Exhibit 10.48B
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT is entered into as of June 4, 1999 (the
"Agreement") by and between CASTLE CREEK TECHNOLOGY PARTNERS LLC, a Delaware
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limited liability company ("Castle Creek"), and P-COM, INC., a Delaware
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corporation (the "Company").
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RECITALS
WHEREAS, Castle Creek, the Company and certain other parties are
parties to a certain Securities Purchase Agreement dated as of December 21, 1998
(the "Purchase Agreement") whereby the Company issued to Castle Creek 5,500
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shares of the Company's Series B Convertible Participating Preferred Stock (the
"Preferred Stock") and stock purchase warrants dated December 22, 1998 (the
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"Warrants") to purchase 455,494 shares of the Company's common stock, $0.0001
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par value per share (the "Common Stock").
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WHEREAS, pursuant to the terms of the Certificate of Designations,
Preferences and Rights of the Preferred Stock (the "Certificate"), the Preferred
Stock (a) is convertible by Castle Creek at the Conversion Price (as defined in
the Certificate) into shares of Common Stock and (b) accrues a premium (the
"Premium") equal to 6% of the face amount of the Preferred Stock per year
payable in shares of Common Stock or cash.
WHEREAS, pursuant to a certain Registration Rights Agreements dated as
of December 21, 1998 (the "Registration Rights Agreement") by and among the
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Company, Castle Creek and certain other parties, the Company agreed to register
the resale by Castle Creek of shares of the Common Stock issuable upon
conversion of the Preferred Stock and upon exercise of the Warrants.
WHEREAS, pursuant to the Registration Rights Agreement if a
registration statement covering the resale by Castle Creek (the "Registration
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Statement") was not declared effective by April 21, 1999, the Company agreed to
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pay to Castle Creek a late registration penalty in an amount calculated pursuant
to Section 2.3 of the Registration Rights Agreement (the "Late Registration
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Penalty").
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WHEREAS, the Company desires that Castle Creek exchange all its
outstanding shares of Preferred Stock for Common Stock, exchange the Warrants
for new warrants, waive all rights to receive the Premium through the date of
conversion, waive certain rights to receive the Late Registration Penalty and
waive certain covenants set forth in certain of the foregoing agreements, all as
more fully described herein.
WHEREAS, Castle Creek is willing to agree to the foregoing, all as
more fully described herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements of the parties contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. Definitions: Capitalized terms used herein and not otherwise defined herein
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shall have the meanings ascribed to such terms in the Stock Purchase Agreement
or the Certificate, as applicable.
2. Exchange of Securities. Castle Creek agrees that on the date hereof it
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shall exchange all its outstanding Preferred Stock for shares of Common Stock
and the Company agrees that on the date hereof it shall:
a. issue to Castle Creek 1,882,758 shares of Common Stock in exchange for
such Preferred Stock (the "Exchange Shares"); and
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b. issue to Castle Creek in exchange for the Warrants, new warrants to
purchase shares of Common Stock in the form attached hereto as Exhibit A (the
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"Exchange Warrants").
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The Company agrees that Castle Creek shall have the same rights and
the Company shall have the same obligations as though the Exchange Shares,
Exchange Warrants and the Registrable Securities were Securities under the
Purchase Agreement.
3. Registration Rights. The Company agrees to amend the Registration Statement
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previously filed on January 21, 1999 with the Securities and Exchange Commission
(the "SEC") to register the resale by Castle Creek of the Exchange Shares and
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the shares of Common Stock issuable upon exercise of the Exchange Warrants
(collectively, the "Registrable Securities"). Such amendment shall be filed
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within 5 business days of the date hereof and shall be declared effective no
later than 45 days following the date hereof. The Company agrees that it shall
be subject to the same obligations, covenants and agreements contained in the
Registration Rights Agreement as if it were incorporated herein by reference and
applicable to the Registrable Securities (including without limitation,
penalties for delays in registration pursuant to Section 2.3 of the Registration
Rights Agreement).
4. Waiver: Castle Creek agrees to waive its rights and remedies, and to release
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the Company from all actions, claims, damages, and obligations, and all other
liabilities of whatever nature existing as of the date hereof relating to or
arising from (1) the Late Registration Penalty accrued as of the date hereof,
(2) the Company's failure to solicit by proxy the Stockholder Approval (as
defined in the Certificate) in accordance with the Certificate, and the Purchase
Agreement, (3) the Company's failure to pay the Premium to Castle Creek on its
shares of Preferred Stock, (4) the failure of the Company to comply with Section
4.3 of the Purchase Agreement and Section 2.5 of the Registration Rights
Agreement with respect to the Company's Annual Report on Form 10-K for the year
ended December 31, 1998, (5) any requirement under Section 2.3 of the
Registration Rights Agreement to make certain payments in Preferred Stock, and
(6) any obligation of the Company to make payments to Castle Creek in respect of
any Override Election Event occurring prior to the date hereof. Upon the
effectiveness of the amended registration statement in accordance with Section 3
above (including meeting the time deadlines) Castle
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Creek shall waive all rights and remedies, and release the Company from all
actions, claims, damages, and obligations, and all other liabilities of
whatever nature existing as of the date of effectiveness relating to or
arising from the Late Registration Penalty accrued through the date of
effectiveness; provided such registration statement is available for use as of
such date.
5. Put Right.
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a. Beginning on the tenth business day after the date of this Agreement,
except to the extent that and only to the extent prohibited by Section 160 of
the Delaware General Corporation Law or by the Credit Agreement, as amended,
by and among the Company, Union Bank of California, N.A. and Bank of America
National Trust and Savings Association (the "Credit Agreement") in amounts in
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excess of $1,833,333 (in which case, to the extent that such limitations and
prohibitions prevent redemptions under this Section 5, the Company shall use
its best efforts to take all reasonably necessary actions not prohibited by
this Agreement or the Credit Agreement to remove such limitations or
prohibition), upon the occurrence of an Event of Default (as defined below),
Castle Creek shall have the right to elect at any time and from time to time
by delivery of a notice to the Company (the "Redemption Notice") to require
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the Company to purchase for cash for an amount per share of Common Stock equal
to the Redemption Amount (as defined herein), any or all of the then
outstanding Exchange Shares held by Castle Creek. To the extent that the
Company is unable to honor any redemption otherwise required by this Section
5.a due to limitations or prohibitions imposed by the Credit Agreement or
Section 160 of the Delaware General Corporation Law, the Company will,
notwithstanding anything contained in this Section 5.a, be in breach of this
Agreement and Castle Creek will be entitled to pursue any and all remedies
available to it by virtue of such breach.
b. The Redemption Amount per share of Common Stock shall equal the greater
of (I) $4.00 and the (II) the highest closing bid price of the Common Stock
during the period beginning on the date of the Redemption Notice and ending on
the date of redemption, as reported on the principal securities exchange or
trading market on which the Common Stock is traded.
c. The Company shall pay to Castle Creek the Redemption Amount in cash,
with respect to each share of Common Stock which is subject to the Redemption
Notice within five (5) business days of the Company's receipt of such
Redemption Notice.
d. An Event of Default means any one of the following:
(i) once the Registration Statement as amended pursuant to Section 3
above is declared effective, the Company fails to remove any restrictive
legend on any certificate for Registrable Securities; or
(ii) the Registration Statement as amended pursuant to Section 3 above
is not declared effective within 70 days of the date hereof or after being
declared effective, cannot be utilized by Castle Creek for the re-sale of
all Registrable Securities for a period of ten (10) consecutive business
days or for an aggregate of more than twenty (20) days in any twelve month
period (not including any Permitted Blackouts (as defined in the
Registration Rights Agreement)).
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6. 8-K: The Company agrees to file on or before the next business day following
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the date hereof a Form 8-K pursuant to the Securities Exchange Act of 1934, as
amended, describing this Agreement and to include as an exhibit therein a copy
of this Agreement.
7. Right of First Refusal. Castle Creek hereby waives the financing
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restrictions contained in Section 4.5 of the Purchase Agreement (1) with respect
to the matters described in Section 8 hereof, and (2) with respect to all other
issuances of securities to third parties prior to December 21, 1999 of this
Agreement so long as (a) the Company offers Castle Creek a right to participate
up to $3,000,000 on the same terms and conditions as are offered to the persons
purchasing the Restricted Securities (as defined in the Purchase Agreement) and
(b) the Company does not file a registration statement with respect to the sale
or resale of the Restricted Securities, or securities issuable upon exercise or
conversion of the Restricted Securities, until the date which is twenty (20)
days following the date the Registration Statement as amended pursuant to
Section 3 above is declared effective (provided such registration statement is
available for use for such twenty (20) days) and the Company may not enter into
any agreement that would obligate it to file such a registration statement prior
to such date.
8. Agreement With Other Holders. The Company shall not offer or pay
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consideration or other inducement to any other holder of the Preferred Stock,
Warrants or other warrants issued in exchange for warrants issued to holders of
Series B Convertible Participating Preferred Stock of the Company (the "Other
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Warrants") (I) to amend or consent to a waiver or modification of any provisions
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of the Purchase Agreement, the Registration Rights Agreement, the Certificate,
the Warrants or the Other Warrants, (II) to convert or exchange any Preferred
Stock or exercise any Warrants or Other Warrants on terms other than as are
contained in the Certificate, Warrants or Other Warrants, as applicable
(including but not limited to, a reduction in the Conversion Price or such other
mechanism as results in a like result, whether directly or indirectly including
an exchange of securities), or (III) to change the economic substance of the
Transaction Documents (as defined in the Purchase Agreement) applicable to any
other holder, unless the same consideration or inducement is also offered to
Castle Creek or is equivalent (on a per share of Preferred Stock basis) to the
consideration and inducements paid to Castle Creek under this Agreement.
9. Legend Removal: The Company agrees that upon the effectiveness of the
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Registration Statement as amended pursuant to Section 3 above, the Company shall
at the request of Castle Creek remove or cause to be removed all restrictive
legends including the Legend (as defined in the Purchase Agreement) from the
Registrable Securities.
10. Representations of the Company. The Company hereby represents and warrants
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to Castle Creek as follows as of the date hereof:
a. Authorization and Enforcement: (i) The Company has the requisite power
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and authority to enter into and perform its obligations under this Agreement
and the Exchange Warrant; (ii) the execution, delivery and performance of this
Agreement and the Exchange Warrant by the Company and the consummation by it
of the transactions contemplated hereby and thereby have been duly authorized
by the Company's Board of Directors and no further consent or authorization of
the Company, its Board of Directors or its stockholders is required;
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and (iii) this Agreement and the Exchange Warrant constitute valid and binding
obligations of the Company enforceable against the Company in accordance with
their respective terms.
b. No Conflicts. The execution, delivery and performance of this
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Agreement and the Exchange Warrant by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby will not (i)
result in a violation of the Certificate of Incorporation (including without
limitation the Certificate) or the bylaws of the Company; (ii) cause Castle
Creek to be deemed an "Acquiring Person" under the Amended and Restated Rights
Agreement between the Company and BankBoston, N.A.; or (iii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights under (other than
rights to anti-dilution adjustments resulting in not more than 200,000
additional shares of Common Stock being issued in the aggregate upon
conversion or exercise of the relevant securities), or result in termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party
(including without limitation, the Purchase Agreement and the Registration
Rights Agreement), or result in a violation of any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which any property or assets of the Company or any of its subsidiaries
is bound or affected.
c. Availability of Form S-3 for Resale of Registrable Securities. The
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Company will remain eligible to register the Registrable Securities for resale
pursuant to the Securities Act of 1933, as amended, on Form S-3 until all of
the Registrable Securities are sold by Castle Creek.
d. Issuance of Shares. The shares issuable upon exercise of the Exchange
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Warrants (the "Warrant Shares") are duly authorized and reserved for issuance,
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and, upon exercise of the Warrant Shares in accordance with the Exchange
Warrants will be validly issued, fully paid and non-assessable, and free from
all taxes, liens, claims and encumbrances (except as created by Castle Creek)
and will not be subject to preemptive rights (except as granted by Castle Creek)
or to the Company's knowledge after reasonable investigation other similar
rights of stockholders of the Company (other than as granted by Castle Creek).
The Exchange Shares are duly authorized and reserved for issuance, and are
validly issued, fully paid and non-assessable, and free from all taxes, liens,
claims and encumbrances (except as created by Castle Creek) and are not and will
not be subject to preemptive rights (except as granted by the Castle Creek) or
to the Company's knowledge after reasonable investigation other similar rights
of stockholders of the Company (other than as granted by Castle Creek). The
Board of Directors of the Company (the "Board") has unanimously approved the
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issuance of Exchange Shares and the Warrant Shares upon the exercise of the
Exchange Warrants pursuant to the terms thereof.
e. SEC Documents. Other than with respect to the allegedly untimely
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filing of the Company's Annual Report on Form 10-K for the year ended December
31, 1998, as of their respective dates, the SEC Documents (as defined in the
Purchase Agreement) complied in all material respects with the requirements of
the Exchange Act (as defined in the Purchase Agreement) and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. None of the statements made in any such SEC
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Documents is currently required to be updated or amended under applicable law.
Since December 31, 1998, there has been no material adverse change and no
material adverse development in the business, properties, operations,
financial condition or results of operations or publicly-announced prospects
of the Company, except as clearly disclosed as such in the SEC Documents filed
with the SEC since December 31, 1998.
f. Disclosure. No information (written or oral) relating to or concerning
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the Company and set forth in this Agreement or provided to Castle Creek in
connection with the transactions contemplated hereby contains an untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading. No material adverse
fact (within the meaning of the federal securities laws of the United States)
exists with respect to the Company or any of its subsidiaries which has not been
publicly disclosed. The Company has not provided Castle Creek with any material
non-public information.
g. Exemption. The transactions contemplated hereby are exempt from the
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registration requirements of the Securities Act.
11. Representations of Castle Creek. Castle Creek hereby represents and
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warrants to the Company as of the date hereof that this Agreement has been duly
and validly authorized, executed and delivered by Castle Creek and is a valid
and binding agreement of Castle Creek enforceable in accordance with its terms.
12. Legal Fees and Indemnification. The Company agrees to reimburse Castle
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Creek for all legal fees and expenses incurred in connection with negotiating
and executing this Agreement and reviewing the Registration Statement in an
aggregate amount not to exceed $50,000. The Company agrees to indemnify and
hold harmless Castle Creek and each of its officers, directors, employees,
partners, agents and affiliates for actual loss or damage to the extent arising
as a result of (a) any breach by the Company of any of its representations or
covenants set forth herein or (b) any cause of action, suit or claim brought or
made against such indemnitee, other than by the Company solely for breach of
this Agreement by the indemnitee or by governmental or regulatory authorities,
and arising out of or resulting from the execution, delivery, performance or
enforcement of this Agreement or any other instrument, document or agreement
executed pursuant hereto or contemplated hereby, except to the extent that such
actual loss or damage directly results from a breach by such indemnitee of this
Agreement or from a violation of law. The right to indemnification shall
include the right to advancement of expenses as they are incurred.
13. Successors and Assigns. Except as otherwise expressly provided herein, all
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covenants and agreements contained in this Agreement by or on behalf of any of
the parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
Notwithstanding the foregoing, the Company may not assign its rights or
obligations under this Agreement to any other party without Castle Creek's prior
written consent which may be withheld by Castle Creek for any or no reason.
14. Severability. Whenever possible, each provision of this Agreement shall be
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interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this
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Agreement is held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.
15. Counterparts. This Agreement may be executed simultaneously in two or more
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counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement. This Agreement may be executed by facsimile signature and shall
be binding when so executed.
16. Descriptive Headings, Interpretation. The descriptive headings of this
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Agreement are inserted for convenience only and do not constitute a substantive
part of this Agreement. The use of the word "including" in this Agreement shall
be by way of example rather than by limitation.
17. Governing Law. All issues and questions concerning the construction,
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validity, enforcement and interpretation of this Agreement and the exhibits
hereto shall be governed by, and construed in accordance with the laws of the
State of Delaware, without giving effect to any choice of law or conflict of law
rules or provisions (whether of the State of Delaware or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of Delaware.
18. Notices. All notices, demands or other communications to be given or
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delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each party at the address indicated in the
Purchase Agreement.
19. No Strict Construction. The parties hereto have participated jointly in
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the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
P-COM, INC.
By:
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Its:
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CASTLE CREEK TECHNOLOGY PARTNERS LLC
By: Castle Creek Partners, LLC
Its: Investment Manager
By:
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Its:
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