THIS ASSET PURCHASE AGREEMENT, dated as of April 5, 2000 (together
with all schedules and exhibits hereto, the "Agreement"), is by and between
Paradyne Networks, Inc., a corporation organized and existing under the laws of
Delaware ("PDYN"), Paradyne Corporation, a corporation organized and existing
under the laws of Delaware and a wholly owned subsidiary of PDYN (the "Buyer"),
P-Com, Inc., a corporation organized and existing under the laws of Delaware
("P-COM"), and Control Resources Corporation, a corporation organized and
existing under the laws of Delaware and a wholly owned subsidiary of P-COM (the
"Seller").
RECITALS
WHEREAS, the Seller is presently engaged in the design, manufacture
and sale of communications products primarily for network and information
service providers (the foregoing is referred to hereinafter as the "Business");
WHEREAS, subject to the terms and conditions of this Agreement, the
Buyer desires to purchase from Seller, and the Seller desires to sell to the
Buyer, all of the assets of the Seller related to the Business; and
WHEREAS, the Seller desires that the Buyer assume, and the Buyer has
agreed to assume, certain of the liabilities of the Seller related to the
Business;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Capitalized words and phrases used and not
otherwise defined in this Agreement shall have the following meanings:
"Actions" is defined in Section 4.9.
"Affiliate" means a Person that directly, or indirectly through one
or more intermediaries, controls, is controlled by or is under common control
with the Person specified. For purposes of this definition, the term control of
a Person means the possession, direct or indirect, of the power to (i) vote 50%
or more of the voting securities of such Person or (ii) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise, and the terms and phrases controlling, controlled by and under common
control with have correlative meanings.
"Agreement" is defined in the preamble.
"Allocation Schedule" is defined in Section 2.4(c)
<PAGE>
"Assumed Liabilities" means the liabilities of the Seller assumed by
the Buyer pursuant to this Agreement which specifically exclude the Excluded
Liabilities set forth on Schedule 2.3.
"AT&T" means any entity which is affiliated with AT&T Corp.
"Business" is defined in the Recitals.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York are authorized or required by law to
close.
"Buyer" is defined in the preamble.
"Closing" is defined in Section 3.1.
"Closing Cash Payment" is defined in Section 2.4(a)(i).
"Closing Date" means the date on which the Closing occurs pursuant
to Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Computer Programs" is defined in Section 2.1(i).
"Contracts" is defined in Section 2.1(c).
"Cause" shall mean (a) a material breach of the Buyer's written
policies constituting dishonesty, breach of a fiduciary obligation, intentional
wrongdoing or malfeasance, violation or negligent disregard for workplace rules
and procedures, insubordination, theft, violent acts or threats of violence, or
consumption of alcohol or possession of controlled substances on the property of
the Buyer (or an Affiliate of the Buyer); (b) conviction of a criminal violation
constituting a felony (other than a felony traffic offense) or involving fraud
or dishonesty; (c) the failure to materially satisfy the conditions and
requirements of an employment with the Buyer (or an Affiliate of the Buyer), and
such failure by its nature is incapable of being cured, or such failure remains
uncured for more than 30 days following receipt by the employee of written
notice from the Buyer specifying the nature of the failure and demanding the
cure thereof. For purposes of this definition, inattention by an employee to his
or her duties shall be deemed a failure capable of cure.
"Equipment" is defined in Section 2.1(b).
"Environmental Law" shall mean any and all statutes, codes, laws
(including, without limitation, common law), ordinances, agency rules,
regulations, and guidance, and reporting or licensing requirements relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface, or subsurface strata),
including, without limitation (i) the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq. ("CERCLA"); (ii) the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act, as amended, 42
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<PAGE>
U.S.C. ss. 6901 et seq. ("RCRA"); (iii) the Emergency Planning and Community
Right to Know Act (42 U.S.C. ss. 11001 et seq.); (iv) the Clean Air Act (42
U.S.C. ss. 7401 et seq.); (v) the Clean Water Act (33 U.S.C. ss. 1251 et seq.);
(vi) the Toxic Substances Control Act (15 U.S.C. ss. 1261 et seq.); (vii) the
Hazardous Materials Transportation Act (49 U.S.C. ss. 5101 et seq.); (viii) the
Safe Drinking Water Act (41 U.S.C. ss. 300f et seq.); (ix) any state, county,
municipal, or local statutes, laws or ordinances similar or analogous to the
federal statutes listed in parts (i) - (viii) of this paragraph; (x) any
amendments to the statutes, laws or ordinances listed in parts (i) - (ix) of
this paragraphs; (any rules, regulations, guidelines, directives, orders or the
like adopted pursuant to or implementing the statutes, laws, ordinances and
amendments listed in parts (i) - (ix) of this paragraph; and (xii) any other
law, statutes, ordinance, amendment, rule, regulation, guideline, directive,
order or the like relating to environmental protection, pollution, or
environmental control.
"Environmental Liability of the Buyer" is defined as all
liabilities, costs and expenses (including reasonable attorney and expert fees)
and damages arising out of or relating to any provision of any applicable
Environmental Law, as it pertains to, or arises out of (i) any act or omission
of the Buyer, its employees, agents or representatives; (ii) the operation of
the Business subsequent to the Closing; (iii) the Leased Real Property, or any
other plant, facility, site, area, or property owned, leased, operated, or used
by the Buyer or in the operation of the Business subsequent to the Closing at
which a release of a Hazardous Material has occurred on, in, at, from, adjacent,
or about such Leased Real Property, plant, facility, site, area, or property
subsequent to the Closing when such release occurred during the Buyer's
ownership, lease, operation or use of such Leased Real Property, plant,
facility, site, area, or property.
"Environmental Liability of the Seller" is defined as all
liabilities, costs and expenses (including reasonable attorney and expert fees)
and damages arising out of or relating to any provision of any applicable
Environmental Law, as it pertains to, or arises out of (i) any act or omission
of the Seller, its employees, agents or representatives; (ii) the operation of
the Business prior to the Closing; (iii) the Leased Real Property, or any other
plant, facility, site, area, or property owned, leased, operated, or used by the
Seller or in the operation of the Business prior to the Closing at which a
release of a Hazardous Material has occurred on, in, at, from, adjacent, or
about such Leased Real Property, plant, facility, site, area, or property prior
to the Closing when such release occurred during the Seller's ownership, lease,
operation or use of such Leased Real Property, plant, facility, site, area, or
property.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate." An "ERISA Affiliate" of any entity shall mean any
member of a group of trades or businesses under common control (as defined in
Sections 4001(a)(14) or 4001(b)(1) of ERISA) with that entity, or that is
required to be considered a single employer with that entity pursuant to
Sections 414(b), (c) or (m) of the Code.
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.3
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<PAGE>
"Financial Statements" means (i) the unaudited statement of income
for the years ending December 31, 1999, December 31, 1998 and December 31, 1997
and accompanying balance sheet of the Seller as at such dates, and (ii) the
unaudited statement of income for the two-month period ending February 29, 2000
and accompanying balance sheet of the Seller as at such date, as previously
delivered to the Buyer and attached hereto as Exhibit 1.1.
"GAAP" means general accepted accounting principles consistently
applied in the United States of America, as from time to time in effect.
"Hazardous Material" means, for purposes of this Agreement, any
chemical, waste, substance, material, pollutant, contaminant, equipment or
fixture defined or deemed as "hazardous" or "toxic" or otherwise regulated under
any Environmental Law or other law or regulation relating to pollution and
environmental control, including, without limitation, CERCLA hazardous
substances, RCRA hazardous wastes, pesticides and other agricultural chemicals,
oil and petroleum-products or by-products and any constituents thereof,
asbestos-containing materials, and polychlorinated biphenyls (PCBs).
"Hired Employee" is defined in Section 8.2(a).
"Intellectual Property Rights" shall mean all rights to, all
patents, trademarks, trade names, service marks, copyrights, trade secret rights
and other intellectual property rights of the Seller and any applications or
registrations therefor, and all schematics, technology, source code, know-how,
computer software programs and all other tangible and intangible information or
material used by the Seller in the Business.
"Inventory" is defined in Section 2.1(d).
"IRS" means the Internal Revenue Service.
"ISRA" is defined in Section 6.11.
"Leased Real Property" is defined in Section 2.1(a).
"Leases" is defined in Section 2.1(a).
"Material Adverse Effect" means, with respect to the Business or the
Transferred Assets, a material adverse effect on the assets, financial condition
or properties of the Business and the Transferred Assets, taken as a whole.
"NetPath" means all products of the Business which are identified by
the trade name NetPath.
"Net Revenue Value" shall mean an amount billed to the customer or
an order from a customer that is/will be included in the income statement as
revenue in accordance with GAAP, net of any revenue credits. Amounts
specifically excluded from Net Revenue Value include but are not limited to
sales tax or other taxes (including without limitation any added value, use, or
similar tax), freight, interest, other product delivery services, and duty.
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"Net Working Capital" shall mean the sum of the Seller's (i) current
assets which shall consist of cash, accounts receivable, inventory and prepaid
expenses, (ii) other assets, (iii) fixed assets, (iv) any assets which are
reclassified from current to long term as a result of the audit of the Seller's
Financial Statements as set forth in Section 2.4(a)(iii); less the sum of (a)
current liabilities which shall consist of accounts payable, employee
compensation, current portion of long term debt (only as it relates to capital
leases) and other accrued liabilities, (b) long term warranty reserves, and (c)
any liabilities which are reclassified from current to long term as a result of
the audit of the Seller's Financial Statements as set forth in Section
2.4(a)(iii). Net Working Capital shall specifically exclude software/test
development, capitalized software, accrued vacation costs (including taxes)
intercompany account, accrued interest P-COM, notes payable, and all amounts
classified as taxes payable (because such amounts will not be assumed by the
Buyer). In addition, any asset or liability classifications which (i) are not of
an inter-company nature between the Seller and its Affiliates, or (ii) are not
in the nature of an asset or liability specifically excluded from Net Working
Capital herein, and (iii) appear on the Seller's Closing Date balance sheet and
do not appear on the Seller's balance sheet for the two-month period ending
February 29, 2000, shall be included in Net Working Capital.
"NJDEP" is defined in Section 6.11.
"Note" is defined in Section 2.4(a)(ii).
"Path View" means a software product of the Business which uses the
trade name Path View.
"Permits" is defined in Section 2.1(g).
"P-COM" is defined in the preamble.
"Person" means an individual, a partnership, a limited liability
company, a joint venture, a corporation, a trust, an unincorporated
organization, a division or operating group of any of the foregoing, a
government or any department or agency thereof or any other entity.
"Personnel" is defined in Section 4.9
"Plan" means all plans, programs, policies, commitments or other
arrangements (whether or not set forth in a written document) that are currently
or, within the past three years have been, maintained by P-COM, or to which
P-COM has contributed, on behalf of the Seller that provide incentive
compensation, stock options or other stock purchase rights, severance or
termination pay, medical, dental, life, disability or accident benefits (whether
or not insured), collective bargaining agreements, benefits described in
Sections 125 or 129 of the Code, or pension, profit sharing or retirement
benefits to, or for the benefit of, any active, former or retired service
provider of the Seller or their spouses or dependents.
"Purchase Price" is defined in Section 2.4(a).
"Records" is defined in Section 2.1(f).
"Regulations" is defined in Section 4.10(a).
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<PAGE>
"Representative" means any officer, director, principal, agent,
employee, counsel, consultant, independent auditor or other representative of a
Person.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" means all forms, reports and documents together with
all exhibits required to be filed with the SEC by the Buyer.
"Securities Act" means The Securities Act of 1933, as amended.
"Seller" is defined in the preamble.
"Severance Plan" is defined in Section 8.2(b).
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss. 59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, filing, questionnaire, information
return or other document required to be filed, including requests for extensions
of time, filings made with estimated tax payments, claims for refund and amended
returns that may be filed, for any period with any taxing authority (whether
domestic or foreign) in connection with any Tax (whether or not a payment is
required to be made with respect to such filing).
"Transferred Assets" is defined in Section 2.1.
"Transfer Taxes" is defined in Section 8.10.
ARTICLE II
PURCHASE AND SALE OF TRANSFERRED ASSETS
2.1 Transferred Assets. Subject to the terms and conditions of this
Agreement, the Seller shall sell, transfer, assign and convey to the Buyer, and
the Buyer shall purchase and acquire from the Seller, on the Closing Date the
following (the "Transferred Assets"):
(a) The Seller's rights in, to and under, the real estate leases
described in Schedule 2.1(a) (the "Leases"), together with all of the Seller's
right, title and interest, if any, in the building, office, warehouse or plant
space, fixtures and improvements thereon and any security deposits relating to
the Leases (collectively, the "Leased Real Property") and any and all assignable
warranties of third parties covering such buildings, fixtures and improvements;
provided, however, that the Seller shall retain any and all rights under the
Leases in connection with any event occurring prior to the Closing Date.
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<PAGE>
(b) The Seller's rights in, to and under all machinery, spare parts,
equipment, furniture and fixtures of the Seller located in, on or about the
Leased Real Property, and used principally in connection therewith and in
connection with the Business as set forth in Schedule 2.1(b) (the "Equipment"),
and any and all assignable warranties of third parties covering the Equipment;
(c) All assignable rights of the Seller in, to and under (i) the
leases, licenses (including patent, know-how and trademark licenses), contracts
and commitments set forth in Schedule 2.1(c), including, without limitation,
commitments for additions to property, plant or equipment deliverable after the
Closing Date (the "Contracts"), (ii) all unfilled purchase and sales orders of
the Business existing as of the Closing Date and (iii) all security deposits
related to the Contracts;
(d) All of the Seller's inventory of work in process, samples,
finished goods, raw materials and supplies (to the extent of the Seller's rights
therein) located on the Leased Real Property or located elsewhere and related
solely to the Business (the "Inventory");
(e) All the Intellectual Property Rights, as set forth in Schedule
2.1(e);
(f) All books, records, accounting records, drawings, customer
lists, files and documents (including computer tapes or disks) of the Seller
relating to the Business or the Transferred Assets that are located upon the
Leased Real Property or elsewhere and are in all cases related primarily to the
operations of the Business, or are necessary for the daily operations of the
Business (the "Records"), but not the corporate minute books, corporate seals,
consolidated financial statements or tax records of the Seller;
(g) All permits, licenses, certificates and governmental or
regulatory authorizations which the Seller has obtained for the conduct of the
Business which are assignable to the Buyer, as set forth in Schedule 2.1(g) (the
"Permits"). Schedule 2.1(g) also sets forth all Permits that are not assignable
to the Buyer;
(h) All accounts and notes receivable of the Seller as of the
Closing Date for products sold, arising out of the conduct of the Business, as
set forth in Schedule 2.1(h);
(i) All of the Seller's assignable data processing programs used in
the conduct of the Business, including accounting, invoicing, auditing and data
processing programs, as set forth in Schedule 2.1(i) (the "Computer Programs"),
with the understanding that certain of the Computer Programs are non-exclusive
and may in certain instances continue also to be used by the Seller. Schedule
2.1(i) also sets forth the Computer Programs that are not assignable to the
Buyer.
(j) All other assets of the Seller, including miscellaneous office
supplies used in the conduct of the Business and located on the Leased Real
Property or elsewhere and in all cases related primarily to the operations of
the Business, or are necessary for the daily operations of the Business;
(k) The Seller's goodwill, if any, associated with the Business;
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(l) All of the Seller's intangible rights with respect to claims for
warranties or defects of workmanship, manufacturing or design against third
parties relating to any Transferred Assets; and
(m) All rights which the Seller possesses to use the corporate name
"Control Resources Corporation" in connection with the Business.
2.2 Excluded Assets. The Seller shall retain, and the Buyer shall
not purchase, the assets of the Seller set forth in Schedule 2.2 hereto
(collectively, the "Excluded Assets"), all of which shall remain the exclusive
property of the Seller, free and clear of any claim of the Buyer except as
provided for herein.
2.3 Assumption of Liabilities by the Buyer. On the Closing Date,
subject to the terms and conditions of this Agreement, the Buyer shall
unconditionally and irrevocably assume, and agrees to pay, perform and
discharge, the Assumed Liabilities as they existed at the Closing Date and as
they have existed or shall exist after the Closing Date (whether fixed or
contingent, arising by law or by contract or otherwise). The Buyer shall not
assume those liabilities specifically set forth on Schedule 2.3 (the "Excluded
Liabilities"). The Excluded Liabilities shall remain the obligation of the
Seller.
2.4 Purchase Price. (a) Upon the terms and subject to the conditions
contained herein, as consideration for the purchase of the Transferred Assets
(including the Assumed Liabilities), the Buyer shall deliver to the Seller an
aggregate purchase price (the "Purchase Price") equal to the following:
i. At the Closing, the sum of $3,100,000,
payable by wire transfer, in immediately available funds, to an account which
the Seller shall designate in writing to the Buyer, in lawful money of the
United States of America (the "Closing Cash Payment");
ii. At the Closing, an interest bearing Note
from the Buyer (the "Note") in the form of Exhibit 2.4 in the principal amount
of $4,546,842. The principal amount of such Note shall be (i) decreased by the
amount of cash reflected in the Closing Date balance sheet of the Seller, and
ii. increased or decreased, as the case may be, on a dollar for dollar basis by
the difference, if any, between the Net Working Capital reflected on the
unaudited balance sheet of the Seller as of February 29, 2000, (as included in
Exhibit 1.1 hereto) and the Net Working Capital reflected on the balance sheet
of the Seller as of the close of business on the Closing Date as prepared by the
Buyer and audited by PriceWaterhouseCoopers LLP at the Buyer's sole cost and
expense. Such Closing Date balance sheet shall be prepared from the books and
records of the Business in accordance with GAAP on a basis consistent with the
audited Financial Statements described in Section 2.4(a)(iii). The audit of said
Closing Date balance sheet shall be completed not later than 60 days after the
Closing Date and the Note shall be reissued as soon as practicable after the
completion of such audit in order to reflect the final principal amount as
adjusted pursuant to this Section 2.4(a)(ii).
iii. The income statement of the Seller for
the year ending December 31, 1999 and the accompanying balance sheet of the
Seller as at such date
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shall be audited by PriceWaterhouseCoopers LLP at the Buyer's sole cost and
expense and such audit shall be completed not later than 60 days after the
Closing Date. At the Buyer's option, the financial statements of the Seller for
the periods ending December 31, 1998 and December 31, 1997 may be audited by
PriceWaterhouseCoopers LLP at the Buyer's sole cost and expense and the Seller
and/or P-COM shall reasonably assist the Buyer for a period of 180 days after
the Closing Date in the conduct of such audit. In the event of any proposed
adjustments resulting from the audit of the Financial Statements for the period
ending December 31, 1999 or the Closing Date balance sheet of the Seller, the
Buyer shall provide the Seller with direct access to PriceWaterhouseCoopers LLP
for the purpose of resolving any dispute regarding such adjustments, in the same
manner and timely fashion that the Seller would have had if the Seller had
engaged PriceWaterhouseCoopers LLP to perform such audit. It is recognized that
time is of the essence and all parties shall cooperate in the resolution of such
dispute.
iv. The principal amount of the Note and any
interest payable thereon, shall, at the option of the Buyer, be paid by the
Buyer either: (i) on or before September 15, 2000 by wire transfer of
immediately available funds to an account which the Seller shall designate in
writing to the Buyer in an amount equal to the full amount due, or (ii) on
September 15, 2000 by the (a) issuance to the Seller of registered shares of
common stock of PDYN with the number of such shares based on the average closing
price of PDYN's common stock on the 7 business days immediately preceding the
day such shares of common stock of PDYN are delivered by PDYN to the Seller, and
(b) delivery of a good check to the Seller for the difference between the total
value of such shares and the full amount due under the Note.
(b) Should the total of (i) the Net Revenue Value of invoiced
amounts for shipments of NetPath equipment to AT&T during the year 2000, plus
(ii) the Net Revenue Value of the Seller's NetPath equipment which is ordered by
AT&T prior to December 15, 2000 with a requested delivery date, including any
requested extensions thereof, which is within the Buyer's standard lead time for
such products, during the year 2000 and not delivered by the Buyer before
December 31, 2000, plus (iii) Net Revenue Value for billings to AT&T for Path
View and/or Path View based services during the year 2000, be in excess of
$12,000,000, no later than January 15, 2001 the Buyer shall make an additional
payment to the Seller of $1,500,000, which payment may, at the option of the
Buyer, be made either by (a) issuance to the Seller of registered shares of
common stock of PDYN having an aggregate value of not less than $1,500,000
computed on the basis of the average closing price of PDYN's common stock on the
7 business days immediately preceding the day such shares of common stock of
PDYN are delivered by the Buyer to the Seller, or (b) by wire transfer of
immediately available funds to an account which the Seller shall designate in
writing to the Buyer in an amount equal to the full amount due
(c) Within 90 days of the determination of the final Purchase Price,
the Buyer shall prepare a schedule allocating the Purchase Price among the
Transferred Assets for the Seller's review (the "Allocation Schedule"). Within
15 days after the receipt of such Allocation Schedule, the Seller will propose
to the Buyer any changes to such Allocation Schedule (and in the event no such
changes are proposed in writing to the Buyer within such time period, the Seller
will be deemed to have agreed to, and accepted the Allocation Schedule). The
Buyer and the Seller shall endeavor in good faith to resolve any differences
with respect to the Allocation
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Schedule. If the Buyer and the Seller are unable to resolve any differences,
then any remaining disputed matters will be finally and conclusively determined
by an independent accounting firm of recognized national standing selected by
the Buyer and the Seller. The allocation in the Allocation Schedule will comply
with the requirements of Section 1060 of the Code. The Buyer and the Seller each
agrees to file IRS Form 8594 and Tax Returns in accordance with the Allocation
Schedule.
ARTICLE III
CLOSING
3.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on the first to occur of: (i) June 1,
2000, or (ii) four days following the date on which all of the conditions set
forth in Article VII hereto have been fulfilled, or (iii) such other date as
agreed by the Buyer and the Seller (such date, the "Closing Date"). The Closing
shall be held at 10:00 a.m., local time, on the Closing Date at the offices of
Cadwalader, Wickersham & Taft, 100 Maiden Lane, New York, New York 10038 or such
other place as agreed between the Buyer and the Seller.
3.2 Seller's Deliveries at the Closing. At the Closing, the Seller
shall deliver to the Buyer bills of sale, deeds, endorsements, assignments and
all other instruments of transfer, reasonably satisfactory in form and substance
to the Buyer and its counsel, as shall be effective and necessary to vest in the
Buyer all of the Seller's interest in and title to the Transferred Assets,
together with the certificates and other agreements contemplated by Article VII.
3.3 Buyer's Deliveries at the Closing. At the Closing, the Buyer
shall deliver to the Seller (i) the Closing Cash Payment and the Note, as
provided in Section 2.4 and (ii) the certificates, agreements, and other
documents contemplated by Article VII.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND P-COM
The Seller hereby represents and warrants to the Buyer as follows:
4.1 Organization of Seller. The Seller is duly organized, validly
existing and in good standing as a corporation under the laws of the State of
Delaware and has full corporate power and authority to conduct the Business as
it is presently being conducted and to own and lease its properties and assets.
The Seller is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its business or its
ownership of property makes such qualification necessary and where the failure
so to qualify would have a Material Adverse Effect.
4.2 Authorization. Each of the Seller and P-COM hereby represents
and warrants to the Buyer that each of the Seller and P-COM has all necessary
corporate power and authority to enter into this Agreement and each has taken
all corporate action necessary to consummate the transactions contemplated
hereby and to perform its obligations hereunder. This Agreement has
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been duly executed and delivered by the Seller and P-COM and, assuming the due
execution and delivery of this Agreement by the Buyer, is a legal, valid and
binding obligation of the Seller and P-COM, enforceable against the Seller and
P-COM in accordance with its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
4.3 Financial Statements. The Seller has delivered to the Buyer the
Financial Statements. The Financial Statements are true, correct and complete,
are based on the books and records of the Business, fairly present the financial
condition and, results of operations and cash flow of the Business, as of the
dates and for the periods indicated therein, and have been prepared in
accordance with GAAP.
4.4 Absence of Certain Changes. (a) Since December 31, 1999, there
has not been any change in the Business, Transferred Assets, or Assumed
Liabilities except for (i) changes contemplated hereby or relating to the
transactions contemplated hereby, (ii) changes in the ordinary course of
business, and (iii) changes which have not, individually or in the aggregate,
had a Material Adverse Effect.
(b) Since December 31, 1999, the Seller has not declared, set aside,
or paid any dividends or made any other payments (whether in cash, stock or
property) in respect of any of the Seller's capital stock.
4.5 Title to Transferred Assets, Right to Convey. The Seller has
good and marketable title to, or valid and subsisting leasehold interests in,
all of the Transferred Assets to be conveyed by it, free and clear of all liens,
claims and encumbrances of every kind and nature, and will convey the same to
the Buyer, subject however to the following, all of which is set forth in
Schedule 4.5:
(a) liens for taxes and assessments not yet due and payable;
(b) liens for taxes, assessments, charges and other claims the
validity of which the Seller is contesting in good faith;
(c) the Contracts being subject to the Seller's obligations
thereunder and to the rights and obligations of the other parties thereto;
(d) the Seller not having exclusive right and title to the Seller's
trade names and style names included in the Intellectual Property Rights; and
(e) the existence of imperfections of title, exceptions, liens,
security interests, claims, and other charges and encumbrances which do not
interfere materially with the Seller's present use or ownership of any of the
Transferred Assets or the conduct and operation of the Business taken as a
whole.
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4.6 Contracts and Commitments.
(a) The Leases listed on Schedule 2.1(a) include all leases for the
Leased Real Property, and copies thereof have been furnished to the Buyer. The
Seller hereby represents that it is the lessee under the Leases listed on
Schedule 2.1(a). Except as set forth in Schedule 2.1(a), the Seller's interest
in the Leases is free and clear of any mortgages and liens, and is not subject
to any deeds of trust, assignments, subleases or rights of any third parties
known to or created or permitted by the Seller.
(b) The Contracts set forth in Schedule 2.1(c) include all material
leases for personal property, contracts and commitments related to the conduct
of the Business and the operation of the Transferred Assets. Copies of the
Contracts have been made available to the Buyer.
(c) Except as set forth in Schedule 4.6(c), all Contracts and the
Leases are in full force and effect, valid and existing and binding, and each of
them is, to the Seller's knowledge, binding upon and enforceable against the
parties thereto in accordance with their respective terms other than those
Contracts and the Leases the failure of which to be in full force and effect,
valid or existing or binding or enforceable, individually or in the aggregate,
would not have a Material Adverse Effect. Neither the Seller, nor, to the
Seller's knowledge, any other party to such Contract or the Leases, is in
default under the terms thereof, and, to the Seller's knowledge, there exists no
condition which, after notice or lapse of time or both, would constitute such a
default, other than those defaults which, individually, or in the aggregate,
would not have a Material Adverse Effect. Except as set forth in Schedule
4.6(c), no consents to the assignment to the Buyer of any such Contracts or the
Leases are required and the assignment of such Contracts or Leases will not
cause a breach, default or event of default under any such Contract or Lease.
(d) Except as set forth in Schedule 4.6(d), neither the Seller nor
its Affiliates are parties to any written or oral:
(i) contracts materially affecting the
Business and not made in the ordinary course of business;
(ii) contracts containing covenants
limiting, in a manner which is material to the Business, its freedom to engage
in any line of business in any geographic area or to compete with any Person;
(iii) contracts for employment or to employ,
in connection with the Business, including without limitation contracts to
employ executive officers and other contracts with officers or directors of the
Seller, which can not be terminated by the Seller upon notice of sixty days or
less without penalty or premium.
(iv) agreement, contract, or commitment for
the future purchases of, or payment for, supplies or products, or for the
performance of services by a third party which supplies, products or services
used in the conduct of the Business involving in any one case $10,000 or more;
or
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(v) agreement, contract or commitment to
sell or supply products or to perform maintenance, services or similar duties in
connection with the Business involving in any one case $10,000 or more.
(e) Except as set forth on Schedule 4.6(e), there exists no actual
or, to the knowledge of the Seller, any threatened termination, cancellation, or
limitation of, or any amendment, modification, or change to any Contract, which
would have a Material Adverse Effect on the business or condition, financial or
otherwise, of the Business, including without limitation: (i) the business
relationship of the Seller with any customer, distributor, or related group of
customers or distributors whose purchases individually or in the aggregate are
material to the operations and financial condition of the Business, (ii) the
requirements of any customer or related group of customers of the Seller whose
purchases individually or in the aggregate are material to the operations and
financial condition of the Business, or (iii) the business relationship of the
Seller with any material supplier to the Business.
4.7 No Conflict or Violation. Except as set forth in Schedule 4.7,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in (a) a violation of or a conflict
with any provision of the Certificate of Incorporation or Bylaws of the Seller
or its Affiliates, (b) a breach of, or a default under, or a right to accelerate
with respect to, the Leases, any Contract, commitment or other obligation to
which the Seller or its Affiliates is a party or is subject or by which any of
the Transferred Assets are bound, which would have a Material Adverse Effect, or
interfere in any material way with the ability of the Seller or its Affiliates
to consummate the transactions contemplated by this Agreement, (c) a violation
by the Seller of any statute, rule, regulation, ordinance, code, order,
judgment, writ, injunction, decree or award, which would have a Material Adverse
Effect, or would interfere in any material way with the ability of the Seller to
consummate the transactions contemplated by this Agreement, or (d) the creation
of any lien, charge, or encumbrance upon any of the Transferred Assets, or
result in the acceleration of the maturity of any payment date of any of the
Assumed Liabilities, or increase or adversely effect the obligations of the
Seller under any of the Assumed Liabilities.
4.8 Consents and Approvals. To the Seller's knowledge, except as set
forth in Schedule 4.8, no consent, approval, authorization or other action by,
or filing with or notification to, any governmental or regulatory authority or
other third party is required to be made or obtained by the Seller or its
Affiliates on or prior to the Closing Date in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, except (i) where failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification, would not interfere in any material way with the ability of the
Seller to consummate the transactions contemplated by this Agreement or would
not have a Material Adverse Effect or (ii) for those requirements which become
applicable to the Seller as a result of the specific regulatory status of the
Buyer or as a result of any other facts that specifically relate to the business
or activities in which the Buyer is or proposes to be engaged.
4.9 Litigation. Except as set forth in Schedule 4.9, there is no
action, order, writ, injunction, judgment or decree outstanding, or suit,
litigation, proceeding, labor dispute (other than routine grievance procedures
or routine, uncontested claims for benefits
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under any benefit plans for any officers, employees or agents of the Seller
employed in connection with the Business (collectively, "Personnel") , which
have been previously disclosed to the Buyer), arbitration, investigation or
reported claim, pending or, to the Seller's knowledge, threatened, before any
court, governmental entity or arbitrator (collectively, "Actions"), relating to
(i) the Business or the Transferred Assets, (ii) any benefit plan for Personnel
or any fiduciary or administrator thereof or (iii) the transactions contemplated
by this Agreement. Nor is the Seller in default under or in violation of any
order, writ, injunction, or decree of any court, governmental entity or
arbitrator, affecting the Business or the Transferred Assets.
4.10 Compliance with Law; Permits and Licenses. (a) Except as set
forth in Schedule 4.10(a), to the Seller's knowledge, the Seller has not
received notice of any material, unremedied violation of any applicable law,
rule, regulation, order, writ or decree of any court or any governmental agency
or instrumentality (collectively, "Regulations"), where the consequences of such
default or violation would have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.10(b), the Seller holds all
governmental or regulatory licenses, permits and authorizations necessary for
the ownership and conduct of the Business in each of the jurisdictions in which
the Business is presently being conducted or operated, and such governmental or
regulatory licenses, permits and authorizations are in full force and effect,
except where the failure to hold any thereof or the failure of any thereof to be
in full force and effect would not have a Material Adverse Effect.
4.11 Brokers. Except for an agreement between P-COM and CIBC
Oppenheimer Corp., neither the Seller nor any of its Affiliates has employed, or
is subject to any valid claim of, any broker, finder, investment banker,
consultant or other intermediary in connection with the transactions
contemplated by this Agreement who will be entitled to a fee or commission in
connection with such transactions.
4.12 Intellectual Property Rights. (a) The Seller owns, or is
licensed or otherwise entitled to exercise, without restriction (other than
pursuant to applicable law and the terms of each such license) the Intellectual
Property Rights without any conflict or infringement of the rights of others and
upon the consummation of the transactions contemplated by this Agreement, the
Buyer will own or have the uncontested right to use the Intellectual Property
Rights. Except as set forth in Schedule 4.12(a), all Intellectual Property
Rights and registrations, applications and agreements related thereto of the
Seller and any of its Affiliates which are necessary for the operation of the
Business are fully assignable to the Buyer without the consent of any third
party.
(b) Schedule 2.1(e) also lists (i) all patents and all registered
copyrights, trade dress, trade names, trademarks, service marks and other
company, product or service identifiers and work rights included in the
Intellectual Property Rights, and specifies the jurisdictions in which each such
Intellectual Property Right has been registered, including the respective
registration numbers; (ii) all licenses, sublicenses and other agreements as to
which the Seller is a party and pursuant to which the Seller or any other Person
is authorized to use any Intellectual Property Right except for licenses for
software which is generally available; and (iii) if applicable, all parties to
whom the Seller has delivered copies of the Seller source code, whether pursuant
to an escrow arrangement or otherwise, or parties who have the right to receive
such
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source code. Copies of all such licenses, sublicenses, and other agreements
identified pursuant to clause (ii) above have been delivered by the Seller to
the Buyer.
(c) The Seller is not, or as a result of the execution and delivery
of this Agreement or the performance of the Seller's obligations hereunder will
not be, in violation of, or lose or in any way impair any material rights
pursuant to any license, sublicense or agreement described in Schedule 2.1(e).
(d) The Seller is the absolute owner or licensee of, with all
necessary right, title and interest in and to (free and clear of any liens,
encumbrances or security interests), the Intellectual Property Rights and has
rights to the use, sale, license or disposal thereof or the material covered
thereby in connection with the services or products in respect of which the
Intellectual Property Rights are being used, sold, licensed or disposed of.
Except as described in Schedule 2.1(e), the Seller has taken all commercially
reasonable actions and made all applicable applications and filings pursuant to
applicable laws to perfect or protect its interests in such Intellectual
Property Rights.
(e) To the Seller's knowledge, no claims with respect to the
Intellectual Property Rights have been asserted or are threatened, written or
otherwise, by any Person, and there are no claims (i) to the effect that the
manufacture, marketing, license, sale, offer for sale, import or use of any
product or service as now used or offered or proposed for use or sale by the
Seller infringes any copyright, patent, trademark, trade secret or other
intellectual property right of any third party or violates any license or
agreement with any third party; (ii) contesting the right of the Seller to use,
sell, license or dispose of any Intellectual Property Rights; or (iii)
challenging the ownership, validity or effectiveness of any of the Intellectual
Property Rights.
(f) There has not been and there is not now any unauthorized use,
infringement or misappropriation of any of the Intellectual Property Rights by
any third party, including, without limitation, any service provider of the
Seller; the Seller has not been sued or charged as a defendant in any claim,
suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, service marks, copyrights of other intellectual property
rights and which has not been finally terminated prior to the date hereof; there
are no such charges or claims outstanding; and the Seller does not have any
infringement liability or threat thereof, written or otherwise, with respect to
any trademark, service mark, copyright, registered patent or other intellectual
property right of another.
(g) No Intellectual Property Right is subject to any outstanding
order, judgment, settlement agreement, decree, or, except as provided for in the
terms of the relevant license, stipulation or agreement restricting in any
manner the licensing thereof by the Seller. The Seller has not entered into any
agreement granting any third party the right to bring infringement actions with
respect to, or otherwise to enforce rights with respect to, any Intellectual
Property Right owned by the Seller. The Seller has the exclusive right to file,
prosecute and maintain all applications and registrations with respect to the
Intellectual Property Rights owned by the Seller.
(h) Except as set forth in Schedule 4.12(h), no royalties or fees
are payable by the Seller to anyone for use of the Intellectual Property Rights.
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(i) All Intellectual Property Rights owned by the Seller or its
Affiliates have been (i) developed by employees of the Seller or its Affiliates,
(ii) developed by independent contractors or (iii) was acquired from a third
party. Except as described on Schedule 4.12(i), every current and for the last
five years every former officer, director, consultant, independent contractor or
employee of the Seller has entered into an agreement that requires such officer,
director, consultant, independent contractor or employee to assign to the Seller
any interest in any Intellectual Property Rights created by such Person in the
course of his or her engagement with the Seller that relates to the Business and
to keep confidential any trade secrets, proprietary data or other proprietary
business information of the Seller and to the Seller's knowledge, no such
officer, director, consultant, independent contractor or employee is in breach
of his, her or its obligations pursuant to any such agreement, nor is a party to
any other agreement that requires such individual to assign any interest in any
Intellectual Property Rights created by such Person in the course of his or her
engagement with the Seller that relates to the Business to any Person other than
the Seller, or to keep confidential any trade secrets, proprietary data,
customer information or other business information of any Person other than the
Seller.
4.13 Employee Plans. Any Plan required to be qualified under Section
401(a) of the Code has either obtained a favorable determination letter as to
its qualified status from the IRS or still has a remaining period of time under
applicable Treasury Regulations or IRS pronouncements in which to apply for such
determination letter and to make any amendments necessary to obtain a favorable
determination. To the extent any Plan with an existing determination letter from
the IRS must be amended to comply with the applicable requirements of the Tax
Reform Act of 1986 and subsequent legislation, the time period for effecting
such amendments will not expire prior to the consummation of the transactions
contemplated by this Agreement. The Seller has furnished to the Buyer copies of
the Plans and related Plan documents (including trust documents, insurance
policies or contracts, employee booklets, summary plan descriptions and other
authorizing documents, and to the extent still in its possession any material
employee communications relating thereto) and, where applicable, will provide,
as soon as practicable hereafter, copies of the most recent IRS determination
letters and Forms 5500 with respect to any such Plan. Each Plan has been
maintained and administered in all respects in compliance with its terms
(whether written or otherwise), with any oral written representations made to
any participant or beneficiary by or on behalf of P-COM or any affiliate of
P-COM, and with the requirements prescribed by all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, which are
applicable to such Plan, except to the extent noncompliance would not have a
Material Adverse Effect on the Seller's obligations and liabilities arising from
such Plan or related provisions of ERISA and the Code. No suit, administrative
proceeding, action or other litigation has been brought or is threatened against
or with respect to any such Plan, including any audit or inquiry by the IRS or
United States Department of Labor. All contributions, reserves or premium
payments required to be made or accrued as of the date hereof to the Plans have
been made or accrued.
No Plan is a "defined benefit plan" within the meaning of Section
414(j) of the Code.
Neither P-COM nor any ERISA Affiliate of P-COM maintains or
contributes to or, within the past six years has maintained or contributed to,
or been required to maintain or
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contribute to, any "defined benefit plan" (as defined in Section 414(j) of the
Code), including any multiemployer plan within the meaning of Section 3(37) of
ERISA.
Except as specifically set forth in this Agreement, neither the
Buyer nor any ERISA Affiliate of the Buyer shall have any liability or
obligation with respect to (i) employment-related liabilities, whether
contingent or otherwise, arising out of any individual's employment or working
relationship with the Seller or any ERISA Affiliate of the Seller; or (ii) any
Plan.
4.14 Taxes. Except as set forth on Schedule 4.14, (a) and except for
such Tax Returns the failure of which to be timely filed would not have a
Material Adverse Effect, as of the date hereof and as of the Closing Date, all
Tax Returns relating to the Transferred Assets required to be filed by or on
behalf of the Seller or its Affiliates have been duly filed, or extensions have
been obtained, and all taxes, assessments, and levies shown thereon to be due
and payable, have been paid.
(b) There are no pending federal or state tax disputes in which the
Seller or its Affiliates, with respect to the Business, are alleged to be liable
or in which the Seller or its Affiliates are claiming a refund.
(c) All taxes required to be withheld prior to the Closing Date from
employees of the Seller or its Affiliates engaged in the Business for income
taxes and social security taxes have been properly withheld and, if required
prior to the Closing Date, have been deposited with the appropriate governmental
agency.
(d) Except for any Transfer Taxes covered by Section 8.10 of this
Agreement, the Seller has fully paid all sales, use and withholding Taxes, the
non-payment of which may give rise to successor liability under state law.
4.15 Environmental and Other Regulations. (a) Except as set forth in
Schedule 4.15(a), to the Seller's knowledge, the Seller is in compliance with
all applicable laws and regulations relating to pollution and environmental
control with respect to the Business or the Transferred Assets in all
jurisdictions in which the Seller is presently operating the Business, other
than those laws or regulations which are being contested by the Seller in good
faith and by appropriate proceedings and except where failure to be in
compliance would not have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.15(b), to the Seller's
knowledge, the Seller is in compliance with all applicable laws and regulations
relating to equal employment opportunity and employee health and safety with
respect to the Business or the Transferred Assets in all jurisdictions in which
the Seller is presently operating the Business, other than those laws or
regulations which are being contested by the Seller in good faith and by
appropriate proceedings and except where failure to be in compliance would not
have a Material Adverse Effect.
(c) With respect to the Business, there are no actions, suits,
claims, arbitration proceedings, or complaints pending or, to the Seller's
knowledge, threatened by any
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governmental authority, municipality, community, citizen, or other entity,
against the Seller relating to environmental protection, compliance with
environmental laws, or the condition of the Leased Real Property, nor is the
Seller aware of any unasserted action, suit, claim, proceeding, or complaint the
assertion of which is probable.
(d) With respect to the Business, no lien has arisen or any of the
Transferred Assets under or as a result of any federal, state or local law, rule
or registration relating to environmental protection.
4.16 Labor Matters. (a) Neither the Seller nor its Affiliates is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by them in connection with the operation of the
Business.
(b) The Seller and its Affiliates, with respect to the Business, is
in material compliance with all applicable federal, state, local and foreign
laws and regulations concerning the employer-employee relationship and with all
agreements relating to the employment of the Seller's employees, including
applicable wage and hour laws, fair employment laws, safety laws, worker
compensation statutes, unemployment laws, and social security laws. Except as
set forth on Schedule 4.16(b), with respect to the Business, to the Seller's
knowledge, there are no pending or threatened claims, investigations, charges,
citations, hearings, consent decrees, or litigation concerning: wages,
compensation, bonuses, commissions, or payroll deductions; equal employment or
human rights violations regarding race, color, religion, sex, national origin,
age, handicap, veteran's status, disability, or any other recognized class,
status, or attribute under any federal, state, local or foreign equal employment
law prohibiting discrimination; representation petitions or unfair labor
practices; grievances or arbitrations pursuant to current or expired collective
bargaining agreements; workers' compensation; wrongful termination, negligent
hiring, immigration or any other claim based on the employment relationship or
termination of the employment relationship. With respect to the Business, to the
Seller's knowledge the Seller is not liable for any unpaid wages, bonuses, or
commissions (other than those not yet due) or any tax, penalty, assessment, or
forfeiture for failure to comply with any of the foregoing.
4.17 Insurance. Schedule 4.17 sets forth a list of the insurance
policies providing insurance coverage for the Business and the Transferred
Assets. Each of such policies is issued in favor of the Seller and is valid,
existing and binding and in full force and effect. There are no outstanding
requirements or written recommendations by any current insurer or underwriter
with respect to the Business or the Transferred Assets which require or
recommend changes in the conduct of the Business, or require any repairs or
other work to be done with respect to any of the Transferred Assets or
operations of the Business.
4.18 Sufficiency of Transferred Assets. Except as set forth in
Schedule 4.18, the Transferred Assets constitute substantially all the assets of
the Seller used in the Business as conducted by the Seller prior to the date
hereof, and constitute all the rights and assets necessary to conduct the
Business in the ordinary course as presently conducted by Seller.
4.19 Inventory. Schedule 4.19 lists all inventory owned by the
Seller as of December 31, 1999, including goods supplied to the Seller by
suppliers, goods on consignment and all other goods customarily sold by the
Seller (whether located on the premises of the Seller,
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in transit to or from such premises, in other storage facilities, or otherwise),
and identifies whether such inventory is owned by the Seller free and clear of
any liens, claims, charges and encumbrances or held on consignment
(collectively, the "Inventory"). The Inventory is valued at cost (determined on
a first-in first-out basis) or market, whichever is lower, with allowances for
excess and obsolete materials and materials below standard quality determined in
accordance with GAAP consistently applied. The quality and quantity of the
Inventory is such that the Inventory is, in all material respects readily usable
and saleable in the ordinary course of the business of the Seller, except such
amounts as are reserved in accordance with GAAP consistently applied. All
Inventory materially in excess of reasonable estimated requirements for the
Seller based on current operations for the calendar year 2000 is set forth in
Schedule 4.19.
4.20 Suppliers. Schedule 4.20 hereto lists all suppliers of goods to
the Seller during the prior two years and the value of goods supplied to the
Seller in each such year where such value exceeds $10,000 per annum. Schedule
4.20 also contains a list of each supplier the Seller reasonably expects to
purchase goods from, with an aggregate value exceeding $10,000, during the
twelve months following the Closing Date. There has not been any event,
happening or fact which would lead the Seller to believe any of such suppliers
will not continue to supply the current level and type of goods currently being
provided to the Seller on similar terms and conditions.
4.21 Backlog. Schedule 4.21 hereto sets forth as of a date not
earlier than 10 days prior to the date hereof, the backlog of orders that the
Seller is to ship and contract work to be performed by the Seller. The Seller
either possesses sufficient inventory of parts, materials and personnel to
produce the same within their scheduled delivery dates or such parts of
materials have lead times such that, absent the occurrence of a force majeure
event, the Seller can acquire such parts and materials in time to produce and
ship such backlog in accordance with its scheduled shipping date.
4.22 Accounts Receivable. The amount of all accounts receivable of
the Seller will be good and collectible in full in the ordinary course of
business at the Closing; all accounts receivable arise from bona fide
transactions in the ordinary course of business; no contest with respect to the
amount or validity of any amount is pending; and none of such accounts
receivable is or will on the Closing be subject to any defenses, counterclaim,
rights of return, refusals to pay or setoff except to the extent of the
allowance therefor recorded in accordance with GAAP. The value at which accounts
receivable are carried reflect the accounts receivable valuation policy of the
Seller. As of December 31, l999 and as of the Closing, except as set forth in
Schedule 4.22, there is and will be (i) no account debtor or note debtor
delinquent in its payment by more than 45 days, (ii) no account debtor or note
debtor that has refused (or threatened to refuse) to pay its obligation for any
reason, (iii) no account debtor or note debtor that is insolvent or bankrupt and
(iv) no account receivable or note receivable which is pledged to any third
party by the Seller, except as set forth on Schedule 4.22. The Seller holds no
deposits from customers and has received no prepaid service contract revenue or
other prepaid revenue.
4.23 Definition of "knowledge". The phrases "to the knowledge of the
Seller", "the Seller has not received notice", "to the Seller's knowledge", "the
Seller has not been notified" and any other similar phrases as used in this
Article IV refer to the directors and executive officers of the Seller, P-COM
and its Affiliates and, as to specific areas which are the
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subject of the representations and warranties, those employees of the Seller or
P-COM having management responsibilities related to such specific areas of the
Business.
4.24 Employee Stock Options. The number of outstanding unvested
options that the Hired Employees hold pursuant to the P-COM 1995 Stock
Option/Stock Issuance Plan (as amended and restated effective as of April 1997)
as reflected in Schedule 7.1(e) is correct in all material respects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as follows:
5.1 Organization of the Buyer. The Buyer is duly organized, validly
existing and in good standing under the laws of Delaware and has full corporate
power and authority to conduct its business as it is presently being conducted
and to own and lease its properties and assets.
5.2 Authorization. The Buyer has all necessary corporate power and
authority to enter into this Agreement and has taken all corporate action
necessary to consummate the transactions contemplated hereby and to perform its
obligations hereunder. This Agreement has been duly executed and delivered by
the Buyer and, assuming the due execution and delivery of this Agreement by the
Seller, is a legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms, except that (i) such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefore may be brought.
5.3 No Conflict or Violation. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
result in (a) a violation of or a conflict with any provision of the Certificate
of Incorporation or Bylaws of the Buyer, (b) a breach of, or a default under, or
a right to accelerate with respect to, any term or provision of any contract,
commitment or other obligation to which the Buyer or any of its Affiliates is a
party or is subject, or (c) a violation by the Buyer of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or award
which would have a Material Adverse Effect on the Buyer.
5.4 Consents and Approvals. No consent, approval, authorization or
other action by, or filing with or notification to, any governmental or
regulatory authority or other third party is required to be made or obtained by
the Buyer or any of its Affiliates on or prior to the Closing Date in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, except where failure to
obtain such consent, approval, authorization or action, or to make such filing
or notification, would not interfere in any material way with the ability of the
Buyer to consummate the transactions contemplated by this Agreement or would not
have a Material Adverse Effect on the Buyer.
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5.5 Litigation. There is no material action, order, writ,
injunction, judgment or decree outstanding, or suit, litigation, proceeding,
labor dispute (other than routine grievance procedures or routine, uncontested
claims for benefits under any benefit plans for any officers, employees or
agents of the Buyer), arbitration, investigation or reported claim, pending or,
to the knowledge of the Buyer, threatened, before any court, governmental entity
or arbitrator, which seeks to delay or prevent the consummation of the
transactions contemplated by this Agreement or would, if successful, materially
and adversely affect the ability of the Buyer to consummate the transactions
contemplated by this Agreement.
5.6 Brokers. The Buyer has not employed, and is not subject to any
valid claim of, any broker, finder, investment banker, consultant or other
intermediary in connection with the transactions contemplated by this Agreement
who will be entitled to a fee or commission in connection with such
transactions.
5.7 Purchase for Resale. The Buyer is purchasing the Inventory
transferred herein for resale.
5.8 No Breach by the Seller. As of the date hereof, the Buyer does
not know of any condition or event which constitutes or may constitute a
material breach by the Seller of the warranties and representations set forth in
Article IV; provided, however, no right of recovery against the Buyer shall
accrue to the Seller under this Section 5.8; it being understood, however, that
the Seller may use such knowledge as a defense to any claim by the Buyer
alleging any breach of the Seller's representations and warranties under Article
IV.
5.9 Organizational Documents. Copies of the Certificate of
Incorporation and Bylaws of the Buyer have been delivered to the Seller and such
copies are accurate and complete, without any amendment, modification or
supplement, as of the date of this Agreement and the Closing Date.
5.10 Investigation and Evaluation. Execution of this Agreement shall
constitute the Buyer's representation that the Buyer has requested and been
provided with the opportunity to review and examine originals or copies of such
documents of or relating to the Business and the Transferred Assets and the
transactions contemplated by this Agreement as the Buyer has deemed necessary or
desirable to evaluate the merits of purchasing the Transferred Assets and
assuming the Assumed Liabilities and the Buyer has made its determination to do
so solely based upon its own analysis. The Buyer understands and agrees that the
Seller makes and has made no representations in connection with the purchase and
transfer by the Buyer of the Transferred Assets and Assumed Liabilities other
than those expressly contained herein, which have been relied upon by the Buyer
in entering into this Agreement.
5.11 SEC filings. PDYN has timely filed all SEC Reports required to
be filed by PDYN and has made such SEC Reports available to the Seller. The SEC
Reports (i) as of their respective dates were duly prepared in accordance with
the rules and regulations of the SEC applicable to such SEC Reports, and (ii)
did not at the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such later filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be
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stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
ARTICLE VI
ACTIONS BY SELLER AND BUYER PRIOR TO THE CLOSING
6.1 Conduct of Business. (a) The Seller covenants and agrees that,
from the date hereof through the Closing Date, the Seller shall conduct the
Business only in the ordinary course and in a manner consistent with the current
practice of the Business.
(b) Except as contemplated by this Agreement, from the date hereof
through the Closing Date, the Seller shall not, without the consent of the
Buyer, purchase or acquire any assets or properties, whether real or personal,
tangible or intangible, that if acquired would be a Transferred Asset hereunder,
and shall not sell, pledge, dispose of or encumber any of the Transferred
Assets, the sale, pledge, disposition or encumbrance of which would have a
Material Adverse Effect, except in the ordinary course and in a manner
consistent with current practice of the Business.
(c) The Seller covenants and agrees that, from the date hereof
through the Closing Date, the Seller shall maintain the Transferred Assets in
their present order and condition, reasonable wear and use excepted, and deliver
the Transferred Assets to the Buyer on the Closing Date in such condition.
(d) The Seller covenants and agrees that, from the date hereof
through the Closing Date, the Seller shall take all steps reasonably necessary
to maintain the Intellectual Property Rights and other intangible assets of the
Seller.
(e) From the date hereof through the Closing Date, the Seller will
not adopt any new plan, program, policy or arrangement that, if it existed as of
the Closing Date, would constitute a Plan, or substantially modify or amend any
existing Plan.
6.2 Access to Information. From the date hereof through the Closing
Date, upon reasonable notice, the Seller shall, and shall cause each of its
officers, employees, auditors and agents to (i) afford the Representatives of
the Buyer reasonable access, during normal business hours, to the offices,
properties, books and records of the Business and (ii) furnish to the
Representatives of the Buyer such additional financial and operating data and
other information regarding the Business and the Transferred Assets, as the
Buyer may from time to time reasonably request for the purpose of consummating
the transactions contemplated by this Agreement; provided, however, that such
investigation shall not unreasonably interfere with the business or operations
of the Seller; and provided further that the Seller shall not be required to
take any action which would constitute a waiver of the attorney-client
privilege.
6.3 Regulatory and Other Authorizations. (a) Each of the Seller and
the Buyer shall use its best efforts to obtain all authorizations, consents,
orders and approvals of all federal, state and foreign regulatory bodies and
officials that may be or become necessary for the performance of its obligations
pursuant to this Agreement and shall cooperate fully with the
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other party in promptly seeking to obtain all such authorizations, consents,
orders and approvals. Neither the Seller nor the Buyer shall take any action
that will have the effect of delaying, impairing or impeding the receipt of any
required approval.
(b) If, in order to properly prepare documents required to be filed
with governmental authorities or its financial statements, it is necessary that
either the Seller or the Buyer be furnished with additional information relating
to the Business, the Transferred Assets or Assumed Liabilities and such
information is in the possession of the other party, such party agrees to use
its best efforts to furnish such information in a timely manner to such other
party, at the cost and expense of the party being furnished such information.
6.4 Bulk Transfer Laws. The Buyer hereby waives compliance by the
Seller with the provisions of any so-called bulk transfer laws of any
jurisdiction in connection with the sale of the Transferred Assets to, and the
assumption of the Assumed Liabilities by, the Buyer.
6.5 Insurance. Through the Closing Date, the Seller or its
Affiliates will continue to maintain insurance policies providing insurance
coverage for the Business and Transferred Assets of the kinds, in the amounts
and against the risks substantially as are presently provided pursuant to the
policies set forth on Schedule 4.17 for the Business and the Transferred Assets.
After the Closing Date, the Buyer shall provide all insurance coverage for the
Business and Transferred Assets.
6.6 Release from Assumed Liabilities. The Buyer shall, at the
request of the Seller, use its best efforts to obtain promptly the release of
the Seller from any Assumed Liabilities if it can do so without incurring
expense (unless reimbursed by the Seller) or materially increasing its
obligations under any of the Assumed Liabilities.
6.7 Further Action. Each of the Seller and the Buyer shall execute
such documents and other papers and take such further actions as may be
reasonably required or desirable to carry out the transactions contemplated by
this Agreement. Upon the terms and subject to the conditions of this Agreement,
each of the parties shall use its best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
6.8 Non-Assignable Leases, Contracts, and Permits. (a) Nothing in
this Agreement shall constitute an agreement to assign any Lease, Contract, or
Permit (i) which, by its terms or by law, is not assignable without the consent
of the other party or parties to such Lease, Contract, or Permit unless such
consent shall have been given, or (ii) if any attempted assignment thereof,
without the consent of the other party or parties, would constitute a breach
thereof, or would contravene any law or regulation. If any such consent shall
not be obtained, then the Seller and the Buyer shall, at the request of the
Buyer and at the Buyer's cost, do all things reasonably necessary and cooperate
with each other in any legal and reasonable arrangement designed to provide for
the Buyer the benefit of any such Lease, Contract, or Permit, including
maintaining the Seller's Permits (and any bond or other financial security
posted in connection with the issuance thereof) until issuance of similar
permits to the Buyer. With respect to any non-assignable customer contracts and
orders (including bids) made in the
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name of the Seller which the Buyer has assumed in accordance with Section 2.3,
the Buyer, acting in the capacity of subcontractor, shall complete and deliver
to customers the work and products represented by such contracts or orders. In
conjunction with the Buyer, and at the Buyer's direction and expense, the Seller
shall invoice and collect the accounts receivable for such orders for the
Buyer's account, segregate the funds and promptly pay to the Buyer any amounts
so collected.
(b) Notwithstanding the aforementioned, the Seller shall use
reasonable commercial efforts to obtain, at its sole cost and expense, prior to
the Closing all consents and estoppels which, in the reasonable judgment of the
Buyer, are necessary or appropriate for the transfer or assignment of each of
the material Transferred Assets and the Business to the Buyer and the
consummation of the transactions contemplated hereby. All such consents and
estoppels shall be in writing and in form and substance reasonably satisfactory
to the Buyer, and executed counterparts thereof will be delivered to the Buyer
promptly after receipt thereof but in no event later than the Closing Date.
6.9 Schedules. The Seller shall have the obligation to supplement or
amend the Schedules being delivered concurrently with the execution of this
Agreement and annexed hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules; provided, however,
that for the purpose of the rights and obligations of the parties, any such
supplemental or amended disclosure shall not be deemed to have been disclosed as
of the date of this Agreement unless so agreed to in writing by the Buyer or to
preclude the Buyer from seeking a remedy in damages for losses incurred as a
result of such supplemented or amended disclosure, subject to the offsets and
limitations set forth in Section 9.3(b). The Seller's obligation to amend or
supplement the Schedules shall terminate on the Closing Date.
6.10 Notification of Changes. Between the date hereof and the
Closing Date, the Seller shall promptly notify the Buyer in writing of any
change that would have a Material Adverse Effect on the financial condition of
the Business, any material damage to or loss of any of the Transferred Assets,
or the institution of or, if known by the Seller, the threat of institution of
legal, administrative, or other proceedings against the Seller, related to the
Business, or the occurrence or existence of any unasserted proceedings known to
the Seller that are probable of assertion.
6.11 Compliance with New Jersey Industrial Site Recovery Act. With
respect to the Leased Real Property, the Seller covenants and agrees that it
will comply with all applicable provisions of the New Jersey Industrial Site
Recovery Act, N.J.S.A. 13: 1K-6 et. seq. ("ISRA"), including, but not limited
to: (i) filing all necessary documents with the New Jersey Department of
Environmental Protection ("NJDEP") and receiving all necessary approval prior to
the Closing to allow the transactions contemplated hereby to proceed prior to
full compliance with ISRA; (ii) obtaining all necessary authorizations,
consents, orders and approvals from NJDEP; and (iii) completing all necessary
post-Closing and remedial activities, if any, required by NJDEP for its
approval. The Buyer shall grant the Seller and its representatives access during
business hours to conduct any required post-Closing remedial activities and the
Seller agrees to indemnify, defend and hold the Buyer harmless for any such
activities and take any necessary action to repair, rebuild, reconstruct or
otherwise correct, to the reasonable satisfaction of the
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Buyer, any further damages or destruction caused by the Seller or its
representatives while performing such activities.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of the Seller. The obligations of the
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, all or any of which may be waived, in whole or in part, by the
Seller:
(a) Representations and Warranties; Covenants. The representations
and warranties of the Buyer contained in this Agreement shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made on and as of the Closing Date, and all the covenants and other
obligations contained in this Agreement to be complied with by the Buyer on or
before the Closing Date shall have been complied with in all material respects,
and the Seller shall have received a certificate of the Buyer to such effect
signed by a duly authorized officer thereof;
(b) No Prohibition. There shall not exist any temporary restraining
order, preliminary or permanent injunction, final judgment, law or regulation
prohibiting the consummation of this Agreement or the transactions contemplated
hereby, or, to the knowledge of any party, any pending or threatened action by
any governmental authority or private party prohibiting or seeking to prohibit
the consummation of this Agreement or the transactions contemplated hereby;
(c) Employment Agreements. Effective as of the Closing, the Buyer
shall have entered into an employment agreement with each of Steve Klein and
Howard Katz on terms reasonably acceptable to Messrs. Klein and Katz,
respectively. In addition, the Buyer shall have made an employment offer to each
of the individuals whose name is set forth on Schedule 7.1(c) and such offers
shall have been accepted by substantially all such individuals; and
(d) Additional Documents. The Seller shall have received such
additional documents, certificates, payments, assignments, transfers and other
deliveries as it or its counsel may reasonably request and as are customary to
effect a closing of the matters herein contemplated.
(e) Employee Stock Options. On or before the Closing Date, the Buyer
shall have either (i) issued to each Hired Employee an option at a price of
$17.00 per share to purchase a number of shares of common stock of PDYN equal to
the number of outstanding unvested options that the Hired Employee had held on
the Closing Date granted under the P-COM 1995 Stock Option/Stock Issuance Plan
(as amended and restated effective as of April 1997), or (ii) assume such
outstanding unvested options along with such appropriate adjustments having been
made thereto to ensure that the Hired Employees' rights and benefits pursuant to
such option are maintained. No action or adjustment shall be taken or made to
any such assumed option which is an "incentive stock option" as defined in
Section 422 of the Code, which would result in a
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"modification" (as such term is defined in Section 424 of the Code) resulting in
such option ceasing to qualify as an incentive stock option. P-COM agrees not to
issue more options under the P-COM 1995 Stock Option/Stock Issuance Plan (as
amended and restated effective as of April 1997). Schedule 7.1(e) sets forth the
number of unvested options for each Hired Employee as of March 31, 2000.
7.2 Conditions to Obligations of the Buyer. The obligations of the
Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, all or any of which may be waived, in whole or in part, by the
Buyer:
(a) Representations and Warranties; Covenants. The representations
and warranties of the Seller contained in this Agreement shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made on and as of the Closing, and all the covenants and other
obligations contained in this Agreement to be complied with by the Seller on or
before the Closing Date shall have been complied with in all material respects,
and the Buyer shall have received a certificate of the Seller to such effect
signed by a duly authorized officer thereof;
(b) No Prohibition. There shall not exist any temporary restraining
order, preliminary or permanent injunction, final judgment, law or regulation
prohibiting the consummation of this Agreement or the transactions contemplated
hereby or to obtain substantial damages from the Buyer, in respect of the
consummation of the transactions contemplated hereby, or, to the knowledge of
any party, any pending or threatened action by any governmental authority or
private party prohibiting or seeking to prohibit the consummation of this
Agreement or the transactions contemplated hereby or, which seeks to enjoin the
operation of all or a material portion of the Business or the Transferred
Assets, which, in the reasonable judgment of the Buyer, would make it
inadvisable to consummate the transactions contemplated by this Agreement;
(c) Consents. The Seller shall have obtained and delivered to the
Buyer the consents and approvals set forth on Schedule 4.8;
(d) Employment Agreements. Effective as of the Closing, Steve Klein
and Howard Katz shall have each entered into an employment agreement with the
Buyer on terms reasonably acceptable to the Buyer;
(e) Additional Agreement. Effective as of the Closing, Bruce O'Pray
shall have entered into an agreement with the Buyer, on terms reasonably
acceptable to the Buyer, whereby Mr. O'Pray agrees not to compete with the Buyer
or solicit employment for any Hired Employees or other employees of the Buyer.
(f) Leases. The Seller shall have obtained the written consent of
each lessor of the Leased Real Property to the assignment of the Leases to the
Buyer and the Seller shall have delivered copies of such consents to the Buyer;
(g) Certified Resolutions and Incumbency. The Buyer shall have
received a certificate of the Secretary or Assistant Secretary of the Seller
containing a true and correct copy
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of the resolutions duly adopted by the Seller's board of directors, approving
and authorizing the execution and delivery of this Agreement and related
documents and the transactions contemplated hereby and thereby. The Secretary or
Assistant Secretary of the Seller shall also certify that such resolutions have
not been rescinded, revoked, modified, or otherwise affected and remain in full
force and effect. In addition, the Buyer shall have received a certificate of
incumbency of each of the Seller and P-COM executed by an executive officer and
Secretary or Assistant Secretary of the Seller and P-COM, respectively, listing
the officers of the Seller and P-COM authorized to execute this Agreement and
the instruments of transfer on behalf of the Seller, certifying the authority of
each such officer to execute the agreements, documents, and instruments on
behalf of each of the Seller and P-COM in connection with the consummation of
the transactions contemplated herein;
(h) Instruments of Transfer. The Seller shall have delivered to the
Buyer such warranty deeds, quitclaim deeds, bills of sale, motor vehicle titles,
endorsements, assignments, licenses, and other good and sufficient instruments
of conveyance and transfer and any other instruments reasonably deemed
appropriate by counsel to the Buyer all in form and substance reasonably
satisfactory to counsel to the Buyer to vest in the Buyer all of the Seller's
rights, title, and interest with respect to the Transferred Assets, free and
clear of all liens, charges, encumbrances, pledges, or claims of any nature;
(i) Condition of Transferred Assets. On the Closing Date, all of the
Transferred Assets shall be in substantially the same condition as at the close
of business on the date hereof, except for ordinary use and wear thereof and
changes occurring in the ordinary course of business or expressly permitted by
this Agreement between the date hereof and the Closing Date, and the Buyer shall
have received a certificate dated as of the Closing Date, executed by an
authorized officer of the Seller to such effect; provided, however, if on or
prior to the Closing Date any of the Transferred Assets shall have suffered loss
or damage on account of fire, flood, accident, act of war, civil commotion, or
any other cause or event beyond the reasonable power and control of the Seller
(whether or not similar to the foregoing) to an extent which, in the reasonable
opinion of the Buyer, materially affects the value of the Transferred Assets,
taken as a whole, the Buyer shall have the right either (a) to terminate this
Agreement and all of the Buyer's obligations hereunder without incurring any
liability to the Seller as a result of such termination or (b) to consummate the
transactions provided for herein and be paid the full amount of all insurance
proceeds, if any, paid or payable to the Seller, in respect of such loss plus an
amount up to a maximum of $500,000 equal to any deductible or co-insurance
reserve applicable to such loss. If under the circumstances described in the
foregoing sentence, the Buyer shall elect to consummate the transactions
provided for herein, the Seller shall, on demand, pay to the Buyer the full
amount of any insurance proceeds received by the Seller in respect of any such
loss, together with up to a maximum of $500,000 of any deductible or
co-insurance reserve applicable to such loss; and
(j) Additional Documents. The Buyer shall have received such
additional documents, certificates, payments, assignments, transfers and other
deliveries as it or its counsel may reasonably request and as are customary to
effect a closing of the matters herein contemplated.
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(k) Certificate of Non-foreign status and State Tax Clearance
Certificates. The Seller shall have delivered to the Buyer a duly executed
certificate stating that the Seller is not a "foreign person" for purposes of
Section 1445 and Section 897 of the Code.
(l) Proprietary Information and Inventions Agreement of P-COM. P-COM
and the Seller shall have assigned and transferred to the Buyer any and all
Intellectual Property Rights they may own and be entitled to pursuant to the
terms of such Proprietary Information and Inventions Agreements P-COM and the
Seller have entered into with any employee of the Seller.
ARTICLE VIII
ACTIONS BY SELLER AND BUYER
AFTER THE CLOSING
8.1 Confidentiality. The Confidentiality Agreement dated February
16, 2000 between the Seller and the Buyer and attached as Exhibit 8.1 (the
"Confidentiality Agreement") is incorporated by reference herein and shall
continue in full force and effect through the Closing Date. The definition of
"Confidential Information" contained in the Confidentiality Agreement is hereby
amended to include this Agreement, all Schedules and Exhibits to this Agreement,
and all information obtained from the Seller pursuant to Section 8.3
8.2 Employment of Seller's Personnel. (a) The Buyer shall offer to
employ beginning immediately after the Closing Date, at rates of compensation
not less than the Seller's rates of compensation as in effect on the Closing
Date, but otherwise in accordance with the normal hiring practices and policies
of the Buyer and PDYN, all of the Seller's employees listed on Schedule 8.2(a)
and shall employ all of the Seller's employees who accept such offer of
employment. The Seller shall use its best efforts between the date hereof and
the Closing Date to make all of its employees available for employment by the
Buyer. Such employees who are hired by the Buyer shall be referred to herein as
"Hired Employees."
(b) Each Hired Employee of the Seller who, from and after the
Closing Date, is employed by the Buyer and who is subsequently involuntarily
terminated by the Buyer (other than for Cause) before the first anniversary of
the Closing Date, shall be subject to the terms and conditions of the
Paradyne/CRC Special Severance Plan, a description of which is attached hereto
as Exhibit 8.2(b)(i) (the "Severance Plan"). The terms of the Severance Plan
shall be applicable to the Hired Employees for a period of one year from the
date of beginning employment with the Buyer and during such time shall be
determinative of any severance arrangements for all Hired Employees. Following
the one year period from the date of employment by the Buyer, all such Hired
Employees shall then be subject to the Buyer's relevant severance plans and the
Severance Plan shall be of no further force and effect. For purposes of
computing any severance payments owed to a Hired Employee under this Section
8.2(b), it shall be deemed that such employee commenced his or her employment
with the Buyer on the date such employee commenced his or her employment with
the Seller, as determined from the employment records transferred to the Buyer
pursuant to this Agreement. In accordance with the Severance Plan, certain
severance payments described in the Severance Plan shall be conditioned upon the
affected Hired Employees' execution of a Termination Agreement, Waiver and
Release of Claims in the form attached hereto as Exhibit 8.2(b)(ii). The Buyer
agrees that (i) the
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principal office described in the Severance Plan is located in Fair Lawn, New
Jersey, (ii) for purposes of the Severance Plan, the Buyer does not now or
currently intend to have any facilities within 50 miles of Fair Lawn, New
Jersey, (iii) the Buyer will not materially amend, modify or terminate, the
Severance Plan, and (iv) the Buyer will not materially amend or modify the
Termination Agreement, Waiver and Release of Claims.
(c) In addition to any severance payments owed to any Hired Employee
pursuant to Section 8.2(b) above, if any Hired Employee who is named on Schedule
8.2(c) is involuntarily terminated by the Buyer (other than for Cause) before
the first anniversary of the Closing Date, such employee shall receive from the
Buyer at the time of such termination an additional severance payment equal to
the amount set forth opposite such Hired Employee's name on Schedule 8.2(c). The
costs incurred, directly or indirectly, in connection with the termination or
severance after the Closing Date of any Hired Employee shall be borne
exclusively by the Buyer. However, the Seller shall be responsible for any and
all costs incurred, directly or indirectly, in connection with the termination
or severance of any employee of the Seller set forth on Schedule 8.2 (a) who is
not a Hired Employee.
(d) The Seller shall be responsible for complying with the
requirements of Section 4980B of the Code and Part VI of Title I of ERISA for
the employees of the Seller or any Affiliate of the Seller (including the Hired
Employees) and their "qualified beneficiaries" whose "qualifying event" (as such
terms are defined in Section 4980B of the Code) occurs on or prior to the
Closing Date.
(e) The Buyer shall be solely responsible for employment-related
liabilities arising out of the Hired Employees' employment or working
relationship with the Buyer.
(f) As to any Plan that is a tax-qualified defined contribution
retirement plan, the Seller shall, effective no later than the Closing Date,
fully vest all Hired Employees in their benefits thereunder. Within 90 days
after the Closing Date, the Seller shall make eligible rollover distributions
(within the meaning of Section 402(c) of the Code) from any such plan available
to the Hired Employees, except that if the Seller elects to first file the plan
with the IRS for a favorable determination letter, the Seller must (i) do so
within 90 days after the Closing Date, (ii) comply with any reasonable
requirements the IRS imposes as a condition of issuing such letter; and (iii)
make eligible rollover distributions available within 90 days after the issuance
of such letter.
(g) If any Hired Employee has an unreimbursed balance in his or her
medical or dependent care reimbursement accounts as of the Closing Date, the
Seller shall continue to reimburse such Hired Employees from their respective
accounts for eligible claims the Hired Employee incurs prior to the Closing Date
(subject to paragraph (d) above). Any such claims shall be submitted to the
Seller or its designee in the manner specified by the Seller by February 28,
2001. Nothing in this Section 8.2(g) shall be deemed to require that the Seller
pay dependent care claims after the Closing Date that exceed the balance of the
dependent claim claimant's reimbursement account as of the Closing Date.
(h) The Seller shall be responsible for the payment of all earned
but unpaid salaries, bonus, vacation pay, sick pay, holiday pay, and other like
obligations (including related
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taxes) and payments to the employees of the Business for all periods ending on
or prior to the Closing Date, other than such of the foregoing that are included
in Assumed Liabilities, and the Buyer shall be responsible for all Assumed
Liabilities related to such employees. The Seller shall be responsible for the
payment of any amounts due to the employees pursuant to any Plans as a result of
the employment of its employees, and, in determining bonuses and other similar
payments due to the employees for any period ended on or prior to the Closing
Date, the Seller shall, if payment thereof will occur after the Closing Date,
waive any requirement that such employees be employees of the Seller on the date
such bonuses or other similar payments are paid. The Seller shall be responsible
for all incurred but unreported or unpaid medical claims occurring prior to the
Closing Date and for the cost associated with any hospital confinement which
commences prior to the Closing Date. The Buyer shall become responsible for all
costs and liabilities attributable to the employees accruing on and after the
Closing Date; provided, however, that the Buyer shall not be responsible for (a)
liabilities arising under the Plans other than to the extent reflected in the
Assumed Liabilities or (b) liabilities associated with any leaves taken prior to
the Closing Date in connection with the Family and Medical Leave Act of 1993.
Effective on the Closing Date, the Seller and P-COM shall, and hereby does,
release all the employees listed on Schedule 8.2(a) from any employment and/or
confidentiality agreement previously entered into between the Seller and such
employees relating to the Business to the extent (but only to the extent)
necessary for the Buyer to operate the Business in the same manner as operated
by the Seller prior to the Closing Date.
8.3 Books and Records; Access to Information. (a) The Seller agrees
that on and after the Closing Date it will permit the Buyer and its
Representatives, during normal business hours, to have access to and to examine
and take copies of all books and records of the Seller which are not delivered
to the Buyer pursuant to this Agreement and which relate to the Business or the
Transferred Assets, whether with respect to events occurring prior to the
Closing Date or to transactions or events occurring subsequent to the Closing
Date which arise out of transactions or events occurring prior to the Closing
Date. All books and records of the Seller relating to the Business or the
Transferred Assets and not delivered to the Buyer pursuant hereto will be
preserved by the Seller for a period of not less than seven years following the
Closing Date.
(b) The Buyer agrees that it shall preserve and keep all books and
records with respect to the Transferred Assets and Assumed Liabilities for a
period of at least seven years from the Closing Date. After such seven-year
period, the Buyer may discard all such books and records unless the Seller or
its Affiliates, 6 months prior to the termination of such seven-year period, has
given notice to the Buyer of its intent to remove and retain all or any part of
such books and records. During such seven-year period, duly authorized
Representatives of the Seller shall, upon reasonable notice, have access thereto
during normal business hours to examine, inspect and copy such books and
records.
(c) The Buyer agrees to receive, maintain and make available to the
Seller for inspection and photocopying during normal business hours all records,
data and analyses of the Business, including without limitation all records,
data and analyses relating to the Business prior to the Closing Date, with
respect to quality control, environmental rules and regulations and employee
health and safety, including, without limitation, all applicable documents and
records issued by or pertaining to regulations promulgated by the Occupational
Safety and Health Administration, the Environmental Protection Agency, or state
agencies.
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(d) The Seller and the Buyer will provide each other with such
cooperation and information as either of them reasonably may request of the
other in filing any Tax Return, amended Tax Return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes, preparation for
litigation or investigation of claims in conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall include
providing copies of all relevant Tax Returns, documents and records, or portions
thereof, relating exclusively to the Business (but not including income or
franchise Tax Returns or portions thereof). Each of the Seller and the Buyer
shall make its employees available on a mutually convenient basis to provide
explanation of any documents or information provided hereunder. Notwithstanding
Section 8.3(b), each of the Seller and the Buyer will retain all Tax Returns,
schedules and work papers and all material records or other documents relating
to Tax matters of the Business for the taxable year of the Seller ending on or
after the Closing Date and for all previous years, until the expiration of the
statute of limitations of the taxable years to which such Tax Returns and other
documents relate (and, to the extent notified by the other party in writing, any
extensions thereof). Any information obtained under this Section 8.3(d) shall be
kept confidential, except as may be otherwise necessary in connection with the
filing of Tax Returns or claims for refund or in conducting an audit or other
proceeding.
(e) After the Closing Date, the Seller and its Affiliates and the
Buyer shall cooperate with each other in all reasonable respects in connection
with the defense or assertion of any claim related to any Transferred Asset,
non-Transferred Asset or Assumed Liability or non-Assumed Liability, as the case
may be, including, without limitation, making available records relating to such
claim and furnishing, without expense, management employees of the party as may
be reasonably necessary for the preparation of the defense or assertion of any
such claim or for testimony as a witness in any proceeding relating to such
claim; provided, however, that the foregoing right to cooperation shall not be
exercisable by one party in such a manner as to interfere unreasonably with the
normal operations and business of the other party. The Seller and its Affiliates
shall reimburse the Buyer for all expenses incurred by the Buyer pursuant to
this Section 8.3(e), including salary expenses of employees who are required to
be away from their normal place of employment.
8.4 Mail Received After Closing. (a) In the event that the Buyer
receives after the Closing any mail or other communications addressed to the
Seller, the Buyer may open such mail or other communications and deal with the
contents thereof in its discretion to the extent that such mail or other
communications and the contents thereof relate to the Business or any of the
Transferred Assets or to any of the Assumed Liabilities, including the right to
endorse without recourse the name of the Seller on any check received by the
Buyer with respect to the Business or the Transferred Assets, and to deal with
the proceeds in accordance with the terms of this Agreement. The Buyer agrees to
deliver promptly or cause to be delivered to the Seller all other mail and the
contents thereof which does not relate to the Transferred Assets or the Assumed
Liabilities.
(b) In the event that the Seller or its Affiliates receives after
the Closing Date mail or other communications addressed to the Seller or its
Affiliates which relates to the Business, any of the Transferred Assets or any
of the Assumed Liabilities, the Seller or its Affiliates shall promptly deliver
or cause to be delivered all such mail and the contents thereof to the Buyer.
The Seller and its Affiliates agree to cooperate with the Buyer and to make
arrangements
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(including "lock box" and other banking arrangements) reasonably necessary in
order to properly deal with checks addressed to the Seller or its Affiliates but
which belong to the Buyer pursuant to this Agreement, and to properly direct the
proceeds thereof to the Buyer.
8.5 Other Employee Benefits. Effective as of the Closing Date, and
for a period of not less than 12 months following the Closing Date, the Buyer
shall (or shall cause an appropriate Subsidiary or Affiliate to) provide the
Hired Employees with benefits (including, without limitation, welfare benefits)
that are substantially similar to the benefits the Buyer provides to its other
similarly-situated employees, except that the short- and long-tem disability
plans available to the Hired Employees during the first 12 months following the
Closing Date will be comparable to the short-term and long-tem disability plans
the Seller made available to the Hired Employees prior to the Closing Date. In
addition, any such plan or arrangement of the Buyer shall cover all claims
relating to conditions which existed prior to the Closing Date.
8.6 No Solicitation. For a period of two years following the
Closing, the Seller and its Affiliates shall not, directly or indirectly,
solicit, induce to leave employment or offer employment to any Hired Employee of
the Buyer, or any Affiliate of the Buyer.
8.7 Discharge of Business Obligations. From and after the Closing
Date, the Seller shall pay and discharge, in accordance with past practice but
not less than on a timely basis, all obligations and liabilities incurred prior
to the Closing Date in respect of the Business, its operations or the assets and
properties used therein (except for those expressly assumed by the Buyer
hereunder), including without limitation any liabilities or obligations to
employees and clients of the Business.
8.8 UCC Matters. From and after the Closing Date, the Seller will
promptly refer all inquiries with respect to ownership of the Transferred Assets
or the Business to the Buyer. In addition, the Seller will execute such
documents and financing statements as the Buyer may reasonably request from time
to time to evidence transfer of the Transferred Assets to the Buyer, including
any necessary assignments of financing statements.
8.9 Tax Matters. (a) As soon as practicable after the Closing Date,
but in no event later than the final due date for the filing of a final Form 941
as required under the Code and applicable regulations thereunder, the Seller
shall provide a Form W-2 for each of its employees for the period beginning on
January 1, 2000 through the Closing Date, as required under the Code and the
regulations promulgated thereunder. Following the Closing Date, the Buyer shall
continue as the Successor Employer, as such term is defined in the applicable
regulations of the Code.
(b) The Seller and the Buyer shall cooperate with each other in all
reasonable respects in connection with the satisfaction of this provision,
including but not limited to, making the appropriate books and records available
as described under Section 8.3.
8.10 Sales and Transfer Taxes. The Buyer and the Seller shall
equally share the liability for and each shall pay one-half of any sales,
transfer and similar Taxes incurred as a result of the sale of the Transferred
Assets (the "Transfer Taxes"). The Seller will file all necessary Tax Returns
and other documents required to be filed with respect to all such Taxes.
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8.11 Change of Name. Immediately after the Closing, the Seller shall
change its name to "Control Liquidating Corp.".
ARTICLE IX
INDEMNIFICATION
9.1 Survival of Certain Representations and Warranties. The
representations and warranties set forth in Sections 4.18, 4.20 and 4.21 shall
survive the Closing for a period of six months after the Closing Date. The
representations and warranties set forth in Sections 4.1, 4.2, 4.3, 4.4,
4.5(c)-(e), 4.6, 4.7, 4.9, 4.10, 4.13, 4.15(b), 4.16 and 4.17 and in Sections
5.1, 5.2, 5.3, 5.5, 5.8 and 5.10 shall survive the Closing for a period of 12
months after the Closing Date. The representations and warranties set forth in
Sections 4.5(a) and (b), 4.12 and 4.15(d) shall survive the Closing for a period
of 24 months after the Closing Date. The representations and warranties set
forth in Section 4.15(a) and (c) shall survive the Closing for a period equal to
the applicable statute of limitations. The representations set forth in Section
4.14 and the covenants set forth in Section 8.9 shall survive the Closing for
the applicable statute of limitations period. All other representations and
warranties of the Seller and the Buyer contained in this Agreement shall
terminate at the Closing and shall be of no force and effect thereafter.
9.2 Indemnification by the Buyer. (a) The Buyer agrees, subject to
the other terms and conditions of this Agreement, to indemnify the Seller (and
the Seller's directors, officers, employees, Affiliates, successors and assigns)
against, and hold it harmless from all liabilities, costs and expenses
(including reasonable attorney and expert fees) of and damages to the Seller
arising out of (i) the breach of any representation, warranty, covenant or
agreement of the Buyer herein, (ii) the Assumed Liabilities, (iii) the operation
of the Business, as relates to the Transferred Assets, and the Transferred
Assets after the Closing Date, and (iv) the Environmental Liability of the
Buyer. No claim may be asserted nor may any action be commenced against the
Buyer for breach of any representation, warranty, covenant or agreement
contained herein, unless written notice of such claim or action is received by
the Buyer describing in detail the facts and circumstances with respect to the
subject matter of such claim or action on or prior to the date on which the
representation, warranty, covenant or agreement on which such claim or action is
based ceases to survive as set forth in Section 9.1, irrespective of whether the
subject matter of such claim or action shall have occurred before or after such
date. Nothing contained in this Section 9.2(a) shall in any manner alter or
modify the time of survival of the representations and warranties of the Seller
and the Buyer as set forth in Section 9.1 and/or the Excluded Liabilities
retained by the Seller pursuant to this Agreement.
(b) Except for claims with respect to Assumed Liabilities, as to
which the limitations of this sentence (including provisos) shall not apply, no
claim may be made against the Buyer for indemnification pursuant to this Section
9.2 unless the aggregate of all liabilities and damages of the Seller (exclusive
of legal fees incurred in connection with pursuing such claim) with respect to
this Section 9.2 shall exceed $100,000; provided that no indemnification shall
be available with respect to any liability or damage if the aggregate of all
liabilities and damages for which the Seller has received indemnification shall
have exceeded 100% of the aggregate purchase price set forth in Section 2.4. For
the purposes of this subsection (b), in computing such aggregate amount of
claims, the amount of each claim shall be deemed to be an
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amount (i) net of any Tax benefit to the Seller or any Affiliate thereof, and
(ii) net of any insurance proceeds and any indemnity, contributions or other
similar payment payable by any third party with respect thereto.
(c) Payments by the Buyer pursuant to subsection (a) of this Section
9.2 shall be limited to the amount of any liability or damage that remains after
deducting therefrom (i) any Tax benefit to the Seller or any Affiliate thereof,
arising from such liability or damage and (ii) any insurance proceeds and any
indemnity, contribution or other similar payment payable to the Seller or any
Affiliate from any third party with respect thereto. Tax benefits will be
considered to be realized by the Seller or any Affiliate thereof for purposes of
this Section 9.2 in the year in which a payment occurs, and the amount of the
Tax benefits shall be determined by assuming (i) the Seller is in the maximum
United States federal income tax bracket after any deduction reportable with
respect to a payment hereunder and (ii) the Seller's effective state and local
income tax rate is its effective rate for the most recent prior taxable year for
which such information is available.
(d) The Seller agrees to give the Buyer prompt written notice of any
claim, assertion, event or proceeding by or in respect of a third party of which
it has knowledge concerning any liability or damage as to which it may request
indemnification hereunder. The Buyer shall have the right to direct, through
counsel of its own choosing, the defense or settlement of any such claim or
proceeding; the Seller may participate in such defense, but in such case the
expenses of the Seller shall be paid by the Seller. The Seller shall provide the
Buyer with access to its records and personnel relating to any such claim,
assertion, event or proceeding during normal business hours and shall otherwise
cooperate with the Buyer and aid at the Buyer's request in the defense or
settlement thereof, and the Buyer shall reimburse the Seller for all its
reasonable out-of-pocket expenses in connection therewith. If the Buyer elects
to direct the defense of any such claim or proceeding, the Seller shall not pay,
or permit to be paid, any part of any claim or demand arising from such asserted
liability, unless the Buyer consents in writing to such payment or unless the
Buyer, subject to the last sentence of this subsection (d), withdraws from the
defense of such asserted liability, or unless a final judgment from which no
appeal may be taken by or on behalf of the Buyer is entered against the Seller
for such liability. If the Buyer shall fail to defend, or if, after commencing
or undertaking any such defense, fails to prosecute or withdraws from such
defense, the Seller shall have the right to undertake the defense or settlement
thereof, at the Buyer's expense. If the Seller assumes the defense of any such
claim or proceeding pursuant to this subsection (d) and proposes to settle such
claim or proceeding prior to a final judgment thereon or to forego appeal with
respect thereto, then the Seller shall give the Buyer prompt written notice
thereof, and the Buyer shall have the right to participate in the settlement or
assume or reassume the defense of such claim or proceeding.
(e) Except as set forth in this Agreement, the Buyer is not making
any representation, warranty, covenant or agreement with respect to the matters
contained herein. Anything herein to the contrary notwithstanding, no breach of
any representation, warranty, covenant or agreement contained herein shall give
rise to any right on the part of the Seller, after the consummation of the
purchase and sale of the Transferred Assets and assumption of Assumed
Liabilities contemplated hereby, to rescind this Agreement or any of the
transactions contemplated hereby.
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9.3 Indemnification by the Seller and P-COM. (a) The Seller and
P-COM, jointly and severally, agree, subject to the other terms and conditions
of this Agreement, to indemnify the Buyer (and the Buyer's directors, officers,
employees, Affiliates, successors and assigns) against, and hold it harmless
from all liabilities, costs and expenses (including reasonable attorney and
expert fees) of and damages to the Buyer, arising out of (i) the breach of any
representation, warranty, covenant or agreement of the Seller or P-COM herein,
(ii) the operation of the Business and the Transferred Assets prior to the
Closing Date, (iii) the failure to deliver good, valid and marketable title to
any of the Transferred Assets, (iv) the Excluded Liabilities, and (v) the
Environmental Liability of the Seller. No claim may be asserted nor may any
action be commenced against the Seller and/or P-COM for any patent infringement
arising in connection with (i) any engineering work relating to the design of
products which was not completed prior to the Closing Date (with such completion
evidenced by delivery to customers of such products or the existence of the
Seller's standard manufacturing control documentation for such products), (ii)
any patents which were granted after the Closing Date and for which there were
no claims as set forth in Section 4.12(e), except those patents issued or
issuable to the Seller or its Affiliates which are used in the Transferred
Assets at the time of the Closing, or (iii) third party patents (or patent
applications) of which the Seller had prior knowledge. In addition, no claim may
be asserted nor may any action be commenced against the Seller and/or P-COM for
breach of any representation, warranty, covenant or agreement contained herein,
or any Excluded Liabilities which are asserted against the Buyer, unless written
notice of such claim or action is received by the Seller or P-COM describing in
detail the facts and circumstances with respect to the subject matter of such
claim or action on or prior to the date on which the representation, warranty,
covenant or agreement on which such claim or action is based ceases to survive
as set forth in Section 9.1, irrespective of whether the subject matter of such
claim or action shall have occurred before or after such date. Nothing contained
in this Section 9.3(a) shall in any manner alter or modify the time of survival
of the representations and warranties of the Seller and the Buyer as set forth
in Section 9.1 and/or the liabilities assumed by the Buyer pursuant to this
Agreement and as set forth in Section 2.3 hereto.
(b) Except for claims with respect to the representations and
warranties set forth in Section 4.14 and the covenants set forth in Section 8.9,
as to which the limitations of this sentence (including provisos) shall not
apply, no claim may be made against the Seller or P-COM for indemnification
pursuant to this Section 9.3 unless the aggregate of all liabilities and damages
(exclusive of legal fees incurred in connection with pursuing such claim) of the
Buyer with respect to this Section 9.3 shall exceed $100,000; provided that no
indemnification shall be available with respect to any liability or damage if
the aggregate of all liabilities and damages for which the Buyer has received
indemnification shall have exceeded 100% of the aggregate purchase price set
forth in Section 2.4. For the purposes of this subsection (b), in computing such
aggregate amount of claims, the amount of each claim shall be deemed to be an
amount (i) net of any Tax benefit to the Buyer or any Affiliate thereof, and
(ii) net of any insurance proceeds and any indemnity, contributions or other
similar payment payable by any third party with respect thereto.
(c) Payments by the Seller or P-COM pursuant to subsection (a) of
this Section 9.3 shall be limited to the amount of any liability or damage that
remains after deducting therefrom (i) any Tax benefit to the Buyer or any
Affiliate thereof arising from such liability or damage, and (ii) any insurance
proceeds and any indemnity, contribution or other similar
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payment payable to the Buyer or any Affiliate from any third party with respect
thereto. Tax benefits will be considered to be realized by the Buyer for
purposes of this Section 9.3 in the year in which a payment occurs, and the
amount of the Tax benefits shall be determined by assuming (i) the Buyer is in
the maximum United States federal income tax bracket after any deduction
reportable with respect to a payment hereunder and (ii) the Buyer's effective
state and local income tax rate is its effective rate for the most recent prior
taxable year for which such information is available.
(d) The Buyer agrees to give the Seller or P-COM prompt written
notice of any claim, assertion, event or proceeding by or in respect of a third
party of which it has knowledge concerning any liability or damage as to which
it may request indemnification hereunder. The Seller and P-COM shall have the
right to direct, through counsel of its own choosing, the defense or settlement
of any such claim or proceeding; the Buyer may participate in such defense, but
in such case the expenses of the Buyer shall be paid by the Buyer. The Buyer
shall provide the Seller and P-COM with access to its records and personnel
relating to any such claim, assertion, event or proceeding during normal
business hours and shall otherwise cooperate with and aid at the Seller's or
P-COM's request the Seller and/or P-COM in the defense or settlement thereof,
and the Seller and/or P-COM shall reimburse the Buyer for all its reasonable
out-of-pocket expenses in connection therewith. If the Seller or P-COM elects to
direct the defense of any such claim or proceeding, the Buyer shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted
liability unless the Seller or P-COM consents in writing to such payment or
unless the Seller or P-COM, subject to the last sentence of this subsection (d),
withdraws from the defense of such asserted liability or unless a final judgment
from which no appeal may be taken by or on behalf of the Seller is entered
against the Buyer for such liability. If the Seller and/or P-COM shall fail to
defend, or if, after commencing or undertaking any such defense, fails to
prosecute or withdraws from such defense, the Buyer shall have the right to
undertake the defense or settlement thereof, at the Seller's and/or P-COM's
expense. If the Buyer assumes the defense of any such claim or proceeding
pursuant to this subsection (d) and proposes to settle such claim or proceeding
prior to a final judgment thereon or to forego appeal with respect thereto, then
the Buyer shall give the Seller and P-COM prompt written notice thereof, and the
Seller and P-COM shall have the right to participate in the settlement or assume
or reassume the defense of such claim or proceeding.
(e) Except as set forth in this Agreement, neither the Seller nor
P-COM is making a representation, warranty, covenant or agreement with respect
to the matters contained herein. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of the
Buyer, after the consummation of the purchase and sale of the Transferred Assets
and assumption of Assumed Liabilities contemplated hereby, to rescind this
Agreement or any of the transactions contemplated hereby.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Methods of Termination. The transactions contemplated herein
may be terminated and/or abandoned at any time but not later than the Closing:
-36-
<PAGE>
(a) by mutual written consent of the Buyer and the Seller; and
(b) by the Buyer or the Seller if the Closing has not occurred
within 90 days of the date hereof for any reason.
10.2 Procedure Upon Termination. In the event of termination and
abandonment by the Buyer or by the Seller, or both, pursuant to Section 10.1,
written notice thereof shall be given to the other party and the transactions
contemplated by this Agreement shall be terminated and/or abandoned, without
further action by the parties. If the transactions contemplated by this
Agreement are terminated and/or abandoned as provided herein:
(a) each party hereto will redeliver all documents, work papers and
other material (and all copies thereof) of the other party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same; and
(b) all confidential information received by either party hereto
with respect to the business of the other Party hereto shall be treated in
accordance with Section 8.1.
10.3 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 10.1, this Agreement shall thereafter become void
and have no effect, and no party hereto shall have any liability or obligation
to any other party hereto in respect of this Agreement, except that the
provisions of Section 8.1 (Confidentiality), Article XI (Miscellaneous) and this
Section 10.3 shall survive any such termination.
ARTICLE XI
MISCELLANEOUS
11.1 Specific Performance. It is expressly understood and agreed
that the material breach of any covenant contained in this Agreement will result
in irreparable injury to the other party and that therefore such other party
shall be entitled to specific performance thereof.
11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by the Seller without the prior written
consent of the Buyer, or by the Buyer without the prior written consent of the
Seller. Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, and no other Person shall have any right, benefit or obligation
hereunder.
11.3 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the other
parties shall be in writing and delivered in person or by courier or by
facsimile transmission as follows (or at such address or facsimile number of
which notice shall have been duly given in accordance with this Section 11.3):
-37-
<PAGE>
If to the Seller or P-COM:P-Com, Inc.
3175 S. Winchester Blvd.
Campbell, CA 95008
Telephone: (408) 874-4313
Facsimile: (408) 874-4324
Attention: Robert Collins
If to the Buyer or PDYN: Paradyne Corporation
8545 126th Avenue North
Largo, FL 33773
Telephone: (727) 530-2209
Facsimile: (727) 530-2210
Attention: Patrick M. Murphy
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others. Any failure by any party to
deliver copies of any notice shall not, in itself, affect the validity of such
notice if otherwise properly made to the other party.
11.4 Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of Delaware, without regard to the conflict of law principles thereof.
11.5 Resolution of Conflicts; Arbitration. (a) In the event of any
dispute among the parties in connection with this Agreement, including without
limitation, disputes over a claim pursuant to Section 9.2 or Section 9.3, and
disputes over any amount payable pursuant to Section 2.4 hereof, the Seller and
the Buyer shall attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims. If the Seller and the Buyer should
so agree, a memorandum setting forth such agreement shall be prepared and signed
by both parties.
(b) If no such agreement can be reached after good faith negotiation
(or in any event after 60 days from the date of a notice setting forth such
dispute), either the Buyer or the Seller may demand arbitration of the matter
unless the amount of the damage or loss is at issue in pending litigation with a
third party, in which event arbitration shall not be commenced until such amount
is ascertained or both parties agree to arbitration; and in either such event
the matter shall be settled by arbitration conducted by three arbitrators. The
Buyer and the Seller shall each select one arbitrator, and the two arbitrators
so selected shall select a third arbitrator. The arbitrators shall set a limited
time period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole
judgment of the arbitrators, to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrators shall rule upon
motions to compel or limit discovery and shall have the authority to impose
sanctions, including attorneys' fees and costs, to the same extent as a court of
law or equity, should the arbitrators determine that discovery was sought
without substantial justification or that discovery was refused or objected to
without substantial justification. The decision of a majority of the three
arbitrators as to the validity and amount of any claim shall be binding and
conclusive upon the parties to this Agreement. Such decision shall be written
and shall be supported by written findings of fact and conclusions which shall
set
-38-
<PAGE>
forth the award, judgment, decree or order awarded by the arbitrators. The
arbitrators shall not be empowered to award punitive damages.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Washington, D.C. under the rules then in effect of the American Arbitration
Association. The arbitrators shall determine how all expenses relating to the
arbitration shall be paid, including without limitation, the respective expenses
of each party, the fees of each arbitrator and the administrative fee of the
American Arbitration Association.
(d) The provisions set forth in Section 11.5(b) and (c) shall not
apply to disputes involving Environmental Liability or ISRA compliance, as
defined in this Agreement.
11.6 Entire Agreement; Amendments and Waivers. This Agreement
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by all parties. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
11.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
11.9 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
11.10 Expenses. Except as otherwise provided in this Agreement, the
Seller and the Buyer will each be liable for its own costs and expenses incurred
in connection with the negotiation, preparation, execution or performance of
this Agreement.
11.11 Publicity. The parties agree to notify each other prior to
issuing any press release or making any public statement regarding the
transactions contemplated hereby, and will attempt to obtain the reasonable
approval of the other party prior to making such release or statement,
including, without limitation, any press release issued by either or both of the
parties in connection with the Closing.
[Remainder of page intentionally left blank].
-39-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
PARADYNE CORPORATION
By: /s/ James L. Slattery
-------------------------------------
Name: James L. Slattery
Title: Sr. Vice President
Signed in Savannah G.A
PARADYNE NETWORKS, INC.
By: /s/ James L. Slattery
-------------------------------------
Name: James L. Slattery
Sr. Vice President
Title: Signed in Savannah G.A
P-COM, INC.
By: /s/ George P. Roberts
-------------------------------------
Name: George P. Roberts
Title: Chairman and CEO
CONTROL RESOURCES CORPORATION
By: /s/ Bruce O'Pray
-------------------------------------
Name: Bruce O'Pray
Title: CEO
<PAGE>
Schedule 2.1(a)
Lease and Leased Real Property
Property Lease: Lease with Polevoy Associates for facilities at 16-00 Pollitt
Drive
Subordination
Agreement: For 16-00 Pollitt Drive between Seller, Polevoy Associates, and
Fleet Bank
<PAGE>
Schedule 2.1(b)
Equipment
The attached list identifies all fixed assets by asset tag and description.
<PAGE>
Schedule 2.1(c)
Assignable Contracts
Customer Contracts:
AT&T Global Network Services (assigned to AT&T from Sears Technology
Services)
Advantis/DSI Escrow Agreement
British Broadcasting Company
Electronic Data Services
Walgreen's
Board of Education - City of New York
Equipment Lease (assignable):
Vanguard
Assumable Equipment Leases:
Finova Leasing
Newcourt (assigned from AT&T Capital)
Green Tree
Patent and Trademark Licenses:
Agreement with Integrated Network Corp for Patent No. 4,862,480
Value Added Reseller Agreement:
Sybase, Inc.
Escrow Agreements:
Between BBC, Seller, and National Computing Center regarding RNETS
Between AGNS, Seller, and DSI regarding NAXS
License Agreements for Software:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Name Licensor License Format
==========================================================================================================
<S> <C> <C>
Windows 3.1, 95, 98, NT Microsoft Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
DOS Microsoft Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Word Perfect Corel Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Noteworks On Technology Multi-user License
- ----------------------------------------------------------------------------------------------------------
Netware Novell Multi-user License
- ----------------------------------------------------------------------------------------------------------
ProComm Plus Datastorm Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
PCAnywhere Symantec Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
WinPort Lan Source Multi-user License
- ----------------------------------------------------------------------------------------------------------
Sygate Sybergen Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
LanShadow Global Data Security Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Norton AntiVirus Norton Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Quattro Corel Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Paradox Corel Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Visio Visio Corp Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Word Microsoft Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Powerpoint Microsoft Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Excel Microsoft Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Project Manager Microsoft Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Time Line Corel Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
All Clear SPSS Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Real World RWC Multi-user License
- ----------------------------------------------------------------------------------------------------------
FAS Best Programs Finance Use
- ----------------------------------------------------------------------------------------------------------
Rapid Pay Rapid Pay Service agreement
- ----------------------------------------------------------------------------------------------------------
Solaris Sun Microsystems Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Adaptive Server Enterprise Sybase Development and VAR Distribution
- ----------------------------------------------------------------------------------------------------------
NetCharts Visual Mining a.k.a. NetFactory OEM license
- ----------------------------------------------------------------------------------------------------------
NetQuest Stack NetQuest Source Code and Distribution
License
- ----------------------------------------------------------------------------------------------------------
Intermetrics Compiler Tasking Inc Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Opus Make Opus Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
PC-lint for C/C++ Gimpel Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Multi-edit for Win American Cybernetics Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Diab Compiler Diab Data Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
SDS Cross Code Software Development Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
SDS Single Step Software Development Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
pSOS+ Development Integrated Systems Distribution agreement
- ----------------------------------------------------------------------------------------------------------
Telesoft ISDN BRI/PRI/MLPPP stack Telesoft Development and distribution
- ----------------------------------------------------------------------------------------------------------
Comm++ Greenleaf Software Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Keil Compiler Keil Software Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
MS Visual C++ Microsoft Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
MS Visual Basic Microsoft Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Super X Frontier Technology Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
HoTMetaL Pro SoftQuad Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Java Workshop SunSoft Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Java Studio SunSoft Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Crisp Vital Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Visual workshop SunSoft Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Workshop Pro C SunSoft Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Workshop Compiler SunSoft Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
PVCS Intersolve Shrink wrap with key
- ----------------------------------------------------------------------------------------------------------
Schematic Capture Accel Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Spectra Accel Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
PCAD Accel Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
AutoCad LT AutoDesk Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
AutoCad AutoDesk Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Model Sim Model Tech Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Alliance Xilinx Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Foundation Xilinx Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Max Plus 2 Altera Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
SNMPC Castle Rock Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
HP OpenView HP Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Website O'Reilly Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
NetXray Cinco Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Super TCP Suite Frontier Tech Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Netwrx LanQuest Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------
HPUX HP Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
AIX/NetView IBM Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
IOS Cicso Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
MRS IBM Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Cascadeview Lucent Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
HP C++ Compiler HP Shrink Wrap with key
- ----------------------------------------------------------------------------------------------------------
Power J Sybase Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Frame Maker Adobe Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
PageMaker Adobe Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Page Mill Adobe Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Photoshop Adobe Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Illustrator Adobe Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Dimensions Adobe Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Hypersnap Hyperionics Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
Kleptomainia StrucuRise Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
WinFrame Citrix Systems Standard Shrink Wrap
- ----------------------------------------------------------------------------------------------------------
</TABLE>
Unfilled sales orders: as of 4/14/00
Customer PO # Open Amount
AGNS 1396 - NP64+IL-8-PDGB4 1,095,860
70 - NP100IL-8-PDWJ8 168,700
150 - NP100IL-8-PDYDS 361,500
5 - NP100IL-8-PDYE8 12,050
Services Called for
Under Appendix L in
the minimum
Pathviewamount of 936,000
Associated Press 76902 68,225
TOTALS 2,642,335
Purchase Orders:
Attached is a list of open purchase orders as of April 14, 2000.
<PAGE>
Schedule 2.1 (e)
Intellectual Property Rights
Trademarks
US Trademark registration number 2,237,909 for the trade name Access
Integrator (DOC S/N 75-059,632).
CRC has applied to the US DOC and EU OHIM for a Trade Mark Registration
for NetPath
Patents:
United States patent "AA Programmable Bus For The Control of Electronic
Apparatus" (Patent No. 4,447,813) which was assigned to CRC by Bruce L.
O'Pray.
License Agreement with Integrated Network Corporation ("INC") for use of
their US Patent No. 4,862,480 relating to digital telecommunications
systems.
Copyrights:
CRC routinely marks for copyright all software and firmware as well as
printed circuit board artwork and publications including manuals and
brochures.
All ownership rights, including but not limited to schematics, source code,
specifications, other documentation, and know-how of the products on the
attached list.
Domain name:
controlresources.com
Licenses:
See License Agreements for Software on Schedule 2.1(c)
Parties With a Right to Seller's Source Code:
AGNS has a right to NAXS software under an escrow agreement BBC has a
right to RNETS under an escrow agreement
Protection of Intellectual Property:
Seller has had a policy of not devoting resources to patent applications,
has no applications planned, and makes no representations that the Intellectual
Property includes any inventions for which a patent may be applied.
<PAGE>
Schedule 2.1(g)
Permits
CRC has been granted permits that are non-assignable from the following state
and local governing and/or regulatory bodies:
Certificate of Incorporation - State of Delaware
Certificate of Authority for sales and use tax - State of New York
Certificate of Registration for sales and use tax - Illinois Department of
Revenue
Certificate of Authority to do business - State of New Jersey
Certificate of Occupancy - Township of Fair Lawn, N.J. for the premises at
16-00 Pollitt Drive.
CRC has obtained the following products registrations which may be assigned:
FCC Part 68 for products which connect to the public switched telephone
network.
British Telecomm, BS 6301 - Model 8F Data Bridge
EC, Declaration of Conformity - Model 190 RNET
Canada, Department of Communications - IDRS, Model 1060 IDRU, Model 1060-5
IDRU
Industry Canada - NetPath 100, NetPath 64, NetPath 64+
<PAGE>
Schedule 2.1(h)
Receivables
CRC Accounts Receivable Aging as of 4/14/2000
Customer Invoice # Invoice Date Amount Due Date
AT&T 14100 02/16/00 1,554.03 02/26/00
AT&T 14101 02/18/00 1,095.63 02/28/00
AT&T 14102 02/23/00 649.96 03/04/00
AT&T 14103 02/25/00 1,174.54 03/06/00
AT&T 14113 03/13/00 1,076.50 03/23/00
AT&T 14114 03/15/00 593.60 03/25/00
AT&T 14121 03/31/00 38,535.12 04/10/00
AT&T 14122 04/03/00 153,288.83 04/13/00
AT&T 14123 04/05/00 141,680.33 04/15/00
AT&T 14124 04/07/00 3,655.00 05/07/00
AT&T 14125 04/07/00 421.53 05/07/00
AT&T 14126 04/10/00 204,090.91 04/20/00
AT&T 14127 04/12/00 79,269.30 04/22/00
AT&T 14128 04/12/00 87,734.80 04/22/00
AT&T 14129 04/12/00 50,700.38 04/22/00
AT&T 14131 04/14/00 56.72 05/14/00
------------
Total AT&T 765,577.18
Garban 14112 03/10/00 194.85 04/09/00
Garban 14130 04/13/00 1,120.39 05/13/00
------------
Total Garban 1,315.24
Lucent 14120 03/31/00 79,071.70 04/30/00
DCI 14105 02/29/00 2,077.85 03/30/00
EOG, Inc. 200006 02/14/00 200.09 3/14/2000
EOG, Inc. 200009 03/06/00 161,437.20 4/6/2000
EOG, Inc. 2000010 03/13/00 454.28 4/13/2000
------------
Total EOG 162,091.57
Aimtronics 2000011 03/14/00 344.53 4/14/2000
Aimtronics 2000012 02/23/00 92.28 3/23/2000
Aimtronics 2000013 04/11/00 1,229.91 5/11/2000
Aimtronics 2000014 04/13/00 339.85 5/13/2000
Aimtronics 2000015 04/13/00 113.29 5/13/2000
------------
Total Aimtronics 2,119.86
Total CRC Aging 1,012,253.40
<PAGE>
Schedule 2.1(i)
Computer Programs
Internally written software owned by CRC consisting of the Inventory Control
System.
Licensed accounting, invoicing, and auditing software used by CRC that is
assignable:
Real World
FAS
Quattro
Paradox
Excel
Rapid Pay (as part of service)
In addition some of the software items listed in Schedule 2.1(c) are used to
create the data processing infrastructure used in the conduct of the business.
There are no data processing programs necessary for the conduct of the Business
that are not assignable to Buyer.
<PAGE>
Schedule 2.2
Excluded Assets
o Corporate minute books, corporate seals, consolidated financial
statements, and tax records of Seller.
o Seller's cash, cash equivalent and bank accounts.
o Seller's rights under the Leases in connection with any event occurring
prior to the Closing Date.
<PAGE>
Schedule 2.3
Excluded Liabilities
The following categories of liabilities, as set forth in the Seller's Financial
Statements and records, are "Excluded Liabilities":
o Accrued interest to P-COM
o The intercompany account shown on the Seller's December 31, 1999 balance
sheet and all other liablities between the Seller and its Affiliates
o Notes payable
o All Tax liabilities
Any Environmental Liability of the Seller, as defined in the Agreement.
<PAGE>
Schedule 4.5
Title Exceptions
(None)
<PAGE>
Schedule 4.6(c)
Material Contract or Lease Defaults
The following contracts may not be assigned without prior written consent which
will not be unreasonably withheld:
Polevoy Associates (Landlord) (Consent received)
Customers:
AT&T Global Network Services (Consent received)
Electronics Data Services (Consent received)
Walgreen's
Board of Education, City of New York
The following license agreements may not be assigned without prior written
consent which will not be unreasonably withheld:
Novell
Lan Source (Consent received)
Sybase
NetQuest (Consent received)
The following equipment leases do not permit assignment but are assumable with
consent of lessor:
<TABLE>
<CAPTION>
Lease Equipment Term Start End Value
<S> <C> <C> <C> <C> <C>
Finova FB6000 FT Package 60 Oct-96 Oct-01 $ 15,490.40
Months
Test Equipment
Green Tree (1) 59011 16 8 Port Processr Card 36 Feb-99 Feb-02 $ 43,181.00
Months
(1) 59012 V.35 8 Port Panel
(2) Port HSSI Mutiplexer
Newcourt Test Equipment 36 Jun-98 Jun-01 $ 31,981.75
Months
Newcourt Postage Meter 51 Dec-97 Jan-03 $ 5,892.54
Months
Newcourt Test Equipment 36 May-98 May-01 $ 7,995.00
Months
</TABLE>
<PAGE>
Schedule 4.6(d)
Contracts not in the Ordinary Course
Seller has verbally agreed with AT&T Network Solutions that warranty coverage
for all NetPath equipment sold to AT&T Network Solutions will be extended from
the one year provided for in the agreement to a term of five years.
<PAGE>
Schedule 4.6(e)
Contracts with Threatened Termination or Cancellation
(None)
<PAGE>
Schedule 4.7
Conflict or Violation
(None)
<PAGE>
Schedule 4.8
Consents and Approvals
There are no consents or approvals required other than the lease and contract
assignment disclosed in Schedule 4.6(c).
<PAGE>
Schedule 4.9
Litigation
(None)
<PAGE>
Schedule 4.10(a)
Compliance with Law
(None)
<PAGE>
Schedule 4.10(b)
Permits and Licenses
(None)
<PAGE>
Schedule 4.12(a)
Intellectual Property Rights from Others
The following license agreements require consent to assign which may not be
unreasonably be withheld:
NetQuest (NetQuest Stack)
Sybase (Adaptive Service Enterprise)
Lan Source (Winport)
Novell (Netware)
The following license agreements may be assigned with notice:
Integrated Systems (pSOS+)
Visual Mining/NetFactory (NetCharts)
Telesoft (ISDN BRI/PRI/MLPPP)
<PAGE>
Schedule 4.12 (h)
Fees and Royalties
Fees or royalties are payable by the Seller for software used in its products in
accordance with previously provided agreements with Sybase, Integrated Systems
(PSOS), and Visual Mining (NetCharts).
<PAGE>
Schedule 4.12(i)
Exceptions to Intangible Rights
Aklilu, Melake Miranda, Lilia
Andersen, John Moore, Kimberly
Barone, Rosa Nesci, Mark
Bhatt, Krishna O'Pray, Suzanne
Blauvelt, Clarence Passarelli, Michael
Brown, Michael, Jr. Renfroe, Gaynor
Carter, James Rivas, Norma
Cheyen, Chen Robibero, Ernest
Cornejo, Belinda Rubinstein, Mark
DeBari, Kelly Sargent, Peter
Denholm, Charles Scolaro, Frank, Jr.
Fasnacht, Samuel Shah, Chetna
Fernandez, Sergio Siha, Hanan
Gatulo, Luisa Stepien, Joseph
Gruneiro, Nieves Sutaria, Mahesh
Hanak, James Tailor, Umed
Hay, Kevin Tiongco, Ellieta
Hernandez, Raymond Tocci, Mary
Ivory, Christopher Tuttle, Norman
Kawalsky, Colin Veltri, Joseph
Kaznica, Robert Weydig, Wes
Lorenzetti, Todd
<PAGE>
Schedule 4.14
Taxes
(None)
<PAGE>
Schedule 4.15(a)
Environmental and Other Regulations
(None)
<PAGE>
Schedule 4.15(b)
Employee Regulations
(None)
<PAGE>
Schedule 4.16(b)
Labor Matters
(None)
<PAGE>
Schedule 4.17
Insurance
Attached is a list of insurance policies.
<PAGE>
Schedule 4.18
Sufficiency of Transferred Assets
(None)
<PAGE>
Schedule 4.19
Inventory
Seller's inventory is disclosed in the attached list. Seller owns all inventory
free and clear of any liens, claims, charges, encumbrances and holds no
inventory on consignment.
All inventory in excess of reserves and reasonable estimated requirements for
the Seller based on current operations for the Calendar Year 2000 is set forth
below:
Finished Goods Legacy 63,202
NetPath 97,099
Work-in-Process Legacy 26,888
NetPath 0
Raw Materials Legacy 190,969
NetPath 120,770
TOTAL 498,928
As previously disclosed, most inventory with requirements in excess of one year
is associated with contracts which include ongoing support requirements.
<PAGE>
Schedule 4.20
Suppliers
Attached is the list of suppliers of goods during the prior two years with a
value in excess of $10,000 per annum:
<PAGE>
Schedule 4.21
Backlog
See Unfilled Orders - Schedule 2.1(c)
<PAGE>
Schedule 4.22
Accounts Receivable
(None)
<PAGE>
Schedule 7.1(e)
P-COM Stock Options
As of
3/31/2000
GRANT Shares Shares
DATE TOTAL Vested Unvested
ANDERSON, MARK 07/03/97 6,000 3,250 2,750
BLACK, PATRICIA 05/23/97 800 467 333
BRANCHE, LINDEN 05/23/97 6,000 3,500 2,500
BRENCOVICH, ED 0 0 0
BRUNO, PETER JOHN 05/23/97 9,000 5,250 3,750
BURKE, CYNTHIA A 05/23/97 2,000 1,167 833
CAMPOLO, DOMINICK 05/23/97 800 467 333
CARLINO, NANCY 0 0 0
CHAM, ANDREW 05/23/97 9,000 5,250 3,750
CHUNG, YOUNG 08/31/98 15,000 5,938 9,063
CUOCCI, SALVATORE 05/23/97 2,000 1,167 833
CURLEY, LINDA 05/23/97 3,000 1,750 1,250
CUSTODIO, OSCAR 05/23/97 800 467 333
DATRI, WILLIAM 05/23/97 12,000 7,000 5,000
DE BARI, FRANK 05/23/97 10,000 5,833 4,167
DESAI, LINABEN D 05/23/97 800 467 333
DUDLEY, BERNARD 05/23/97 1,500 875 625
FACENTE, CRAIG A 05/23/97 20,000 11,667 8,333
FIX, EDWARD 0 0 0
GENTILELLA, FRANK 05/23/97 9,000 5,250 3,750
GUGLER, MICHAEL 05/23/97 15,000 8,750 6,250
HAWKINS, HOMER 04/23/99 10,000 2,292 7,708
HEBERLING, WILLIAM 05/23/97 13,000 7,583 5,417
HERBERT, RONALD 05/23/97 800 467 333
HOEK, SCOTT H 05/23/97 8,000 4,667 3,333
HOLMES, PETER B 05/23/97 8,000 4,667 3,333
HUC, JANUSZ 05/23/97 7,000 4,083 2,917
IANNARELLA, JOSEPH 05/23/97 4,000 2,333 1,667
JUAREZ, SARA 05/23/97 800 467 333
KATZ, HOWARD F 05/23/97 14,000 8,167 5,833
KIRCHHOEFER, ROBERT C. 0 0 0
KLEIN, STEVEN 05/23/97 60,000 35,000 25,000
KLEIN, STEVEN 09/18/98 30,000 11,250 18,750
KNAPP, CHRISTOPHER 07/03/97 6,000 3,250 2,750
KOCHENBURGER, KENNETH 05/23/97 1,500 875 625
LAGOMARSINO, STEVEN J 05/23/97 14,000 8,167 5,833
LAU, RAYMOND W.F. 05/23/97 9,000 5,250 3,750
LOMAX, PETER 05/23/97 9,000 5,250 3,750
MANDAL, SADHAN 05/23/97 20,000 11,667 8,333
MCGUIRE, ROBERT E 03/13/98 20,000 7,500 12,500
MENDEZ, ARQUIMIDES R 05/23/97 800 467 333
MICHEL, NABIL A. 05/23/97 800 467 333
MONTANEZ, SAMUEL 05/23/97 800 467 333
NEUENSCHWANDER, HUGO 05/23/97 1,500 875 625
OECHSNER, SUSAN A 05/23/97 2,000 1,167 833
OTERO, JOSE 05/23/97 9,000 5,250 3,750
PASSARO, ANTOINETTE 05/23/97 7,000 4,083 2,917
-43-
<PAGE>
PASTERNAK, BETTI 05/23/97 10,000 5,833 4,167
PATEL, DIPESH 0 0 0
PFANNKUCHE, ROBERT 0 0 0
PRONOVOST, MARTHA M 05/23/97 1,500 875 625
RANCAN, MICHAEL 05/23/97 3,000 1,750 1,250
SANECKI, PATRICIA 05/23/97 2,000 1,167 833
SONG, WALTER 05/23/97 12,000 7,000 5,000
STEEL, WALTER N 05/23/97 20,000 11,667 8,333
SURTI, NALINI H 05/23/97 800 467 333
TRAPANIS, NICK 05/23/97 5,000 2,917 2,083
VANKEUREN, GEORGE 05/23/97 7,000 4,083 2,917
WEBSTER, CHARLES 01/02/98 20,000 8,333 11,667
ZAKUR, MICHAEL 05/23/97 10,000 5,833 4,167
471,000 254,146 216,854
<PAGE>
Schedule 7.1(c)
Key Employees
The following employees shall have received and accepted offers of employment:
Young Chung
Sadhan Mandal
Walter Steel
<PAGE>
Schedule 8.2(a)
Employees
ANDERSON, MARK NEUENSCHWANDER, HUGO
BLACK, PATRICIA OECHSNER, SUSAN A
BRANCHE, LINDEN OTERO, JOSE
BRENCOVICH, EDWARD PFANNKUCHE, ROBERT
BRUNO, PETER JOHN PASSARO, ANTOINETTE
BURKE, CYNTHIA A PASTERNAK, BETTI
CAMPOLO, DOMINICK PATEL, DIPESH
CARLINO, NANCY PRONOVOST, MARTHA M
CARROLL, MARGARET RANCAN, MICHAEL
CHAM, ANDREW SANECKI, PATRICIA
CHUNG, YING YOUNG SONG, WALTER
CUOCCI, SALVATORE STEEL, WALTER N
CURLEY, LINDA SURTI, NALINI H
CUSTODIO, OSCAR TRAPANIS, NICK
DATRI, WILLIAM VANKEUREN, GEORGE
DE BARI, FRANK WEBSTER, CHARLES
DESAI, LINABEN D ZAKUR, MICHAEL
DUDLEY, BERNARD
FACENTE, CRAIG A
FIX, EDWARD
GENTILELLA, FRANK
GUGLER, MICHAEL
HAWKINS, HOMER
HEBERLING, WILLIAM
HERBERT, RONALD
HOEK, SCOTT H
HOLMES, PETER B
HUC, JANUSZ
IANNARELLA, JOSEPH
JUAREZ, SARA
KATZ, HOWARD F
KIRCHHOEFER, ROBERT C.
KLEIN, STEVEN
KNAPP, CHRISTOPHER
KOCHENBURGER, KENNETH
LAGOMARSINO, STEVEN J
LAU, RAYMOND W.F.
LOMAX, PETER
MANDAL, SADHAN
MCGUIRE, ROBERT E
MENDEZ, ARQUIMIDES R
MICHEL, NABIL A.
MONTANEZ, SAMUEL
<PAGE>
Schedule 8.2(c)
Additional Severance
----------------------------------------------------
Employee Payment
====================================================
Hawkins, Homer $20,000
----------------------------------------------------
Katz, Howard 18,000
----------------------------------------------------
Webster, Charles 75,000
----------------------------------------------------
Gugler, Michael 24,500
----------------------------------------------------
Carlino, Nancy 25,000
----------------------------------------------------
Montanez, Samuel 2,500
----------------------------------------------------
Passaro, Antoinette 10,000
----------------------------------------------------
Sanecki, Patricia 5,000
----------------------------------------------------
De Bari, Frank 15,000
----------------------------------------------------
Rancan, Michael 10,000
----------------------------------------------------
Dudley, Bernard 10,000
----------------------------------------------------
<PAGE>
Financial Statements
CONTROL RESOURCES CORP.
Unaudited Statement of Income
Period: 12/01/97 to 12/31/1997
Reporting-period Year-to-date
Amount Amount
Sales - net $ 2,832,696 $ 12,684,949
Cost of goods sold 1,342,387 6,506,255
------------ ------------
Gross Profit $ 1,490,309 $ 6,178,694
Expenses:
Direct Sales $ 71,130 $ 681,653
Publications 10,478 137,138
Hardware development 101,382 1,400,419
Software development 94,620 1,100,551
Quality Assurance 61,078 723,420
Customer Service 6,520 74,062
Finance 23,322 229,398
Business/Tech development 13,864 193,678
General & Administrative 180,849 1,777,409
Total expenses $ 563,243 $ 6,317,728
------------ ------------
Operating profit (loss) $ 927,066 $ (139,034)
------------ ------------
PreTax profit (loss) $ 927,066 $ (139,034)
------------ ------------
Net Profit (loss) for period $ 927,066 $ (139,034)
<PAGE>
CONTROL RESOURCES CORP
Unaudited Balance Sheet
As of 12/31/1997
<TABLE>
<CAPTION>
ASSETS
Current Assets:
<S> <C> <C>
Cash $ 3,278,627
Accounts Receivable 3,230,612
Inventory 524,527
Prepaid expenses 101,718
-------------
Total current assets 7,135,484
Fixed assets $ 2,638,113
Less: accumulated depreciation (1,513,161)
Construction in process 22,350
Other Assets 429,112
Total Assets $ 8,711,898
=============
Liabilities and Equity (Deficit)
Current Liabilities:
Accounts Payable 337,448
Intercompany Account 5,772,309
Notes Payable 4,000,000
Employee Compensation 221,318
Other Accrued Liabilities 455,808
Total Current Liabilities $ 10,786,883
-------------
Total Liabilities $ 10,786,883
-------------
Stockholders Equity (Deficit):
Common Stock $ 28,248
Paid In Capital 1,412,566
Accumulated Retained earnings (3,515,799)
Total Stockholders Equity $ (2,074,985)
-------------
Total Liabilities & Equity $ 8,711,898
=============
</TABLE>
<PAGE>
CONTROL RESOURCES CORP
Unaudited Balance Sheet
As of 12/31/1998
1998
ACTUALS
All Sub Accounts
ASSETS
<TABLE>
<S> <C>
Current Assets:
Cash $ 192,114
Accounts Receivable 3,370,411
Inventory 2,125,815
Prepaid expenses 134,573
---------------------
Total current assets $ 5,822,913
Fixed assets $ 3,096,961
Less: accumulated depreciation (1,972,727)
Construction in Process 575,184
Other Assets 347,036
Total Assets $ 7,869,367
=====================
Liabilities and Equity (Deficit)
Current Liabilities:
Accounts Payable 1,082,976
Intercompany Account 7,468,603
Notes Payable 4,000,000
Employee Compensation 75,297
Other Accured Liabilities 523,291
Total Current Liabilities $ 13,150,167
---------------------
Total Liabilities $ 13,150,167
---------------------
Stockholders Equity (Deficit):
Common Stock $ 28,248
Paid In Capital 1,412,566
Accumulated Retained earnings (6,721,614)
Total Stockholders Equity $ (5,280,800)
---------------------
Total Liabilities & Equity $ 7,869,367
=====================
</TABLE>
<PAGE>
CONTROL RESOURCES CORP.
Unaudited Statement of Income
Period: 12/01/98 to 12/31/98
<TABLE>
<CAPTION>
1998 CURRENT PERIOD 1998 YEAR-TO-DATE
ACTUALS ACTUALS
All Sub Accounts All Sub Accounts
Amount Amount
<S> <C> <C>
Sales - net $ 1,690,724 $ 6,829,853
Cost of goods sold 961,724 3,925,607
--------------------------------- ---------------------------
Gross Profit $ 729,000 $ 2,904,246
Expenses:
Direct Sales $ 94,992 $ 1,131,025
Marketing 10,596 166,486
Publications 22,748 264,243
Administration (70,888) (575,184)
Hardware developoment 209,173 1,310,318
Software development 99,082 1,070,564
Quality Assurance 61,657 677,063
Customer service 7,036 78,656
Lan Administration 5,547 68,209
Finance 19,701 244,231
General and administrative 106,749 1,235,447
--------------------------------- ---------------------------
Total expenses $ 566,393 $ 5,671,058
--------------------------------- ---------------------------
Operating profit (loss) $ 162,607 $ (2,766,812)
--------------------------------- ---------------------------
Interest expense $ 27,425 $ 358,521
Intangible Asset Amtz 6,715 80,481
--------------------------------- ---------------------------
PreTax profit (loss) $ 128,467 $ (3,205,814)
--------------------------------- ---------------------------
Net Profit (loss) for period $ 128,467 $ (3,205,814)
</TABLE>
<PAGE>
Exhibit 1.1
CONTROL RESOURCES CORP.
Unaudited Statement of Income
Period: 02/01/2000 to 02/20/2000
<TABLE>
<CAPTION>
2000 CURRENT PERIOD 2000 YEAR-TO-DATE
ACTUALS ACTUALS
All Sub Accounts All Sub Accounts
Amount Amount
<S> <C> <C>
Sales - net $ 790,068 $ 2,066,126
Cost of goods sold 421,497 971,207
-------------------------- --------------------------
Gross Profit $ 368,571 $ 1,094,919
Expenses:
Direct Sales $ 68,662 $ 129,822
Marketing 8,391 15,844
Publications 22,880 47,470
Administration (41,078) (90,836)
Hardware developoment 92,365 219,129
Software development 79,268 168,863
Qualtiy Assurance 68,918 138,981
Customer service 6,846 14,889
Lan Administration 5,580 11,152
Finance 11,699 22,817
General and administrative 102,194 206,982
-------------------------- --------------------------
Total expenses $ 425,725 $ 885,113
-------------------------- --------------------------
Operating profit (loss) $ (57,154) $ 209,806
-------------------------- --------------------------
Interest expense $ 29,941 $ 60,775
Intangible Asset Amtz 18,825 37,650
-------------------------- --------------------------
PreTax profit (loss) $ (105,920) $ 111,381
-------------------------- --------------------------
Net Profit (loss) for period $ (105,920) $ 111,381
</TABLE>
<PAGE>
CONTROL RESOURCES CORP
Unaudited Balance Sheet
As of 2/29/2000
2000
ACTUALS
All Sub Accounts
ASSETS
Current Assets:
Cash $ 463,172
Accounts Receivable 940,471
Inventory 2,441,528
Prepaid expenses 63,791
-------------
Total current assets $ 3,908,962
Fixed assets $ 3,356,036
Less: accumulated depreciation (2,529,634)
Software/ Test Development 642,462
Total Capitalized Software 794,323
Other Assets 65,020
Total Assets $ 6,237,169
=============
Liabilities and Equity (Deficit)
Current Liabilities:
Accounts Payable $ 989,844
Intercompany Account 8,226,633
Accrued Interest P-Com 1,098,977
Notes Payable 4,000,000
Employee Compensation 124,109
Current Portion Long Term Debt 15,170
Other Accrued Liabilities 416,720
-------------
Total Current Liabilities $ 14,871,453
-------------
Long Term Debt $ 25,596
Total Liabilities $ 14,897,049
-------------
Stockholders Equity (Deficit):
Common Stock $ 28,248
Paid In Capital 1,412,566
Retained earnings - 01/01/00 (10,212,075)
Current period earnings $ 111,381
-------------
Total Stockholders Equity $ (8,659,880)
-------------
Total Liabilities & Equity $ 6,237,169
=============
<PAGE>
CONTROL RESOURCES CORP
Unaudited Balance Sheet
As of 12/31/1999
1999
ACTUALS
All Sub Accounts
ASSETS
Current Assets:
Cash $ 15,693
Accounts Receivable 721,490
Inventory 2,391,293
Prepaid expenses 69,349
-------------
Total current assets $ 3,197,825
Fixed assets $ 3,354,105
Less: accumulated depreciation (2,452,391)
Software/ Test Development 531,386
Total Capitalized Software 831,974
Other Assets 65,020
Total Assets $ 5,527,919
=============
Liabilities and Equity (Deficit)
Current Liabilities:
Accounts Payable $ 557,533
Intercompany Account 8,186,310
Accrued Interest P-Com 1,037,310
Notes Payable 4,000,000
Employee Compensation 93,241
Current Portion Long Term Debt 15,170
Other Accrued Liabilities 381,653
-------------
Total Current Liabilities $ 14,271,217
-------------
Long Term Debt $ 27,962
Total Liabilities $ 14,299,179
-------------
Stockholders Equity (Deficit):
Common Stock $ 28,248
Paid In Capital 1,412,566
Retained earnings - 01/01/00 (6,721,614)
Current period earnings $ (3,490,460)
-------------
Total Stockholders Equity $ (8,771,260)
-------------
Total Liabilities & Equity $ 5,527,919
=============
<PAGE>
CONTROL RESOURCES CORP.
Unaudited Statement of Income
Period: 12/01/1999 to12/31/1999
1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS
All Sub Accounts All Sub Accounts
Amount Amount
Sales - net $ 484,044 $ 6,155,495
Cost of goods sold 359,770 3,169,090
------------ ------------
Gross Profit $ 124,274 $ 2,986,405
Expenses:
Direct Sales $ 70,356 $ 1,059,903
Marketing 17,355 221,636
Publications 23,875 295,488
Administration (44,677) (556,269)
Hardware development 128,946 1,340,035
Software development 101,381 1,199,037
Quality Assurance 78,053 830,918
Customer service 7,312 86,473
Lan Administration 6,284 68,620
Finance (3,520) 146,182
General and administrative 91,252 1,263,277
------------ ------------
Total expenses $ 476,617 $ 5,955,300
------------ ------------
Operating profit (loss) $ (352,343) $ (2,968,895)
------------ ------------
Interest expense $ 31,843 $ 344,906
Intangible Asset Amtz 18,825 176,652
------------ ------------
PreTax profit (loss) $ (403,011) $ (3,490,453)
------------ ------------
Net Profit (loss) for period $ (403,011) $ (3,490,453)
<PAGE>
Exhibit 2.4
Note
<PAGE>
Exhibit 8.1
Confidentiality Agreement
<PAGE>
Exhibit 8.2(b)(i)
Paradyne/CRC Special Severance Plan
<PAGE>
Exhibit 8.2(b)(ii)
Termination Agreement, Waiver and Release
<PAGE>
PROMISSORY NOTE
$4,667,573 April 14, 2000
Paradyne Corporation ("Paradyne"), FOR VALUE RECEIVED, hereby
promises to pay to the order of Control Resources Corporation, a Delaware
corporation ("CRC"), on September 15, 2000 (or sooner, as herein provided) at
the offices of P-COM, Inc., 3175 S. Winchester Blvd., Campbell, CA 95008 or at
such location as the holder hereof may hereafter designate in writing, the
principal sum of US$4,667,573, as such amount may be adjusted as provided for in
Section 1 below (the "Principal Sum"). The Principal Sum from time to time
outstanding shall bear interest payable at a rate equal to the Prime Rate of US
commercial banks as published in the Wall Street Journal (Eastern edition) from
time to time (or if more than one such rate is published, the average of such
rates).
Paradyne has on the date hereof purchased certain of the assets of
CRC pursuant to the terms and conditions of the Asset Purchase Agreement, dated
April 5, 2000 by and between Paradyne, Paradyne Networks, Inc., P-COM, Inc. and
CRC (the "Purchase Agreement"). Capitalized words and phrases used and not
otherwise defined in this Note have the meanings provided in the Purchase
Agreement. Paradyne hereby covenants and agrees with CRC as follows:
1. The Principal Sum shall be increased or decreased, as the case
may be, as provided for in the Purchase Agreement.
<PAGE>
2. Paradyne may prepay, in whole or in part, the Principal Sum in
cash by wire transfer of immediately available funds to CRC's account in an
amount equal to the full amount due, without penalty or premium, at any time
prior to September 15, 2000 on the condition that together with any such
prepayment Paradyne shall pay all accrued but unpaid interest on the amount
being prepaid.
3. On September 15, 2000 Paradyne may pay the Principal Sum and any
interest payable thereon by (a) the issuance to CRC of registered shares of
common stock of Paradyne Networks, Inc. with the number of such shares based on
the average closing price of Paradyne Networks, Inc.'s common stock on the 7
business days immediately preceding the day such shares of common stock of
Paradyne Networks, Inc. are delivered to CRC, and (b) delivery of a good check
to CRC for the difference between the total value of such shares and the full
amount due under this Note.
4. If any payments of principal or interest hereunder become due and
payable on a Saturday, Sunday or public holiday under the laws of the State of
Delaware, the due date of such payment shall be extended to the next succeeding
full business day and, in the case of principal, interest thereon shall be
payable at the applicable rate during such extension
5. This Promissory Note may not be changed or discharged orally, but
only by an agreement in writing and signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought
6. Presentment or demand for payment, notice of dishonor, protest
and notice of protest are hereby waived.
-2-
<PAGE>
7. This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of Delaware without reference to choice
of law doctrine.
IN WITNESS WHEREOF, this Promissory Note is executed and delivered
on the date first above written.
PARADYNE CORPORATION
By: ________________________________
-3-
<PAGE>
EXHIBIT 10.77
PROMISSORY NOTE
---------------
Date: May 3, 2000
$250,000
Promise to Pay. FOR VALUE RECEIVED, James Sobczak, an individual
--------------
residing in the State of California (the "Borrower"), promises to pay to the
order of P-COM, INC. (the "Holder") the principal sum of Two Hundred Fifty
Thousand Dollars and 00/100 ($250,000), without interest thereon, payable in
full on the first anniversary of Borrower's voluntary or involuntary
termination from Holder. Borrower agrees that time is of the essence and if
this Note is not paid when due, whether at stated maturity or by
acceleration, interest shall then accrue on the unpaid principal of this Note
at the rate of twelve percent (12%) per annum, compounded monthly during such
period of default for so long as such event of default continues. The
principal and interest represented by this Note shall be payable in
immediately available fund in lawful money of the United States which shall
be legal tender for public and private debts at the time of payment. All
payments hereunder shall be payable to the order of Holder at 3175 S.
Winchester Boulevard, Campbell, California 95008, or to such person as shall
be designated in writing from time to time by Holder. Payments received by
Holder shall be applied first to the collection expenses incurred by Holder,
then to interest, if any, and the balance, to principal.
Prepayment. Borrower may prepay without permission or penalty all or any
----------
portion of the principal balance of this Note.
Costs. Borrower promises to pay all costs incurred by Holder in the
-----
collection of this Note, including but not limited to reasonable attorneys'
fees and expenses.
Default Borrower shall be in default (an "Event of Default") under this
-------
Note on the occurrence of any of the following: (a) non-payment of any
principal amount when due under this Note; (b) Borrower (i) admitting
insolvency or an inability to pay her debts as they mature, (ii) making a
general assignment for the benefit of creditors, (iii) commencing a case
under or otherwise seeking to take advantage of any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation
law, statute or proceeding, (iv) by any act indicating his consent to,
approval of or acquiescence in any such proceeding or the appointment of any
receiver of or trustee for her or a substantial part of her property or
suffering any such receivership, trusteeship or proceeding to continue
without dismissal for a period of thirty (30) days, or (v) becoming a debtor
in any case under any chapter of the applicable Bankruptcy Code; (c) the
occurrence of a material adverse change in the financial condition of
Borrower which is not cured within ten (10) days of the date of notice from
Holder to Borrower with respect to such occurrence; (d) the death of the
undersigned. Upon the occurrence of any Event of Default, the Holder, at its
sole option, may accelerate the due date of and declare the unpaid balance of
this Note to be immediately due and payable without notice, presentation,
demand of payment or protest, all of which are hereby expressly waived by the
Borrower.
1
<PAGE>
Remedies. BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY
--------
IN CONNECTION WITH ANY SUIT BROUGHT UNDER THIS NOTE BY HOLDER. Borrower
hereby (i) agrees to waive any and all lack of diligence or delays in the
collection or enforcement hereof and (ii) expressly consents to any extension
of time for payment of this Note and any other indulgence or forbearance by
Holder. Any such extension, release, substitution, indulgence, or forbearance
may be made without notice to any party and without in any way affecting the
personal liability of any party liable hereon. Borrower waives notice, demand
for payment and presentment.
Notice. Any notice or legal process or summons to Borrower where
------
provided for in this Note shall be given by mailing such notice by certified
mail, return receipt requested, to Borrower at 1110 Petrini Way, San Jose,
California 95120 or to such other address Borrower may designate by written
notice to Holder hereof. Any notice to the Holder hereof shall be given by
mailing such notice by certified mail, return receipt requested, to the
Holder at 3175 S. Winchester Boulevard, Campbell, California 95008, or at
such other address as may have been designated by written notice to Borrower.
Miscellaneous. This Note shall be binding upon Borrower and his heirs
-------------
and successors and shall inure to the benefit of Holder and its successors
and assigns. Any modifications to this Note shall be in writing and signed by
the Borrower and the Holder. This Note is executed and delivered in and shall
be governed by and construed in accordance with the laws of the State of
California. Borrower hereby consents to the in personam jurisdiction of any
court sitting in Santa Clara County. In the event that any particular
provision contained herein is determined to be invalid, whether in whole or
in part, the remaining provisions hereof otherwise not invalid and any
partially valid provision to the extent valid or enforceable shall continue
in full force and effect. Any reference herein to the singular shall include
the plural, any reference to the masculine shall include the feminine gender,
and any reference to "it" shall include "his," or vice versa, as the case may
be.
IN WITNESS WHEREOF, the undersigned, with full power and authority to do
so, has
caused these presents to be executed and delivered on the day and year first
above written.
ATTEST: BORROWER:
/s/ Caroline Baldwin Kahl /s/ James Sobczak
------------------------- -----------------------
Name: Caroline Baldwin Kahl JAMES SOBCZAK
Title: Corporate General Counsel
2
<PAGE>
EXHIBIT 10.78
RELOCATION SERVICES AGREEMENT
THIS AGREEMENT is made effective as of this 8/th/ day of November, 1999 between
RELOACTION, a California corporation ("RELOACTION") and P-COM, INC. ("COMPANY").
IN CONSIDERATION of the mutual obligations, terms and conditions of this
AGREEMENT, the parties agree as follows:
1 Definitions.
-----------
1.1 DIRECT COSTS. "DIRECT COSTS" shall mean actual costs related to
------------
services provided under applicable SUPPLEMENTS and more specifically
described in applicable SUPPLEMENTS.
1.2 EMPLOYEE. "EMPLOYEE" shall mean any person authorized by COMPANY to
--------
receive the SERVICES covered by this AGREEMENT.
1.3 SERVICES. "SERVICES" shall mean the employee relocation services
--------
provided to EMPLOYEES by RELOACTION in accordance with this AGREEMENT
and described in one or more SUPPLEMENTS to this AGREEMENT.
1.4 SERVICE PARTNER. "SERVICE PARTNER" shall mean service providers other
---------------
than RELOACTION staff, selected and managed by RELOACTION to perform
specific services.
1.5 SUPPLEMENTS. "SUPPLEMENTS" shall mean the supplements to this
-----------
AGREEMENT designated in Section 17 or subsequently designated as part
of this AGREEMENT which set forth the terms and conditions of the
specific SERVICES to be provided by RELOACTION for COMPANY.
2. Agreement to Provide SERVICES. COMPANY agrees to retain RELOACTION to
-----------------------------
provide, and RELOACTION agrees to provide, the SERVICES on the terms and
conditions of this AGREEMENT.
3. Fees and DIRECT COSTS.
---------------------
3.1 Fees and DIRECT COSTS related to SERVICES performed by RELOACTION
---------------------
shall be charged by RELOACTION and paid by COMPANY as specified in the
applicable SUPPLEMENT.
3.2 Payments. Except as provided in the applicable SUPPLEMENT, fees for
--------
SERVICES and DIRECT COSTS shall be due and payable by COMPANY within
thirty (30) days of receipt of invoice by COMPANY. Any income earned
on funds advanced to RELOACTION for the purpose of providing SERVICES
to COMPANY shall be the sole property of RELOACTION. Any fees paid
to RELOACTION by real estate brokers or other vendors in the course of
<PAGE>
RELOACTION providing SERVICES shall be the sole property of
RELOACTION.
3.3 Late Payments. Payments not made when due shall accrue interest at
-------------
the rate of 1.5% per month or the maximum rate permitted by California
law for nonexempt lenders, whichever is less.
4. Termination.
-----------
4.1 Right to Terminate. Either party shall have the right to terminate
------------------
any or all SERVICES under this AGREEMENT by giving written notice of
the termination to the other party at least thirty (30) days prior to
the effective date of the termination.
4.2 Effect of Termination. Upon termination of this AGREEMENT, RELOACTION
---------------------
shall complete the SERVICES authorized as of the effective date of the
termination. At the option of the COMPANY, COMPANY may assume full
responsibility for the terminated SERVICES. In the event of a
material default by COMPANY, RELOACTION may require COMPANY to assume
full responsibility for SERVICES.
4.3 Assumption of SERVICES by COMPANY. Upon any assumption of
---------------------------------
responsibility for SERVICES by COMPANY, (i) RELOACTION shall not be
responsible for providing any further SERVICES other than delivery of
active files to COMPANY; (ii) RELOACTION shall be held harmless by
COMPANY from any costs, expenses, or liability arising after the date
of the assumption; and (iii) COMPANY shall assume any contractual
obligations of RELOACTION, incurred in the ordinary course of
providing SERVICES, under contracts with third party purchasers of
EMPLOYEES' residences and with third party vendors retained to assist
in providing SERVICES. For each EMPLOYEE for which specific SERVICES
have commenced as of the termination, RELOACTION shall be entitled to
the fees as described in the applicable SUPPLEMENT(S) for such
SERVICES.
5. Responsibilities of the Parties. It is expressly understood and agreed
-------------------------------
that RELOACTION's sole responsibility is to perform the SERVICES described
herein by adhering to a standard of reasonable business care. If a claim,
demand, action, liability, suit, cause of action or the like (collectively
"DISPUTE") is asserted or made against RELOACTION or COMPANY as a result of
the rendering of such SERVICES, and provided such DISPUTE is not a result
of RELOACTION's failure to adhere to a standard of reasonable business
care, negligence, willful misconduct or dishonesty, COMPANY agrees to
defend, indemnify and hold RELOACTION harmless from such DISPUTE. In the
event of a DISPUTE arising from RELOACTION's failure to adhere to a
standard of reasonable business care, negligence, willful misconduct or
dishonesty, RELOACTION shall defend, indemnify and hold COMPANY harmless
from such DISPUTE. RELOACTION's liability shall be reduced by an amount
equal to the proportionate extent of any negligence on the part of the
COMPANY or any person receiving SERVICES hereunder. COMPANY and RELOACTION
acknowledge that the relationship between the parties requires a
cooperative effort, and each party agrees to keep the other promptly
informed of any situation and/or condition that may result in
2
<PAGE>
any DISPUTE being asserted and to reasonably cooperate with the other party
to achieve an equitable and just outcome in the event of a DISPUTE. The
provisions of this Section shall survive the termination of this AGREEMENT.
6. Notices. Any and all notices or other communications required or permitted
-------
by this AGREEMENT or by law to be served on or given to either party hereto
by the other party shall be in writing and shall be deemed duly served and
given when personally delivered to either of the parties to whom it is
directed, or in lieu of such personal service, three (3) business days
after being deposited in the United States mail, first class postage
prepaid, addressed to the parties at the addresses indicated on the
signature page of this AGREEMENT.
7. Audit of Records. RELOACTION will retain complete records of all
----------------
transactions under this AGREEMENT for a period of at least three (3) years
from the date the SERVICES are completed for each EMPLOYEE. Such records
shall be available for audit by the COMPANY at its expense at the offices
of RELOACTION during regular business hours upon reasonable notice to
RELOACTION.
8. PROPRIETARY INFORMATION. The terms and conditions of this AGREEMENT,
-----------------------
including the SUPPLEMENTS hereto, have been prepared by RELOACTION for the
sole use of COMPANY and constitutes proprietary information of RELOACTION
which is a valuable trade secret (the "PROPRIETARY INFORMATION"). COMPANY
agrees to maintain in confidence and shall not disclose to any person or
entity, without the prior written consent of RELOACTION, the PROPRIETARY
INFORMATION. COMPANY shall disclose the PROPRIETARY INFORMATION only to
those employees, agents, and representatives of COMPANY who require the
PROPRIETARY INFORMATION to carry out their responsibilities. PROPRIETARY
INFORMATION shall not include information: (a) already in the public domain
or already in the possession of COMPANY prior to its disclosure under this
AGREEMENT, (b) disclosed to COMPANY by a third party not obligated to
maintain such information in confidence, or (c) information which enters
the public domain without breach of any confidentiality obligations.
9. Entire Agreement. This AGREEMENT, including the attached SUPPLEMENTS,
----------------
contains the entire agreement between COMPANY and RELOACTION respecting the
SERVICES of RELOACTION. Any agreement or representation respecting the
SERVICES of RELOACTION or the duties of either COMPANY or RELOACTION in
relation thereto, not expressly set forth in this AGREEMENT, is null and
void.
10. Assignment. This AGREEMENT may not be assigned or otherwise transferred by
----------
either party without the prior written consent of the other party provided,
however, RELOACTION expressly retains the right to assign or pledge its
right to receive payments hereunder for purposes of securing adequate
financing. Such financing may be secured by a security agreement which
grants to a lender a security interest in, among other things, this
AGREEMENT and any rights arising under any other instrument, document,
account or other obligation that result from this AGREEMENT.
11. Successors. This AGREEMENT shall be binding upon and shall inure to the
----------
benefit of the parties hereto and their respective assigns and successors.
3
<PAGE>
12. Amendments. This AGREEMENT may be amended or modified by, and only by, a
----------
written instrument executed by the parties.
13. Attorneys' Fees. Should any litigation be initiated between the parties
---------------
hereto concerning this AGREEMENT or the rights and duties in relation
thereto, the party prevailing in such litigation shall be entitled, in
addition to such other relief as may be granted, to a reasonable sum as and
for its attorneys' fees in such litigation or in a separate action brought
for that purpose.
14. Severability. In the event any of the provisions of this AGREEMENT are
------------
determined to be invalid or unenforceable, the same shall be deemed
severable from the remainder of this AGREEMENT and shall not cause the
invalidity or unenforceability of the remainder of this AGREEMENT.
15. Governing Law. This AGREEMENT shall be construed under and in accordance
-------------
with the laws of the State of California.
16. Captions. The captions in this AGREEMENT are for convenience only and are
--------
not to be relied upon in construing this AGREEMENT.
17. Applicable SUPPLEMENTS. The following SUPPLEMENTS, as initialed by COMPANY
----------------------
and RELOACTION and attached hereto, are incorporated herein and made part
of this AGREEMENT:
Initials:
--------
SUPPLEMENTS COMPANY RELOACTION
----------------------------------------------------- ----------
Home Buyout - Amended [ILLEGIBLE]^^ __________
-------------
18. Due Authority. RELOACTION and COMPANY hereby represent and warrant to the
-------------
other party, and each person executing this AGREEMENT on behalf of each
of the respective party certifies by his/her signature, that the person
executing this AGREEMENT on behalf of the respective party is properly
authorized to execute this AGREEMENT on behalf of the respective party,
that such person's signature is sufficient to bind the respective party and
that the respective party is bound thereby.
IN WITNESS WHEREOF, the parties hereto have executed this AGREEMENT as of the
date first set forth.
P-COM, INC. RELOACTION
3175 Winchester Boulevard 7901 Stoneridge Drive, Suite 390
Campbell, CA 95008 Pleasanton, CA 94588
By: /s/ David R. Aronovici By: /s/ Ronald C. Whitmill
--------------------------------- -------------------------------
Name: David R. Aronovici Name: Ronald C. Whitmill
-------------------------------- ------------------------------
Title: Director, Human Resources Title: Senior Vice President
------------------------------- -----------------------------
Date: November 8, 1999 Date: December 9, 1999
-------------------------------- ------------------------------
4
<PAGE>
HOME BUYOUT
SUPPLEMENT
THIS SUPPLEMENT is an addition to and part of that certain RELOCATION SERVICES
AGREEMENT (the "AGREEMENT") made effective as of the 8/th/ day of November, 1999
between RELOACTION, a California corporation ("RELOACTION"), and P-COM, INC.
("COMPANY"). All provisions of the AGREEMENT not specifically changed by the
provisions of this SUPPLEMENT shall continue in all respects in full force and
effect.
1. Definitions.
-----------
1.1 ANTICIPATED SALE PRICE. "ANTICIPATED SALE PRICE" with respect to each
----------------------
HOME shall mean the average of two (2) independent appraisals obtained
from two (2) independent appraisers reasonably acceptable to
RELOACTION, COMPANY, and the EMPLOYEE, which appraisals shall be based
on comparable sales analysis when possible. If, however, the
appraisals vary by more than five percent (5%) of the higher appraised
value, a third appraisal shall be obtained by RELOACTION, and the
ANTICIPATED SALE PRICE shall be the average of two closest. RELOACTION
shall carefully review all appraisals and appraisal reports;
acceptance of such appraisals and reports is solely within the
discretion of RELOACTION. If, in the judgment of RELOACTION, any
appraisal report has been incompetently prepared, RELOACTION may
request reanalysis and reappraisal or reject such appraisal and obtain
a new appraisal report in lieu of the rejected appraisal report.
1.2 BONA FIDE OFFER. "BONA FIDE OFFER" shall mean an offer from an
---------------
unrelated third party to purchase EMPLOYEE's HOME that RELOACTION
reasonably determines is made in good faith and is likely to close
under its terms and is consistent with COMPANY'S relocation policy.
1.3 DIRECT COSTS. "DIRECT COSTS" shall mean:
------------
a. Real estate commissions and incidental closing costs including
title search, title insurance, transfer taxes, and legal fees
incurred in the sale of any HOME.
b. Costs related to cleaning and repair of and minor improvements to
any HOME; provided however, that in no event shall such costs
exceed $2,500 without the prior authorization of COMPANY unless
incurred in an emergency making prior authorizations impractical.
c. Mortgage interest payments, finance charges, insurance, and taxes
related to any HOME, except to the extent such expenses are
chargeable to the EMPLOYEE.
d. Capital losses arising from the resale of any HOME (with any
capital gains from the resale of any HOME being considered a
credit against DIRECT COST).
5
<PAGE>
e. All other out-of-pocket costs and expenses incurred in good faith
by RELOACTION with respect to its purchase, ownership, and resale
of any HOME.
1.4 EFFECTIVE SALE PRICE. "EFFECTIVE SALE PRICE" shall mean the actual
--------------------
selling price of the HOME, under an amended sale, received at closing
less contingencies, allowances, adjustments or concessions to the
purchaser.
1.5 EQUITY. "EQUITY" with respect to a HOME shall mean the OFFER PRICE of
------
the HOME (or RELOACTION's EFFECTIVE SALE PRICE if higher) less the
amount of all encumbrances on the HOME and closing and other costs
related to the sale of the HOME payable by or chargeable to the
EMPLOYEE, including credits to the buyer.
1.6 EQUITY PAYMENTS. "EQUITY PAYMENTS" shall mean payments to an EMPLOYEE
---------------
of EQUITY in accordance with Section 2.3 of this SUPPLEMENT, and
payments made on behalf of EMPLOYEE to remove liens and/or
encumbrances on the HOME.
1.7 HOME/SPECIAL HOME.
-----------------
a. For purposes of providing services under this SUPPLEMENT, "HOME"
shall mean a single family or two family residence or condominium
located in the United States or Canada which is used by the
EMPLOYEE as his/her principal residence and is owned by the
EMPLOYEE, the EMPLOYEE's spouse or any dependent of the EMPLOYEE
residing in the same household, together with the associated
property customarily considered part of such dwelling, but
exclusive of any land in excess of a normal lot for the
neighborhood in which the HOME is located.
b. RELOACTION and COMPANY may consent to include a property as a
"SPECIAL HOME." SPECIAL HOMES shall include, but are not limited
to, mobile homes, manufactured homes located on leased or rented
land, cooperative apartments or multifamily dwellings, property in
which part is used for non-residential purposes, property which
includes land in excess of a normal lot for the neighborhood or
where the value of the land exceeds the improvement value,
property valued in excess of $500,000 or less than $50,000,
property located outside of the United States or Canada, and
property which requires correction of conditions or significant
repairs after acquisition. Property will be considered a SPECIAL
HOME when RELOACTION is requested by COMPANY to purchase property
for a pre-determined price or to modify the method to determine
the ANTICIPATED SALE PRICE. If COMPANY requests RELOACTION to
proceed with the purchase of a SPECIAL HOME, and RELOACTION
agrees, COMPANY shall pay all amounts due RELOACTION as required
for a HOME. In addition, COMPANY shall pay all additional costs
determined necessary by COMPANY and RELOACTION to sell the SPECIAL
HOME according to a mutually agreeable marketing plan.
6
<PAGE>
1.8 HOME BUYOUT. "HOME BUYOUT" shall mean those services provided by
-----------
RELOACTION to designated EMPLOYEES pursuant to this SUPPLEMENT.
1.9 OFFER PERIOD. "OFFER PERIOD" shall mean the period of time, from the
------------
date of the offer letter, during which EMPLOYEE may accept
RELOACTION's offer to purchase the HOME.
1.10 OFFER PRICE. "OFFER PRICE", shall mean the ANTICIPATED SALE PRICE of
-----------
that HOME or such other price as determined by COMPANY.
1.11 VALUATION COSTS. "VALUATION COSTS" shall mean the appraisal fees,
---------------
broker's market analyses fees, inspection fees, preliminary title fees
and related fees incurred by RELOACTION during the initial valuation
of each HOME.
2. HOME BUYOUT.
-----------
2.1 Valuation and Marketing Assistance. Upon designation by COMPANY of an
----------------------------------
EMPLOYEE as eligible for HOME BUYOUT, RELOACTION will:
a. Promptly contact the EMPLOYEE and provide counseling regarding the
HOME sale process.
b. Provide EMPLOYEE with list of real estate agents from which to
obtain a broker's market analysis and marketing plans and to
assist EMPLOYEE to select a listing agent.
c. Obtain 2 real estate brokers' market analyses of the HOME.
d. Obtain the ANTICIPATED SALE PRICE.
e. Obtain and review a preliminary title report and appropriate
property inspections on the HOME, which may include pest, general
home, radon, etc., and provide copies of such documents to the
COMPANY and the EMPLOYEE as requested by COMPANY.
f. Provide for the COMPANY and the EMPLOYEE a written profile and
marketing strategy for the HOME, including recommended list price.
g. During the OFFER PERIOD, maintain regular contact with the broker,
the EMPLOYEE, and the COMPANY, follow up on progress and showings,
monitor list price, buyer and broker comments and responses, and
offer negotiating assistance.
h. Prepare written monthly status report for COMPANY.
7
<PAGE>
2.2 Offer to Purchase.
-----------------
a. After determining the ANTICIPATED SALE PRICE, RELOACTION shall
offer to purchase the EMPLOYEE's HOME for the OFFER PRICE by
forwarding to EMPLOYEE an offer. EMPLOYEE shall have an OFFER
PERIOD of sixty (60) days in which to accept RELOACTION's offer.
EMPLOYEE may accept the offer by completing in full and returning
in a timely manner the Contract of Sale and related documents
provided by RELOACTION with the offer.
b. Upon determination by RELOACTION that a property is a SPECIAL
HOME, RELOACTION shall notify COMPANY and obtain authorization to
proceed with an offer to purchase the SPECIAL HOME.
2.3 Payment of EQUITY. The EMPLOYEE shall be entitled to EQUITY as
-----------------
follows, subject to the conditions set forth in the Contract of Sale:
a. EQUITY may be advanced during the OFFER PERIOD in an amount not to
exceed 90% of the EQUITY, as needed to close on the purchase of a
new principal residence, upon receipt of executed acceptance
papers and according to the terms of the Equity Loan Note.
b. 100%, or the remaining balance, of the EQUITY upon EMPLOYEE's
acceptance of RELOACTION's offer to purchase the HOME and vacation
of the property.
2.4 Amended Sale. If, during the OFFER PERIOD, EMPLOYEE receives a BONA FIDE
------------
OFFER for the purchase of the HOME, the EMPLOYEE may present the offer to
RELOACTION. If RELOACTION determines that the offer is a BONA FIDE OFFER,
RELOACTION will amend its Contract of Sale to meet the price and terms of
the BONA FIDE OFFER and pay EMPLOYEE's EQUITY based on the BONA FIDE OFFER
in accordance with Section 2.3 of this SUPPLEMENT. RELOACTION will sign the
BONA FIDE OFFER and proceed with the transaction as seller. RELOACTION
shall use all reasonable efforts to close the sale under the terms of the
BONA FIDE OFFER. RELOACTION will complete the purchase from the EMPLOYEE at
the price determined by the BONA FIDE OFFER. In the event the sale does not
close, RELOACTION will proceed to market and resell the property as
described in Section 2.5. Any forfeited earnest money retained by
RELOACTION shall be credited to DIRECT COST.
2.5 Resale. Upon the EMPLOYEE's acceptance of RELOACTION's offer to
------
purchase the HOME, RELOACTION shall use all reasonable efforts to sell
the HOME at the most favorable price and terms available. RELOACTION
will list the HOME for sale with a broker of its choosing. RELOACTION
shall maintain the HOME in good repair after it is vacated by EMPLOYEE
and until the closing of the resale. RELOACTION shall not sell any
HOME purchased from an EMPLOYEE of COMPANY for less than ninety five
percent (95%) of its ANTICIPATED SALE PRICE without the prior
authorization of COMPANY, which consent shall not be unreasonably
withheld. Consent shall be deemed
8
<PAGE>
given by COMPANY unless written notice of COMPANY's disapproval of any
such transaction is received by RELOACTION within three (3) business
days after such notice has been given to COMPANY.
3. Reimbursable Expenses.
---------------------
3.1 COMPANY shall advance to RELOACTION all VALUATION COSTS, EQUITY
PAYMENTS and DIRECT COSTS incurred or to be incurred by RELOACTION in
providing services pursuant to this SUPPLEMENT. Reimbursable expenses
shall be payable by COMPANY as follows:
a. EQUITY PAYMENTS. EQUITY PAYMENTS shall be advanced to RELOACTION
---------------
by COMPANY prior to payment to EMPLOYEE.
b. VALUATION COSTS. Estimated VALUATION COSTS shall be invoiced to
---------------
COMPANY upon receipt of authorization of service.
c. DIRECT COSTS. DIRECT COSTS shall be invoiced in advance by
------------
RELOACTION at ten percent (10%) of the OFFER PRICE. Upon depletion
of DIRECT COST funds, additional DIRECT COSTS will be invoiced in
advance at ten percent (10%) of the OFFER PRICE, or shall be
invoiced in an amount based on RELOACTION'S reasonable good faith
estimate of funds required to pay all debts at closing.
3.2 Payments shall be due and payable upon receipt of invoice by COMPANY.
3.3 Closing Adjustment Upon Resale. Upon the closing of an amended sale or
------------------------------
resale of each EMPLOYEE's HOME, an adjustment shall be made to reflect
the actual DIRECT COSTS incurred by RELOACTION with an excess advance
of DIRECT COSTS by COMPANY being reflected as a credit to COMPANY. If
additional DIRECT COSTS are incurred or accounted for after the
closing adjustment, such additional DIRECT COSTS will be invoiced by
RELOACTION.
4. Fees.
----
4.1 BASE FEE. COMPANY shall pay RELOACTION a "BASE FEE" of Five Thousand
--------
Dollars ($5,000) for each EMPLOYEE authorized to receive services.
However, the BASE FEE shall be One Thousand Dollars ($1,000) with
respect to any EMPLOYEE who, prior to the offer being made, elects not
to participate further in the HOME BUYOUT. BASE FEES shall be invoiced
to COMPANY with VALUATION COSTS upon determination of ANTICIPATED SALE
PRICE.
4.2 INCENTIVE FEE. An "INCENTIVE FEE" shall be earned by RELOACTION upon
-------------
the closing of the following HOME sales:
a. If a HOME is closed as an amended sale an INCENTIVE FEE of One
Thousand Dollars ($1,000) shall be earned at closing.
9
<PAGE>
b. If a HOME resale is completed where the DIRECT COSTS are fourteen
percent (14%) or less of the purchase price an INCENTIVE FEE of
One Thousand Dollars ($1,000) shall be earned at closing.
Prepayment penalties on the EMPLOYEE's mortgage, excise taxes, and
interest on EQUITY advances when they are charged, will be
excluded from the DIRECT COSTS for calculation of INCENTIVE FEES
earned.
INCENTIVE FEES shall be invoiced at resale closing or shall be deducted
from closing proceeds in accordance with Section 3.3.
4.3 SPECIAL HOME FEE. If COMPANY authorizes RELOACTION to purchase a
----------------
SPECIAL HOME and RELOACTION agrees, COMPANY shall pay all fees for a
HOME plus an additional SPECIAL HOME FEE equal to one percent (1%) of
the purchase price (minimum of $1,000) upon completion of the resale.
10
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the use in this Registration Statement on Form S-3 of our
report dated March 30, 2000, relating to the consolidated financial statements
and financial schedule of P-Com, Inc., which is incorporated by reference in
such Registration Statement. We also consent to the reference to us under the
headings "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
San Jose, California
May 4, 2000
