PROMISSORY NOTE
THIS PROMISSORY NOTE (the "NOTE") is made and entered into as of June 16,
2004 by and between P-Com, Inc., a Delaware corporation (hereinafter called the
"BORROWER" or the "CORPORATION"), and ___________________ (individually, the
"HOLDER," and collectively with the holders of all other notes of same like and
tenor, the "HOLDERS").
FOR VALUE RECEIVED, Borrower, hereby promises to pay to the order of
Holder or its registered assigns, the sum of
___________________________________________ ($__________) on the earlier of (a)
ninety (90) days from June 16, 2004 (the "ISSUE DATE") or (b) the date on which
the holders of a majority of the Corporation's outstanding common stock approve
the removal of the 9.999% exercise limitation from all outstanding Series C-1
Warrants and Series C-2 Warrants (the "STOCKHOLDER APPROVAL") (the earlier date
referred to herein as the "MATURITY Date"). The Corporation shall pay interest
on the unpaid principal balance hereof at the rate of six percent (6%) per
annum. Interest shall accrue on the unpaid principal balance hereof from the
Issue Date until the same is paid, whether at maturity, or upon prepayment,
repayment, or otherwise. Interest shall be calculated based on a 360-day year of
twelve 30-day months. The principal amount hereof, together with all accrued and
unpaid interest thereon, shall be due and payable on the Maturity Date. All
payments of principal and interest shall be made in, and all references herein
to monetary denominations shall refer to, lawful money of the United States of
America. All payments shall be made at such address as the Holder shall have
given or shall hereafter give to the Borrower by written notice made in
accordance with the provisions of this Note.
The term "NOTE" and all references thereto, as used throughout this
instrument, shall mean this instrument as originally executed, or if later
amended or supplemented, then as so amended or supplemented.
ARTICLE I
APPLICATION OF PRINCIPLE
Upon the receipt of Stockholder Approval, the principal amount of the Note
shall be applied upon the 61st day following the receipt of Stockholder Approval
as the purchase price due upon the exercise of all of Holder's outstanding
Series C-1 Warrants and Series C-2 Warrants. The purchase price shall be
calculated under the terms of the Corporation's Special Warrant Offer, offered
to the Corporation's warrantholders in June 2004, the terms of which Holder was
unable to take advantage because of the 9.999% exercise limitation on the Series
C-1 Warrants and Series C-2 Warrants (the "BLOCKER"). Any accrued interest shall
be paid in cash to Holder.
ARTICLE II
HOLDER'S COVENANTS
Holder agrees to vote its existing shares in the Corporation with voting
rights in favor of the removal of the Blocker. By execution of this Note, Holder
hereby delivers its request to remove the Blocker, as required under the Series
C-1 Warrants and Series C-2 Warrants, once the requisite Stockholder Approval
has been received by the Corporation. Holder's failure to observe its
obligations described herein shall constitute a breach of the Note. Upon such
breach, Borrower's obligation to accrue and pay interest on the principle shall
cease and Borrower's obligation to repay the Note shall cease until Holder
complies with its covenants.
ARTICLE III
PREPAYMENT
This Note may be prepaid in whole or in part, without premium, penalty or
discount, at any time, or from time to time, at the option of the Borrower,
together with accrued interest on the amount prepaid.
ARTICLE IV
EVENTS OF DEFAULT
A. Events of Default. In the event (each of the events described in
clauses (i)-(iii) below after expiration of the applicable cure period (if any)
being an "EVENT OF DEFAULT"):
(i) the Corporation fails to pay in full the principal hereof,
and/or the accrued and unpaid interest thereon, when due, whether at maturity,
upon acceleration or otherwise;
(ii) the Corporation or any subsidiary of the Corporation shall make
an assignment for the benefit of creditors, or apply for or consent to the
appointment of a receiver or trustee for it or for a substantial part of its
property or business; or such a receiver or trustee shall otherwise be
appointed; or
(iii) bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings for relief under any bankruptcy law or any law
for the relief of debtors shall be instituted by or against the Corporation or
any subsidiary of the Corporation, and if instituted against the Corporation or
any subsidiary of the Corporation by a third party, shall not be dismissed
within 60 days of their initiation;
then, upon the occurrence of an Event of Default, the unpaid principal balance
of this Note and accrued interest on this Note shall become immediately due and
payable, without presentment, demand, protest or other formalities of any kind,
all of which are hereby expressly waived by the undersigned.
ARTICLE V
RANK
The Notes shall rank senior to any indebtedness outstanding as of the
Issue Date as to repayment, except that the Notes shall rank junior to any
secured indebtedness of the Corporation for which a security interest has been
perfected as of the Issue Date.
ARTICLE VI
MISCELLANEOUS
A. Failure or Indulgency Not Waiver. No failure or delay on the part of
any Holder in the exercise of any power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege.
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B. Notices. Any notices required or permitted to be given under the terms
of this Note shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five days after being placed in the mail, if mailed, or upon
receipt or refusal of receipt, if delivered personally or by courier or
confirmed telecopy, in each case addressed to a party. The addresses for such
communications shall be:
If to the Corporation:
P-Com, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Telephone: 000.000.0000
Facsimile: 408.874.4324
Attention: Chief Executive Officer
If to the Holder:
North Sound Legacy Fund LLC
c/o North Sound Capital LLC
00 Xxx Xxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Telephone: 000.000.0000
Fascimile: 203.967.5851
Each party shall provide notice to the other parties of any change in
address or the address of any transferee of the Note.
A. Amendment Provision. This Note and any provision hereof may be amended
only by an instrument in writing signed by the Corporation and the Holder.
B. Assignability. This Note shall be binding upon the Corporation and its
successors and assigns and shall inure to the benefit of the Holder and its
successors and assigns. This Note may not be pledged or assigned to any
affiliate or to any other person or entity without the prior written consent of
the Corporation.
C. Cost of Collection. If an Event of Default occurs hereunder, the
Corporation shall pay the Holder hereof costs of collection, including
reasonable attorneys' fees.
D. Governing Law; Jurisdiction. This Note shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be performed in the State of California. The parties
irrevocably consent to the jurisdiction of the United States federal courts and
the state courts located in the State of California in any suit or proceeding
based on or arising under this Note and irrevocably agrees that all claims in
respect of such suit or proceeding may be determined in such courts. Each party
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irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The parties further agree that service of process upon
the other party mailed by first class mail shall be deemed in every respect
effective service of process upon the other party in any such suit or
proceeding. Nothing herein shall affect the right of the parties to serve
process in any other manner permitted by law. The parties agree that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
E. Lost or Stolen Notes. Upon receipt by the Corporation of (i) evidence
of the loss, theft, destruction or mutilation of any Note and (ii) (y) in the
case of loss, theft or destruction, of indemnity (without any bond or other
security) reasonably satisfactory to the Corporation, or (z) in the case of
mutilation, upon surrender and cancellation of any Note, the Corporation shall
execute and deliver a new Note of like tenor and date.
F. Remedies Cumulative. The remedies provided in this Note shall be
cumulative and in addition to all other remedies available under this Note, at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit either party's right to
pursue actual damages for any failure by the other party to comply with the
terms of this Note. Each party acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the other party and that
the remedy at law for any such breach may be inadequate. Each party therefore
agrees, in the event of any such breach or threatened breach, that the other
party shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.
G. Business Day. For purposes of this Note, the term "BUSINESS DAY" means
any day, other than a Saturday or Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law, regulation or
executive order to close. If any payment to be made hereunder shall be stated to
be or become due on a day which is not a business day, such payment shall be
made on the next following business day and such extension of time shall be
included in computing interest in connection with such payment.
H. JURY TRIAL WAIVER. BORROWER AND HOLDER HEREBY WAIVE TRIAL BY JURY IN
ANY LEGAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER
SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF OR RELATED TO
THIS NOTE OR THE RELATIONSHIP EVIDENCED HEREBY. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR HOLDER TO ACCEPT AND RELY UPON THIS NOTE.
I. Severability. If any provision of this Note shall be prohibited or
invalid, under applicable law, it shall be ineffective only to such extent,
without invalidating the remainder of this Note.
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J. Maximum Interest Rate. If the effective interest rate on this Note
would otherwise violate any applicable usury law, then the interest rate shall
be reduced to the maximum permissible rate and any payment received by the
Holder in excess of the maximum permissible rate shall be treated as a
prepayment of the principal of this Note.
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IN WITNESS WHEREOF, the parties hereto have executed this Note as of the
date first written above.
P-COM, INC.
By:
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Name:
Title:
HOLDER
By:
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Name:
Title:
[Signature page to Promissory Note.]
