ASSET PURCHASE AGREEMENT
by and among
P-COM, Inc., a Delaware corporation,
Atlantic Communication Sciences, Inc., a Florida corporation,
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, L. ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ Technical Services, Inc.,
the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust, U/A, dated June 22, 1988, and the L. ▇▇▇▇▇
▇▇▇▇▇▇▇ Revocable Trust, U/A, dated June 18, 1991
Dated as of August 2, 1996
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF ASSETS................................................. 1
Section 1.1 Description of Assets to be Acquired................................. 1
Section 1.2 Excluded Assets...................................................... 2
ARTICLE II LIABILITIES................................................................ 2
Section 2.1 Liabilities Not Assumed.............................................. 2
ARTICLE III PURCHASE PRICE............................................................ 3
Section 3.1 Consideration........................................................ 3
Section 3.2 Amount............................................................... 3
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................. 4
Section 4.1 Representations and Warranties of Seller and each Securityholder..... 4
(a) Organization of Seller............................................... 4
(b) Capital Structure.................................................... 4
(c) Authorization of Seller.............................................. 5
(d) Affiliates Agreements................................................ 5
(e) Financial Information................................................ 6
(f) Absence of Certain Changes and Events................................ 6
(g) Conduct of Business.................................................. 8
(h) Undisclosed Liabilities.............................................. 8
(i) Inventory............................................................ 8
(j) Taxes................................................................ 8
(k) Employee Matters..................................................... 9
(l) Compliance With Law.................................................. 10
(m) Governmental Consents................................................ 10
(n) Intellectual Property Rights......................................... 10
(o) Restrictive Documents or Orders...................................... 12
(p) Contracts and Commitments............................................ 12
(q) Assets............................................................... 13
(r) Title to the Property................................................ 13
(s) Litigation........................................................... 13
(t) No Conflict or Default............................................... 13
(u) Consents............................................................. 14
(v) Labor Relations...................................................... 14
(w) Pension, Profit Sharing, etc......................................... 15
(x) Brokers' and Finders' Fees/Contractual Limitations................... 15
(y) Interested Party Relationships....................................... 15
i.
(z) Certain Payments..................................................... 15
(aa) Products Liability................................................... 15
(ab) Product Warranties................................................... 15
(ac) Returns.............................................................. 15
(ad) Customers............................................................ 15
(ae) Suppliers............................................................ 16
(af) Books and Records.................................................... 16
(ag) Complete Disclosure.................................................. 16
(ah) Performance of Agreement............................................. 16
(ai) Absence of Governmental or Other Objection........................... 16
(aj) Insurance............................................................ 17
(ak) Environmental Matters................................................ 17
(al) Backlog.............................................................. 20
(am) Accounts Receivable.................................................. 20
Section 4.2 Representations and Warranties of Purchaser.......................... 20
ARTICLE V COVENANTS................................................................... 22
Section 5.1 Covenants Against Disclosure......................................... 22
Section 5.2 Net Asset Determination.............................................. 22
Section 5.3 Non-Competition...................................................... 23
Section 5.4 Maintenance of Business.............................................. 25
Section 5.5 Access to Information................................................ 27
Section 5.6 Other Discussions.................................................... 28
Section 5.7 Assignment of Contracts.............................................. 28
Section 5.8 Relocation of Seller's Facilities.................................... 28
Section 5.9 Liquidation of Seller................................................ 28
Section 5.10 Fairness Hearing and Permit.......................................... 28
Section 5.11 Reorganization....................................................... 29
Section 5.12 Termination of Employment Agreements................................. 29
ARTICLE VI CLOSING.................................................................... 29
Section 6.1 Time of Closing...................................................... 29
Section 6.2 Deliveries by Seller................................................. 29
Section 6.3 Deliveries by Purchaser.............................................. 30
Section 6.4 Further Assurances................................................... 30
ARTICLE VII CONDITIONS PRECEDENT TO OBLIGATIONS....................................... 31
Section 7.1 Conditions to Obligations of Purchaser............................... 31
(a) Representations and Warranties....................................... 31
(b) Performance of Agreement............................................. 31
(c) No Material Adverse Change........................................... 31
(d) Absence of Governmental or Other Objection........................... 31
(e) Due Diligence Review................................................. 31
(f) Evidence of Title.................................................... 31
ii.
(g) Certificate of President and Securityholders.................................. 31
(h) Approval of Documentation..................................................... 32
(i) Execution of Escrow Agreement................................................. 32
(j) Licenses...................................................................... 32
(k) Third Party Consents.......................................................... 32
(l) Proprietary Agreements........................................................ 32
Section 7.2 Conditions to Obligations of Seller........................................... 32
(a) Performance of Agreement...................................................... 32
(b) Issuance of Permit............................................................ 32
(c) Execution of Escrow Agreement................................................. 32
(d) Absence of Governmental or Other Objection.................................... 32
(e) Third Party Consents.......................................................... 33
ARTICLE VIII INDEMNIFICATION................................................................... 33
Section 8.1 Survival of Representations, Warranties, Covenants and Agreements............. 33
Section 8.2 Seller and Securityholder Indemnification..................................... 33
Section 8.3 Procedure for Indemnification with Respect to Third-Party Claims.............. 34
Section 8.4 Procedure For Indemnification with Respect to Non-Third Party Claims.......... 35
ARTICLE IX MISCELLANEOUS PROVISIONS............................................................ 36
Section 9.1 Notice........................................................................ 36
Section 9.2 Entire Agreement.............................................................. 37
Section 9.3 Binding Effect; Assignment.................................................... 37
Section 9.4 Expenses of Transaction; Taxes................................................ 37
Section 9.5 Waiver; Consent............................................................... 37
Section 9.6 Third-Party Beneficiaries..................................................... 38
Section 9.7 Counterparts.................................................................. 38
Section 9.8 Severability.................................................................. 38
Section 9.9 Remedies of Purchaser......................................................... 38
Section 9.10 Governing Law................................................................. 38
Section 9.11 Arbitration; Attorneys' Fees.................................................. 38
Section 9.12 Cooperation and Records Retention............................................. 39
iii.
Exhibits
3.2(b) Escrow Agreement
4.1(d) Form of Affiliate's Agreement
6.2(a) ▇▇▇▇ of Sale
6.2(b) Opinion of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, P.A., counsel to Seller
6.2(d) Form of Offer Letter for Key Employees and Other Employees and
Consultants
6.2(e) Form of Proprietary Information and Inventions Agreement
6.2(g) Assignment and Assumption of the Contracts
Schedules
1.1(a) List of Related Property
1.1(b) List of Inventory
1.1(c) List of Contracts
1.1(d) List of Governmental Permits
1.1(e) List of Intellectual Property Rights
1.1(f) List of Accounts Receivable
1.1(j) List of Leasehold Interests
1.2 List of Excluded Assets
2.1 List of Assumed Liabilities
3.2(b) Description of Milestones
4.1 Disclosure Letter
4.1(b) List of Holders of Outstanding Seller Common Stock
4.1(d) List of Affiliates
4.1(v) List of Employees
4.1(ad) List of Material Customers
4.1(ae) List of Suppliers
4.1(aj) List of Insurance Policies
4.1(ak) List of Environmental Matters
4.1(al) Backlog of Orders
iv.
ASSET PURCHASE AGREEMENT
------------------------
THIS AGREEMENT is dated as of August 2, 1996 by and among P-COM, Inc.,
a Delaware corporation ("Purchaser"), Atlantic Communication Sciences, Inc., a
Florida corporation ("Seller"), and the individuals and other entities listed on
the signature pages hereto (collectively, the "Securityholders").
WHEREAS, Seller is engaged in, among other things, the business of
manufacturing, selling and servicing radio systems or sub-systems or components
thereof (the "Business"), which Business is located primarily at ▇▇▇▇-▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ (the "Business Premises");
WHEREAS, Purchaser desires to acquire from Seller and Seller desires
to transfer to Purchaser, the assets, properties, and rights of Seller, upon the
terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
ARTICLE I
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PURCHASE AND SALE OF ASSETS
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Section 1.1 Description of Assets to be Acquired. Upon the terms and
----------- ------------------------------------
subject to the conditions set forth in this Agreement, at the Time of Closing
(as defined in Section 6.1), Seller agrees to convey, sell, transfer, assign,
and deliver to Purchaser, and Purchaser shall purchase from Seller, all right,
title, and interest of Seller at the Time of Closing in and to the assets,
personal properties, and rights of the Business of every kind, nature, and
description, personal, tangible, and intangible, known or unknown, wherever
located, including, without limitation, the following:
(a) The machinery, equipment, computer hardware, peripherals,
software, quality assurance equipment and furniture and fixtures (the "Related
Property"), including those listed on Schedule 1.1(a) hereto;
(b) The inventory owned by Seller (whether located on the premises of
the facilities owned by Seller in West Melbourne, Florida, in transit to or from
such premises, in other storage or warehouse facilities, or otherwise)
including, without limitation, finished goods and components, including those
listed on Schedule 1.1(b) hereto (the "Inventory");
1.
(c) All rights under all agreements, contracts, contract rights,
licenses, purchase and sale orders, quotations, and other executory commitments
relating to the Business (collectively, the "Contracts"), including, without
limitation, those listed on Schedule 1.1(c) hereto;
(d) All franchises, licenses, permits, consents, authorizations, and
approvals of any foreign, federal, state or local regulatory, administrative or
other governmental agency or body, relating to the Business, including those
listed on Schedule 1.1(d);
(e) All rights to, all patents, trademarks, trade names, service
marks, copyrights, trade secret rights and other intellectual property rights,
and any applications or registrations therefor, and all net lists, schematics,
technology, source code, know-how, computer software programs and all other
tangible and intangible information or material used, usable or proposed to be
used in the Business, including, without limitation, those listed on Schedule
1.1(e) hereto (collectively, the "Intellectual Property Rights");
(f) All accounts receivable of Seller relating to the Business,
including, without limitation, those listed on Schedule 1.1(f) (collectively,
the "Accounts Receivable");
(g) All rights under express or implied warranties from suppliers and
vendors to Seller relating to the Business;
(h) All of Seller's causes of action, judgments, and claims or demands
of whatever kind or description arising out of or relating to the Business;
(i) All goodwill of the Business (the "Goodwill"); and
(j) All leasehold interests of Seller relating to the Business,
including, without limitation, those listed on Schedule 1.1(j).
The assets, properties, and rights to be conveyed, sold, transferred,
assigned, and delivered to Purchaser pursuant to this Section 1.1 are sometimes
hereinafter collectively referred to as the "Assets."
Section 1.2 Excluded Assets. Notwithstanding the provisions of
----------- ---------------
Section 1.1 hereof, the Assets to be transferred to Purchaser pursuant to this
Agreement shall not include those assets specifically listed on Schedule 1.2
(collectively, the "Excluded Assets").
2.
ARTICLE II
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LIABILITIES
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Section 2.1 Liabilities Not Assumed. Except as expressly set forth
----------- -----------------------
on Schedule 2.1 attached hereto (except as modified by Section 4.1(p) of this
Agreement) (the "Assumed Liabilities"), Purchaser shall not assume nor shall
Purchaser nor any affiliate of Purchaser be deemed to have assumed or
guaranteed, any liabilities, litigation, disputes, debts, payables (including,
without limitation, payables as of the Time of Closing to suppliers of goods
that have been sold by Seller prior to the Time of Closing) obligations,
counterclaims, rights of set-off or commitments, whether such liabilities are
contingent or otherwise or direct or indirect, of Seller or any of the
Securityholders in existence on or prior to the Time of Closing, as set forth in
the Contracts (other than the Contracts that are "Assumed Liabilities" (except
as modified by Section 4.1(p) of this Agreement)), or otherwise or based on any
events, facts, or circumstances in existence prior to or in connection with the
sale of the Assets or the Business or in connection with or arising from any
activities of Seller or any services provided by or goods or assets sold by or
products delivered to Seller or based on any obligations under the Contracts
that arise after the Time of Closing to the extent that the obligation is
imposed, asserted or incurred as a result of acts or omissions of Seller,
Securityholders, or third parties acting on behalf of, or performing any
function at the request of Seller and/or Securityholders prior to or on the
Closing (collectively, the "Liabilities"); provided, however, that supplies
ordered by Seller prior to the Time of Closing but not paid for, delivered, used
and part of a revenue generating radio system until after the Time of Closing
shall be Assumed Liabilities.
ARTICLE III
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PURCHASE PRICE
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Section 3.1 Consideration. Upon the terms and subject to the
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conditions contained in this Agreement, in consideration for the Assets and in
full payment therefore and the assumption of the Assumed Liabilities, Purchaser
will pay, or cause to be paid, the purchase price set forth in Section 3.2.
Section 3.2 Amount. The purchase price ("Purchase Price") for the
----------- ------
Assets shall consist of Shares of Common Stock of Purchaser to be issued
directly from Purchaser to each of the ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust, U/A dated June
22, 1988, the L. ▇▇▇▇▇ ▇▇▇▇▇▇▇ Revocable Trust, U/A dated June 18, 1991, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇
Technical Services, Inc., as assignees of Seller and in furtherance of its
complete liquidation, in accordance with their pro rata ownership interest in
the capital stock of Seller (the "Purchase Shares").
The Purchase Shares shall consist of the following:
3.
(i) Twenty-Five Thousand (25,000) shares of Common Stock to be
issued at the Time of Closing;
(ii) Forty-Five Thousand (45,000) shares of Common Stock to be
issued at the Time of Closing;
(iii) An aggregate of 41,500 shares of Common Stock to be issued
at the Time of Closing and held in an escrow account pursuant to the escrow
agreement, the form of which is attached hereto as Exhibit 3.2(b) (the "Escrow
Agreement"), to be released based on the achievement of milestones set forth on
the attached Schedule 3.2(b); and
(iv) An aggregate of 33,000 shares of Common Stock (as adjusted
for any stock dividends, combinations or splits with respect to such shares)
that will be contingent shares to be issued based on the achievement of
milestones set forth on the attached Schedule 3.2(b) (the "Contingent Shares").
In addition, the Contingent Shares shall be subject to the same indemnification
obligations as are set forth in the Escrow Agreement.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1 Representations and Warranties of Seller and each
----------- -------------------------------------------------
Securityholder. Except as set forth in a letter (Schedule 4.1) specifically
--------------
referring to this Section 4.1 of this Agreement (the "Disclosure Letter")
delivered by Seller and the Securityholders to Purchaser and ▇▇▇▇▇▇▇, Phleger &
▇▇▇▇▇▇▇▇ LLP, counsel to Purchaser, and provided further that each
representation and warranty made by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇
Technical Services, Inc. is made to the best of their knowledge, after due
inquiry, Seller and each Securityholder hereby, jointly and severally, represent
and warrant to Purchaser that:
(a) Organization of Seller. Seller is a corporation duly organized
----------------------
and validly existing under the laws of the state of Florida and has all
requisite power and authority to own and operate the Business in the places
where the Business is now conducted and to directly own, lease, and operate the
Assets. Seller is duly qualified or licensed to do business as a corporation
and is in good standing in the state of Florida, and is not required to be
qualified in any other jurisdiction in which the nature of its business or
location of its properties requires such qualification or licensing and where
the failure to be so qualified would adversely affect the Business.
4.
(b) Capital Structure.
-----------------
(i) The authorized capital stock of Seller consists of One
Million (1,000,000) shares of Common Stock, par value $0.10 per share. As of the
date of this Agreement, there were issued and outstanding Ten Thousand (10,000)
shares of Seller Common Stock. As of the date of this Agreement, there were no
shares of Common Stock reserved for issuance upon the exercise of options to
purchase shares of Seller Common Stock (the "Seller Options"). There are no
outstanding shares of Seller capital stock or any other equity securities or
rights to purchase equity securities of Seller (collectively, "Seller capital
stock"), other than as described in the preceding sentence.
(ii) All outstanding shares of Seller Common Stock are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, Seller's Articles of Incorporation or
Bylaws or any agreement to which Seller is a party or by which Seller may be
bound. To the best of Seller's and Securityholder's knowledge, after due
inquiry, all outstanding common stock or other securities have been issued in
compliance with applicable federal and state securities laws. There are no
options, warrants, calls, conversion rights, commitments or agreements of any
character to which Seller is a party or by which Seller may be bound that do or
may obligate Seller to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of Seller capital stock or that do or may obligate
Seller to grant, extend or enter into any such option, warrant, call, conversion
right, commitment or agreement, other than those described in Section 4.1(b)(i)
above.
(iii) Schedule 4.1(b) contains a complete and accurate list of,
---------------
and the number of shares owned of record by, the holders of outstanding Seller
Common Stock and their state or country of residence.
(iv) Except for any restrictions imposed by applicable state and
federal securities laws, there is no right of first refusal, co-sale right,
right of participation, right of first offer, option or other restriction on
transfer applicable to any shares of Seller capital stock.
(v) Seller is not a party or subject to any agreement or
understanding, and there is no agreement or understanding between or among any
persons that affects or relates to the voting or giving of written consent with
respect to any outstanding security of Seller.
(c) Authorization of Seller. Seller and each Securityholder has full
-----------------------
power and authority to enter into this Agreement and the Escrow Agreement, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby, including, without limitation, the
execution and delivery of this Agreement and the Escrow Agreement, general
conveyances, bills of sale, assignments, and other documents and instruments
evidencing the conveyance of the
5.
Assets or delivered in accordance with Section 6.2 hereunder (the "Closing
Documents") and the Escrow Agreement. Each of the Seller and the
Securityholders has taken all necessary and appropriate action with respect to
the execution and delivery of this Agreement, the Closing Documents, and the
Escrow Agreement. This Agreement and the Escrow Agreement constitute valid and
binding obligations of Seller and the Securityholders, enforceable in accordance
with their respective terms except as limited by applicable bankruptcy,
insolvency, moratorium, reorganization, or other laws affecting creditors'
rights and remedies generally.
(d) Affiliates Agreements. Schedule 4.1(d) sets forth those persons
----------------------
who are, in Seller's reasonable judgment, "affiliates" of Seller within the
meaning of Rule 145 (each such person, together with the persons identified
below, an "Affiliate") promulgated under the Securities Act of 1933, as amended
(the "Securities Act") ("Rule 145"). Seller shall provide Purchaser such
information and documents as Purchaser shall reasonably request for purposes of
reviewing such list. Seller shall use its best efforts to deliver or cause to
be delivered to Purchaser, concurrently with the execution of this Agreement
from each of the Affiliates of Seller identified in the foregoing list who are
directors or officers of Seller, and concurrently with or promptly following
execution of this Agreement from each other Affiliate, Affiliates Agreements in
the form attached hereto as Exhibit 4.1(d). Purchaser shall be entitled to
place appropriate legends on the certificates evidencing any Purchaser Common
Stock to be received by such Affiliates pursuant to the terms of this Agreement,
and to issue appropriate stop transfer instructions to the transfer agent for
Purchaser Common Stock, consistent with the terms of such Affiliates Agreements.
(e) Financial Information. Seller has furnished to Purchaser a
---------------------
complete and accurate copy of its balance sheet as of June 30, 1996, and its
statement of operations, cash flow and shareholders' equity for its fiscal year
ended June 30, 1996 (which, collectively with the Closing Date Balance Sheet
referred to in Section 5.2 hereof, shall be referred to herein for all purposes
as, the "Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied and fairly present the consolidated financial position of Seller as and
at the dates thereof and Seller's consolidated results of operations and cash
flows for the periods then ended. The notes to the Financial Statements as at
and for each such period set forth in reasonable detail Seller's accounting
policies, principles and methods with respect to the calculation of its accounts
receivable (including policies for its warranty and bad debt reserves, revenue
recognition and capitalized software development costs). The projections of
Seller were prepared in good faith and are based on reasonable assumptions.
(f) Absence of Certain Changes and Events. Except as contemplated
-------------------------------------
herein, since June 30, 1996, there has not been:
6.
(i) Any material adverse change in the financial condition,
results of operation, assets, liabilities, business, or prospects of Seller or
any occurrence, circumstance, or combination thereof which reasonably could be
expected to result in any such material adverse change;
(ii) Any event, including, without limitation, shortage of
materials or supplies, fire, explosion, accident, requisition or taking of
property by any governmental agency, flood, drought, earthquake, or other
natural event, riot, act of God or a public enemy, or damage, destruction, or
other casualty, whether covered by insurance or not, which has had a material
adverse effect on the Business or the Assets or any such event which reasonably
could be expected to have such an effect on the Business or the Assets;
(iii) Any material transaction relating to the Business (other
than the transactions contemplated herein) which was entered into or carried out
by Seller other than in the ordinary and usual course of business;
(iv) Any change made by Seller in its method of operating the
Business or its accounting practices relating thereto;
(v) Any mortgage, pledge, lien, security interest,
hypothecation, charge or other encumbrance imposed or agreed to be imposed on or
with respect to the Assets other than liens arising with respect to taxes not
yet due and payable, and such minor liens and encumbrances, if any, which arise
in the ordinary course of business and are not material in nature or amount
either individually or in the aggregate, and which do not detract from the value
of the Assets or impair the operations conducted thereon or any discharge or
satisfaction thereof;
(vi) Any sale, lease, or disposition of, or any agreement to
sell, lease, or dispose of any of the Assets, other than sales, leases, or
dispositions in the usual and ordinary course of business and consistent with
prior practice;
(vii) Any modification, waiver, change, amendment, release,
rescission, accord and satisfaction, or termination of, or with respect to, any
material term, condition, or provision of any contract, agreement, license, or
other instrument to which Seller is a party and relating to or affecting the
Business or the Assets, other than any satisfaction by performance in accordance
with the terms thereof in the usual and ordinary course of business and
consistent with prior practice;
(viii) Any labor disputes or disturbances materially affecting in
an adverse fashion the Business or the financial condition of Seller, including,
without limitation, the filing of any petition or charge of unfair labor
practices with the National Labor Relations Board;
7.
(ix) Any notice (written or unwritten) from any employee of
Seller who provides any services to the Business that such employee has
terminated, or intends to terminate, such employee's employment with Seller;
(x) Any notice (written or unwritten) from any of Seller's
Suppliers that any such Supplier will not continue to supply the current level
and type of goods currently being provided by such Supplier to Seller on similar
terms and conditions;
(xi) Any adverse relationships or conditions with vendors or
customers that may have a material adverse effect on the Business or the Assets;
(xii) Any waivers of any rights relating to the Business of
substantial value by Seller;
(xiii) Any other event or condition of any character which
materially adversely affects, or may reasonably be expected to so affect, the
Assets or the results of operations, prospects or financial condition of Seller;
or
(xiv) Any purchase or lease of or any agreements to purchase or
lease capital assets relating to the Business by Seller in excess of $10,000
individually, or in excess of $25,000 in the aggregate.
(g) Conduct of Business. At all times since December 31, 1995, Seller
-------------------
has conducted the Business in the ordinary course thereof and used reasonable
commercial efforts to preserve intact the organization of the Business and the
good will of its customers, suppliers, and others having business relations with
Seller.
(h) Undisclosed Liabilities. There are no debts, liabilities, or
-----------------------
obligations with respect to Seller or to which the Assets or Business are
subject, whether liquidated, unliquidated, accrued, absolute, contingent, or
otherwise, that are not identified in the Disclosure Letter.
(i) Inventory. Schedule 1.1(b) lists all Inventory owned by Seller
---------
relating to the Business, including goods supplied to Seller by Suppliers, goods
on consignment, and all other goods customarily sold by Seller in connection
with the Business (whether located on the Business Premises of Seller, in
transit to or from such Business Premises, in other storage facilities, or
otherwise), and identifies whether such Inventory is owned by Seller or held on
consignment. The Inventories are valued at cost (determined on a first-in
first-out basis) or market, whichever is lower, with adequate allowances for
excess and obsolete materials and materials below standard quality in accordance
with GAAP consistently applied. The quality and quantity of the Inventories are
such that the Inventories are readily usable and saleable in the ordinary course
of business of Seller, except such amounts as are reserved in accordance with
GAAP
8.
consistently applied. All Inventories materially in excess of reasonable
estimated requirements for Seller based on current operations for the three (3)
months from the date hereof are set forth in Schedule 1.1(b). Except as
disclosed in Schedule 1.1(b), Seller holds no Inventories manufactured to
customer specifications effectively rendering the Inventories saleable only to
that customer. Seller has continued to replenish the Inventory in a normal and
customary manner consistent with past practices.
(j) Taxes.
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(i) Definitions. For purposes of this Agreement:
-----------
a. the term "Taxes" means (A) all federal, state, local,
foreign and other net income, gross income, gross receipts, sales, use, ad
valorem, transfer, franchise, profits, license, lease, service, service use,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, windfall profits, customs, duties or other taxes, fees, assessments or
charges of any kind whatever, together with any interest and any penalties,
additions to tax or additional amounts with respect thereto, (B) any liability
for payment of amounts described in clause (A) whether as a result of transferee
liability, of being a member of an affiliated, consolidated, combined or unitary
group for any period, or otherwise through operation of law, and (C) any
liability for the payment of amounts described in clauses (A) or (B) as a result
of any tax sharing, tax indemnity or tax allocation agreement or any other
express or implied agreement to indemnify any other person; and the term "Tax"
means any one of the foregoing Taxes; and
b. the term "Returns" means all returns, declarations,
reports, statements and other documents required to be filed in respect of
Taxes, and the term "Return" means any one of the foregoing Returns.
(ii) Seller has properly completed and filed on a timely basis and
in correct form all Returns required to be filed on or prior to the Time of
Closing. As of the time of filing, the foregoing Returns correctly reflected the
facts regarding the income, the Business, the Assets, operations, activities,
status or other matters of Seller or any other information required to be shown
thereon. In particular, the foregoing Returns are not subject to penalties under
Section 6662 of the Code, relating to accuracy-related penalties (or any
corresponding provision of state, local, federal or foreign Tax law) or any
other penalties. An extension of time within which to file any Return that has
not been filed has not been requested or granted. Seller will properly complete
and file on a timely basis and in correct form all Returns required to be filed
on or prior to the Closing. There are no liens for Taxes on the Assets, and all
Taxes due or payable, and all interest and penalties thereon, whether disputed
or not, which could result in the imposition of any Lien on the Assets or
against Purchaser, have been paid in full.
9.
(iii) With respect to all amounts in respect of Taxes imposed
upon Seller, or for which Seller is or could be liable, whether to taxing
authorities (as, for example, under law) or to other persons or entities (as,
for example, under tax allocation agreements), with respect to all taxable
periods ending on or before the Time of Closing and portions of periods
commencing before the Time of Closing and ending after the Time of Closing, all
applicable tax laws and agreements have been fully complied with, and all such
amounts required to be paid by Seller to taxing authorities or others on or
before the Closing have been paid, and all such amounts required to be paid by
Seller to taxing authorities or others after the Closing which have not been
paid are reflected on the Financial Statements.
(iv) The Seller is not, and has not been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
No Securityholder is other than a United States person within the meaning of the
Code.
(k) Employee Matters.
----------------
(i) The hours worked by and payments made to the Seller
employees have not been in violation in any respect of the Fair Labor Standards
Act or any other applicable federal, state or local laws dealing with such
matters.
(ii) All payments due from the Seller on account of employee
health and welfare insurance have been paid.
(iii) All severance and vacation and similar payments by the
Seller which are or were due under the terms of any agreement or otherwise have
been paid in full.
(l) Compliance With Law. Schedule 1.1(d) sets forth all of Seller's
-------------------
franchises, licenses, permits, use permits, consents, authorizations, and
approvals of any federal, state, or local regulatory, administrative, or other
governmental or zoning agency or body (collectively referred to herein as
"Governmental Permits"). Seller has complied and is in compliance with all
applicable federal, state, and, to the best of Seller's and each
Securityholder's knowledge, local laws, statutes, licensing requirements, rules,
and regulations, and judicial or administrative or zoning decisions. To the
best of Seller's and each Securityholder's knowledge, after due inquiry, Seller
has been granted all licenses, permits (temporary and otherwise),
authorizations, and approvals from federal, state, and local government
regulatory or zoning bodies necessary to carry on the Business and maintain the
Assets, all of which are currently valid and in full force and effect. All such
licenses, permits, authorizations, and approvals shall be transferred to
Purchaser as of the Time of Closing, and shall be valid and in full force and
effect to the same extent as if Seller were continuing operation of the
Business. To the best of Seller's and each Securityholder's knowledge, after
due inquiry, there is no order issued,
10.
investigation, or proceeding pending or threatened, or notice served with
respect to any violation of any law, ordinance, order, writ, decree, rule, or
regulation issued by any federal, state, local, or foreign court or governmental
agency or instrumentality applicable to Seller. Seller has valid use permits
for its Business.
(m) Governmental Consents. To the best of Seller's and each
---------------------
Securityholder's knowledge, no consent, approval, order, or authorization of, or
registration, qualification, designation, declaration, or filing with any
federal, state, local, or provincial governmental authority on the part of
Seller or any Securityholder is required in connection with the consummation of
the transactions contemplated hereunder.
(n) Intellectual Property Rights.
----------------------------
(i) Seller owns, or is licensed or otherwise entitled to
exercise, without restriction all Intellectual Property Rights without any
conflict or infringement of the rights of others. All of such Intellectual
Property Rights are set forth in Schedule 1.1(e).
(ii) Schedule 1.1(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 mask work rights included in
the Intellectual Property Rights, and specifies the jurisdictions in which each
such Intellectual Property Right has been registered, including the respective
registration numbers; (ii) all licenses, sublicenses and other agreements as to
which Seller is a party and pursuant to which Seller or any other person is
authorized to use any Intellectual Property Right; and (iii) all parties to whom
Seller has delivered copies of Seller source code, whether pursuant to an escrow
arrangement or otherwise, or parties who have the right to receive such source
code. Copies of all licenses, sublicenses, and other agreements identified
pursuant to clause (ii) above have been delivered by Seller to Purchaser.
(iii) Seller is not, or as a result of the execution and
delivery of this Agreement or the performance of Seller's obligations hereunder
will not be, in violation of, or lose or in any way impair any material rights
pursuant to any license, sublicense or agreement described in Schedule 1.1(e).
(iv) Seller is the absolute owner or licensee of, with all
necessary right, title and interest in and to (free and clear of any liens,
encumbrances or security interests), the Intellectual Property Rights and has
rights to the use, sale, license or disposal thereof or the material covered
thereby in connection with the services or products in respect of which the
Intellectual Property Rights are being used. To the best of Seller's and each
Securityholder's knowledge, after due inquiry, Seller has taken all actions and
made all applications and filings pursuant to applicable laws to perfect or
protect their interests in such Intellectual Property Rights.
11.
(v) No claims with respect to the Intellectual Property Rights
have been asserted or, to the best knowledge of Seller, after diligent
investigation, are threatened by any person, and Seller knows of no claims (i)
to the effect that the manufacture, marketing, license, sale or use of any
product as now used or offered or proposed for use or sale by Seller infringes
any copyright, patent, trade secret, or other intellectual property right of any
third party or violates any license or agreement with any third party, (ii)
contesting the right of 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.
(vi) All patents and registered trademarks, service marks, and
other company, product or service identifiers and registered copyrights held by
Seller are valid and subsisting.
(vii) There has not been and there is not now any unauthorized
use, infringement or misappropriation of any of the Intellectual Property Rights
by any third party, including, without limitation, any service provider of
Seller; Seller has not been sued or charged as a defendant in any claim, suit,
action or proceeding which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or other intellectual property rights and
which has not been finally terminated prior to the date hereof; there are no
such charges or claims outstanding; and Seller does not have any infringement
liability with respect to any patent, trademark, service ▇▇▇▇, copyright or
other intellectual property right of another.
(viii) No Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
manner the licensing thereof by Seller. Seller has not entered into any
agreement to indemnify any other person against any charge of infringement of
any Intellectual Property Right. Seller has not entered into any agreement
granting any third party the right to bring infringement actions with respect
to, or otherwise to enforce rights with respect to, any Intellectual Property
Right. Seller has the exclusive right to file, prosecute and maintain all
applications and registrations with respect to the Intellectual Property Rights.
(o) Restrictive Documents or Orders. Neither Seller nor any
-------------------------------
Securityholder is a party to or bound under any agreement, contract, order,
judgment, or decree, or any similar restriction not of general application which
adversely affects, or reasonably could be expected to adversely affect (i) the
continued operation by Purchaser of the Business after the Time of Closing on
substantially the same basis as said business was theretofore operated or (ii)
the consummation of the transactions contemplated by this Agreement.
12.
(p) Contracts and Commitments.
-------------------------
(i) There is set forth on Schedule 1.1(c) a list of all
outstanding Contracts, whether or not in writing, to which Seller or any of the
Securityholders is a party, to which any of the Assets are subject or that
relate to any aspect of the Business.
(ii) Seller and each Securityholder, as the case may be, has
performed all of its obligations under the terms of each Contract, and is not in
default thereunder. To the best of Seller's and each Securityholder's knowledge,
no event or omission has occurred which but for the giving of notice or lapse of
time or both would constitute a default by any party thereto under any such
Contract. Each such Contract is valid and binding on all parties thereto and in
full force and effect. Seller has received no written or unwritten notice of
default, cancellation, or termination in connection with any such Contract.
Seller has paid, or will pay, all debts and performed all obligations required
as of the Time of Closing under the terms of all Contracts which form part of
the Assumed Liabilities.
(iii) There has not been any notice (written or unwritten) from
any of Seller's Suppliers that any such Supplier will not continue to supply the
current level and type of goods currently being provided by such Supplier to
Seller on the same terms and conditions.
(iv) Schedule 1.1(c) also lists all sole or limited source
supply agreements. Notwithstanding anything in this Agreement or in any
Schedule, Seller and the Securityholders shall also be responsible for all debts
and obligations arising under all Contracts that occurred on or prior to the
Closing or have their basis for liability arising on or prior to the Closing
from the actions, conduct, inactions or omissions of Seller or agents acting on
Seller's behalf.
(q) Assets. The Assets (excluding the Excluded Assets) consist of all
------
the assets necessary to operate the Business in the same manner as the Business
was operated by Seller and the Securityholders immediately prior to the Time of
Closing, and none of the Securityholders, nor any family member or entity
affiliated with any of the Securityholders or any such family member owns, or
has any interest in, any asset used in the operation of the Business. All
assets used in and necessary for the operation of the Business are located on
the Business Premises, including Uncle Bob's storage unit No. 794 in Melbourne,
Florida.
(r) Title to the Property.
---------------------
(A) Seller has good and marketable title to the Assets, including
all property listed on Schedule 1.1(a), free and clear of all Liens. Seller has
a valid leasehold interests in all leased properties, free and clear of all
Liens, listed on Schedule 1.1(j) as leased by Seller.
13.
(B) By virtue of the deliveries made at the Closing, Purchaser
will obtain good and marketable title to all of the Assets, free and clear of
all Liens, and a valid leasehold interest in the real property described in its
lease agreement, free and clear of all Liens.
(s) Litigation. None of Seller, the Securityholders nor any of
----------
Seller's officers or directors is engaged in, or has received any threat of, any
litigation, arbitra tion, investigation, claim or other proceeding relating to
Seller, the Securityholders, or its officers, directors, employees, benefit
plans, properties, Intellectual Property Rights, the Business, the Assets,
licenses, permits, or goodwill; or against or affecting the actions taken or
contemplated in connection therewith, nor, to the best of each's knowledge, is
there any reasonable basis therefor. There is no action, suit, proceeding, or
investigation pending or threatened against Seller, or the Securityholders, or
the officers or directors of Seller, that questions the validity of this
Agreement, the Escrow Agreement, or the right of Seller or the Securityholders
to enter into this Agreement, the Escrow Agreement, the Closing Documents, or to
consummate the transactions contemplated hereby or thereby, or which might
result in any material adverse change in the Assets, the Business, condition,
prospects or properties of Seller, or the financial condition of the
Securityholders. There is no action, suit, proceeding, or investigation by
Seller or the Securityholders currently pending or which any of them currently
intends to initiate. None of Seller, the Securityholders, nor any of Seller's
officers or directors is bound by any judgment, decree, injunction, ruling or
order of any court, governmental, regulatory or administrative department,
commission, agency or instrumentality, arbitrator or any other person which
would or could have a material adverse effect on the Business or the Assets.
(t) No Conflict or Default. Neither the execution and delivery of
----------------------
this Agreement or the Escrow Agreement, nor compliance with the terms and
provisions hereof and thereof, including without limitation, the consummation of
the transactions contemplated hereby and thereby, will violate any statute,
regulation, or ordinance of any governmental or administrative authority, or
conflict with or result in the breach of any term, condition, or provision of
Seller's Articles of Incorporation or Bylaws, as presently in effect, or of any
agreement, deed, contract, mortgage, indenture, writ, order, decree, legal
obligation, or instrument to which Seller or any of the Securityholders are a
party or by which it or they or any of the Assets are or may be bound, or
constitute a default (or an event which, with the lapse of time or the giving of
notice, or both, would constitute a default) thereunder.
(u) Consents. No consent, approval, order or authorization of, or
--------
registration, qualification, designation, declaration or filing with any
governmental, regulatory or administrative authority on the part of Seller is
required in connection with the consummation of the transactions contemplated
hereunder. No consent, approval or authorization of Seller's Board of Directors
(or any committee thereof), shareholders or of any third party (other than
Purchaser and parties related to Purchaser, such as
14.
lenders, stockholders, shareholders and similar persons) is required in
connection with Seller's consummation of the transactions contemplated hereunder
that has not been obtained or waived by the Time of Closing.
(v) Labor Relations.
---------------
a. To the best of Seller's and each Securityholder's knowledge,
with respect to the Business, Seller has not failed to comply in any
respect with Title VII of the Civil Rights Act of 1964, as amended, the
Fair Labor Standards Act, as amended, the Occupational Safety and Health
Act of 1970, as amended, all applicable federal, state, and local laws,
rules, and regulations relating to employment, and all applicable laws,
rules and regulations governing payment of minimum wages and overtime
rates, and the withholding and payment of taxes from compensation of
employees.
b. There are no labor controversies pending or threatened
between Seller and any of its employees (the "Employees") or any labor
union or other collective bargaining unit representing any of the
Employees.
c. Seller has never entered into a collective bargaining
agreement or other labor union contract relating to the Business and
applicable to the Employees.
d. There are no written employment or separation agreements, or
oral employment or separation agreements other than those establishing an
"at-will" employment relationship between Seller and any of the Employees.
e. Attached hereto as Schedule 4.1(v) is a list of all
employees of the Business.
(w) Pension, Profit Sharing, etc. Seller has no "Employer Pension
-----------------------------
Benefit Plan" in effect, as such term is defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended.
(x) Brokers' and Finders' Fees/Contractual Limitations. Neither the
--------------------------------------------------
Securityholders nor Seller is obligated to pay any fees or expenses of any
broker or finder in connection with the origin, negotiation, or execution of
this Agreement or in connection with any transactions contemplated hereby.
Neither Seller nor any officer, director, employee, shareholder, agent, or
representative of Seller (collectively "Agent/Representatives") are or have been
subject to any agreement, letter of intent, or understanding of any kind which
prohibits, limits, or restricts Seller or Agent/Representatives from
negotiating, entering into and consummating this Agreement and the transactions
contemplated hereby.
15.
(y) Interested Party Relationships. Neither the Securityholders nor
------------------------------
Seller (nor any family member of the Securityholders or any corporation,
partnership, or other entity which, directly or indirectly, alone or together
with others, controls, is controlled by, or is in common control with the
Securityholders, Seller, or any such family member) have any material financial
interest, direct or indirect, in any material supplier or customer, any party to
any contract which is material to the Business, or any competitor with the
Business.
(z) Certain Payments. In connection with the Business, Seller has
----------------
not and no person directly or indirectly on behalf of Seller has made or
received any payment that was not legal to make or receive.
(aa) Products Liability. There are no claims received by Seller or
------------------
any Securityholder against Seller, fixed or contingent, asserting (a) any
damage, loss or injury caused by any Product or (b) any breach of any express or
implied product warranty or any other similar claim with respect to any Product
other than standard warranty obligations (to replace, repair or refund) made by
Seller in the ordinary course of business, except for those claims that, if
adversely determined against Seller, would not have a material adverse change on
the business, results of operations, financial condition or prospects of the
Business. As used herein, "Product" shall mean any products manufactured,
designed, developed, distributed, sold, re-sold, customized or serviced by
Seller in connection with the Business.
(ab) Product Warranties. Seller has provided to Purchaser copies of
------------------
its warranty policies and all outstanding warranties or guarantees relating to
any of Seller's products, if any, other than warranties or guarantees implied by
law.
(ac) Returns. There are no agreements or arrangements, written or
-------
oral, that expressly entitle any business partner of Seller to return products
sold, delivered or shipped by Seller to such business partner or any of its
successors.
(ad) Customers. Except as indicated on Schedule 4.1(ad) attached
---------
hereto, no single customer of Seller accounted for more than 5% of the net sales
of Seller during the twelve-month period ended December 31, 1995. Seller has
furnished Purchaser with complete and accurate copies or descriptions of all
current agreements (written or unwritten) with such customers. Neither Seller
nor the Securityholders is aware of any event, happening, or fact which would
lead it or him to believe that any of such customers will not continue their
current level of purchases after the Time of Closing.
(ae) Suppliers. Schedule 4.1(ae) hereto lists all Suppliers of goods
---------
to Seller during the prior three (3) years and the value of goods supplied to
Seller in each such year. Seller and the Securityholders are not aware of any
event, happening, or fact which would lead them to believe that any of such
suppliers will not continue to supply
16.
the current level and type of goods currently being provided to Seller on
similar terms and conditions.
(af) Books and Records. The books and records of Seller to which
-----------------
Purchaser and its accountants and attorneys have been given access are the true
books and records of Seller and truly and fairly reflect the underlying facts
and transactions in all material respects.
(ag) Complete Disclosure. No representation or warranty made by
-------------------
Seller or any Securityholder in this Agreement, nor any document, written
information, statement, financial statement, certificate, schedule or exhibit
prepared and furnished or to be prepared and furnished by Seller or any
Securityholder or its respective representatives pursuant hereto or in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading in light of the circumstances under which they were
furnished. All schedules and exhibits prepared by Seller and the
Securityholders shall be updated as of the Time of Closing. To the best
knowledge of Seller and any Securityholder after reasonable inquiry, there is no
event, fact or condition that has resulted in, or could reasonably be expected
to result in any event, change or effect that is materially adverse to the
condition (financial or otherwise), properties, assets, liabilities, businesses,
operations, results of operations or prospects of Seller taken as a whole that
has not been set forth in this Agreement or in the Disclosure Letter.
(ah) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
Seller prior to the Time of Closing have been fully performed and complied with
at or prior to the Time of Closing, including the delivery of the instruments
and documents in accordance with Section 6.2.
(ai) Absence of Governmental or Other Objection. There is no pending
------------------------------------------
or threatened lawsuit or action or hearing challenging the transaction by any
body or agency of the federal, state, or local government or by any third party,
and the consummation of the transaction has not been enjoined by a court of
competent jurisdiction as of the Time of Closing. There is no legislation and
no rulings in effect by the Federal Communications Commission that would make
operation of Seller's radio systems inoperable in the United States.
(aj) Insurance. Schedule 4.1(aj) lists all insurance policies and
---------
fidelity bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of Seller, the amounts of coverage under each
such policy and bond of Seller. Seller has not been refused any requested
coverage and no material claim made by Seller has been denied by the
underwriters of such policies or bonds. All premiums payable under all such
policies and bonds have been paid, and Seller is
17.
otherwise in full compliance with the terms of such policies and bonds (or other
policies and bonds providing substantially similar insurance coverage). Seller
is in compliance with each of such policies. Such policies of insurance and
bonds are of the type and in amounts customarily carried by persons conducting
businesses similar to those of Seller. Seller does not know of any threatened
termination of, the invalidation of any coverage of or material premium increase
with respect to, any of such policies.
(ak) Environmental Matters.
---------------------
(i) For purposes of this Section 4.1(ak), the following terms
shall have the following meanings:
"Court Order" shall mean any judgment, order, award or decree
of any foreign, federal, state, local or other court or tribunal, or any
governmental entity, and any award in any arbitration proceeding.
"Disposal Site" shall mean landfill, disposal agent, waste
hauler or recycler of Hazardous Materials.
"Environmental Encumbrance" shall mean any lien, claim,
charge, security interest, mortgage, pledge, easement, conditional sale or other
title retention agreement, defect in title, covenant or other restrictions of
any kind in favor of any governmental entity for (i) any liability under any
Environmental Law, or (ii) damages arising from, or costs incurred by such
governmental entity in response to, a Release or threatened Release of a
Hazardous Material into the environment.
"Environmental Laws" shall mean all Requirements of Laws
which relate to any Hazardous Material or the use, handling, transportation,
production, spill, leaking, pumping, injection, deposit, disposal, discharge,
dispersal, Release, threatened Release, migration, emission, sale or storage of,
or the exposure of any person to, a Hazardous Material.
"Governmental Permits" shall mean all licenses, franchises,
permits, privileges, immunities, approvals and other authorizations from a
governmental entity.
"Hazardous Material" shall mean any material or substance
that is prohibited or regulated by any Requirement of Law or that is designated
by any governmental entity to be radioactive, toxic, hazardous or otherwise a
danger to health, reproduction or the environment.
"Hazardous Materials Activities" shall mean the use,
handling, transportation, distribution, sale, Release or threatened Release of,
or Remedial Action concerning any Hazardous Material, performed in connection
with the Real Property.
18.
"Real Property" shall mean real property now or at any time
in the past owned or leased by Seller or any predecessors or affiliates.
"Release" shall mean release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration of a Hazardous Material in, on, under or through the Real Property or
the air, soil, surface water, ground water or improvements thereof.
"Remedial Action" shall mean any reporting, investigation,
characterization, feasibility study, health assessment, risk assessment,
remediation, treatment, recycling, removal, transport, monitoring, maintenance
or any other activity incident to the Release, threatened Release,
investigation, remediation or removal of a Hazardous Material existing on the
Real Property or in, on, under or through the air, soil, ground water, surface
water or improvements thereof.
"Requirements of Laws" shall mean any foreign, federal, state
and local laws, statutes, regulations, rules, guidelines, codes, ordinances,
judgments, injunctions, decrees, orders, permits, approvals, treaties or
protocols enacted, adopted, issued or promulgated by any governmental entity
(including, without limitation, those pertaining to electrical, building,
zoning, environmental and occupational safety and health requirements) or common
law in effect on the date hereof.
(ii) Except as set forth in Schedule 4.1(ak), to the best of
Seller's and each Securityholder's knowledge, after due inquiry,
a. Seller complies in all material respects with all
applicable Environmental Laws;
b. Seller has obtained all environmental, health and
safety Governmental Permits necessary for its operation or required by any
Environmental Laws, all such Governmental Permits are in good standing, and
Seller is in compliance in all material respects with all terms and conditions
of such permits;
c. none of Seller nor any of the Real Property or present
or past Seller operations is subject to any pending or ongoing investigation by,
notice or order from or agreement with any person (including, without
limitation, any prior owner or operator of the Real Property) with respect to
(A) any claim of Environmental Law, (B) any Remedial Action, or (C) any claim of
losses and expenses arising from the Release or threatened Release of a
Hazardous Material;
d. Seller is not subject to any pending or existing
judicial or administrative proceeding, Court Order or settlement alleging or
addressing a violation of or liability under any Environmental Law;
19.
e. Seller has not filed, and Seller does not intend to
file any notice or report under any Environmental Law reporting a violation of
any Environmental Law;
f. there is not now, and to the best knowledge of Seller,
there has never been, in any Seller Real Property (A) any underground storage
tank or surface impoundment; (B) any landfill or waste pile which either is or
was used in the frequent manner to dispose or store any Hazardous Material or
contains or contained a substantial volume of Hazardous Material; or (C) any
polychlorinated biphenyls;
g. Seller has not received any notice of claim to the
effect that it is or may be liable to any person as a result of the Release or
threatened Release of a Hazardous Material into the environment from or on any
Real Property;
h. Seller is not aware of any Environmental Encumbrance
on any Real Property;
i. any asbestos-containing material which is on or part
of any Real Property is in good repair according to the current standards and
practices governing such material, and its presence or condition does not
violate any currently applicable Environmental Law;
j. none of the products Seller manufactures, distributes
or sells or has manufactured, distributed or sold in the past, contains
substantial amounts of asbestos-containing material;
k. other than Hazardous Materials reasonably necessary
for the conduct of Seller's operations which are properly stored in accordance
with applicable Environmental Laws, no Hazardous Material is present on Real
Property, and no reasonable likelihood exists that any Hazardous Material
present on other property will come to be present on the Real Property;
l. Hazardous Materials Activities (A) have been conducted
in compliance with applicable Environmental Laws, and (B) have not resulted in
the exposure of any person to a Hazardous Material in a manner which has or will
cause an adverse health effect to such person;
m. no court order, action, proceeding, liability or claim
exists or, to the best knowledge of Seller is threatened, against any Disposal
Site or against Seller with respect to any transfer or release of Hazardous
Materials by Seller to a Disposal Site, and there is no valid basis for such
claim;
n. Seller is not aware of any fact or circumstance which
is reasonably expected to involve Seller in any environmental litigation or
impose upon
20.
Seller any environmental liability which would have a material and adverse
effect on the business condition of Seller; and
o. Seller has no records pertaining to environmental
audits or environmental assessments of any Real Property.
(al) Backlog. Schedule 4.1(al) hereto sets forth the backlog of
-------
orders relating to the Business that Seller is to ship and contract work to be
performed as of the Time of Closing. Seller either possesses sufficient
inventory of parts, materials and personnel to produce the same within their
scheduled delivery dates or such parts or materials have lead times such that
Seller can acquire such parts and materials in time to produce and ship such
backlog in accordance with its scheduled shipping date.
(am) Accounts Receivable. The amount of all Accounts Receivable
-------------------
purchased by Purchaser will be good and collectible in full in the ordinary
course of business within 90 days of closing; all Accounts Receivable arise from
bona fide transactions in the ordinary course of business; no contest with
respect to the amount or validity of any amount is pending; and none of such
Accounts Receivable is or will at the Closing be subject to any counterclaim or
setoff. The value at which Accounts Receivable are carried reflect the accounts
receivable valuation policy of Seller. As of June 30, 1996 and as of the
Closing, except as set forth in Schedule 1.1(f), there is and will be (i) no
account debtor or note debtor delinquent in its payment by more than 30 days,
(ii) no account debtor or note debtor that has refused (or threatened to refuse)
to pay its obligation for any reason, (iii) no account debtor or note debtor
that is insolvent or bankrupt, and (iv) no account receivable or note receivable
which is pledged to any third party by Seller. Seller holds no deposits from
customers and has received no prepaid service contract revenue or other prepaid
revenue.
Section 4.2 Representations and Warranties of Purchaser. Purchaser
----------- -------------------------------------------
hereby represents and warrants that:
(a) Organization. Purchaser is a corporation duly organized and
------------
validly existing under the laws of the State of Delaware, and has all corporate
power and authority to lease, own, and operate its properties and carry on its
business and operations and to directly own, lease, and operate the assets of
Purchaser. Purchaser is duly qualified or licensed to do business as a
corporation, and is in good standing in each jurisdiction where the failure to
qualify would have a material adverse effect on its business and operations.
Purchaser has made available to Seller complete and accurate copies of its
Articles of Incorporation and Bylaws and all amendments thereto, and minutes and
actions of all of its Board of Directors and its shareholders. No corporate
actions have been approved or taken by Purchaser's Board of Directors or the
shareholders that are not reflected in such minutes and actions.
21.
(b) Brokers' and Finders' Fees/Contractual Limitations. Purchaser is
--------------------------------------------------
not obligated to pay any fees or expenses of any broker or finder in connection
with the origin, negotiation, or execution of this Agreement, the Escrow
Agreement, or in connection with any transactions contemplated hereby that
Seller, or the Securityholders would be required or obligated to make or pay.
Neither Purchaser nor any officer, director, employee, agent, or representative
of Purchaser (collectively, the "Purchaser's Representatives") is or has been
subject to any agreement, letter of intent, or understanding of any kind which
prohibits, limits, or restricts Purchaser or Purchaser's Representatives from
negotiating, entering into, and consummating this Agreement, the Escrow
Agreement, and the transactions contemplated hereby and thereby.
(c) Valid Issuance of Purchase Shares. The Purchase Shares, when
---------------------------------
issued and delivered in accordance with the terms hereof and for the
consideration expressed herein, will be duly and validly issued, fully paid and
nonassessable and will be issued in compliance with all applicable federal and
state securities laws.
(d) SEC Filings. Purchaser has filed all forms, reports and documents
-----------
required to be filed with the Securities and Exchange Commission ("SEC") since
March 2, 1995, and has provided to Seller and the Securityholders (i) its Annual
Report on Form 10-K for the fiscal year ended December 31, 1995, (ii) its
Quarterly Reports on Form 10-Q for the period ended ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇▇) the
proxy statement relating to Purchaser's 1996 annual meeting of shareholders,
(iv) the two prospectuses which form part of the two registration statements on
Form S-1 declared effective by the SEC on March 2, 1995 and August 17, 1995,
respectively, and (v) the prospectus which forms part of the registration
statement on Form S-3 declared effective by the SEC on May 16, 1996
(collectively, the "Purchaser SEC Reports"). The Purchaser SEC reports were
prepared in accordance with the requirements of the Securities Act of 1933, as
amended or the Securities Exchange Act of 1934, as amended, as the case may be,
and did not at the time they were filed or declared effective, as the case may
be, contain any untrue statement of a material fact or omit to state a material
fact required or be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
ARTICLE V
---------
COVENANTS
---------
Section 5.1 Covenants Against Disclosure. The parties agree to
----------- ----------------------------
maintain the confidentiality of the terms and conditions of this Agreement,
except to the extent required by law and pursuant to the public reporting
obligations of Purchaser. No party shall disseminate (except to the parties to
this Agreement) any press release or announcement concerning the transactions
contemplated by this Agreement or the Escrow Agreement or the parties hereto or
thereto without the prior written consent of
22.
Seller and Purchaser, except as required under the public reporting obligations
of Purchaser or as may be required to obtain consents necessary pursuant to
Sections 7.1(k) and 7.2(e) hereof to consummate the transactions contemplated
herein; provided that Purchaser shall issue a press release acceptable to Seller
describing the transaction contemplated herein at any time within ten (10) days
after the Time of Closing.
Section 5.2 Net Asset Determination.
----------- -----------------------
(a) As used in this Section 5.2, the "Net Assets" of Seller
shall mean: Inventory plus Accounts Receivable (less allowance for doubtful
accounts), and cash on hand at the Time of Closing, plus the property, plant and
equipment included in Schedule 1.1(a) hereto, at their net book value at the
Time of Closing.
(b) As soon as reasonably practicable after the Time of Closing,
but in no event later than five (5) business days thereafter, Seller shall
deliver to Purchaser an unaudited balance sheet (the "Closing Date Balance
Sheet") of Seller dated as of the Time of Closing. The Closing Date Balance
Sheet shall fairly present the Net Assets of Seller as of the Time of Closing in
accordance with the tax basis of accounting applied on a basis consistent with
previous periods.
(c) Upon receipt of the Closing Date Balance Sheet by Seller
(the "Post-Time of Closing"), if the Net Assets as of the Time of Closing are at
any time after the Closing in the sole but reasonable opinion of the Purchaser
less than $350,000, with at least $100,000 of such Net Assets being comprised of
property, plant and equipment and at least $250,000 of such Net Assets being
comprised of Inventory, Accounts Receivable and cash on hand (the "Minimum Net
Assets"), then Seller and the Securityholders shall immediately pay Purchaser in
cash the amount by which the Net Assets as of the Time of Closing are less than
the Minimum Net Assets; provided, however that Seller represents that the
Inventory consists of parts, supplies and equipment used by Seller for the
production of existing products or products currently under development and
Seller and Purchaser agree that the property, plant and equipment and Inventory
of Seller shall be valued at the actual price paid by Seller and that such
valuation shall take account of any defined depreciation schedules, if
applicable. Notwithstanding the foregoing, in the event that Seller and the
Securityholders do not make the payment in cash within the time set forth in
this Section 5.2, Purchaser shall be entitled to deduct from the shares of
Common Stock held pursuant to the Escrow Agreement that number of shares with a
fair market value equal to the closing sales price of the Common Stock of
Purchaser as reported on the Nasdaq NMS on the execution date of this Agreement
sufficient to cover the payment owed by Seller and the Securityholders.
23.
Section 5.3 Non-Competition.
----------- ---------------
5.3.1 Commencing on the Time of Closing and continuing for four
-----
(4) years thereafter, Seller and each of the Securityholders other than ▇▇▇▇▇▇▇
▇. ▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇, and ▇▇▇▇ Technical Services, Inc. (collectively,
the "Consultants"), agree individually, that it, he, or she shall not engage
(except in his or her capacity as an officer, director, and/or employee of
Purchaser), directly or indirectly, whether on its, his, or her own account or
as a shareholder (other than as a less than 1% shareholder of a publicly-held
company (other than Purchaser)), partner, joint venturer, employee, consultant,
advisor, and/or agent, of any person, firm, corporation, or other entity, in any
or all of the following activities worldwide:
(a) Enter into or engage in the business of manufacturing, selling or
servicing radio systems or sub-systems or components thereof of the type
produced by Seller or by Purchaser, either presently or during the term of this
Section 5.3, or radio antennas of a type which is competitive with the type
produced by Seller or by Purchaser, either presently or during the term of this
Section 5.3;
(b) Solicit customers, suppliers, or business patronage which results
in competition with Purchaser or any of its affiliates, in the business of
producing or selling radio systems or sub-systems or components thereof or radio
antennas;
(c) Encourage or solicit any employees of Purchaser or any of its
affiliates to leave the employment of Purchaser or any of its affiliates for any
reason; or
(d) Promote or assist, financially or otherwise, any person, firm,
association, corporation, or other entity engaged in the business of producing
or selling radios or radio antennas.
5.3.2 Commencing on the Time of Closing and continuing for four
-----
(4) years thereafter, each Consultant agrees individually, that he or it shall
not engage (except in his or its capacity as an officer, director, and/or
employee of Purchaser), directly or indirectly, whether on his or its own
account or as a shareholder (other than as a less than 1% shareholder of a
publicly-held company (other than Purchaser)), partner, joint venturer,
employee, consultant, advisor, and/or agent, of any person, firm, corporation,
or other entity, in any or all of the following activities worldwide:
(a) Enter into or engage in the business of manufacturing, selling or
servicing terrestrial microwave radio systems or sub-systems or components
thereof of the type presently produced by Seller, or radio antennas of a type
which is competitive with the type presently produced by Seller;
(b) Solicit customers, suppliers, or business patronage which results
in competition with Purchaser or any of its affiliates, in the business of
producing
24.
or selling terrestrial microwave radio systems or sub-systems or components
thereof or radio antennas;
(c) Encourage or solicit any employees of Purchaser or any of its
affiliates to leave the employment of Purchaser or any of its affiliates for any
reason; or
(d) Promote or assist, financially or otherwise, in the design,
production, or sales of terrestrial microwave radios or terrestrial microwave
radio antennas for any person, firm, association or corporation.
5.3.3 Without limitation, the parties agree and intend that the
-----
covenants contained in this Section 5.3 shall be deemed to be a series of
separate covenants and agreements, one for each and every county of each state
and political sub division worldwide. If, in any judicial proceeding, a court
shall refuse to enforce in such action any of the separate covenants deemed
included herein, then at the option of Purchaser, wholly-unenforceable covenants
shall be deemed eliminated from the provisions hereof for the purpose of such
proceeding to the extent necessary to permit the remaining separate covenants to
be enforced in such a proceeding.
5.3.4 The parties agree that due to the unique nature of the
-----
services and capabilities of Seller and the Securityholders, there can be no
adequate remedy at law for any breach of their obligations hereunder, that any
such breach may allow Seller or any of the Securityholders and/or third parties
to unfairly compete with Purchaser resulting in irreparable harm to Purchaser,
and therefore, that upon any such breach or any threat thereof, Purchaser shall
be entitled to appropriate equitable relief in addition to whatever remedies it
might have at law. Further, Purchaser shall be entitled to indemnification by
Seller and each Securityholder from any loss or harm, including, without
limitation, attorney's fees, in connection with any breach, or any enforcement,
of Seller's or such Securityholder's obligations hereunder.
5.3.5 Seller and the Securityholders represent and warrant to
-----
Purchaser that the covenants of Seller and each of the Securityholders in this
Section 5.3 are reasonably necessary for the protection of Purchaser's interests
under this Agreement and are not unduly restrictive upon Seller or any of the
Securityholders.
5.3.6 The parties agree that the covenants of Seller and each of
-----
the Securityholders in this Section 5.3 shall not apply to a specific
Securityholder in the event that and after such Securityholder's employment with
Purchaser is terminated by Purchaser without just cause.
Section 5.4 Maintenance of Business. During the period from the date
----------- -----------------------
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Time of Closing, Seller shall carry on its business in the
usual, regular and ordinary course in substantially the same manner as conducted
prior to the date of this
25.
Agreement and, to the extent consistent with such business, use its best efforts
to preserve intact its present business organizations, keep available the
services of its present service providers and preserve its relationships with
customers, suppliers, distributors, licensors, licensees, and others having
business dealings with it, to the end that its goodwill and ongoing businesses
shall be unimpaired at the Time of Closing. Seller shall promptly notify
Purchaser of any event or occurrence not in the ordinary course of business of
Seller, and any event which could have a material and adverse effect on the
business condition of Seller. Except as expressly contemplated by this
Agreement, Seller, without the prior written consent of Purchaser shall not:
(a) Accelerate, amend or change the period of exercisability of
---
options, warrants, stock or purchase rights or authorize cash payments in
exchange therefor or perform any actions that would prohibit the pooling of
interests accounting treatment;
(b) Enter into any commitment or transaction not in the ordinary
---
course of business to be performed over a period longer than six (6) months in
duration, or, except as in accordance with its existing capital budget
previously disclosed to Purchaser, to purchase fixed assets with an aggregate
purchase price exceeding $5,000;
(c) Grant any severance or termination pay to any service provider;
---
(d) Transfer to any person or entity any rights to the Seller's
---
Intellectual Property Rights, except licenses of Intellectual Property Rights in
connection with the sale of Seller's products in the ordinary course of business
consistent with past practice;
(e) Enter into or amend any agreements pursuant to which any other
---
party is granted marketing or other similar rights of any type or scope with
respect to any products of Seller;
(f) Violate, amend or otherwise modify the terms of any contract;
---
(g) Except with prior consultation with Purchaser, commence a
---
lawsuit other than for the routine collection of bills;
(h) Declare or pay any dividends on or make any other distributions
---
(whether in cash, stock or property) in respect of any Seller Common Stock or
otherwise, or split, combine or reclassify any of its Common Stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for shares of Seller Common Stock, or repurchase or otherwise
acquire, directly or indirectly, any shares of Seller Common Stock except
repurchases of Common Stock at
26.
cost from former service providers in accordance with the terms of agreements
providing for the repurchase of shares in connection with any termination of
service to Seller;
(i) Issue, deliver or sell or authorize or propose the issuance,
---
delivery or sale of or authorization of, the purchase of any shares of Seller
capital stock or securities convertible into, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than the issuance of shares of Seller Common Stock upon the exercise of
previously outstanding options and warrants to purchase Seller's capital stock;
(j) Cause or permit any amendments to Seller's Articles of
---
Incorporation or Bylaws;
(k) Acquire or agree to acquire by merging or consolidating with, or
---
by purchasing a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof, or otherwise acquire or agree to acquire any
assets which are material, individually or in the aggregate, to the business
condition of Seller;
(l) Sell, lease, license or otherwise dispose of any of its properties
---
or assets except in the ordinary course of business;
(m) Incur any indebtedness for borrowed money or guarantee any such
---
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others;
(n) Adopt or amend any employee benefit plans, or enter into any
---
employment contract, pay any bonus or remuneration to any service provider, or
increase the salaries or wage rates of its employees other than pursuant to
scheduled employee reviews under Seller's normal employee review cycle or in
connection with the hiring of employees other than officers in the ordinary
course of business, in all cases consistent with past practice, or otherwise
increase or modify the compensation or benefits payable or to become payable by
Seller to any of its service providers;
(o) Revalue any of its assets, including, without limitation, writing
---
down the value of inventory or accounts receivable;
(p) Liquidate or discount any Account Receivable or subject any
---
Account Receivable to a claim or setoff;
(q) Pay, discharge or satisfy in an amount in excess of $5,000 in any
---
one case any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction in the
27.
ordinary course of business consistent with past practice of liabilities
reflected or reserved against in the Financial Statements;
(r) Make any material Tax election other than in the ordinary course
---
of business and consistent with past practice, change any material tax election,
adopt any material Tax accounting method other than in the ordinary course of
business and consistent with past practice, change any material Tax accounting
method, file any material Tax return (other than any estimated tax returns,
payroll tax returns or sales tax returns) or any amendment to a material Tax
return other than in the ordinary course of business, enter into any closing
agreement, settle any Tax claim or assessment or consent to any Tax claim or
assessment;
(s) Engage in any activities or transactions that are outside the
---
ordinary course of its business consistent with past practice;
(t) Fail to pay or otherwise satisfy its material monetary obligations
---
as they become due or consistent with past practice, except such as are being
contested in good faith;
(u) Waive or commit to waive any rights of substantial value;
---
(v) Cancel, amend or, other than in the ordinary course upon
---
expiration of a policy term, renew any material insurance policy;
(w) Alter, or enter into any commitment to materially alter, its
---
interest in any corporation, association, joint venture, partnership or business
entity in which Seller directly or indirectly holds any interest on the date
hereof;
(x) Take, or agree (in writing or otherwise) to take, any of the
---
actions described in this Section 5.4 or any action which would make any of the
representations or warranties or covenants of Seller contained in this Agreement
materially untrue or incorrect; or
(y) Hire, or enter into any commitment to hire, any additional
---
employees or service providers of Seller.
Section 5.5 Access to Information. Seller will give Purchaser and
----------- ---------------------
their respective accountants, legal counsel and other representatives full
access, during normal business hours, to all of the properties, books,
contracts, commitments, and records relating to the Business and the Assets, and
Seller will furnish to Purchaser, their respective accountants, legal counsel,
and other representatives during such period all such information concerning the
Business or the Assets as Purchaser may reasonably request; provided, that any
furnishing of such information pursuant hereto or any investigation by Purchaser
shall not affect Purchaser's right to rely on the
28.
representations, warranties, agreements and covenants made by Seller and the
Securityholders in this Agreement. Seller and the Securityholders shall
cooperate with the Purchaser in auditing the financial statements of Seller,
including, but not limited to, executing any and all written representations
reasonably required by Purchaser's accountants.
Section 5.6 Other Discussions. From the date hereof until the
----------- -----------------
earlier of the Time of Closing or the termination of this Agreement, neither
Seller, nor any officer, director, employee, shareholder, agent, or
representative of Seller (collectively, "Agent/Representatives") shall discuss
or negotiate on its or their behalf, with any other party, concerning the
possible disposition of the Business or the Assets. If Seller or any of the
Agent/Representatives receives any inquiries from another party relating to any
proposed disposition of the Business or the Assets following the date hereof,
Seller shall promptly (a) advise such party that Seller is not entitled to enter
into any such discussions or negotiations and (b) notify Purchaser of such
inquiry.
Section 5.7 Assignment of Contracts. Seller and the Securityholders
----------- -----------------------
shall use their best efforts to assist Purchaser in obtaining good and
sufficient assignments to Purchaser of the Contracts and Seller's rights
thereunder.
Section 5.8 Relocation of Seller's Facilities. From the Time of
----------- ---------------------------------
Closing until four years after the Time of Closing, Purchaser will not relocate
the Business Premises (outside of Brevard County, Florida) without the prior
written consent of a majority in interest of the Securityholders then providing
services to Purchaser or cause any Securityholder to be transferred to a
principal place of employment outside of Brevard County, Florida without such
Securityholder's prior written consent.
Section 5.9 Liquidation of Seller. As soon as practicable after the
----------- ---------------------
Time of Closing, and in any event within twelve (12) months thereafter, Seller
and the Securityholders shall cause Seller to be completely liquidated and
dissolved under Florida law and all of Seller's remaining assets, if any, to be
distributed to the Securityholders. The Securityholders shall be responsible
for all liabilities of the Business, not assumed by Purchaser pursuant to this
Agreement, that may arise after the liquidation of the Seller.
Section 5.10 Fairness Hearing and Permit. Purchaser and Seller and
------------ ---------------------------
the Securityholders shall prepare an Application for Qualification of Securities
by Permit under Section 25121 of the California Corporate Securities Law of
1968, as amended, a related Notice of Hearing and other disclosure materials
(the "Disclosure Document") to be supplied to the Securityholders of Seller in
connection with the transactions contemplated hereby (collectively, the "Hearing
Documents"). Purchaser and Seller will file the Disclosure Document and the
Hearing Documents as promptly as practicable with the California Department of
Corporations and request a hearing on the fairness of the issuance of the
Purchase Shares pursuant to Section 25142 of such California
29.
Corporate Securities Law. Purchaser and Seller will thereafter endeavor in good
faith to obtain a finding of fairness and the issuance of a permit to such
effect by the California Department of Corporations as result of such hearing,
but they shall in no event be required to alter the terms of the issuance of the
Purchase Shares in order to obtain such finding and issuance. Seller and the
Securityholders further agree to pay up to $25,000 towards the costs and
expenses that Purchaser incurs with respect to the fairness hearing and the
preparation of the Hearing Documents.
Section 5.11 Reorganization. Purchaser, Seller and Securityholders
------------ --------------
hereby agree to treat and report the transaction contemplated by this Agreement
as a "reorganization" within the meaning of Section 368(a)(1)(C) of the Internal
Revenue Code of 1986 for federal income tax purposes (and as a reorganization
under corresponding provisions of state tax laws). Each Securityholder has
received its own advice, including tax advice, with respect to all matters set
forth in this Agreement.
Section 5.12 Termination of Employment Agreements. Seller agrees to
------------ ------------------------------------
terminate all employment agreements between Seller and its officers and
employees prior to the Time of Closing.
ARTICLE VI
----------
CLOSING
-------
Section 6.1 Time of Closing. The transactions contemplated by this
----------- ---------------
Agreement shall be completed (the "Closing") on the first business day on which
the last of the conditions contained in Article VII hereof is fulfilled or
waived (the "Time of Closing"), with the expectation that the Closing shall
occur on or about August 21, 1996 unless otherwise agreed to in writing by
Seller. The Closing shall take place at the offices of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇ LLP, Two Embarcadero Place, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ or at such other place or date as may be agreed to in writing by Purchaser
and Seller. The "Closing" shall mean the deliveries to be made by the parties
hereto at the Time of Closing in accordance with this Agreement.
Section 6.2 Deliveries by Seller. At the Closing, the
----------- --------------------
Securityholders and Seller, as applicable, shall deliver to Purchaser, all duly
and properly executed, the following:
(a) A good and sufficient ▇▇▇▇ of Sale for the Assets, in the form
attached hereto as Exhibit 6.2(a), selling, delivering, transferring, and
assigning to Purchaser title to all of Seller's right, title, and interest to
the Assets, free and clear of all mortgages, pledges, liens, encumbrances,
security interests, equities, charges, and restrictions of any nature
whatsoever.
30.
(b) An opinion of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, P.A., counsel to Seller, dated
the date of the Closing, in the form attached hereto as Exhibit 6.2(b).
(c) The Escrow Agreement.
(d) Executed offer letters offering employment to certain individuals
and offering options to certain consultants listed on Schedule 4.1(c) in the
form attached hereto as Exhibit 6.2(d).
(e) Executed Proprietary Information and Inventions Agreement from
each service provider in the form attached hereto as Exhibit 6.2(e).
(f) An affidavit of Seller, stating, under penalty of perjury,
Seller's United States taxpayer identification number and that Seller is not a
foreign person, pursuant to Section 1445(b)(2) of the Code.
(g) A good and sufficient Assignment of the Contracts and an
Assumption of the Contracts that are Assumed Liabilities, in the form attached
hereto as Exhibit 6.2(g) (the "Assignment").
(h) A good and sufficient Assignment of the trade names and other
intellectual property rights, selling, delivering, transferring, and assigning
to Purchaser title to all of Seller's right, title, and interest to such trade
names and other intellectual property rights.
(i) An affiliate's agreement signed by each affiliate of Seller.
Section 6.3 Deliveries by Purchaser. At the Closing, Purchaser shall
----------- -----------------------
deliver, or cause to be delivered, to Seller and/or the Securityholders, as
applicable, all duly and properly executed, the following:
(a) The payment set forth in Section 3.2.
(b) The Assignment.
Section 6.4 Further Assurances. At or after the Time of Closing,
----------- ------------------
each party shall prepare, execute, and deliver, at the preparer's expense, such
further instruments of conveyance, sale, assignment, or transfer, and shall take
or cause to be taken such other or further action, as any party shall reasonably
request of any other party at any time or from time to time in order to perfect,
confirm, or evidence in Purchaser title to all or any part of the Assets or to
consummate, in any other manner, the terms and provisions of this Agreement.
31.
ARTICLE VII
-----------
CONDITIONS PRECEDENT TO OBLIGATIONS
-----------------------------------
Section 7.1 Conditions to Obligations of Purchaser. Each and every
----------- --------------------------------------
obligation of Purchaser to be performed at the Closing shall be subject to the
satisfaction as of or before the Time of Closing of the following conditions
(unless waived in writing by Purchaser):
(a) Representations and Warranties. The representations and
------------------------------
warranties of Seller and the Securityholders set forth in Section 4.1 of this
Agreement shall have been true and correct when made and shall be true and
correct at and as of the Time of Closing as if such representations and
warranties were made as of such date and time.
(b) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
the Securityholders and Seller, as the case may be, including Board of Directors
and shareholder approval, shall have been fully performed and complied with at
or prior to the Time of Closing, including the delivery of the instruments and
documents in accordance with Section 6.2 hereof.
(c) No Material Adverse Change. There shall have been no material
--------------------------
adverse change in the financial condition, prospects business, or properties of
Seller which materially adversely affects the conduct of the Business as
presently being conducted or the financial condition, business, or properties of
Seller since June 30, 1996.
(d) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state, or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing and any applicable waiting
period under any applicable federal law shall have expired.
(e) Due Diligence Review. Purchaser shall have completed to its sole
--------------------
satisfaction its due diligence review of Seller and its operations, business,
and financial condition, and Purchaser shall have received favorable reviews
from their advisors of the results of their final due diligence review of the
Business and Assets.
(f) Evidence of Title. Purchaser shall have received evidence, at or
-----------------
prior to the Time of Closing, satisfactory to Purchaser of Seller's title to all
of the Assets and right to fully convey all Assets free and clear of any lien,
encumbrances or restric tions on transfer.
32.
(g) Certificate of President and Securityholders. Seller shall have
--------------------------------------------
delivered to Purchaser a certificate executed by its President and the
Securityholders, dated the date of the Closing, to the effect that the
conditions set forth in subsections (a), (b), (c) and (d) of this Section 7.1,
have been satisfied.
(h) Approval of Documentation. The form and substance of all
-------------------------
certificates, instruments, opinions, and other documents delivered or to be
delivered to Purchaser under this Agreement shall be satisfactory to Purchaser
and their counsel in all reasonable respects.
(i) Execution of Escrow Agreement. Purchaser shall have received
-----------------------------
fully executed copies of the Escrow Agreement.
(j) Licenses. Purchaser shall have received all licenses from all the
--------
appropriate governmental agencies necessary to operate the Business in the same
manner as Seller operated the Business prior to the Time of Closing.
(k) Third Party Consents. Seller and each Securityholder shall have
--------------------
obtained all third party consents and approvals and assignments to all Contracts
and all other instruments required to consummate the transactions contemplated
by this Agreement or as reasonably requested by counsel to Purchaser.
(l) Proprietary Agreements. All employees and consultants shall have
----------------------
entered into the Proprietary Information and Inventions Agreement in the form
attached hereto as Exhibit 6.2(e).
Section 7.2 Conditions to Obligations of Seller. Each and every
----------- -----------------------------------
obligation of Seller to be performed at the Time of Closing shall be subject to
the satisfaction as of or before such time of the following conditions (unless
waived in writing by Seller):
(a) Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement which are to be performed or complied with by
Purchaser shall have been fully performed and complied with at or prior to the
Time of Closing.
(b) Issuance of Permit. The California Department of Corporations
------------------
shall have issued a permit under Section 25121 of the California Corporate
Securities Law of 1968, as amended, covering the issuance of the Purchase Shares
following a fairness hearing conducted pursuant to Section 25142 of the
California Corporate Securities Law.
(c) Execution of Escrow Agreement. Purchaser shall have received
-----------------------------
fully executed copies of the Escrow Agreement.
33.
(d) Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any body or agency
of the federal, state, or local government or by any third party, and the
consummation of the transaction shall not have been enjoined by a court of
competent jurisdiction as of the Time of Closing.
(e) Third Party Consents. Seller and each Securityholder shall have
--------------------
obtained all third party consents and approvals and assignments to all Contracts
and all other instruments required to consummate the transactions contemplated
by this Agreement and the Escrow Agreement or as reasonably requested by counsel
to Purchaser.
ARTICLE VIII
------------
INDEMNIFICATION
---------------
Section 8.1 Survival of Representations, Warranties, Covenants and
----------- ------------------------------------------------------
Agreements.
----------
(a) Notwithstanding any investigation conducted at any time with
regard thereto by or on behalf of any party, all representations, warranties,
covenants, and agreements of Seller and Securityholder shall survive the
execution, delivery, and performance of this Agreement. All representations and
warranties of Seller and Securityholder set forth in this Agreement shall be
deemed to have been made again by Seller and Securityholder at and as of the
Closing.
(b) As used in this Article VIII, except as otherwise indicated in
this Article VIII, any reference to a representation, warranty, agreement, or
covenant contained in any section of this Agreement shall include the schedule
relating to such section.
Section 8.2 Seller and Securityholder Indemnification.
----------- -----------------------------------------
(a) Seller and each of the Securityholders hereby agree, jointly
and severally, to indemnify and hold harmless Purchaser and its officers,
directors and other affiliates against any and all losses, liabilities, damages,
demands, claims, suits, actions, judgments, and causes of action, assessments,
costs, and expenses, including, without limitation, interest, penalties,
attorneys' fees, any and all expenses incurred in investigating, preparing, and
defending against any litigation, commenced or threatened, and any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation (collectively, "Damages"), asserted against, resulting from, imposed
upon, or incurred or suffered by Purchaser or its officers, directors and other
affiliates, directly or indirectly, as a result of or arising from (1) any
inaccuracy in or breach or nonfulfillment of any of the representations,
warranties, covenants, or agreements made by any of the
34.
Securityholders or Seller in this Agreement or the Escrow Agreement or any facts
or circumstances constituting such an inaccuracy, breach, or nonfulfillment (all
of which, including those set forth in clause (2) below, shall be referred to as
"Seller and Securityholder Identifiable Claims"), or (2) any of the following
(without giving effect to any of the disclosures or qualifications set forth in
this Agreement, any accompanying schedule, exhibit, certificate or the
Disclosure Letter):
(i) Any handling, discharge, disposal, release, or storage of
any hazardous or toxic substances, wastes or materials by Seller, any
Securityholder, any predecessor of Seller or such Securityholder or any other
third party with respect to any of the properties owned, occupied or leased by
Seller or either Securityholder occurring prior to the Closing;
(ii) Any litigation or claim arising from actions or
inactions of Seller prior to the Time of Closing;
(iii) Any Damages incurred by Seller or the Business, or
arising out of or related to the activities of Seller or services or assets
provided by or products delivered to or by Seller, prior to the Closing;
(iv) Taxes imposed on Purchaser or its affiliates for periods
ending on or prior to the Closing and for portions through the Closing of
periods beginning prior to the Closing and ending after the Closing (including,
without limitation, any deferred Tax liability, any Tax liability arising from
the transactions contemplated in this Agreement and the Escrow Agreement, or any
other transaction entered into or consummated prior to the Closing), including,
without limitation, any liability arising out of or related to any returns filed
prior to the Time of Closing;
(v) Any Liabilities of the Securityholders or Seller imposed
upon Purchaser as transferee of the Assets or otherwise, including, without
limitation, any liability arising out of any Lien or any obligation or claim
brought by creditors of Seller or claims based on the premise that the sale of
the Assets did not comply with any bulk sales provisions and any liability
arising out of obligations to Seller's employees (including, without limitation,
any obligations under any employee benefit, profit sharing, or pension or
welfare plan) or out of Seller's status as employer of its employees;
(vi) Any amounts paid or payable by Purchaser after the Time of
Closing with respect to any Liabilities of Seller, which have not been paid in
full by Seller following twenty (20) days' notice from Purchaser to Seller of
the existence of such Liability and Purchaser's intention to pay in full such
Liability on behalf of Seller; and
35.
(b) Without limiting the foregoing, any amounts paid or payable by
Purchaser pursuant to this Agreement, the employee offer letters or the Escrow
Agreement shall be subject to a right of setoff by Purchaser or its affiliates
for any Damages incurred by Purchaser or its officers, directors or other
affiliates in connection with this Agreement or the Escrow Agreement.
Section 8.3 Procedure for Indemnification with Respect to Third-Party
----------- ---------------------------------------------------------
Claims.
------
(a) If the Purchaser or any affiliate of Purchaser determines to
seek indemnification (such party shall be referred to herein as an "Indemnified
Party") under this Article VIII with respect to Seller and Securityholder
Identifiable Claims (such Claims shall be referred to herein as "Identifiable
Claims") resulting from the assertion of liability by third parties, such
Indemnified Party shall give notice to the parties from which indemnification is
sought (such parties shall be referred to herein as "Indemnifying Parties")
within 60 days of such Indemnified Party becoming aware of any such Identifiable
Claim or of facts upon which any such Identifiable Claim will be based; the
notice shall set forth such material information with respect thereto as is then
reasonably available to such Indemnified Party. In case any such liability is
asserted against any Indemnified Party, and such Indemnified Party notifies the
Indemnifying Parties thereof, the Indemnifying Parties will be entitled, if such
Indemnifying Parties so elect by written notice delivered to such Indemnified
Party within 20 days after receiving such Indemnified Party's notice, to assume
the defense thereof with counsel selected by the Indemnifying Party, which
counsel shall be reasonably satisfactory to such Indemnified Party.
Notwithstanding the foregoing, (i) such Indemnified Party shall also have the
right to employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless such
Indemnified Party shall reasonably determine that there is a conflict of
interest between or among such Indemnified Party and any Indemnifying Party with
respect to such Identifiable Claim, in which case the fees and expenses of such
counsel will be borne by such Indemnifying Parties, (ii) none of the Indemnified
Parties shall have any obligation to give any notice of any assertion of
liability by a third party unless such assertion is in writing, and (iii) the
rights of the Indemnified Parties to be indemnified hereunder in respect of
Identifiable Claims resulting from the assertion of liability by third parties
shall not be adversely affected by their failure to give notice pursuant to the
foregoing unless, and, if so, only to the extent that, such Indemnifying Parties
are materially prejudiced thereby. With respect to any assertion of liability by
a third party that results in an Identifiable Claim, the parties hereto shall
make available to each other all relevant information in their possession
material to any such assertion.
(b) In the event that such Indemnifying Parties, within 20 days
after receipt of the aforesaid notice of an Identifiable Claim, fail to assume
the defense of such Indemnified Party against such Identifiable Claim, such
Indemnified Party shall
36.
have the right to undertake the defense, compromise, or settlement of such
action on behalf of and for the account, expense, and risk of such Indemnifying
Parties.
(c) Notwithstanding anything in this Article VIII to the contrary,
(i) if there is a reasonable probability that an Identifiable Claim may
materially adversely affect such Indemnified Party, such Indemnified Party shall
have the right to participate in such defense, compromise, or settlement and
such Indemnifying Parties shall not, without such Indemnified Party's written
consent (which consent shall not be unreasonably withheld), settle or compromise
any Identifiable Claim or consent to entry of any judgment in respect thereof
unless such settlement, compromise, or consent includes as an unconditional term
thereof the giving by the claimant or the plaintiff to such Indemnified Party a
release from all liability in respect of such Identifiable Claim.
Section 8.4 Procedure For Indemnification with Respect to Non-Third
----------- -------------------------------------------------------
Party Claims. In the event that any Indemnified Party asserts the existence of
------------
a claim giving rise to Damages (but excluding claims resulting from the
assertion of liability by third parties), it shall give written notice to the
Indemnifying Parties. Such written notice shall state that it is being given
pursuant to this Section 8.4, specify the nature and amount of the claim
asserted and indicate the date on which such assertion shall be deemed accepted
and the amount of the claim deemed a valid claim (such date to be established in
accordance with the next sentence). If such Indemnifying Parties, within 60
days after the mailing of notice by such Indemnified Party, shall not give
written notice to such Indemnified Party announcing its intent to contest such
assertion of such Indemnified Party, such assertion shall be deemed accepted and
the amount of claim shall be deemed a valid claim. In the event, however, that
such Indemnifying Parties contest the assertion of a claim by giving such
written notice to such Indemnified Party within said period, then the parties
shall act in good faith to reach agreement regarding such claim. If the parties
hereto, acting in good faith, cannot reach agreement with respect to such claim
within ten (10) days after notice thereof, such claim will be submitted to and
settled by arbitration pursuant to Section 9.11 hereof.
ARTICLE IX
----------
MISCELLANEOUS PROVISIONS
------------------------
Section 9.1 Notice. All notices and other communications required or
----------- ------
permitted under this Agreement shall be delivered to the parties at the address
set forth below their respective signature blocks, or at such other address that
they designate by notice to all other parties in accordance with this Section
9.1:
37.
If to Seller or
Securityholders: Atlantic Communication Sciences, Inc.
▇▇▇▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ P.A.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser: P-COM, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ Sophie
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
All notices and communications shall be deemed to have been received: (i) in
the case of personal delivery, on the date of such delivery; (ii) in the case of
telex or facsimile transmission, on the date on which the sender receives
confirmation by telex or facsimile transmission that such notice was received by
the addressee, provided that a copy of such transmission is additionally sent by
mail as set forth in (iv) below; (iii) in the case of overnight air courier, on
the second business day following the day sent, with receipt confirmed by the
courier; and (iv) in the case of mailing by first class certified or registered
mail, postage prepaid, return receipt requested, on the fifth business day
following such mailing.
Section 9.2 Entire Agreement. This Agreement, the exhibits and
----------- ----------------
schedules hereto, and the documents referred to herein embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and supersede all prior and contemporaneous agreements and
understandings, oral or written, relative to said subject matter.
Section 9.3 Binding Effect; Assignment. This Agreement and the
----------- --------------------------
various rights and obligations arising hereunder shall inure to the benefit of
and be binding upon
38.
Seller, its successors and permitted assigns, and Purchaser and their successors
and permitted assigns. Neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be transferred or assigned (by operation of law
or otherwise) by any of the parties hereto without the prior written consent of
the other party.
Section 9.4 Expenses of Transaction; Taxes. P-Com shall bear its own
----------- ------------------------------
costs and expenses in connection with this Agreement and the transactions
contemplated hereby for its own account and the Securityholders shall bear their
and the Seller's own costs and expenses in connection with this Agreement and
the transactions contemplated hereby. Seller shall pay all applicable sales,
use, transfer, documentary and other taxes arising out of the purchase and sale
of the Assets.
Section 9.5 Waiver; Consent. This Agreement may not be changed,
----------- ---------------
amended, terminated, augmented, rescinded, or discharged (other than by
performance), in whole or in part, except by a writing executed by the parties
hereto, and no waiver of any of the provisions or conditions of this Agreement
or any of the rights of a party hereto shall be effective or binding unless such
waiver shall be in writing and signed by the party claimed to have given or
consented thereto. Except to the extent that a party hereto may have otherwise
agreed in writing, no waiver by that party of any condition of this Agreement or
breach by the other party of any of its obligations or representations hereunder
or thereunder shall be deemed to be a waiver of any other condition or
subsequent or prior breach of the same or any other obligation or representation
by the other party, nor shall any forbearance by the first party to seek a
remedy for any noncompliance or breach by the other party be deemed to be a
waiver by the first party of its rights and remedies with respect to such
noncompliance or breach.
Section 9.6 Third-Party Beneficiaries. Except as otherwise expressly
----------- -------------------------
provided for in this Agreement, nothing herein, expressed or implied, is
intended or shall be construed to confer upon or give to any person, firm,
corporation, or legal entity, other than the parties hereto, any rights,
remedies, or other benefits under or by reason of this Agreement.
Section 9.7 Counterparts. This Agreement may be executed
----------- ------------
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
Section 9.8 Severability. If one or more provisions of this
----------- ------------
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
Section 9.9 Remedies of Purchaser. Each of the Seller and the
----------- ---------------------
Securityholders agree that the Assets are unique and not otherwise readily
available to Purchaser. Accordingly, Seller acknowledges that, in addition to
all other remedies to
39.
which Purchaser is entitled, Purchaser shall have the right to enforce the terms
of this Agreement by a decree of specific performance, provided Purchaser is not
in material default hereunder.
Section 9.10 Governing Law. This Agreement shall in all respects be
------------ -------------
construed in accordance with and governed by the laws of the State of California
without regard to the conflicts or choice of law provisions thereof.
Section 9.11 Arbitration; Attorneys' Fees.
------------ ----------------------------
(a) Any controversy between the parties hereto involving the
construction or application of any terms, covenants or conditions of this
Agreement or the Escrow Agreement, or any claims arising out of or relating to
this Agreement or the Escrow Agreement or the breach thereof will be settled by
arbitration in New York, New York, in accordance with the then current
Commercial Arbitration Rules of the American Arbitration Association (the
"AAA"), and judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof. Such arbitration shall be conducted
by three (3) arbitrators chosen by mutual agreement of the parties hereto, or
failing such agreement, an arbitrator appointed by the AAA. There shall be
limited discovery prior to the arbitration hearing as follows: (a) exchange of
witness lists and copies of documentary evidence and documents related to or
arising out of the issues to be arbitrated, (b) depositions of all party
witnesses, and (c) such other depositions as may be allowed by the arbitrators
upon a showing of good cause. Depositions shall be conducted in accordance with
the New York Code of Civil Procedure, the arbitrator(s) shall be required to
provide in writing to the parties the basis for the award or order of such
arbitrator(s), and a court reporter shall record all hearings, with such record
constituting the official transcript of such proceedings.
(b) In the event of arbitration filed or instituted between the
parties with respect to this Agreement or the Escrow Agreement, the prevailing
party will be entitled to receive from the other party all costs, damages and
expenses, including reasonable attorney's fees, incurred by the prevailing party
in connection with that action or proceeding whether or not the controversy is
reduced to judgment or award. The prevailing party will be that party who may
be fairly said by the arbitrator(s) to have prevailed on the major disputed
issues.
Section 9.12 Cooperation and Records Retention. Seller,
------------ ---------------------------------
Securityholder and Purchaser shall (i) each provide the other with such
assistance as may reasonably be requested by them in connection with the
preparation of any Tax return, statement, report, form or other document
(hereinafter collectively a "Tax Return"), or in connection with any audit or
other examination by any taxing authority or any judicial or administrative
proceedings relating to liability for Taxes, (ii) each retain and provide the
other, with any records or other information which may be relevant to any such
Tax Return, audit or examination, proceeding or determination, and (iii) each
provide the
40.
other with any final determination of any such audit or examination, proceeding
or determination that affects any amount required to be shown on any Tax Return
of the other for any period. Without limiting the generality of the foregoing,
Seller (and, after Seller's dissolution, Securityholders) and Purchaser shall
retain, until the applicable statute of limitations (including any extensions)
have expired, copies of all Tax Returns, supporting work schedules and other
records or information which may be relevant to such Tax Returns for all tax
periods or portions thereof ending before or including the Time of Closing and
shall not destroy or otherwise dispose of any such records without first
providing the other party with a reasonable opportunity to review and copy the
same. Seller (and, after Seller's dissolution, Securityholders) shall keep the
original copies of such records, as well as all books of accounts, general
ledgers, sales invoices, accounts payable and payroll records, drawings, files,
papers, and all other records (the "Records") at its facility in Florida and, at
Seller's (and, after Seller's dissolution, Securityholders) expense, shall
promptly provide complete copies of the Records to Purchaser upon Purchaser's
request and shall make all Records available for inspection at any time upon
Purchaser's request.
41.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
P-COM, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ Sohpie
------------------
▇▇▇▇▇▇▇ Sophie
Vice President, Finance and Administration
and Chief Financial Officer
ATLANTIC COMMUNICATION SCIENCES, INC.,
a Florida corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
42.
SIGNATORIES
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
KOOS TECHNICAL SERVICES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
Title: President
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------
▇▇▇▇▇ ▇. ▇▇▇▇
43.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ TRUST, U/A DATED JUNE 22, 1988
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Grantee and Trustee
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ REVOCABLE TRUST, U/A DATED JUNE
18, 1991
By: /s/ L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
L. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
44.
EXHIBIT 3.2(b)
ESCROW AGREEMENT
ESCROW AGREEMENT
----------------
This Agreement is made and entered into on this 26th day of August,
1996, by and among P-COM, Inc., a Delaware corporation ("Purchaser"), Atlantic
Communication Sciences, Inc., a Florida corporation ("Seller") and the
individuals and other entities listed on the signature pages hereto
(collectively, the "Shareholders"). Capitalized terms used herein that are not
otherwise defined shall have the meanings set forth in the Asset Purchase
Agreement (as defined below).
WITNESSETH:
WHEREAS, the parties have entered into that certain Asset Purchase
Agreement dated as of August 2, 1996 (collectively, with all schedules, letters,
exhibits and certificates referred to therein, the "Asset Purchase Agreement")
pursuant to which Seller will sell and Purchaser will purchase the Assets
relating to the Business of Seller (the "Asset Purchase"); and
WHEREAS, the Assets Purchase Agreement provides that at the Closing,
certain shares of Purchaser's Common Stock to be issued as part of the Purchase
Price paid to the Seller or the Shareholders in the Asset Purchase will be
deposited in escrow with Purchaser pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained in the Asset Purchase Agreement and herein, the parties agree as
follows:
ARTICLE I
Escrow and Escrow Shares
------------------------
1.1 Delivery. Pursuant to the Asset Purchase Agreement, the
--------
Secretary of Purchaser (the "Escrow Agent") shall hold in escrow upon the
Closing of the Asset Purchase, stock certificates representing an aggregate of
41,500 shares of Purchaser's Common Stock (the "Escrow Shares"). Concurrently
herewith, each of the Shareholders shall execute and deliver to the Escrow Agent
one (1) blank stock power with respect to the Escrow Shares.
ARTICLE II
Escrow Agreement
----------------
2.1 Duties of Escrow Agent; Distribution of Escrow Shares. The
-----------------------------------------------------
Escrow Agent is hereby authorized and directed to hold the Escrow Shares as
agent for Purchaser and the Shareholders and to distribute the Shares, subject
to Section 2.2 of this Agreement, upon receipt of notice and instructions from
Purchaser, in accordance with the following provision:
(i) Subject to the satisfaction of certain milestones set forth
in Schedule A, the Escrow Shares shall be delivered to the Shareholders in the
----------
amounts and upon the dates set forth in Schedule A. Any Escrow Shares delivered
----------
to the Shareholders pursuant to this Section 2.1(i) shall be delivered within
twenty (20) days following the date upon which the completion of the relevant
milestone is determined.
2.2 Release of Escrow Shares.
------------------------
(i) Notwithstanding any section of this Agreement, the provisions
set forth in this Section 2.2 shall apply with respect to the release of the
Escrow Shares as well as to the issuance of Contingent Shares pursuant to the
Asset Purchase Agreement. If there are existing on any date on which Escrow
Shares are to be released to the Shareholders hereunder (a "Release Date"), any
Indemnifiable Amounts (as defined herein) due and owing to Purchaser and/or its
affiliates, the Escrow Agent shall upon five (5) days' prior notice from the
Purchaser, cause that number of Escrow Shares with a fair market value equal to
the closing bid price of the Common Stock of Purchaser as reported by the Nasdaq
NMS or any similar exchange on the date such written notice is provided to the
Escrow Agent (the "Share Value") sufficient to fully cover such Indemnifiable
Amounts (the "Excluded Shares") to be deducted from the amount of Escrow Shares
otherwise transferrable to the Shareholders on such Release Date and instead
transfer such Excluded Shares to Purchaser to be cancelled, and all right,
title, and interest of the Shareholders in and to such Excluded Shares shall
immediately terminate. In the event that the Indemnifiable Amount is greater
than the Share Value of the Excluded Shares, all excess and unsatisfied
Indemnifiable Amount shall be applied against any shares of Common Stock to be
released on any future Release Date or contingency date, if any, in accordance
with the terms of this Agreement and the Asset Purchase Agreement. Purchaser
shall use its best efforts to notify Seller of any anticipated Indemnifiable
Amounts known to Purchaser at least ten (10) days prior to the relevant Release
Date; however, Purchaser's right to the Indemnifiable Amounts shall not be
invalidated by failure to so notify Seller.
(ii) If, on a Release Date, (a) there are Escrow Shares remaining
in escrow, (b) there are Damages suffered or to be suffered by Purchaser
and/or its affiliates and (c) such Damages may be equal to or greater than the
aggregate Share Value of the then existing Escrow Shares, then such Escrow
Shares shall not be released until a determination is made as to whether such
Damages are Indemnifiable Amounts. Upon such determination, the Escrow Agent
shall release the Escrow Shares that were to be released on such date to the
parties in accordance with such determination, pursuant to subsections (iii),
(iv), (v) and (vi) hereof. In the event that the amount of Damages determined
to be an Indemnifiable Amount is greater than the Share Value of the total
number of shares of Common Stock otherwise transferrable on such Release Date,
all excess and unsatisfied Indemnifiable Amount shall be applied against any
shares of Common Stock to be released on any future Release Dates or contingency
dates, if any, in accordance with the terms of this Agreement and the Asset
Purchase Agreement;
(iii) If, following such Release Date, any Damages are
determined not to be Indemnifiable Amounts, the Escrow Agent shall release all
Escrow Shares transferrable on such Release Date to the Shareholders as soon as
possible after such determination is made;
(iv) If, following such Release Date, any Damages are
determined to be Indemnifiable Amounts, the Escrow Agent shall cause the
requisite number of Excluded Shares to be deducted from the amount of Escrow
Shares otherwise transferrable to the Shareholders and instead transfer such
Excluded Shares to Purchaser to be cancelled, and all right, title, and interest
of the Shareholders in and to such Excluded Shares shall immediately terminate.
The remaining Escrow Shares to be released on such Release Date, if any, as so
reduced by the number of the Excluded Shares, shall then be released to the
Shareholders as soon as possible after such determination is made; and
(v) If, following such Release Date, there are Damages that
have not been determined in good faith to be Indemnifiable Amounts and such
Damages claimed to be suffered by Purchaser and/or its affiliates are less than
the aggregate Share Value of the Escrow Shares to be released on such Release
Date, the Escrow Agent shall release the Escrow Shares reduced by such number of
shares with an aggregate Share Value sufficient to cover the claimed Damages, to
the Shareholders.
(vi) Unless otherwise directed, the use of Escrow Shares for
indemnification hereunder shall be in proportion to the respective interests
therein among the registered holders of the Escrow Shares as set forth in
Schedule A hereto.
----------
ARTICLE III
Indemnification
---------------
3.1 Indemnification. The Escrow Shares shall serve as collateral in
---------------
part for the indemnity obligations of Seller and the Shareholders set forth in
the Asset Purchase Agreement for any and all amounts determined by a court, by
arbitration or otherwise to be payable or owing to Purchaser and/or its
affiliates for Damages under the provisions and procedures of the Asset Purchase
Agreement (collectively, "Indemnifiable Amounts").
3.2 Ownership of Escrow Shares; Voting Rights. The Shareholders
-----------------------------------------
shall have all indicia of ownership of the Escrow Shares while they are held in
escrow, including, without limitation, the right to vote the Escrow Shares and
receive distribu tions thereon and the obligations to pay all taxes,
assessments, and charges with respect thereto, but excluding the right to sell
any Escrow Shares or transfer any rights or interests in the Escrow Shares;
provided that any distribution, other than cash and taxable stock dividends
(which dividends shall be paid to the Shareholders), on or with respect to the
Escrow Shares and any other shares or securities into which such Escrow Shares
may be changed or for which they may be exchanged pursuant to corporate action
of Purchaser affecting holders of Purchaser's Common Stock generally shall be
delivered to and held by the Escrow Agent and treated as included within the
term "Escrow Shares," and shall be subject to the indemnity and escrow
provisions of this Agreement.
3.3 Arbitration. Any controversy involving an Identifiable Claim by
-----------
Purchaser and/or its affiliates pursuant to this Article III shall be finally
settled by arbitration in New York, New York in accordance with the then current
Commercial Arbitration Rules of the American Arbitration Association (the
"AAA"), and judgment upon the award rendered by the arbitrators may be entered
in any court having jurisdiction thereof. Such arbitration shall be conducted
by three (3) arbitrators chosen by mutual agreement of the parties hereto, or
failing such agreement, an arbitrator appointed by the AAA. There shall be
limited discovery prior to the arbitration hearing as follows: (a) exchange of
witness lists and copies of documentary evidence and documents related to or
arising out of the issues to be arbitrated, (b) depositions of all party
witnesses, and (c) such other depositions as may be allowed by the arbitrators
upon a showing of good cause. Depositions shall be conducted in accordance with
the New York Code of Civil Procedure, the arbitrator(s) shall be required to
provide in writing to the parties the basis for the award or order of such
arbitrator(s), and a court reporter shall record all hearings, with such record
constituting the official transcript of such proceedings.
ARTICLE IV
Authority and Indemnification
-----------------------------
4.1 Authority. Upon consummation of the Asset Purchase and in
---------
consideration of the issuance of the Escrow Shares, the Shareholders and
Purchaser shall be deemed to have irrevocably appointed the Secretary of
Purchaser as the Escrow Agent to hold all of the Escrow Shares until their
release in accordance with this Agreement. If the current Secretary no longer
holds such office, the Shareholders and Purchaser by executing this Agreement
shall be deemed to have irrevocably appointed a new secretary as the successor
escrow agent.
4.2 Indemnity. The Escrow Agent shall not be liable to anyone
---------
whatsoever by reason of the release of Escrow Shares to Purchaser at any time or
failure to release Escrow Shares to the Shareholders on the Release Date, where
such release or failure to release resulted from (i) a final determination by a
court or by arbitration, which determination is not appealed, or (ii) joint
written instructions from both the Shareholders and Purchaser. The Shareholders
and Purchaser shall, jointly and severally, indemnify and hold the Escrow Agent
harmless from any and all liability and expense (including, without limitation,
counsel fees) which may arise out of any action taken or omitted by him as an
Escrow Agent in accordance with this Agreement, as the same may be amended,
modified or supplemented.
4.3 Reliance. The Escrow Agent shall be entitled to treat as
--------
genuine, and as the document it purports to be, any letter, paper, facsimile,
telex, or other document furnished or caused to be furnished to it by any party
to this Agreement and believed by it to be genuine and to have been telexed,
telegraphed, faxed, or cabled or signed and presented by any party to this
Agreement. The Escrow Agent may consult with independent counsel with respect
to the Escrow Agent's duties hereunder, and shall be fully protected in respect
to any action taken or suffered by the Escrow Agent.
4.4 Legal Compliance. The Escrow Agent is hereby authorized and
----------------
directed to disregard any and all notices and warnings that may be given by any
person, firm or corporation except (a) a final order, determination, or award of
an arbitrator pursuant to Section 3.3 hereof or (b) a final order, judgment or
decree of any court made, filed, entered or issued, whether with or without
jurisdiction, from which no further appeal may be taken, and the Escrow Agent is
hereby authorized to comply with and obey any and all such final orders,
determinations, awards, judgments and decrees of any such arbitrator or court.
If the Escrow Agent shall comply with or obey any such order, determination,
award, judgment or decree of any such arbitrator or court, he shall not be
liable to any of the parties hereto, or to any other person, firm, association
or corporation, by reason of any such compliance or obedience even if any such
order,
determination, award, judgment or decree may be subsequently revised, modified,
annulled, set aside or vacated.
ARTICLE V
Miscellaneous
-------------
5.1 Notices. Any notice or other communication required or permitted
-------
to be given to the parties hereto shall be deemed to have been given if
personally delivered (including personal delivery by facsimile), or two days
after mailing by certified or registered mail, return receipt requested, first
class postage prepaid, addressed as follows (or at such other address as the
addressed party may have substituted by notice pursuant to this Section 5.1):
If to Seller or
Shareholders: Atlantic Communication Sciences, Inc.
▇▇▇▇-▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, ▇.▇.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser: P-COM, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Two Embarcadero Place
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
5.2 Termination. This Agreement shall terminate upon the earlier of
-----------
(a) the mutual written express agreement of Purchaser and the Shareholders or
(b) when all of the Escrow Shares (together with any applicable stock power(s))
have been distributed according to its terms.
5.3 Interpretation. The validity, construction, interpretation and
--------------
enforcement of this Agreement shall be determined and governed by the laws of
the State of California without regard to the conflicts or choice of law
provisions thereof. The invalidity or unenforceability of any provision of this
Agreement or the invalidity or unenforceability of any provision as applied to a
particular occurrence or circumstance shall not affect the validity or
enforceability of any of the other provisions of this Agree ment or the
applicability of such provision, as the case may be. All provisions of the
Asset Purchase Agreement shall be incorporated herein by reference as if set
forth in their entirety herein.
5.4 Waiver; Amendment. This Agreement or any provision herein may
-----------------
not be changed, amended, terminated, augmented, rescinded, or discharged (other
than by performance), in whole or in part, except by a writing executed by the
parties hereto, and no waiver of any of the provisions or conditions of this
Agreement or any of the rights of a party hereto shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have
given or consented thereto. Except to the extent that a party hereto may have
otherwise agreed in writing, no waiver by that party of any condition of this
Agreement or breach by the other party of any of its obligations or
representations hereunder or thereunder shall be deemed to be a waiver of any
other condition or subsequent or prior breach of the same or any other
obligation or representation by the other party, nor shall any forbearance by
the first party to seek a remedy for any noncompliance or breach by the other
party be deemed to be a waiver by the first party of its rights and remedies
with respect to such noncompliance or breach.
5.5 Attorneys' Fees; Remedies. If any action at law or in equity
-------------------------
(including arbitration as required pursuant to Section 3.3 hereof) is necessary
to enforce or interpret the terms of this Agreement or to protect the rights
obtained hereunder, the prevailing party shall be entitled to its reasonable
attorneys' fees, costs, and disbursements in addition to any other relief to
which it may be entitled. The rights and remedies of the parties under this
Agreement, the Asset Purchase Agreement and the other Related Agreements and all
other letters, certificates or documents executed in connection herewith and
therewith are cumulative and not exclusive of any rights, remedies, powers and
privileges that may otherwise be available to the parties hereto.
5.6 Counterparts. This Agreement may be signed in one or more
------------
counterparts, each of which shall be deemed an original and all of which shall
constitute one agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement on the day
and year first above written.
P-COM, INC.
By:/s/ ▇▇▇▇▇▇▇ Sophie
------------------
▇▇▇▇▇▇▇ Sophie
Chief Financial Officer,
Vice President, Finance and
Administration and Controller
ATLANTIC COMMUNICATION SCIENCES, INC.,
a Florida corporation
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
SIGNATORIES
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
---------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
KOOS TECHNICAL SERVICES, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
------------------------
Title: President
---------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-----------------
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ TRUST, U/A DATED JUNE 22, 1988
By:/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, as Grantee and Trustee
▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ REVOCABLE TRUST, U/A DATED JUNE 18,
1991
By:/s/ L. ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------
L. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
By:/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Trustee
SCHEDULE A
ACS STOCKHOLDER OBJECTIVES
FIRST YEAR OBJECTIVES:
---------------------
STOCKHOLDER'S PAYMENT COMPLETION PROVISOS
MILESTONES (ESCROWED DATE
SHARES)
$5.25M of Sales 36,000 First 12-Mo Pro-rated
of ACS Products period following
Closing date
Completion of the Model 5,500 By May 1, 1997 50% for Modem
500 Modem and 5.7 GHz 50% for RF Unit
RF Unit
EXHIBIT 4.1(d)
FORM OF AFFILIATES AGREEMENT
AVAILABLE UPON REQUEST
EXHIBIT 6.2(a)
▇▇▇▇ OF SALE
AVAILABLE UPON REQUEST
EXHIBIT 6.2(b)
OPINION OF ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇, P.A., counsel to Seller
AVAILABLE UPON REQUEST
EXHIBIT 6.2(d)
FORM OF OFFER LETTER
FOR KEY EMPLOYEES AND OTHER EMPLOYEES AND CONSULTANTS
AVAILABLE UPON REQUEST
EXHIBIT 6.2(e)
FORM OF PROPRIETARY INFORMATION
AND INVENTIONS AGREEMENT
AVAILABLE UPON REQUEST
EXHIBIT 6.2(g)
ASSIGNMENT AND ASSUMPTION OF THE CONTRACTS
AVAILABLE UPON REQUEST
SCHEDULE 1.1(a)
LIST OF RELATED PROPERTY
AVAILABLE UPON REQUEST
SCHEDULE 1.1(b)
LIST OF INVENTORY
AVAILABLE UPON REQUEST
SCHEDULE 1.1(c)
LIST OF CONTRACTS
SCHEDULE 1.1(d)
LIST OF GOVERNMENTAL PERMITS
AVAILABLE UPON REQUEST
SCHEDULE 1.1(e)
LIST OF INTELLECTUAL PROPERTY RIGHTS
AVAILABLE UPON REQUEST
SCHEDULE 1.1(f)
LIST OF ACCOUNTS RECEIVABLE
AVAILABLE UPON REQUEST
SCHEDULE 1.1(j)
LIST OF LEASEHOLD INTERESTS
AVAILABLE UPON REQUEST
SCHEDULE 1.2
LIST OF EXCLUDED ASSETS
AVAILABLE UPON REQUEST
SCHEDULE 2.1
LIST OF ASSUMED LIABILITIES
AVAILABLE UPON REQUEST
SCHEDULE 3.2(b)
DESCRIPTION OF MILESTONES
ACS STOCKHOLDER OBJECTIVES
FIRST YEAR OBJECTIVES:
--------------------------
STOCKHOLDER'S PAYMENT COMPLETION PROVISOS
MILESTONES (ESCROWED DATE
SHARES)
$5.25M of Sales 36,000 First 12-Mo Pro-rated
of ACS Products period
following Closing
date
Completion of the Model 5,500 By May 1, 1997 50% for Modem
500 Modem and 5.7 GHz 50% for RF Unit
RF Unit
SECOND YEAR OBJECTIVES:
--------------------------
STOCKHOLDER'S PAYMENT COMPLETION DATE
MILESTONES (1) (ESCROWED
SHARES)
Completion of the Model 16,500 Second 12-mo period
1000 Modem following Closing Date
(Non-Spread, QAM,
P-COM RFU Interface)
THIRD YEAR OBJECTIVES:
---------------------
STOCKHOLDER'S PAYMENT COMPLETION DATE
MILESTONES (1) (ESCROWED
SHARES)
Completion of a 16,500 Third 12-mo period
Point-to-Multipoint Modem following Closing Date
for operation with a 28 GHz
RF Unit
NOTES:
1. Milestones can be changed subject to mutual consent by P-COM and the
majority of the ACS stockholders. Completion refers to release to
production manufacturing.
SCHEDULE 4.1
DISCLOSURE LETTER
AVAILABLE UPON REQUEST
SCHEDULE 4.1(b)
LIST OF STOCKHOLDERS
AVAILABLE UPON REQUEST
SCHEDULE 4.1(d)
LIST OF AFFILIATES
AVAILABLE UPON REQUEST
SCHEDULE 4.1(v)
LIST OF EMPLOYEES
AVAILABLE UPON REQUEST
SCHEDULE 4.1(ad)
LIST OF CUSTOMERS
AVAILABLE UPON REQUEST
SCHEDULE 4.1(ae)
LIST OF SUPPLIERS
AVAILABLE UPON REQUEST
SCHEDULE 4.1(aj)
LIST OF INSURANCE POLICIES
AVAILABLE UPON REQUEST
SCHEDULE 4.1(ak)
LIST OF ENVIRONMENTAL MATTERS
AVAILABLE UPON REQUEST
SCHEDULE 4.1(al)
BACKLOG OF ORDERS
AVAILABLE UPON REQUEST
