EXHIBIT 10.105
SETTLEMENT AGREEMENT
AND RELEASE OF CLAIMS
This Settlement Agreement and Release of Claims (this "Agreement") is
entered into as of the 10/th/ day of July, 2002, by and between REMEC, Inc., a
California corporation, REMEC Wireless, Inc., a California corporation, REMEC
Manufacturing Philippines, Inc., a Philippines company (REMEC Inc., REMEC
Wireless, Inc. and REMEC Manufacturing Philippines, Inc., individually or
collectively, as the context provides, being "REMEC"), P-Com, Inc., a Delaware
corporation, and P-Com Italia S.p.A., an Italian corporation (P-Com, Inc. and
P-Com Italia S.p.A individually or collectively, as the context provides, being
"P-Com"). The term "Parties" shall be used to refer to REMEC and P-Com
collectively. The term "Party" shall be used to refer to any of REMEC, Inc.,
REMEC Wireless, Inc., REMEC Manufacturing Philippines, Inc., P-Com, Inc. or
P-Com Italia S.p.A. individually.
RECITALS
WHEREAS, on August 10, 1995, P-Com and REMEC entered into a
Manufacturing Agreement pursuant to which REMEC agreed to manufacture, sell and
deliver to P-Com, and P-Com agreed to purchase and accept from REMEC, Outdoor
Units ("XXXx") and Intermediate Frequency Modules ("IFMs") in the quantities and
at the prices specified therein; and
WHEREAS, on August 11, 1997, P-Com and REMEC entered into a Phase II
ODU and IFM Mutual Purchase Order Agreement (the "Phase II Agreement") for
10,000 23 GHz XXXx and 20,000 IFMs to be delivered during the period from
January 1, 1997 through December 31, 1998; and
WHEREAS, under the terms of the Phase II Agreement, P-Com agreed to
provide REMEC with a monthly rolling six-month forecast of P-Com's ODU and IFM
requirements (the "Rolling Forecast") that served as authorization for REMEC to
purchase material; and
WHEREAS, under the terms of the Phase II Agreement, REMEC was
obligated to maintain an inventory stock level of specified modules to permit
assembly, test and delivery of 500 each of any of several ODU configurations
(the "Inventory Stock Level") and work-in-process that did not exceed another
500 units of such modules (the "WIP"); and
WHEREAS, under the terms of the Phase II Agreement, in addition to the
Inventory Stock Level and the WIP, REMEC was authorized to procure certain
components with long procurement lead times to achieve specified inventory
levels (the "Long-Lead Material"); and
WHEREAS, on February 17,1998, P-Com and REMEC entered into a
Memorandum of Understanding pursuant to which P-Com agreed to award REMEC a
contract for an additional 10,000 XXXx to be delivered during a one year period;
and
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WHEREAS, on June 2, 1998, P-Com sent REMEC the June 1998 Rolling
Forecast with projected releases totaling 3,500 XXXx and 2,300 IFMs between June
and November, 1998; and
WHEREAS, on July 17, 1998, P-Com sent REMEC the July 1998 Rolling
Forecast with a lower six-month forecast, reducing XXXx by 2,250 to 1,250 and
IFMs by 1,950 to 350; and
WHEREAS, REMEC had purchased and has been storing a significant amount
of unused material associated with the Inventory Stock Level, WIP and Long-Lead
Material (together, the "Excess Material Inventory") as a result of the
reduction in actual orders from the orders projected by P-Com in the June 1998
Rolling Forecast; and
WHEREAS, the Parties have recognized (and P-Com has acknowledged)
P-Com's liability to REMEC for the cost of the Excess Material Inventory, and
despite the Parties' efforts to resolve this liability in a mutually
satisfactory manner and use the excess inventory on new orders, the liability
for the Excess Material Inventory is currently US$1,552,046 (the "Excess
Material Liability"); and
WHEREAS, P-Com, Inc. has a net account receivable owed to REMEC of
US$91,307.00 and P-Com Italia S.p.A. has a net account receivable owed to REMEC
of US$88,650.00; and
WHEREAS, a dispute has arisen between the Parties regarding the amount
of payments owed to REMEC for such products and services and REMEC has claims
against P-Com exceeding US$3 Million arising from these matters; and
WHEREAS, REMEC Manufacturing Philippines, Inc. purchased from the
distributor of Agilent certain ATF13336 transistors manufactured by Agilent on
behalf of P-Com Italia S.p.A. (the "Transistor Sale" and such transistors being
the "Agilent Transistors") for a purchase price of US$47,560, P-Com Italia
S.p.A. has returned such transistors to REMEC Manufacturing Philippines, Inc.,
and REMEC Manufacturing Philippines, Inc. and P-Com Italia S.p.A. previously
settled the dispute related to such transistors; and
WHEREAS, REMEC and P-Com desire to settle and release any and all
claims (including any and all claims arising out of or in any way connected with
the Transistor Sale to the extent not previously settled or released) and
amounts due arising out of or in any way connected with the matters described
above or arising out of or in any way connected with any other matters between
or among the Parties related to the purchase, sale or provision of any Covered
Products, Services and Commitments (as defined below), in each case, on and
subject to the terms provided herein.
WHEREAS, REMEC has agreed to apply the settlement amount received
pursuant to this Agreement to purchase from Xxxxx McAfee Capital Partners, a
California limited liability company ("Xxxxx"), Xxxxx'x beneficial interest in
certain 4 1/4% Subordinated Convertible Notes due November 2002 and issued by
P-Com, Inc. (the "Notes"). REMEC has also agreed to the restructuring (the
"Restructuring") of the Notes
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(such Notes as restructured being the "Restructured Notes") as described in the
Letter of Intent set forth at Exhibit A hereto (the "Letter of Intent") and has
agreed to convert a portion of the Notes purchased from Xxxxx. It is understood
that Xxxxx will acquire the Xxxxx Notes (as defined below) from Alta Partners
Discount Convertible Arbitrage Holdings, Ltd. ("Alta") through the exercise of a
Purchase Option entered into between Xxxxx and Xxxx as of June 12, 2002 (the
"Purchase Option").
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein and the exchange of good and valuable consideration, the
Parties hereby agree as follows:
Section 1. Definitions. The following terms shall have the meanings
specified below:
(a) "Claims" means any and all claims, causes of action, rights,
obligations, debts, liabilities, accounts, liens, damages (whether general,
special, consequential, punitive or otherwise), losses and expenses of any kind
and nature whatsoever, whether known or unknown, foreseen or unforeseen, patent
or latent, suspected or unsuspected, contingent or unliquidated, which any Party
previously had, currently has or may have, arising from, accrued under, relating
to, or based upon any cause, matter or reason whatsoever relating to any and all
claims, causes of action, rights, obligations, debts, liabilities, liens,
damages, losses and expenses whether or not asserted, that either Party ever
had, now has or hereafter shall or may have arising out of or in any way
relating to the order, manufacture, supply and furnishing of the Covered
Products, Services and Commitments.
(b) "Covered Products, Services and Commitments" means (i) any and all
23 gigahertz modules, transistors, or any other products manufactured or
delivered by REMEC or ordered from REMEC under or pursuant to purchase orders
therefor given by P-Com to REMEC before the date hereof, (ii) any and all
services provided to P-Com by REMEC or to REMEC by P-Com before the date hereof
and (iii) any and all commitments or obligations made or incurred before the
date hereof by P-Com to purchase any modules, transistors or other products or
services from REMEC or made or incurred before the date hereof by REMEC to
purchase any modules, transistors or other products or services from P-Com.
(c) "Xxxxx Notes" means US$4,600,000 in aggregate principal amount of
beneficial interests held by Alta in the Notes.
(d) "DTC" means the Depository Trust Company, its nominees and their
respective successors.
(e) "Indenture" means that certain Indenture dated as of November 1,
1997, by and between P-Com, Inc., as issuer, and State Street Bank and Trust
Company of California, N.A., as trustee.
Section 2. Payment. Subject to the terms of this Agreement, P-Com agrees to
pay in settlement of the Claims the sum of US$2,618,063.28 (the "Settlement
Amount") in
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immediately available funds by wire transfer to the account and designee
designated by REMEC to P-Com in writing.
Section 3. Purchase and Conversion of Notes. Subject to the terms of this
Agreement, REMEC shall apply the Settlement Amount to the purchase by REMEC of
the Xxxxx Notes pursuant to a Note Purchase Agreement substantially in the form
set forth at Exhibit B to this Agreement (the "Note Purchase Agreement").
Immediately upon the purchase of the Xxxxx Notes, REMEC shall convert an
aggregate principal amount of US$2,300,000 of the Xxxxx Notes into Common Stock
(as defined below). The conversion price for such conversion shall be US$2.50
and REMEC shall, therefore, receive from P-Com, Inc. 920,000 shares of Common
Stock. Upon the purchase of the Xxxxx Notes, REMEC shall also consent to the
Restructuring by executing the Letter of Intent. REMEC and P-Com agree and
acknowledge that REMEC may not transfer any or all of the Xxxxx Notes, unless
the transferee of such transfer expressly agrees to be bound by the Letter of
Intent in respect of the Xxxxx Notes and that in such event the Letter of Intent
shall be freely assignable by REMEC to such transferee.
Section 4. Release of Claims.
(a) Notwithstanding the provisions of Section 1542 of the California
Civil Code, excepting the covenants, agreements, stipulations and provisions
contained in this Agreement, each Party to this Agreement does hereby, effective
only as of the Closing Date (as defined below), for itself, and on behalf of its
predecessors, successors, agents, employees, assigns, independent contractors,
attorneys, officers, directors, partners, stockholders, affiliated corporations,
subsidiaries and insurers release, acquit and forever discharge each other Party
and its predecessors, successors, agents, employees, assigns, independent
contractors, attorneys, officers, directors, partners, stockholders, affiliated
corporations, subsidiaries and insurers of and from any and all Claims (as
defined), as limited by Section 11(a) below.
(b) The Parties further acknowledge that they each have been informed
of the provisions of Section 1542 of the Civil Code of the State of California
and do hereby expressly waive and relinquish all rights and benefits that they
have or may have had under said Section, which reads as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
(c) The Parties understand and acknowledge the significance and
consequences of a waiver of Section 1542, and hereby assume full responsibility
for any injuries, damages or losses that they may incur as a result of the
execution of this Agreement.
(d) The Parties acknowledge that they are aware that they may
hereafter discover facts different from or in addition to those they now know or
believe to be true with respect to the claims, causes of action, rights,
obligations, debts, liabilities, accounts,
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liens, damages, losses and expenses herein released, and each agrees that the
within release shall be and remain in effect in all respects as a complete and
general release as to all matters released herein, notwithstanding any such
different or additional facts.
(e) The Parties each agree that each will not make, assert or maintain
against any other Party released in this Agreement any claim, demand, action,
suit or proceeding arising out of or in connection with the matters respectively
released herein. This Agreement may be pleaded as a full and complete defense
to, and may be used as a basis for an injunction against any action, suit or
other proceeding which may be prosecuted, instituted or attempted by or on
behalf of any Party hereto in breach of this Agreement.
Section 5. Closing. The closing of the transactions contemplated by this
Agreement shall take place at the offices of Xxxxxx Xxxxxx White & XxXxxxxxx
LLP, 000 Xxxx Xxxxxx, Xxx Xxxxxxxxx, XX 00000-0000, at 10:00 a.m. (local time),
on July 11, 2002, or at such other time and place as REMEC and P-Com mutually
agree upon, orally or in writing (such time and place being the "Closing" and
the date on which the Closing takes place being the "Closing Date"). At the
Closing, (a) P-Com shall deliver to REMEC the Settlement Amount, (b) REMEC shall
deliver to P-Com the Letter of Intent, and (c) the release of the Claims, as set
forth in Section 4 of this Agreement, shall become effective.
Section 6. Representations and Warranties of P-Com. P-Com, jointly and
severally, represent and warrant to REMEC as follows, as of the date hereof and
as of the Closing Date:
(a) Organization and Good Standing. P-Com, Inc. is a corporation duly
organized, validly existing and in good standing under, and by virtue of, the
laws of the State of Delaware, and has all requisite corporate power and
authority to carry on its business as now conducted. P-Com Italia S.p.A is a
corporation duly organized, validly existing and in good standing under, and by
virtue of, the laws of Italy, and has all requisite corporate power and
authority to carry on its business as now conducted.
(b) Authorization. All corporate action on the part of P-Com, Inc.
and/or P-Com Italia S.p.A., and of their respective officers, directors and
shareholders, necessary for (i) the authorization, execution and delivery of
this Agreement by P-Com, Inc. and P-Com Italia S.p.A., (ii) the performance of
all of obligations of P-Com, Inc. and/or P-Com Italia S.p.A. under this
Agreement, and (iii) the authorization, issuance and delivery of the shares of
P-Com, Inc.'s capital stock issuable on conversion of the Xxxxx Notes, has been
taken. This Agreement, when executed and delivered by P-Com, will constitute
valid and binding obligations of P-Com, Inc. and P-Com Italia S.p.A.,
enforceable in accordance with its terms.
(c) Capitalization. The authorized capital of P-Com, Inc. consists, or
will consist, immediately prior to the Closing, of:
(i) 2,000,000 shares of Preferred Stock of P-Com, Inc., par
value US$0.0001 per share (the "Preferred Stock"), of which none are
outstanding.
(ii) 69,000,000 shares of Common Stock of P-Com, Inc., par value
US$0.0001 per share (the "Common Stock"), 30,021,384 shares of which are issued
and
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outstanding immediately prior to the Closing. All of the outstanding shares of
Common Stock have been duly authorized, fully paid and are nonassessable and
issued in compliance with all applicable federal and state securities laws.
(iii) Except for warrants for 750,000 shares of Common Stock
issued to Silicon Valley Bank in connection with a loan transaction letter of
intent (without giving effect to the 1 for 5 reverse stock split effected by
P-Com, Inc. on June 27, 2002) and except as otherwise set forth in any SEC
Report (as defined below), there are no outstanding options, warrants, rights
(including conversion or preemptive rights and rights of first refusal or
similar rights) or agreements, orally or in writing, for the purchase or
acquisition from P-Com, Inc. of any shares of its capital stock.
(d) No Violation. None of the execution and delivery of this
Agreement, the transfer of the Xxxxx Notes as contemplated by the Note Purchase
Agreement, or the issuance of Common Stock upon the conversion of the Xxxxx
Notes (the "Conversion Shares"), nor any of the other transactions contemplated
hereby or thereby, or compliance with the provisions hereof or thereof, by
P-Com, Inc. and/or P-Com Italia S.p.A., will: (i) conflict with or result in any
breach of any provision of the Certificate of Incorporation, bylaws or other
charter documents of P-Com, Inc. and/or P-Com Italia S.p.A., (ii) violate any
order, writ, injunction, decree, statue, rule or regulation applicable to P-Com,
Inc. and/or P-Com Italia S.p.A. or by which any of its properties or assets may
be bound, or (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, or result in any
material change in, or give rise to any right of termination, cancellation,
acceleration, redemption or repurchase under, any of the material terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, contract, agreement or other instrument or obligation (including
any NASDAQ listing agreement) to which P-Com, Inc. and/or P-Com Italia S.p.A. is
a party or by which its properties or assets may be bound.
(e) Notes/Conversion Shares. The Xxxxx Notes were duly and validly
issued and are freely transferable by Alta or REMEC without restriction and
freely convertible, subject only to the terms of the Indenture, at the option of
REMEC. The Xxxxx Notes are now freely tradeable by Alta or REMEC without further
registration with the SEC and without the need to provide a Rule 144 legal
opinion. 1,840,000 shares of Common Stock have been duly and validly reserved
for the conversion of the Xxxxx Notes and upon issuance will be duly and validly
issued, fully paid, and non-assessable, will be free of any liens, restrictions
or encumbrances other than any liens or encumbrances created or imposed thereon
by the holders of the Xxxxx Notes and, if applicable, by any securities laws,
and will be represented by stock certificates free of any legends or, at the
option of REMEC, registered for the benefit of REMEC with DTC in a form free of
restrictive legends on the security position listing for the Common Stock
maintained by DTC. Upon the conversion of any or all of the Xxxxx Notes, the
Common Stock issued to REMEC Inc. shall be freely tradeable by REMEC, Inc. The
face amount of the Notes currently outstanding is US$29,300,000.
(f) Affiliates; Share Certificates. Neither Xxxxx nor Xxxx are
"affiliates" of P-Com, Inc., as such term is defined in Rule 144 of the
Securities Act of 1933 (an "Affiliate"). From the date that is 2 years prior to
the date of this Agreement until the date
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of this Agreement, no Affiliate has held, beneficially or legally, any portion
of the Xxxxx Note.
(g) SEC Filings. P-Com, Inc. has filed with the SEC all required
forms, reports, registration statements and documents required to be filed by it
with the SEC (collectively, all such forms, reports, registration statements and
documents are referred to in this Agreement as the "SEC Reports"). All the SEC
Reports complied as to form, when filed, in all material respects with the
applicable provisions of the Securities Act of 1933 and the Securities and
Exchange Act of 1934. As of their respective dates (except as subsequently
amended), none of the SEC Reports (including all exhibits and schedules thereto
and documents incorporated by reference therein), at the time they were filed
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Except
as disclosed in the SEC Reports, to the knowledge of P-Com, Inc., no director,
officer or stockholder of P-Com, Inc. has failed to comply with any filing
requirements under Section 13 or Section 16(a) of the Securities Exchange Act of
1934. At present there is no material information about P-Com not publicly
available which would be required to be disclosed in a material developments
section on Form S-3.
(h) NASDAQ Listing. The Common Stock is currently listed for trading
on the NASDAQ National Markets. To the extent any Common Stock is listed for
trading on the NASDAQ National Markets, the Conversion Shares will be listed for
trading on the NASDAQ National Market. Except as disclosed to REMEC by P-Com, no
threat of delisting has been received by P-Com.
(i) Restructuring. All of the conditions to the consummation of the
Restructuring set forth at "Conditions of Restructuring" in the Annex to the
Letter of Intent, other than the negotiation, execution and delivery of
definitive documentation (and definitive delivery and acceptance of delivery of
Existing Notes in acceptance of the Restructuring) as provided therein, have
been met or will be met upon Closing.
(j) Non-Public Information. P-Com has not disclosed to REMEC any
non-public information about P-Com.
Section 7. Representations and Warranties of REMEC. REMEC hereby, jointly
and severally, represent and warrant to P-Com as follows, as of the date hereof
and as of the Closing Date:
(a) Organization and Good Standing. REMEC Inc. is a corporation duly
organized, validly existing and in good standing under, and by virtue of, the
laws of the State of California and has all requisite corporate power and
authority to carry on its business as now conducted. REMEC Wireless Inc. is a
corporation duly organized, validly existing and in good standing under, and by
virtue of, the laws of the State of California and has all requisite corporate
power and authority to carry on its business as now conducted. REMEC
Manufacturing Philippines Inc. is a company duly organized, validly
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existing and in good standing under, and by virtue of, the laws of the
Philippines and has all requisite corporate power and authority to carry on its
business as now conducted.
(b) Authorization. All corporate action on the part of REMEC, Inc.,
REMEC Wireless, Inc. and/or REMEC Manufacturing Philippines, Inc., and their
respective officers, directors and shareholders, necessary for (i) the
authorization, execution and delivery of this Agreement by REMEC, Inc., REMEC
Wireless, Inc. and REMEC Manufacturing Philippines, Inc. and (ii) the
performance of all obligations of REMEC, Inc., REMEC Wireless, Inc. and/or REMEC
Manufacturing Philippines, Inc. under this Agreement, has been taken. This
Agreement, when executed and delivered by REMEC, will constitute valid and
binding obligations of REMEC, Inc., REMEC Wireless, Inc. and REMEC Manufacturing
Philippines, Inc., enforceable in accordance with its terms.
Section 8. Covenants.
(a) Recognition of REMEC as Holder. Upon the Closing Date and until
REMEC transfers its interest in the Xxxxx Notes, P-Com shall recognize REMEC as
the beneficial holder of the Xxxxx Notes.
(b) Indemnification. P-Com hereby agrees for itself and for its legal
representatives, successors and assigns, to indemnify, defend and hold harmless
REMEC and its directors, officers, stockholders, partners, employees, agents,
subsidiaries and successors in interest (collectively, the "Indemnified
Parties") from and against any and all Indemnified Claims (as defined below)
incurred by any Indemnified Parties or asserted against any Indemnified Parties
by or through any holder, legal or beneficial, of any portion of the Notes,
arising out of, related to, or in connection with (i) the Restructuring, (ii)
REMEC's participation in the Restructuring, or (iii) REMEC's purchase of the
Xxxxx Notes. "Indemnified Claims" shall mean any and all liability, costs,
expenses, claims, demands, fines, penalties, causes of action or other
obligation of whatever nature whether under express or implied contract, at
common law or under any applicable law, rule or regulation, and court costs and
reasonable attorneys' fees.
(c) Registration of Restructured Note. P-Com Inc. will file a
registration statement with the Securities and Exchange Commission covering the
resale of the Restructured Notes and the common stock issuable upon conversion
thereof within 60 days after the closing of the Restructuring. P-Com Inc. will
use reasonable efforts to have the registration statement declared effective by
the date that is 30 days after the date of filing such registration statement.
(d) Share Certificates. Promptly upon conversion of US$2,300,000 in
principal amount of the Xxxxx Notes in accordance with the provisions of the
Indenture and applicable procedures of DTC, P-Com, at REMEC's option, either
shall deliver to REMEC an unlegended stock certificate representing 920,000
shares of Common Stock issued in the name of REMEC, Inc. or authorize
registration of 920,000 shares of unlegended Common Stock with DTC for the
benefit of REMEC, Inc on the security position listing for the Common Stock
maintained by DTC.
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(d) Conversion Price. The conversion price applicable to the Xxxxx
Notes or any portion of the Restructured Notes held by REMEC shall be no higher
than the conversion price applicable to the Notes or Restructured Notes held by
any other holder.
(e) Agilent Refunds. REMEC hereby agrees to use commercially
reasonable efforts to assist P-Com in returning the Aglient Transistors to
Aglient and, on behalf of P-Com, to facilitate the refund by Agilent of any
purchase price of the Aglient Transistors to which P-Com or REMEC is legally
entitled. REMEC shall not be obligated to undertake any legal action to recover
such refund. REMEC hereby agrees that to the extent REMEC receives from Agilent
any refund of the purchase price of the Aglient Transistors and to the extent
such refund exceeds US$23,780, REMEC shall forward such portion of the refunded
purchase price which exceeds US$23,780 to P-Com.
(f) P-Com Italia Wire Transfers. Upon REMEC's confirmation that wire
transfers made by P-Com Italia S.p.A. in March 2002 in payment of REMEC Invoice
Numbers 300/20202484 and 300/20202469 were received by REMEC in an amount
exceeding US$13,433, REMEC shall promptly pay to P-Com an amount equal to the
excess of the such amounts received by REMEC over US$13,433. In the event REMEC
did not receive payment from P-Com Italia S.p.A. in an amount exceeding
US$13,433 with respect to such invoices, P-Com shall promptly pay to REMEC an
amount equal to the difference between US$13,433 and the amount, if any,
actually received by REMEC.
Section 9. Conditions of REMEC's Obligations to Close. The obligations of
REMEC to P-Com under this Agreement are subject to the fulfillment, on or before
the Closing, of each of the following conditions, unless otherwise waived:
(a) The representations and warranties of P-Com contained in Section 6
of this Agreement shall be true on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date and P-Com shall have performed and complied with all covenants
and agreements required to be performed or complied with pursuant to this
Agreement on or prior to Closing.
(b) The Settlement Amount shall be delivered in accordance with the
wire transfer instructions provided to P-Com in accordance with Section 2 of
this Agreement.
(c) The Note Purchase Agreement, and all documents to be delivered to
REMEC pursuant to the Note Purchase Agreement, shall be fully completed,
executed and delivered to REMEC, all on terms and in a form acceptable to REMEC
in its sole discretion.
(d) The Purchase Option shall be fully exercised in an manner
satisfactory to REMEC.
(e) A counterpart of the Letter of Intent shall be fully executed by
P-Com, Inc. and delivered to REMEC.
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For purposes of clarification, and without limitation, unless and until the
Closing takes place, the obligations of REMEC to release the Claims as set forth
in this Agreement shall be of no effect.
Section 10. Conditions of P-Com's Obligations to Close. The obligations of
P-Com to REMEC under this Agreement are subject to the fulfillment, on or before
the Closing, of each of the following conditions, unless otherwise waived:
(a) The representations and warranties of REMEC contained in Section 7
of this Agreement shall be true on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date and REMEC shall have performed and complied with all covenants
and agreements required to be performed or complied with pursuant to this
Agreement on or prior to Closing.
(b) A counterpart of the Letter of Intent shall be fully executed by
REMEC, Inc. and delivered to P-Com.
For purposes of clarification, and without limitation, unless and until the
Closing takes place, the obligations of P-Com to release the Claims as set forth
in this Agreement shall be of no effect.
Section 11. Miscellaneous.
(a) Limitation of Release. Notwithstanding the release contained in
Section 4 of this Agreement, this Agreement and the releases set forth in
Section 4 are not intended and shall not be construed as a release or discharge
of the Parties' continuing contractual obligations or defenses with respect to
indemnification, product defects, limitations on liability, ownership of
intellectual property, confidentiality or product liabilities claims arising
under any contract or any applicable law.
(b) P-Com's Right to Modules. P-Com shall have the right to take
possession of or title to any or all of the 23 gigahertz modules produced by
REMEC for P-Com pursuant to the Phase II Agreement that P-Com has not already
taken possession of or title to. P-Com agrees to take physical possession of any
of the 23 gigahertz modules produced by REMEC for which P-Com elects to take
title to pursuant to this Agreement by no later than July 22, 2002. Any of such
23 gigahertz modules shall be taken by P-Com on an "AS IS WHERE IS" basis and
the Parties hereby acknowledge that, other than as specifically reserved by
Section 11(a) and this Section 11(b), any claims relating to such modules,
whether arising by contract or any applicable law, shall be deemed to be Claims
and are released by this Agreement.
(c) No Admission of Liability; Governing Law. Nothing contained in
this Agreement shall constitute or be treated as an admission by any Party of
liability, of any wrongdoing, or of any violation of law. This Agreement shall
be construed and interpreted in accordance with the laws of the State of
California. The Parties further agree that proper venue for any dispute arising
out of or relating to this Agreement will be San Diego, California.
(d) Successors and Assigns; Third Party Beneficiaries. This Agreement
shall be binding on and inure to the benefit of the successors and assigns of
each Party.
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Notwithstanding the foregoing, no Party hereto shall either voluntarily or by
operation of law assign or transfer its rights under this Agreement without the
prior written consent of all of the other Parties, such consent not to be
unreasonably withheld. This Agreement shall not confer any rights or remedies
upon any person other than the Parties hereto and any such successor or
permitted assign of a Party.
(e) Attorneys Fees. If any Party commences any action against another
Party to enforce any of the terms hereof or because of the breach by such other
Party of any of the terms of this Agreement, the prevailing Party shall be
entitled, in addition to any other relief granted, to all costs and expenses
incurred by such prevailing Party in connection with such action, including,
without limitation, all reasonable attorney's fees, and a right to such costs
and expenses shall be deemed to have accrued upon the commencement of such
action and shall be enforceable whether or not such action is prosecuted to
judgment. The "prevailing party", for purposes of this Agreement, means the
Party determined by the court to have most nearly prevailed, even if such Party
did not prevail in all matters, but not necessarily the one in whose favor
judgment is rendered.
(f) Entire Agreement. The Parties each acknowledge and represent that
no promise, representation, or inducement not contained in this Agreement or the
Letter of Intent, has been made to them and that this Agreement and the Letter
of Intent, contains the entire understanding between the Parties and contains
all terms and conditions pertaining to the within compromise and settlement of
the disputes referenced herein. No express or implied warranties, covenants or
representations have been made concerning the subject matter of this Agreement
unless expressly stated. Any prior written or oral negotiations not contained in
this Agreement are not of any force or effect whatsoever. In executing this
Agreement, the Parties have not and do not rely on any statements, inducements,
promises, or representations made by the other Party or their agents,
representatives, or attorneys with regard to the subject matter, basis, or
effect of this Agreement, except those specifically set forth in this Agreement
or the Letter of Intent. The Parties further acknowledge that the terms of this
Agreement are contractual and not a mere recital.
(g) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument. Any counterpart or other signature
delivered by facsimile shall be deemed for all purposes as being good and valid
execution and delivery of this Agreement by that Party.
(h) Titles and Subtitles. The titles and subtitles used in this
Agreement are used principally for the purpose of reference and shall not, by
themselves, affect the meaning or interpretation of this Agreement.
(i) Finder's Fee. Each Party represents that it neither is nor will be
obligated for any finder's fee or commission in connection with this
transaction. Each Party agrees to indemnify and to hold harmless each other
Party from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which such Party or any of its officers, employees, or
representatives is responsible.
11
(j) Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, each Party agrees to renegotiate such
provision in good faith, in order to maintain the economic position enjoyed by
each Party as closely as possible to that under the provision rendered
unenforceable. In the event that the Parties cannot reach a mutually agreeable
and enforceable replacement for such provision, then the Agreement shall be
interpreted as if such provision were so excluded, but so as to maintain the
economic position of each Party as closely as possible to that contemplated
under the terms of this Agreement without exclusion of such provision.
(k) Ability to Enter Into Agreement. Each Party acknowledges that it
has read this Agreement, that each fully understands its rights, privileges and
duties under this Agreement, and that each enters into this Agreement freely and
voluntarily. Each Party further acknowledges that it has had the opportunity to
consult with an attorney of its choice to explain the terms of this Agreement
and the consequences of signing it.
(l) Equal Opportunity to Draft Agreement. This Agreement and the
provisions contained herein shall not be construed or interpreted for or against
any Party because the Party drafted or caused the Party's legal representative
to draft any of these provisions. This Agreement shall be construed without
reference to the identity of the Party or Parties preparing the same, it being
expressly understood and agreed that the Parties participated equally or had
equal opportunity to participate in the drafting thereof.
(m) Waiver. The failure of any Party to enforce any provision of this
Agreement shall not be construed as a waiver of any such provision, nor prevent
such Party thereafter from enforcing such provision or any other provision of
this Agreement. The rights and remedies granted all Parties are cumulative and
the election of one right or remedy shall not constitute a waiver of such
Party's right to assert all other legal remedies available under this Agreement
or otherwise provided by law.
(n) Termination. If the Closing has not been previously consummated,
this Agreement shall terminate on the earlier to occur of any of the following
events:
(i) the mutual written agreement of P-Com and REMEC; or
(ii) automatically if the Closing has not occurred by the close
of business on July 15, 2002.
Nothing in this Section 11(n) shall relieve any Party of any liability for a
breach of this Agreement prior to the termination of this Agreement. Except as
provided for above and except for the provisions of this Section 11, upon the
termination of this Agreement, all rights and obligations of the Parties under
this Agreement shall terminate.
[Remainder of page intentionally left blank]
12
IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement and
Release of Claims on the day and year first set forth above.
REMEC, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
Title: EVP, Chief Financial Officer
REMEC WIRELESS, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Financial Officer
REMEC MANUFACTURING PHILIPPINES, INC.
By: /s/ Xxxxx Xxxxxx
----------------------------------
Name: Xxxxx Xxxxxx
Title: Director
P-COM, INC.
By: /s/ Xxxxxxxx Xxxxxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxxxxx
Title: VP, Chief Financial Officer
P-COM ITALIA S.P.A.
By: /s/ Xxxxxxxx Xxxxxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxxxxx
Title: Managing Director, Chief Financial Officer
EXHIBIT A
LETTER OF INTENT
[See attached.]
P-COM, INC.
0000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
April 11, 2002
To The Beneficial Holders of the Notes
Listed on the Signature Pages hereof
Letter of Intent regarding Proposed Restructuring of
4 1/4% Convertible Subordinated Notes due 2002 (the "Notes")
Ladies and Gentlemen:
This letter, upon execution and delivery of counterparts thereof to P-Com,
Inc. (the "Company"), shall constitute and confirm an agreement between the
Company and each beneficial holder (each an "Undersigned Holder") of Notes (in
the aggregate principal amount indicated in the signature block of such
Undersigned Holder below) delivering such a counterpart regarding the
restructuring of the Notes as further described below (the "Restructuring").
Section 1. The Restructuring. The terms of the Restructuring
shall be as set forth in the Annex hereto.
Section 2. Closing Date. The closing date of the Restructuring
shall occur on November 1, 2002, subject to due satisfaction or waiver of the
closing conditions to consummation of the Restructuring provided for in the
definitive documentation for the Restructuring.
Section 3. Agreement to Accept Restructuring. Intending to be
bound hereby, the Company and each Undersigned Holder, in respect of the full
aggregate principal amount of Notes beneficially held by such Undersigned Holder
and listed in the signature block of such Undersigned Holder's counterpart
hereto, agree to accept and consummate the Restructuring on the terms and
subject to the conditions thereof described in this Letter of Intent (including
the Annex hereto) and each Undersigned Holder agrees to effect such delivery of
the Notes beneficially held by it in such principal amount, and the parties
hereto agree otherwise to execute and deliver such documentation, as is
contemplated in this Letter of Intent to consummate the Restructuring on such
terms and subject to such conditions. Notwithstanding the foregoing, in the
event that P-Com should enter into an agreement with any holder of a beneficial
interest in the Notes providing for issuance of restructured notes in a
restructuring of the Notes so beneficially held by such holder on terms
("Alternative Restructuring Terms") more favorable to such holder than are the
terms of the Restructuring provided for herein to the Undersigned Holders, any
Undersigned Holder may, at such Undersigned Holder's election upon such
Undersigned Holders agreement to be bound by such Alternative Terms, be released
from its obligation to consummate the Restructuring provided for herein.
Section 4. Fees and Expenses. Each of the Company and the
Undersigned Holder shall be responsible for its own costs and expenses incurred
in connection with the Restructuring, whether or not the Restructuring is
consummated.
Section 5. Effectiveness, Termination of Letter of Intent. The
agreements contained herein shall become effective only on such date on which
counterparts of this Letter of Intent shall have been executed and delivered by
the Company and beneficial holders of Notes whose counterpart signature blocks
hereto list principal amounts of Notes that aggregate to an amount of at least
$11,000,000. This Letter of Intent shall be of no force or effect unless and
until such counterparts are so executed and delivered. Except for the provisions
of Section 4 hereof, this Letter of Intent will be superceded, and will be of no
further force or effect, upon the consummation of the Restructuring on the
Closing Date or if such consummation has not occurred on or before November 1,
2002, on November 1, 2002.
Section 6. Governing Law, Amendments, Etc. This Letter of Intent
shall in all respects be governed by and construed in accordance with the laws
of the State of New York. This Letter of Intent may only be amended by a written
instrument signed by authorized representatives of each of the parties hereto.
This Letter of Intent may be executed by the parties hereto in counterparts and
by facsimile transmission, each of which shall be deemed to constitute an
original, but all of which together shall constitute one and the same
instrument.
Section 7. Entire Understanding. This Letter of Intent embodies
the entire understanding of the parties with respect to the Restructuring
contemplated hereby and supersedes all prior written or oral commitments,
arrangements or understandings with respect thereto.
Please indicate your agreement with the foregoing by signing a
copy of this letter and returning it to the Company via facsimile no. (408)
866-3678; Attention: Xxxxxxxx X. Xxxxxxxxxx.
Very truly yours,
P-COM, INC.
By /s/ Xxxxxxxx Xxxxxxxxxx
---------------------------
Name: Xxxxxxxx X. Xxxxxxxxxx
Title: Chief Financial Officer
HOLDER COUNTERPART
to
Letter of Intent dated April 11, 2002
Accepted and agreed to as of
the date written below:
NAME OF BENEFICIAL NOTEHOLDER:
REMEC, INC.
By /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: Chief Financial Officer
Date: July 11, 2002
Principal Amount of Notes Beneficially Held: $4,600,000
ANNEX
to
Letter of Intent dated as of April 11, 2002
P-COM, INC.
Restructuring of
4 1/4% Convertible Subordinated Notes due 2002 (the "Existing Notes")
SUMMARY OF TERMS
HOLDER Only a holder of Existing Notes that is an "accredited
QUALIFICATIONS: investor" as defined in Rule 501 of Regulation D under
the Securities Act of 1933 will be entitled to
participate in the Restructuring (as defined in the
Letter of intent relating to this Summary of Terms (the
"Letter of Intent")).
RESTRUCTURING Each holder of Existing Notes accepting the
CONSIDERATION: Restructuring will be entitled to receive the following
in respect of Existing Notes beneficially held by such
holder and delivered in acceptance of the
Restructuring:
(i) Restructured Notes. On November 1, 2002 (the
"Closing Date"), in exchange for such aggregate
principal amount of Existing Notes beneficially held by
each holder and delivered in acceptance of the
Restructuring that have not prior to the Closing Date
been converted into shares of common stock of the
Company, such holder will receive restructured notes
having the terms described below ("Restructured Notes")
in an aggregate face principal amount equal to such
aggregate principal amount of Existing Notes.
(ii) Pre-Closing Date Conversion. At any time prior to
the Closing Date, each holder will be entitled to
convert the beneficial interest in the Existing Notes
held by such holder and delivered in acceptance of the
Restructuring into common stock of the Company under
the existing terms of the Existing Notes; provided,
however, that (A) the conversion price applicable to
such conversion of the Existing Notes shall be reduced
by the Company pursuant to (and effective starting on
the earliest date following the effectiveness of the
Letter of Intent permissible under) the indenture for
the Existing Notes so as to be not more than $0.50 per
share of common stock at any time prior to the Closing
Date and (B) effective starting on the earliest date
permissible under the indenture for the Existing Notes
following the first trading day after any announcement
of a merger by the Company, such reduced conversion
price applicable to such conversion of the Existing
Notes shall be adjusted to the lower of: (x) $0.50; and
(y) 350% of the per share trading price of the
Company's common stock at the end of trading on the day
following the day of the announcement of the merger.
The Company represents and warrants, in respect of
common stock issued pursuant to conversion under the
provisions of this paragraph (ii) ("Pre-Closing
Conversion Stock"), that such Pre-Closing Conversion
Stock will be eligible to be freely resold under Rule
144(k) under the Securities Act of 1933, assuming that
the holder consummating such resale is not an affiliate
of the Company
(iii) Accrued Interest on Existing Notes Exchanged for
Restructured Notes. All accrued, unpaid interest on the
Existing Notes delivered in the Restructuring will be
paid when due under the Existing Notes.
TERMS OF The Restructured Notes will have terms that include the
RESTRUCTURED following, and will otherwise have terms substantially
NOTES: the same as the Existing Notes:
Maturity: Fifth anniversary of the Closing Date; provided,
however, that the maturity shall be the third
anniversary of the Closing Date in the event that the
Company shall not, on or before November 1, 2002, have
consummated a merger (a "Qualifying Merger") with any
company such that the company resulting from such
merger shall have, at any time during the period
beginning on consummation of such merger and ending on
November 1, 2002, at least $12 million in cash and cash
equivalent assets.
Interest: Payable semiannually in arrears on May 1 and November
1, commencing on May 1, 2003. Interest will be so
payable on each holder's Restructured Notes in the
form, at such holder's option exercised not later than
30 days prior to the payment date for such interest, of
either (i) cash in the amount of such interest accrued
at the rate of 4 1/4% per annum or (ii) shares of
common stock of the Company having a value (determined
using a per share value of the average of the market
price per share of the Company's common stock for each
of the 30 consecutive trading days immediately
preceding the payment date of such interest) equal to
the amount of such interest accrued at the rate of
6% per annum; provided, however, that in the event the
Company shall not, on or before November 1, 2002, have
consummated a Qualifying Merger, the rate of interest
applicable to the Restructured Notes will be 7% per
annum, and such interest shall be payable in cash.
Conversion: (i) At the Holder's Option: Prior to maturity, the
principal of any Restructured Note may be converted in
full or in part at the option of the holder of such
Restructured Note into common stock of the Company at a
conversion rate of one share per principal amount of
Restructured Notes equal to the Conversion Price. The
"Conversion Price" shall initially be $1.00, subject to
customary adjustments; provided, that in the event that
the Company shall not, on or before November 1, 2002,
have consummated a Qualifying Merger, the Conversion
Price will initially be the lesser of (x) $1.00 and (y)
300% of the weighted average of gross proceeds per
share of Company common stock received by the Company
as consideration in all issuances of its common stock
after January 24, 2002 and on or before the Closing
Date (excluding, however, issuances upon conversion of
the Existing Notes). The Conversion Price will be
subject to customary adjustments.
(ii) At the Company's Option: The Company will have the
right, at its option on any date that is both (x) on or
after January 1, 2003 and (y) within a period of 30
consecutive trading days during which the market price
of the Company's common stock exceeded 100% (or, in the
event that the Company shall not, on or before November
1, 2002, have consummated a Qualifying Merger, 150%) of
the Conversion Price in effect for at least any five
trading days during such period, to convert in full or
in part any of the Restructured Notes into common stock
of the Company at a conversion rate of one share per
principal amount of Restructured Notes equal to the
Conversion Price; provided, however, that the Company
will not be entitled to exercise its conversion option
(i) if the registration statement provided for in the
Registration Rights Agreement shall not have become
effective and (ii) unless the market price of the
Company's common stock exceeded the Conversion Price in
effect on the trading day immediately preceding the
date on which the Company gives notice to exercise such
conversion option.
Subordination: The Restructured Notes will be subordinated to all of
the Company's existing and future secured indebtedness
constituting Senior Indebtedness as such term is
defined for purposes of the Existing Notes. The
Restructured Notes will
be effectively subordinated to all liabilities
(including trade payables) of the Company's
subsidiaries.
Redemption: The Company will have the right at any time, at its
option, to redeem in full or in part any of the
Restructured Notes at par (payable in cash) plus, in
the case of each holder's Restructured Notes so
redeemed, unpaid interest accrued to the date of
redemption on the principal so redeemed and payable in
cash or common stock of the Company, as elected by such
holder, on the terms described above under "Interest".
Registration Rights: The Company will file a registration statement with the
Securities and Exchange Commission covering the resale
of the Restructured Notes and the common stock issuable
upon conversion thereof within 90 days after the
Closing Date. The Company will use reasonable efforts
to have the registration statement declared effective
by the date (the "Target Effectiveness Date") that is
the earlier of (x) the date six months after the
Closing Date and (y) the date of effectiveness of any
registration statement covering resales of common stock
issued in a transaction referred to in paragraph (iii)
under "Conditions of Restructuring" below, and will use
reasonable efforts to keep the registration statement
effective until the earlier, with respect to all
securities covered by the registration statement, of
(i) the sale of such securities pursuant to the
registration statement or (ii) the expiration of the
Rule 144(k) holding period applicable to such
securities. In the event that the registration
statement provided for in the Registration Rights
Agreement has not become effective by the Target
Effectiveness Date, the Company will pay liquidated
damages to each holder of the Restructured Notes
accruing, from the Target Effectiveness Date until such
registration statement becomes effective, at the rate
of 0.5% per annum on the outstanding principal amount
of the Restructured Notes held by such holder, such
rate to increase by 0.5% per annum on every 90th day
after the Target Effectiveness Date on which such
registration statement continues to not be effective.
CONDITIONS OF Consummation of the Restructuring will be subject to
RESTRUCTURING: due satisfaction or waiver of conditions that include
the following and such others as are provided for in
the definitive documentation for the Restructuring:
(i) Definitive Documentation: Negotiation, execution
and delivery of definitive documentation
providing for the Restructuring on terms
including those described in this Summary of
Terms and the Letter of Intent and
otherwise mutually acceptable to the Company, the
holders of Existing Notes accepting the
Restructuring and the trustees and depositaries
for the Existing Notes and Restructuring Notes,
including, without limitation:
- Documentation providing for the delivery of
Existing Notes in acceptance of the
Restructuring, which will include among others
representations and warranties by the accepting
holders as to their status as accredited
investors and as otherwise appropriate for
purposes of determining that issuance of the
Restructured Notes qualifies under Regulation D
for exemption from registration under the
Securities Act of 1933;
- an indenture and global note evidencing the
Restructured Notes;
- a registration rights agreement (the
"Registration Rights Agreement") among the
Company and the holders of Existing Notes
receiving Restructured Notes in the Restructuring
providing for the registration of resales of the
Restructured Notes and common stock issuable upon
conversion thereof as described under "Terms of
Restructured Notes - Registration Rights", above;
- consents from the holders of not less that a
majority in principal amount of the Existing
Notes outstanding (before giving effect to
acceptance of the Restructuring) to entry into an
indenture supplemental to the indenture for the
Existing Notes for the purpose of effecting such
modifications to the terms of the Existing Notes
as the Company may request and as may be effected
with such consent, together with a supplemental
indenture providing for such modifications; and
- other documentation customary in transactions
of this type.
(ii) Minimum Level of Accepting Existing Notes:
Delivery, by the close of business on October 30,
2002, of Existing Notes accepting the
Restructuring, and the Company's acceptance of
such delivery in its sole and absolute
discretion, in an aggregate principal amount that
will result in the aggregate outstanding
principal amount of Existing Notes, excluding
Existing Notes that have been so delivered, being
not more than $4.3 million.
(iii) Common Stock Issuance. Receipt by the Company, on
or before the Closing Date, of gross proceeds of
at least $5,000,000 from issuance (after January
24, 2002) of the Company's common stock;
provided, however, that the amount of such gross
proceeds shall be at least $8,000,000 in the
event that the Company shall not, on or before
November 1, 2002, have consummated a Qualifying
Merger.
(iv) Pre-Closing Date Conversion Price Reduction. The
Company shall have effected the Existing Notes
conversion price reduction as provided in
paragraph (ii) under "Restructuring
Consideration" above.
COMPANY'S RIGHT TO The Company will have the right, in its sole and
ACCEPT OR REJECT absolute discretion, (i) to accept or reject any
NOTE DELIVERIES AND delivery of an Existing Note delivered in acceptance of
CONSUMMATION OF the Restructuring and (ii) to decline to proceed with
RESTRUCTURING; the Restructuring or terminate the proposal for the
MODIFICATION OF Restructuring at any time before its consummation.
TERMS OF The Company will also have the right, in its sole and
RESTRUCTURING: absolute discretion, to modify the terms of the
Restructuring at any time before the Closing Date;
provided, however, that any holder of Existing Notes
will have the right, for a period of not less than
three business days after any such modification, to
withdraw its acceptance of the Restructuring
(notwithstanding the commitment to accept the
Restructuring provided for in the Letter of Intent).
TRADING AND LISTING: Except as provided in the Registration Rights Agreement
relating to the Restructured Notes and common stock
issuable upon conversion thereof, the Restructured
Notes will not be registered under the Securities Act
of 1933 and may be transferred only pursuant to an
applicable exemption from such registration.
Trading of beneficial interests in the Restructured
Notes prior to the effectiveness of the registration
statement provided for in the Registration Rights
Agreement (subject to availability of an applicable
exemption from registration under the Securities Act of
1933) will be effected only through book-entry transfer
of interests held through participants in the
depositary for the global note evidencing the
Restructured Notes.
It is expected that upon effectiveness of the
registration statement provided for in the Registration
Rights Agreement, the common stock issuable upon
conversion of the Restructured Notes will either be
listed for trading on the Nasdaq National Market or
will trade in the over-the-counter market; however,
there can be no assurance that such common stock will
qualify for listing on the Nasdaq National Market.
EXHIBIT B
FORM OF NOTE PURCHASE AGREEMENT
