EXHIBIT 10.76
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ASSET PURCHASE AGREEMENT
by and among
PARADYNE NETWORKS INC.
"PDYN",
PARADYNE CORPORATION
as "Buyer",
P-COM, INC.
"P-COM"
and
CONTROL RESOURCES CORPORATION
as "Seller"
Dated as of April 5, 2000
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
1.1 Defined Terms...........................................................1
ARTICLE II
PURCHASE AND SALE OF TRANSFERRED ASSETS
2.1 Transferred Assets......................................................6
2.2 Excluded Assets.........................................................8
2.3 Assumption of Liabilities by the Buyer..................................8
2.4 Purchase Price..........................................................8
ARTICLE III
CLOSING
3.1 Closing................................................................10
3.2 Seller's Deliveries at the Closing.....................................10
3.3 Buyer's Deliveries at the Closing......................................10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND P-COM
4.1 Organization of Seller.................................................10
4.2 Authorization..........................................................10
4.3 Financial Statements...................................................11
4.4 Absence of Certain Changes.............................................11
4.5 Title to Transferred Assets, Right to Convey...........................11
4.6 Contracts and Commitments..............................................12
4.7 No Conflict or Violation...............................................13
4.8 Consents and Approvals.................................................13
4.9 Litigation.............................................................13
4.10 Compliance with Law; Permits and Licenses..............................14
4.11 Brokers................................................................14
4.12 Intellectual Property Rights...........................................14
4.13 Employee Plans.........................................................16
4.14 Taxes..................................................................17
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4.15 Environmental and Other Regulations....................................17
4.16 Labor Matters..........................................................18
4.17 Insurance..............................................................18
4.18 Sufficiency of Transferred Assets......................................18
4.19 Inventory..............................................................18
4.20 Suppliers..............................................................19
4.21 Backlog................................................................19
4.22 Accounts Receivable....................................................19
4.23 Definition of "knowledge"..............................................19
4.24 Employee Stock Options.................................................20
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
5.1 Organization of the Buyer..............................................20
5.2 Authorization..........................................................20
5.3 No Conflict or Violation...............................................20
5.4 Consents and Approvals.................................................20
5.5 Litigation.............................................................21
5.6 Brokers................................................................21
5.7 Purchase for Resale....................................................21
5.8 No Breach by the Seller................................................21
5.9 Organizational Documents...............................................21
5.10 Investigation and Evaluation...........................................21
5.11 SEC filings............................................................21
ARTICLE VI
ACTIONS BY SELLER AND BUYER PRIOR TO THE CLOSING
6.1 Conduct of Business....................................................22
6.2 Access to Information..................................................22
6.3 Regulatory and Other Authorizations....................................22
6.4 Bulk Transfer Laws.....................................................23
6.5 Insurance..............................................................23
6.6 Release from Assumed Liabilities.......................................23
6.7 Further Action.........................................................23
6.8 Non-Assignable Leases, Contracts, and Permits..........................23
6.9 Schedules..............................................................24
6.10 Notification of Changes................................................24
6.11 Compliance with New Jersey Industrial Site Recovery Act................24
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ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of the Seller................................25
7.2 Conditions to Obligations of the Buyer.................................26
ARTICLE VIII
ACTIONS BY SELLER AND BUYER
AFTER THE CLOSING
8.1 Confidentiality........................................................28
8.2 Employment of Seller's Personnel.......................................28
8.3 Books and Records; Access to Information...............................30
8.4 Mail Received After Closing............................................31
8.5 Other Employee Benefits................................................32
8.6 No Solicitation........................................................32
8.7 Discharge of Business Obligations......................................32
8.8 UCC Matters............................................................32
8.9 Tax Matters............................................................32
8.10 Sales and Transfer Taxes...............................................32
8.11 Change of Name.........................................................33
ARTICLE IX
INDEMNIFICATION
9.1 Survival of Certain Representations and Warranties.....................33
9.2 Indemnification by the Buyer...........................................33
9.3 Indemnification by the Seller and P-COM................................35
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Methods of Termination.................................................36
10.2 Procedure Upon Termination.............................................37
10.3 Effect of Termination..................................................37
ARTICLE XI
MISCELLANEOUS
11.1 Specific Performance...................................................37
11.2 Assignment.............................................................37
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11.3 Notices................................................................37
11.4 Choice of Law..........................................................38
11.5 Resolution of Conflicts; Arbitration...................................38
11.6 Entire Agreement; Amendments and Waivers...............................39
11.7 Counterparts...........................................................39
11.8 Invalidity.............................................................39
11.9 Headings...............................................................39
11.10 Expenses...............................................................39
11.11 Publicity..............................................................39
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SCHEDULES AND EXHIBITS
SELLER'S SCHEDULES
Schedule 2.1(a) - Leases and Leased Real Property
Schedule 2.1(b) - Equipment
Schedule 2.1(c) - Contracts
Schedule 2.1(e) - Intellectual Property Rights
Schedule 2.1(g) - Permits
Schedule 2.1(h) - Receivables
Schedule 2.1(i) - Computer Programs
Schedule 2.2 - Excluded Assets
Schedule 2.3 - Excluded Liabilities
Schedule 4.5 - Title Exceptions
Schedule 4.6(c) - Material Contract or Lease Defaults
Schedule 4.6(d) - Contracts not in the Ordinary Course
Schedule 4.6(e) - Termination or Amendments to Contracts
Schedule 4.7 - Conflict or Violation
Schedule 4.8 - Consents and Approvals
Schedule 4.9 - Litigation
Schedule 4.10(a) - Compliance with Law
Schedule 4.10(b) - Permits and Licenses
Schedule 4.12(a) - Intellectual Property Rights Requiring Third Party Consent
to be Assigned
Schedule 4.12(h) - Royalties
Schedule 4.12(i) - Agreements with Officers and Employees regarding
Intellectual Property Rights
Schedule 4.14 - Taxes
Schedule 4.15(a) - Environmental and Other Regulations
Schedule 4.15(b) - Equal Employment Opportunity and Employee Health and Safety
Schedule 4.16(b) - Labor Matters
Schedule 4.17 - Insurance
Schedule 4.18 - Sufficiency of Transferred Assets
Schedule 4.19 - Inventory
Schedule 4.20 - Suppliers
Schedule 4.21 - Backlog
Schedule 4.22 - Accounts Receivable
Schedule 7.1(c) - Key Employees
Schedule 7.1(e) - Employee Stock Options
Schedule 8.2(a) - Employees
Schedule 8.2(c) - Employees with Additional Severance
EXHIBITS
Exhibit 1.1 - Financial Statements
Exhibit 2.4 - Note
Exhibit 8.1 - Confidentiality Agreement
Exhibit 8.2(b)(i) - Paradyne/CRC Special Severance Plan
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Exhibit 8.2(b)(ii) - Form of Termination Agreement, Waiver and Release
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THIS ASSET PURCHASE AGREEMENT, dated as of April 5, 2000 (together
with all schedules and exhibits hereto, the "Agreement"), is by and between
Paradyne Networks, Inc., a corporation organized and existing under the laws of
Delaware ("PDYN"), Paradyne Corporation, a corporation organized and existing
under the laws of Delaware and a wholly owned subsidiary of PDYN (the "Buyer"),
P-Com, Inc., a corporation organized and existing under the laws of Delaware
("P-COM"), and Control Resources Corporation, a corporation organized and
existing under the laws of Delaware and a wholly owned subsidiary of P-COM (the
"Seller").
RECITALS
WHEREAS, the Seller is presently engaged in the design, manufacture
and sale of communications products primarily for network and information
service providers (the foregoing is referred to hereinafter as the "Business");
WHEREAS, subject to the terms and conditions of this Agreement, the
Buyer desires to purchase from Seller, and the Seller desires to sell to the
Buyer, all of the assets of the Seller related to the Business; and
WHEREAS, the Seller desires that the Buyer assume, and the Buyer has
agreed to assume, certain of the liabilities of the Seller related to the
Business;
NOW, THEREFORE, in consideration of the mutual covenants and
promises contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. Capitalized words and phrases used and not
otherwise defined in this Agreement shall have the following meanings:
"Actions" is defined in Section 4.9.
"Affiliate" means a Person that directly, or indirectly through one
or more intermediaries, controls, is controlled by or is under common control
with the Person specified. For purposes of this definition, the term control of
a Person means the possession, direct or indirect, of the power to (i) vote 50%
or more of the voting securities of such Person or (ii) direct or cause the
direction of the management and policies of such Person, whether by contract or
otherwise, and the terms and phrases controlling, controlled by and under common
control with have correlative meanings.
"Agreement" is defined in the preamble.
"Allocation Schedule" is defined in Section 2.4(c)
"Assumed Liabilities" means the liabilities of the Seller assumed by
the Buyer pursuant to this Agreement which specifically exclude the Excluded
Liabilities set forth on Schedule 2.3.
"AT&T" means any entity which is affiliated with AT&T Corp.
"Business" is defined in the Recitals.
"Business Day" means any day other than a Saturday, Sunday or other
day on which commercial banks in New York are authorized or required by law to
close.
"Buyer" is defined in the preamble.
"Closing" is defined in Section 3.1.
"Closing Cash Payment" is defined in Section 2.4(a)(i).
"Closing Date" means the date on which the Closing occurs pursuant
to Section 3.1.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Computer Programs" is defined in Section 2.1(i).
"Contracts" is defined in Section 2.1(c).
"Cause" shall mean (a) a material breach of the Buyer's written
policies constituting dishonesty, breach of a fiduciary obligation, intentional
wrongdoing or malfeasance, violation or negligent disregard for workplace rules
and procedures, insubordination, theft, violent acts or threats of violence, or
consumption of alcohol or possession of controlled substances on the property of
the Buyer (or an Affiliate of the Buyer); (b) conviction of a criminal violation
constituting a felony (other than a felony traffic offense) or involving fraud
or dishonesty; (c) the failure to materially satisfy the conditions and
requirements of an employment with the Buyer (or an Affiliate of the Buyer), and
such failure by its nature is incapable of being cured, or such failure remains
uncured for more than 30 days following receipt by the employee of written
notice from the Buyer specifying the nature of the failure and demanding the
cure thereof. For purposes of this definition, inattention by an employee to his
or her duties shall be deemed a failure capable of cure.
"Equipment" is defined in Section 2.1(b).
"Environmental Law" shall mean any and all statutes, codes, laws
(including, without limitation, common law), ordinances, agency rules,
regulations, and guidance, and reporting or licensing requirements relating to
pollution or protection of human health or the environment (including ambient
air, surface water, ground water, land surface, or subsurface strata),
including, without limitation (i) the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss. 9601 et seq. ("CERCLA"); (ii) the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act, as amended, 42
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U.S.C. ss. 6901 et seq. ("RCRA"); (iii) the Emergency Planning and Community
Right to Know Act (42 U.S.C. ss. 11001 et seq.); (iv) the Clean Air Act (42
U.S.C. ss. 7401 et seq.); (v) the Clean Water Act (33 U.S.C. ss. 1251 et seq.);
(vi) the Toxic Substances Control Act (15 U.S.C. ss. 1261 et seq.); (vii) the
Hazardous Materials Transportation Act (49 U.S.C. ss. 5101 et seq.); (viii) the
Safe Drinking Water Act (41 U.S.C. ss. 300f et seq.); (ix) any state, county,
municipal, or local statutes, laws or ordinances similar or analogous to the
federal statutes listed in parts (i) - (viii) of this paragraph; (x) any
amendments to the statutes, laws or ordinances listed in parts (i) - (ix) of
this paragraphs; (any rules, regulations, guidelines, directives, orders or the
like adopted pursuant to or implementing the statutes, laws, ordinances and
amendments listed in parts (i) - (ix) of this paragraph; and (xii) any other
law, statutes, ordinance, amendment, rule, regulation, guideline, directive,
order or the like relating to environmental protection, pollution, or
environmental control.
"Environmental Liability of the Buyer" is defined as all
liabilities, costs and expenses (including reasonable attorney and expert fees)
and damages arising out of or relating to any provision of any applicable
Environmental Law, as it pertains to, or arises out of (i) any act or omission
of the Buyer, its employees, agents or representatives; (ii) the operation of
the Business subsequent to the Closing; (iii) the Leased Real Property, or any
other plant, facility, site, area, or property owned, leased, operated, or used
by the Buyer or in the operation of the Business subsequent to the Closing at
which a release of a Hazardous Material has occurred on, in, at, from, adjacent,
or about such Leased Real Property, plant, facility, site, area, or property
subsequent to the Closing when such release occurred during the Buyer's
ownership, lease, operation or use of such Leased Real Property, plant,
facility, site, area, or property.
"Environmental Liability of the Seller" is defined as all
liabilities, costs and expenses (including reasonable attorney and expert fees)
and damages arising out of or relating to any provision of any applicable
Environmental Law, as it pertains to, or arises out of (i) any act or omission
of the Seller, its employees, agents or representatives; (ii) the operation of
the Business prior to the Closing; (iii) the Leased Real Property, or any other
plant, facility, site, area, or property owned, leased, operated, or used by the
Seller or in the operation of the Business prior to the Closing at which a
release of a Hazardous Material has occurred on, in, at, from, adjacent, or
about such Leased Real Property, plant, facility, site, area, or property prior
to the Closing when such release occurred during the Seller's ownership, lease,
operation or use of such Leased Real Property, plant, facility, site, area, or
property.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate." An "ERISA Affiliate" of any entity shall mean any
member of a group of trades or businesses under common control (as defined in
Sections 4001(a)(14) or 4001(b)(1) of ERISA) with that entity, or that is
required to be considered a single employer with that entity pursuant to
Sections 414(b), (c) or (m) of the Code.
"Excluded Assets" is defined in Section 2.2.
"Excluded Liabilities" is defined in Section 2.3
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"Financial Statements" means (i) the unaudited statement of income
for the years ending December 31, 1999, December 31, 1998 and December 31, 1997
and accompanying balance sheet of the Seller as at such dates, and (ii) the
unaudited statement of income for the two-month period ending February 29, 2000
and accompanying balance sheet of the Seller as at such date, as previously
delivered to the Buyer and attached hereto as Exhibit 1.1.
"GAAP" means general accepted accounting principles consistently
applied in the United States of America, as from time to time in effect.
"Hazardous Material" means, for purposes of this Agreement, any
chemical, waste, substance, material, pollutant, contaminant, equipment or
fixture defined or deemed as "hazardous" or "toxic" or otherwise regulated under
any Environmental Law or other law or regulation relating to pollution and
environmental control, including, without limitation, CERCLA hazardous
substances, RCRA hazardous wastes, pesticides and other agricultural chemicals,
oil and petroleum-products or by-products and any constituents thereof,
asbestos-containing materials, and polychlorinated biphenyls (PCBs).
"Hired Employee" is defined in Section 8.2(a).
"Intellectual Property Rights" shall mean all rights to, all
patents, trademarks, trade names, service marks, copyrights, trade secret rights
and other intellectual property rights of the Seller and any applications or
registrations therefor, and all schematics, technology, source code, know-how,
computer software programs and all other tangible and intangible information or
material used by the Seller in the Business.
"Inventory" is defined in Section 2.1(d).
"IRS" means the Internal Revenue Service.
"ISRA" is defined in Section 6.11.
"Leased Real Property" is defined in Section 2.1(a).
"Leases" is defined in Section 2.1(a).
"Material Adverse Effect" means, with respect to the Business or the
Transferred Assets, a material adverse effect on the assets, financial condition
or properties of the Business and the Transferred Assets, taken as a whole.
"NetPath" means all products of the Business which are identified by
the trade name NetPath.
"Net Revenue Value" shall mean an amount billed to the customer or
an order from a customer that is/will be included in the income statement as
revenue in accordance with GAAP, net of any revenue credits. Amounts
specifically excluded from Net Revenue Value include but are not limited to
sales tax or other taxes (including without limitation any added value, use, or
similar tax), freight, interest, other product delivery services, and duty.
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"Net Working Capital" shall mean the sum of the Seller's (i) current
assets which shall consist of cash, accounts receivable, inventory and prepaid
expenses, (ii) other assets, (iii) fixed assets, (iv) any assets which are
reclassified from current to long term as a result of the audit of the Seller's
Financial Statements as set forth in Section 2.4(a)(iii); less the sum of (a)
current liabilities which shall consist of accounts payable, employee
compensation, current portion of long term debt (only as it relates to capital
leases) and other accrued liabilities, (b) long term warranty reserves, and (c)
any liabilities which are reclassified from current to long term as a result of
the audit of the Seller's Financial Statements as set forth in Section
2.4(a)(iii). Net Working Capital shall specifically exclude software/test
development, capitalized software, accrued vacation costs (including taxes)
intercompany account, accrued interest P-COM, notes payable, and all amounts
classified as taxes payable (because such amounts will not be assumed by the
Buyer). In addition, any asset or liability classifications which (i) are not of
an inter-company nature between the Seller and its Affiliates, or (ii) are not
in the nature of an asset or liability specifically excluded from Net Working
Capital herein, and (iii) appear on the Seller's Closing Date balance sheet and
do not appear on the Seller's balance sheet for the two-month period ending
February 29, 2000, shall be included in Net Working Capital.
"NJDEP" is defined in Section 6.11.
"Note" is defined in Section 2.4(a)(ii).
"Path View" means a software product of the Business which uses the
trade name Path View.
"Permits" is defined in Section 2.1(g).
"P-COM" is defined in the preamble.
"Person" means an individual, a partnership, a limited liability
company, a joint venture, a corporation, a trust, an unincorporated
organization, a division or operating group of any of the foregoing, a
government or any department or agency thereof or any other entity.
"Personnel" is defined in Section 4.9
"Plan" means all plans, programs, policies, commitments or other
arrangements (whether or not set forth in a written document) that are currently
or, within the past three years have been, maintained by P-COM, or to which
P-COM has contributed, on behalf of the Seller that provide incentive
compensation, stock options or other stock purchase rights, severance or
termination pay, medical, dental, life, disability or accident benefits (whether
or not insured), collective bargaining agreements, benefits described in
Sections 125 or 129 of the Code, or pension, profit sharing or retirement
benefits to, or for the benefit of, any active, former or retired service
provider of the Seller or their spouses or dependents.
"Purchase Price" is defined in Section 2.4(a).
"Records" is defined in Section 2.1(f).
"Regulations" is defined in Section 4.10(a).
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"Representative" means any officer, director, principal, agent,
employee, counsel, consultant, independent auditor or other representative of a
Person.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" means all forms, reports and documents together with
all exhibits required to be filed with the SEC by the Buyer.
"Securities Act" means The Securities Act of 1933, as amended.
"Seller" is defined in the preamble.
"Severance Plan" is defined in Section 8.2(b).
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
ss. 59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means any return, filing, questionnaire, information
return or other document required to be filed, including requests for extensions
of time, filings made with estimated tax payments, claims for refund and amended
returns that may be filed, for any period with any taxing authority (whether
domestic or foreign) in connection with any Tax (whether or not a payment is
required to be made with respect to such filing).
"Transferred Assets" is defined in Section 2.1.
"Transfer Taxes" is defined in Section 8.10.
ARTICLE II
PURCHASE AND SALE OF TRANSFERRED ASSETS
2.1 Transferred Assets. Subject to the terms and conditions of this
Agreement, the Seller shall sell, transfer, assign and convey to the Buyer, and
the Buyer shall purchase and acquire from the Seller, on the Closing Date the
following (the "Transferred Assets"):
(a) The Seller's rights in, to and under, the real estate leases
described in Schedule 2.1(a) (the "Leases"), together with all of the Seller's
right, title and interest, if any, in the building, office, warehouse or plant
space, fixtures and improvements thereon and any security deposits relating to
the Leases (collectively, the "Leased Real Property") and any and all assignable
warranties of third parties covering such buildings, fixtures and improvements;
provided, however, that the Seller shall retain any and all rights under the
Leases in connection with any event occurring prior to the Closing Date.
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(b) The Seller's rights in, to and under all machinery, spare parts,
equipment, furniture and fixtures of the Seller located in, on or about the
Leased Real Property, and used principally in connection therewith and in
connection with the Business as set forth in Schedule 2.1(b) (the "Equipment"),
and any and all assignable warranties of third parties covering the Equipment;
(c) All assignable rights of the Seller in, to and under (i) the
leases, licenses (including patent, know-how and trademark licenses), contracts
and commitments set forth in Schedule 2.1(c), including, without limitation,
commitments for additions to property, plant or equipment deliverable after the
Closing Date (the "Contracts"), (ii) all unfilled purchase and sales orders of
the Business existing as of the Closing Date and (iii) all security deposits
related to the Contracts;
(d) All of the Seller's inventory of work in process, samples,
finished goods, raw materials and supplies (to the extent of the Seller's rights
therein) located on the Leased Real Property or located elsewhere and related
solely to the Business (the "Inventory");
(e) All the Intellectual Property Rights, as set forth in Schedule
2.1(e);
(f) All books, records, accounting records, drawings, customer
lists, files and documents (including computer tapes or disks) of the Seller
relating to the Business or the Transferred Assets that are located upon the
Leased Real Property or elsewhere and are in all cases related primarily to the
operations of the Business, or are necessary for the daily operations of the
Business (the "Records"), but not the corporate minute books, corporate seals,
consolidated financial statements or tax records of the Seller;
(g) All permits, licenses, certificates and governmental or
regulatory authorizations which the Seller has obtained for the conduct of the
Business which are assignable to the Buyer, as set forth in Schedule 2.1(g) (the
"Permits"). Schedule 2.1(g) also sets forth all Permits that are not assignable
to the Buyer;
(h) All accounts and notes receivable of the Seller as of the
Closing Date for products sold, arising out of the conduct of the Business, as
set forth in Schedule 2.1(h);
(i) All of the Seller's assignable data processing programs used in
the conduct of the Business, including accounting, invoicing, auditing and data
processing programs, as set forth in Schedule 2.1(i) (the "Computer Programs"),
with the understanding that certain of the Computer Programs are non-exclusive
and may in certain instances continue also to be used by the Seller. Schedule
2.1(i) also sets forth the Computer Programs that are not assignable to the
Buyer.
(j) All other assets of the Seller, including miscellaneous office
supplies used in the conduct of the Business and located on the Leased Real
Property or elsewhere and in all cases related primarily to the operations of
the Business, or are necessary for the daily operations of the Business;
(k) The Seller's goodwill, if any, associated with the Business;
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(l) All of the Seller's intangible rights with respect to claims for
warranties or defects of workmanship, manufacturing or design against third
parties relating to any Transferred Assets; and
(m) All rights which the Seller possesses to use the corporate name
"Control Resources Corporation" in connection with the Business.
2.2 Excluded Assets. The Seller shall retain, and the Buyer shall
not purchase, the assets of the Seller set forth in Schedule 2.2 hereto
(collectively, the "Excluded Assets"), all of which shall remain the exclusive
property of the Seller, free and clear of any claim of the Buyer except as
provided for herein.
2.3 Assumption of Liabilities by the Buyer. On the Closing Date,
subject to the terms and conditions of this Agreement, the Buyer shall
unconditionally and irrevocably assume, and agrees to pay, perform and
discharge, the Assumed Liabilities as they existed at the Closing Date and as
they have existed or shall exist after the Closing Date (whether fixed or
contingent, arising by law or by contract or otherwise). The Buyer shall not
assume those liabilities specifically set forth on Schedule 2.3 (the "Excluded
Liabilities"). The Excluded Liabilities shall remain the obligation of the
Seller.
2.4 Purchase Price. (a) Upon the terms and subject to the conditions
contained herein, as consideration for the purchase of the Transferred Assets
(including the Assumed Liabilities), the Buyer shall deliver to the Seller an
aggregate purchase price (the "Purchase Price") equal to the following:
i. At the Closing, the sum of $3,100,000,
payable by wire transfer, in immediately available funds, to an account which
the Seller shall designate in writing to the Buyer, in lawful money of the
United States of America (the "Closing Cash Payment");
ii. At the Closing, an interest bearing Note
from the Buyer (the "Note") in the form of Exhibit 2.4 in the principal amount
of $4,546,842. The principal amount of such Note shall be (i) decreased by the
amount of cash reflected in the Closing Date balance sheet of the Seller, and
ii. increased or decreased, as the case may be, on a dollar for dollar basis by
the difference, if any, between the Net Working Capital reflected on the
unaudited balance sheet of the Seller as of February 29, 2000, (as included in
Exhibit 1.1 hereto) and the Net Working Capital reflected on the balance sheet
of the Seller as of the close of business on the Closing Date as prepared by the
Buyer and audited by PriceWaterhouseCoopers LLP at the Buyer's sole cost and
expense. Such Closing Date balance sheet shall be prepared from the books and
records of the Business in accordance with GAAP on a basis consistent with the
audited Financial Statements described in Section 2.4(a)(iii). The audit of said
Closing Date balance sheet shall be completed not later than 60 days after the
Closing Date and the Note shall be reissued as soon as practicable after the
completion of such audit in order to reflect the final principal amount as
adjusted pursuant to this Section 2.4(a)(ii).
iii. The income statement of the Seller for
the year ending December 31, 1999 and the accompanying balance sheet of the
Seller as at such date
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shall be audited by PriceWaterhouseCoopers LLP at the Buyer's sole cost and
expense and such audit shall be completed not later than 60 days after the
Closing Date. At the Buyer's option, the financial statements of the Seller for
the periods ending December 31, 1998 and December 31, 1997 may be audited by
PriceWaterhouseCoopers LLP at the Buyer's sole cost and expense and the Seller
and/or P-COM shall reasonably assist the Buyer for a period of 180 days after
the Closing Date in the conduct of such audit. In the event of any proposed
adjustments resulting from the audit of the Financial Statements for the period
ending December 31, 1999 or the Closing Date balance sheet of the Seller, the
Buyer shall provide the Seller with direct access to PriceWaterhouseCoopers LLP
for the purpose of resolving any dispute regarding such adjustments, in the same
manner and timely fashion that the Seller would have had if the Seller had
engaged PriceWaterhouseCoopers LLP to perform such audit. It is recognized that
time is of the essence and all parties shall cooperate in the resolution of such
dispute.
iv. The principal amount of the Note and any
interest payable thereon, shall, at the option of the Buyer, be paid by the
Buyer either: (i) on or before September 15, 2000 by wire transfer of
immediately available funds to an account which the Seller shall designate in
writing to the Buyer in an amount equal to the full amount due, or (ii) on
September 15, 2000 by the (a) issuance to the Seller of registered shares of
common stock of PDYN with the number of such shares based on the average closing
price of PDYN's common stock on the 7 business days immediately preceding the
day such shares of common stock of PDYN are delivered by PDYN to the Seller, and
(b) delivery of a good check to the Seller for the difference between the total
value of such shares and the full amount due under the Note.
(b) Should the total of (i) the Net Revenue Value of invoiced
amounts for shipments of NetPath equipment to AT&T during the year 2000, plus
(ii) the Net Revenue Value of the Seller's NetPath equipment which is ordered by
AT&T prior to December 15, 2000 with a requested delivery date, including any
requested extensions thereof, which is within the Buyer's standard lead time for
such products, during the year 2000 and not delivered by the Buyer before
December 31, 2000, plus (iii) Net Revenue Value for ▇▇▇▇▇▇▇▇ to AT&T for Path
View and/or Path View based services during the year 2000, be in excess of
$12,000,000, no later than January 15, 2001 the Buyer shall make an additional
payment to the Seller of $1,500,000, which payment may, at the option of the
Buyer, be made either by (a) issuance to the Seller of registered shares of
common stock of PDYN having an aggregate value of not less than $1,500,000
computed on the basis of the average closing price of PDYN's common stock on the
7 business days immediately preceding the day such shares of common stock of
PDYN are delivered by the Buyer to the Seller, or (b) by wire transfer of
immediately available funds to an account which the Seller shall designate in
writing to the Buyer in an amount equal to the full amount due
(c) Within 90 days of the determination of the final Purchase Price,
the Buyer shall prepare a schedule allocating the Purchase Price among the
Transferred Assets for the Seller's review (the "Allocation Schedule"). Within
15 days after the receipt of such Allocation Schedule, the Seller will propose
to the Buyer any changes to such Allocation Schedule (and in the event no such
changes are proposed in writing to the Buyer within such time period, the Seller
will be deemed to have agreed to, and accepted the Allocation Schedule). The
Buyer and the Seller shall endeavor in good faith to resolve any differences
with respect to the Allocation
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Schedule. If the Buyer and the Seller are unable to resolve any differences,
then any remaining disputed matters will be finally and conclusively determined
by an independent accounting firm of recognized national standing selected by
the Buyer and the Seller. The allocation in the Allocation Schedule will comply
with the requirements of Section 1060 of the Code. The Buyer and the Seller each
agrees to file IRS Form 8594 and Tax Returns in accordance with the Allocation
Schedule.
ARTICLE III
CLOSING
3.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place on the first to occur of: (i) June 1,
2000, or (ii) four days following the date on which all of the conditions set
forth in Article VII hereto have been fulfilled, or (iii) such other date as
agreed by the Buyer and the Seller (such date, the "Closing Date"). The Closing
shall be held at 10:00 a.m., local time, on the Closing Date at the offices of
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or such
other place as agreed between the Buyer and the Seller.
3.2 Seller's Deliveries at the Closing. At the Closing, the Seller
shall deliver to the Buyer bills of sale, deeds, endorsements, assignments and
all other instruments of transfer, reasonably satisfactory in form and substance
to the Buyer and its counsel, as shall be effective and necessary to vest in the
Buyer all of the Seller's interest in and title to the Transferred Assets,
together with the certificates and other agreements contemplated by Article VII.
3.3 Buyer's Deliveries at the Closing. At the Closing, the Buyer
shall deliver to the Seller (i) the Closing Cash Payment and the Note, as
provided in Section 2.4 and (ii) the certificates, agreements, and other
documents contemplated by Article VII.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND P-COM
The Seller hereby represents and warrants to the Buyer as follows:
4.1 Organization of Seller. The Seller is duly organized, validly
existing and in good standing as a corporation under the laws of the State of
Delaware and has full corporate power and authority to conduct the Business as
it is presently being conducted and to own and lease its properties and assets.
The Seller is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its business or its
ownership of property makes such qualification necessary and where the failure
so to qualify would have a Material Adverse Effect.
4.2 Authorization. Each of the Seller and P-COM hereby represents
and warrants to the Buyer that each of the Seller and P-COM has all necessary
corporate power and authority to enter into this Agreement and each has taken
all corporate action necessary to consummate the transactions contemplated
hereby and to perform its obligations hereunder. This Agreement has
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been duly executed and delivered by the Seller and P-COM and, assuming the due
execution and delivery of this Agreement by the Buyer, is a legal, valid and
binding obligation of the Seller and P-COM, enforceable against the Seller and
P-COM in accordance with its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally, and
(ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
4.3 Financial Statements. The Seller has delivered to the Buyer the
Financial Statements. The Financial Statements are true, correct and complete,
are based on the books and records of the Business, fairly present the financial
condition and, results of operations and cash flow of the Business, as of the
dates and for the periods indicated therein, and have been prepared in
accordance with GAAP.
4.4 Absence of Certain Changes. (a) Since December 31, 1999, there
has not been any change in the Business, Transferred Assets, or Assumed
Liabilities except for (i) changes contemplated hereby or relating to the
transactions contemplated hereby, (ii) changes in the ordinary course of
business, and (iii) changes which have not, individually or in the aggregate,
had a Material Adverse Effect.
(b) Since December 31, 1999, the Seller has not declared, set aside,
or paid any dividends or made any other payments (whether in cash, stock or
property) in respect of any of the Seller's capital stock.
4.5 Title to Transferred Assets, Right to Convey. The Seller has
good and marketable title to, or valid and subsisting leasehold interests in,
all of the Transferred Assets to be conveyed by it, free and clear of all liens,
claims and encumbrances of every kind and nature, and will convey the same to
the Buyer, subject however to the following, all of which is set forth in
Schedule 4.5:
(a) liens for taxes and assessments not yet due and payable;
(b) liens for taxes, assessments, charges and other claims the
validity of which the Seller is contesting in good faith;
(c) the Contracts being subject to the Seller's obligations
thereunder and to the rights and obligations of the other parties thereto;
(d) the Seller not having exclusive right and title to the Seller's
trade names and style names included in the Intellectual Property Rights; and
(e) the existence of imperfections of title, exceptions, liens,
security interests, claims, and other charges and encumbrances which do not
interfere materially with the Seller's present use or ownership of any of the
Transferred Assets or the conduct and operation of the Business taken as a
whole.
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4.6 Contracts and Commitments.
(a) The Leases listed on Schedule 2.1(a) include all leases for the
Leased Real Property, and copies thereof have been furnished to the Buyer. The
Seller hereby represents that it is the lessee under the Leases listed on
Schedule 2.1(a). Except as set forth in Schedule 2.1(a), the Seller's interest
in the Leases is free and clear of any mortgages and liens, and is not subject
to any deeds of trust, assignments, subleases or rights of any third parties
known to or created or permitted by the Seller.
(b) The Contracts set forth in Schedule 2.1(c) include all material
leases for personal property, contracts and commitments related to the conduct
of the Business and the operation of the Transferred Assets. Copies of the
Contracts have been made available to the Buyer.
(c) Except as set forth in Schedule 4.6(c), all Contracts and the
Leases are in full force and effect, valid and existing and binding, and each of
them is, to the Seller's knowledge, binding upon and enforceable against the
parties thereto in accordance with their respective terms other than those
Contracts and the Leases the failure of which to be in full force and effect,
valid or existing or binding or enforceable, individually or in the aggregate,
would not have a Material Adverse Effect. Neither the Seller, nor, to the
Seller's knowledge, any other party to such Contract or the Leases, is in
default under the terms thereof, and, to the Seller's knowledge, there exists no
condition which, after notice or lapse of time or both, would constitute such a
default, other than those defaults which, individually, or in the aggregate,
would not have a Material Adverse Effect. Except as set forth in Schedule
4.6(c), no consents to the assignment to the Buyer of any such Contracts or the
Leases are required and the assignment of such Contracts or Leases will not
cause a breach, default or event of default under any such Contract or Lease.
(d) Except as set forth in Schedule 4.6(d), neither the Seller nor
its Affiliates are parties to any written or oral:
(i) contracts materially affecting the
Business and not made in the ordinary course of business;
(ii) contracts containing covenants
limiting, in a manner which is material to the Business, its freedom to engage
in any line of business in any geographic area or to compete with any Person;
(iii) contracts for employment or to employ,
in connection with the Business, including without limitation contracts to
employ executive officers and other contracts with officers or directors of the
Seller, which can not be terminated by the Seller upon notice of sixty days or
less without penalty or premium.
(iv) agreement, contract, or commitment for
the future purchases of, or payment for, supplies or products, or for the
performance of services by a third party which supplies, products or services
used in the conduct of the Business involving in any one case $10,000 or more;
or
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(v) agreement, contract or commitment to
sell or supply products or to perform maintenance, services or similar duties in
connection with the Business involving in any one case $10,000 or more.
(e) Except as set forth on Schedule 4.6(e), there exists no actual
or, to the knowledge of the Seller, any threatened termination, cancellation, or
limitation of, or any amendment, modification, or change to any Contract, which
would have a Material Adverse Effect on the business or condition, financial or
otherwise, of the Business, including without limitation: (i) the business
relationship of the Seller with any customer, distributor, or related group of
customers or distributors whose purchases individually or in the aggregate are
material to the operations and financial condition of the Business, (ii) the
requirements of any customer or related group of customers of the Seller whose
purchases individually or in the aggregate are material to the operations and
financial condition of the Business, or (iii) the business relationship of the
Seller with any material supplier to the Business.
4.7 No Conflict or Violation. Except as set forth in Schedule 4.7,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in (a) a violation of or a conflict
with any provision of the Certificate of Incorporation or Bylaws of the Seller
or its Affiliates, (b) a breach of, or a default under, or a right to accelerate
with respect to, the Leases, any Contract, commitment or other obligation to
which the Seller or its Affiliates is a party or is subject or by which any of
the Transferred Assets are bound, which would have a Material Adverse Effect, or
interfere in any material way with the ability of the Seller or its Affiliates
to consummate the transactions contemplated by this Agreement, (c) a violation
by the Seller of any statute, rule, regulation, ordinance, code, order,
judgment, writ, injunction, decree or award, which would have a Material Adverse
Effect, or would interfere in any material way with the ability of the Seller to
consummate the transactions contemplated by this Agreement, or (d) the creation
of any lien, charge, or encumbrance upon any of the Transferred Assets, or
result in the acceleration of the maturity of any payment date of any of the
Assumed Liabilities, or increase or adversely effect the obligations of the
Seller under any of the Assumed Liabilities.
4.8 Consents and Approvals. To the Seller's knowledge, except as set
forth in Schedule 4.8, no consent, approval, authorization or other action by,
or filing with or notification to, any governmental or regulatory authority or
other third party is required to be made or obtained by the Seller or its
Affiliates on or prior to the Closing Date in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby, except (i) where failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification, would not interfere in any material way with the ability of the
Seller to consummate the transactions contemplated by this Agreement or would
not have a Material Adverse Effect or (ii) for those requirements which become
applicable to the Seller as a result of the specific regulatory status of the
Buyer or as a result of any other facts that specifically relate to the business
or activities in which the Buyer is or proposes to be engaged.
4.9 Litigation. Except as set forth in Schedule 4.9, there is no
action, order, writ, injunction, judgment or decree outstanding, or suit,
litigation, proceeding, labor dispute (other than routine grievance procedures
or routine, uncontested claims for benefits
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under any benefit plans for any officers, employees or agents of the Seller
employed in connection with the Business (collectively, "Personnel") , which
have been previously disclosed to the Buyer), arbitration, investigation or
reported claim, pending or, to the Seller's knowledge, threatened, before any
court, governmental entity or arbitrator (collectively, "Actions"), relating to
(i) the Business or the Transferred Assets, (ii) any benefit plan for Personnel
or any fiduciary or administrator thereof or (iii) the transactions contemplated
by this Agreement. Nor is the Seller in default under or in violation of any
order, writ, injunction, or decree of any court, governmental entity or
arbitrator, affecting the Business or the Transferred Assets.
4.10 Compliance with Law; Permits and Licenses. (a) Except as set
forth in Schedule 4.10(a), to the Seller's knowledge, the Seller has not
received notice of any material, unremedied violation of any applicable law,
rule, regulation, order, writ or decree of any court or any governmental agency
or instrumentality (collectively, "Regulations"), where the consequences of such
default or violation would have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.10(b), the Seller holds all
governmental or regulatory licenses, permits and authorizations necessary for
the ownership and conduct of the Business in each of the jurisdictions in which
the Business is presently being conducted or operated, and such governmental or
regulatory licenses, permits and authorizations are in full force and effect,
except where the failure to hold any thereof or the failure of any thereof to be
in full force and effect would not have a Material Adverse Effect.
4.11 Brokers. Except for an agreement between P-COM and CIBC
▇▇▇▇▇▇▇▇▇▇▇ Corp., neither the Seller nor any of its Affiliates has employed, or
is subject to any valid claim of, any broker, finder, investment banker,
consultant or other intermediary in connection with the transactions
contemplated by this Agreement who will be entitled to a fee or commission in
connection with such transactions.
4.12 Intellectual Property Rights. (a) The Seller owns, or is
licensed or otherwise entitled to exercise, without restriction (other than
pursuant to applicable law and the terms of each such license) the Intellectual
Property Rights without any conflict or infringement of the rights of others and
upon the consummation of the transactions contemplated by this Agreement, the
Buyer will own or have the uncontested right to use the Intellectual Property
Rights. Except as set forth in Schedule 4.12(a), all Intellectual Property
Rights and registrations, applications and agreements related thereto of the
Seller and any of its Affiliates which are necessary for the operation of the
Business are fully assignable to the Buyer without the consent of any third
party.
(b) Schedule 2.1(e) also lists (i) all patents and all registered
copyrights, trade dress, trade names, trademarks, service marks and other
company, product or service identifiers and work rights included in the
Intellectual Property Rights, and specifies the jurisdictions in which each such
Intellectual Property Right has been registered, including the respective
registration numbers; (ii) all licenses, sublicenses and other agreements as to
which the Seller is a party and pursuant to which the Seller or any other Person
is authorized to use any Intellectual Property Right except for licenses for
software which is generally available; and (iii) if applicable, all parties to
whom the Seller has delivered copies of the Seller source code, whether pursuant
to an escrow arrangement or otherwise, or parties who have the right to receive
such
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source code. Copies of all such licenses, sublicenses, and other agreements
identified pursuant to clause (ii) above have been delivered by the Seller to
the Buyer.
(c) The Seller is not, or as a result of the execution and delivery
of this Agreement or the performance of the Seller's obligations hereunder will
not be, in violation of, or lose or in any way impair any material rights
pursuant to any license, sublicense or agreement described in Schedule 2.1(e).
(d) The Seller is the absolute owner or licensee of, with all
necessary right, title and interest in and to (free and clear of any liens,
encumbrances or security interests), the Intellectual Property Rights and has
rights to the use, sale, license or disposal thereof or the material covered
thereby in connection with the services or products in respect of which the
Intellectual Property Rights are being used, sold, licensed or disposed of.
Except as described in Schedule 2.1(e), the Seller has taken all commercially
reasonable actions and made all applicable applications and filings pursuant to
applicable laws to perfect or protect its interests in such Intellectual
Property Rights.
(e) To the Seller's knowledge, no claims with respect to the
Intellectual Property Rights have been asserted or are threatened, written or
otherwise, by any Person, and there are no claims (i) to the effect that the
manufacture, marketing, license, sale, offer for sale, import or use of any
product or service as now used or offered or proposed for use or sale by the
Seller infringes any copyright, patent, trademark, trade secret or other
intellectual property right of any third party or violates any license or
agreement with any third party; (ii) contesting the right of the Seller to use,
sell, license or dispose of any Intellectual Property Rights; or (iii)
challenging the ownership, validity or effectiveness of any of the Intellectual
Property Rights.
(f) There has not been and there is not now any unauthorized use,
infringement or misappropriation of any of the Intellectual Property Rights by
any third party, including, without limitation, any service provider of the
Seller; the Seller has not been sued or charged as a defendant in any claim,
suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, service marks, copyrights of other intellectual property
rights and which has not been finally terminated prior to the date hereof; there
are no such charges or claims outstanding; and the Seller does not have any
infringement liability or threat thereof, written or otherwise, with respect to
any trademark, service ▇▇▇▇, copyright, registered patent or other intellectual
property right of another.
(g) No Intellectual Property Right is subject to any outstanding
order, judgment, settlement agreement, decree, or, except as provided for in the
terms of the relevant license, stipulation or agreement restricting in any
manner the licensing thereof by the Seller. The Seller has not entered into any
agreement granting any third party the right to bring infringement actions with
respect to, or otherwise to enforce rights with respect to, any Intellectual
Property Right owned by the Seller. The Seller has the exclusive right to file,
prosecute and maintain all applications and registrations with respect to the
Intellectual Property Rights owned by the Seller.
(h) Except as set forth in Schedule 4.12(h), no royalties or fees
are payable by the Seller to anyone for use of the Intellectual Property Rights.
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(i) All Intellectual Property Rights owned by the Seller or its
Affiliates have been (i) developed by employees of the Seller or its Affiliates,
(ii) developed by independent contractors or (iii) was acquired from a third
party. Except as described on Schedule 4.12(i), every current and for the last
five years every former officer, director, consultant, independent contractor or
employee of the Seller has entered into an agreement that requires such officer,
director, consultant, independent contractor or employee to assign to the Seller
any interest in any Intellectual Property Rights created by such Person in the
course of his or her engagement with the Seller that relates to the Business and
to keep confidential any trade secrets, proprietary data or other proprietary
business information of the Seller and to the Seller's knowledge, no such
officer, director, consultant, independent contractor or employee is in breach
of his, her or its obligations pursuant to any such agreement, nor is a party to
any other agreement that requires such individual to assign any interest in any
Intellectual Property Rights created by such Person in the course of his or her
engagement with the Seller that relates to the Business to any Person other than
the Seller, or to keep confidential any trade secrets, proprietary data,
customer information or other business information of any Person other than the
Seller.
4.13 Employee Plans. Any Plan required to be qualified under Section
401(a) of the Code has either obtained a favorable determination letter as to
its qualified status from the IRS or still has a remaining period of time under
applicable Treasury Regulations or IRS pronouncements in which to apply for such
determination letter and to make any amendments necessary to obtain a favorable
determination. To the extent any Plan with an existing determination letter from
the IRS must be amended to comply with the applicable requirements of the Tax
Reform Act of 1986 and subsequent legislation, the time period for effecting
such amendments will not expire prior to the consummation of the transactions
contemplated by this Agreement. The Seller has furnished to the Buyer copies of
the Plans and related Plan documents (including trust documents, insurance
policies or contracts, employee booklets, summary plan descriptions and other
authorizing documents, and to the extent still in its possession any material
employee communications relating thereto) and, where applicable, will provide,
as soon as practicable hereafter, copies of the most recent IRS determination
letters and Forms 5500 with respect to any such Plan. Each Plan has been
maintained and administered in all respects in compliance with its terms
(whether written or otherwise), with any oral written representations made to
any participant or beneficiary by or on behalf of P-COM or any affiliate of
P-COM, and with the requirements prescribed by all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, which are
applicable to such Plan, except to the extent noncompliance would not have a
Material Adverse Effect on the Seller's obligations and liabilities arising from
such Plan or related provisions of ERISA and the Code. No suit, administrative
proceeding, action or other litigation has been brought or is threatened against
or with respect to any such Plan, including any audit or inquiry by the IRS or
United States Department of Labor. All contributions, reserves or premium
payments required to be made or accrued as of the date hereof to the Plans have
been made or accrued.
No Plan is a "defined benefit plan" within the meaning of Section
414(j) of the Code.
Neither P-COM nor any ERISA Affiliate of P-COM maintains or
contributes to or, within the past six years has maintained or contributed to,
or been required to maintain or
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contribute to, any "defined benefit plan" (as defined in Section 414(j) of the
Code), including any multiemployer plan within the meaning of Section 3(37) of
ERISA.
Except as specifically set forth in this Agreement, neither the
Buyer nor any ERISA Affiliate of the Buyer shall have any liability or
obligation with respect to (i) employment-related liabilities, whether
contingent or otherwise, arising out of any individual's employment or working
relationship with the Seller or any ERISA Affiliate of the Seller; or (ii) any
Plan.
4.14 Taxes. Except as set forth on Schedule 4.14, (a) and except for
such Tax Returns the failure of which to be timely filed would not have a
Material Adverse Effect, as of the date hereof and as of the Closing Date, all
Tax Returns relating to the Transferred Assets required to be filed by or on
behalf of the Seller or its Affiliates have been duly filed, or extensions have
been obtained, and all taxes, assessments, and levies shown thereon to be due
and payable, have been paid.
(b) There are no pending federal or state tax disputes in which the
Seller or its Affiliates, with respect to the Business, are alleged to be liable
or in which the Seller or its Affiliates are claiming a refund.
(c) All taxes required to be withheld prior to the Closing Date from
employees of the Seller or its Affiliates engaged in the Business for income
taxes and social security taxes have been properly withheld and, if required
prior to the Closing Date, have been deposited with the appropriate governmental
agency.
(d) Except for any Transfer Taxes covered by Section 8.10 of this
Agreement, the Seller has fully paid all sales, use and withholding Taxes, the
non-payment of which may give rise to successor liability under state law.
4.15 Environmental and Other Regulations. (a) Except as set forth in
Schedule 4.15(a), to the Seller's knowledge, the Seller is in compliance with
all applicable laws and regulations relating to pollution and environmental
control with respect to the Business or the Transferred Assets in all
jurisdictions in which the Seller is presently operating the Business, other
than those laws or regulations which are being contested by the Seller in good
faith and by appropriate proceedings and except where failure to be in
compliance would not have a Material Adverse Effect.
(b) Except as set forth in Schedule 4.15(b), to the Seller's
knowledge, the Seller is in compliance with all applicable laws and regulations
relating to equal employment opportunity and employee health and safety with
respect to the Business or the Transferred Assets in all jurisdictions in which
the Seller is presently operating the Business, other than those laws or
regulations which are being contested by the Seller in good faith and by
appropriate proceedings and except where failure to be in compliance would not
have a Material Adverse Effect.
(c) With respect to the Business, there are no actions, suits,
claims, arbitration proceedings, or complaints pending or, to the Seller's
knowledge, threatened by any
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governmental authority, municipality, community, citizen, or other entity,
against the Seller relating to environmental protection, compliance with
environmental laws, or the condition of the Leased Real Property, nor is the
Seller aware of any unasserted action, suit, claim, proceeding, or complaint the
assertion of which is probable.
(d) With respect to the Business, no lien has arisen or any of the
Transferred Assets under or as a result of any federal, state or local law, rule
or registration relating to environmental protection.
4.16 Labor Matters. (a) Neither the Seller nor its Affiliates is a
party to any collective bargaining agreement or other labor union contract
applicable to persons employed by them in connection with the operation of the
Business.
(b) The Seller and its Affiliates, with respect to the Business, is
in material compliance with all applicable federal, state, local and foreign
laws and regulations concerning the employer-employee relationship and with all
agreements relating to the employment of the Seller's employees, including
applicable wage and hour laws, fair employment laws, safety laws, worker
compensation statutes, unemployment laws, and social security laws. Except as
set forth on Schedule 4.16(b), with respect to the Business, to the Seller's
knowledge, there are no pending or threatened claims, investigations, charges,
citations, hearings, consent decrees, or litigation concerning: wages,
compensation, bonuses, commissions, or payroll deductions; equal employment or
human rights violations regarding race, color, religion, sex, national origin,
age, handicap, veteran's status, disability, or any other recognized class,
status, or attribute under any federal, state, local or foreign equal employment
law prohibiting discrimination; representation petitions or unfair labor
practices; grievances or arbitrations pursuant to current or expired collective
bargaining agreements; workers' compensation; wrongful termination, negligent
hiring, immigration or any other claim based on the employment relationship or
termination of the employment relationship. With respect to the Business, to the
Seller's knowledge the Seller is not liable for any unpaid wages, bonuses, or
commissions (other than those not yet due) or any tax, penalty, assessment, or
forfeiture for failure to comply with any of the foregoing.
4.17 Insurance. Schedule 4.17 sets forth a list of the insurance
policies providing insurance coverage for the Business and the Transferred
Assets. Each of such policies is issued in favor of the Seller and is valid,
existing and binding and in full force and effect. There are no outstanding
requirements or written recommendations by any current insurer or underwriter
with respect to the Business or the Transferred Assets which require or
recommend changes in the conduct of the Business, or require any repairs or
other work to be done with respect to any of the Transferred Assets or
operations of the Business.
4.18 Sufficiency of Transferred Assets. Except as set forth in
Schedule 4.18, the Transferred Assets constitute substantially all the assets of
the Seller used in the Business as conducted by the Seller prior to the date
hereof, and constitute all the rights and assets necessary to conduct the
Business in the ordinary course as presently conducted by Seller.
4.19 Inventory. Schedule 4.19 lists all inventory owned by the
Seller as of December 31, 1999, including goods supplied to the Seller by
suppliers, goods on consignment and all other goods customarily sold by the
Seller (whether located on the premises of the Seller,
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in transit to or from such premises, in other storage facilities, or otherwise),
and identifies whether such inventory is owned by the Seller free and clear of
any liens, claims, charges and encumbrances or held on consignment
(collectively, the "Inventory"). The Inventory is valued at cost (determined on
a first-in first-out basis) or market, whichever is lower, with allowances for
excess and obsolete materials and materials below standard quality determined in
accordance with GAAP consistently applied. The quality and quantity of the
Inventory is such that the Inventory is, in all material respects readily usable
and saleable in the ordinary course of the business of the Seller, except such
amounts as are reserved in accordance with GAAP consistently applied. All
Inventory materially in excess of reasonable estimated requirements for the
Seller based on current operations for the calendar year 2000 is set forth in
Schedule 4.19.
4.20 Suppliers. Schedule 4.20 hereto lists all suppliers of goods to
the Seller during the prior two years and the value of goods supplied to the
Seller in each such year where such value exceeds $10,000 per annum. Schedule
4.20 also contains a list of each supplier the Seller reasonably expects to
purchase goods from, with an aggregate value exceeding $10,000, during the
twelve months following the Closing Date. There has not been any event,
happening or fact which would lead the Seller to believe any of such suppliers
will not continue to supply the current level and type of goods currently being
provided to the Seller on similar terms and conditions.
4.21 Backlog. Schedule 4.21 hereto sets forth as of a date not
earlier than 10 days prior to the date hereof, the backlog of orders that the
Seller is to ship and contract work to be performed by the Seller. The Seller
either possesses sufficient inventory of parts, materials and personnel to
produce the same within their scheduled delivery dates or such parts of
materials have lead times such that, absent the occurrence of a force majeure
event, the Seller can acquire such parts and materials in time to produce and
ship such backlog in accordance with its scheduled shipping date.
4.22 Accounts Receivable. The amount of all accounts receivable of
the Seller will be good and collectible in full in the ordinary course of
business at the Closing; all accounts receivable arise from bona fide
transactions in the ordinary course of business; no contest with respect to the
amount or validity of any amount is pending; and none of such accounts
receivable is or will on the Closing be subject to any defenses, counterclaim,
rights of return, refusals to pay or setoff except to the extent of the
allowance therefor recorded in accordance with GAAP. The value at which accounts
receivable are carried reflect the accounts receivable valuation policy of the
Seller. As of December 31, l999 and as of the Closing, except as set forth in
Schedule 4.22, there is and will be (i) no account debtor or note debtor
delinquent in its payment by more than 45 days, (ii) no account debtor or note
debtor that has refused (or threatened to refuse) to pay its obligation for any
reason, (iii) no account debtor or note debtor that is insolvent or bankrupt and
(iv) no account receivable or note receivable which is pledged to any third
party by the Seller, except as set forth on Schedule 4.22. The Seller holds no
deposits from customers and has received no prepaid service contract revenue or
other prepaid revenue.
4.23 Definition of "knowledge". The phrases "to the knowledge of the
Seller", "the Seller has not received notice", "to the Seller's knowledge", "the
Seller has not been notified" and any other similar phrases as used in this
Article IV refer to the directors and executive officers of the Seller, P-COM
and its Affiliates and, as to specific areas which are the
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subject of the representations and warranties, those employees of the Seller or
P-COM having management responsibilities related to such specific areas of the
Business.
4.24 Employee Stock Options. The number of outstanding unvested
options that the Hired Employees hold pursuant to the P-COM 1995 Stock
Option/Stock Issuance Plan (as amended and restated effective as of April 1997)
as reflected in Schedule 7.1(e) is correct in all material respects.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as follows:
5.1 Organization of the Buyer. The Buyer is duly organized, validly
existing and in good standing under the laws of Delaware and has full corporate
power and authority to conduct its business as it is presently being conducted
and to own and lease its properties and assets.
5.2 Authorization. The Buyer has all necessary corporate power and
authority to enter into this Agreement and has taken all corporate action
necessary to consummate the transactions contemplated hereby and to perform its
obligations hereunder. This Agreement has been duly executed and delivered by
the Buyer and, assuming the due execution and delivery of this Agreement by the
Seller, is a legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms, except that (i) such enforcement
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally,
and (ii) the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefore may be brought.
5.3 No Conflict or Violation. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
result in (a) a violation of or a conflict with any provision of the Certificate
of Incorporation or Bylaws of the Buyer, (b) a breach of, or a default under, or
a right to accelerate with respect to, any term or provision of any contract,
commitment or other obligation to which the Buyer or any of its Affiliates is a
party or is subject, or (c) a violation by the Buyer of any statute, rule,
regulation, ordinance, code, order, judgment, writ, injunction, decree or award
which would have a Material Adverse Effect on the Buyer.
5.4 Consents and Approvals. No consent, approval, authorization or
other action by, or filing with or notification to, any governmental or
regulatory authority or other third party is required to be made or obtained by
the Buyer or any of its Affiliates on or prior to the Closing Date in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, except where failure to
obtain such consent, approval, authorization or action, or to make such filing
or notification, would not interfere in any material way with the ability of the
Buyer to consummate the transactions contemplated by this Agreement or would not
have a Material Adverse Effect on the Buyer.
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5.5 Litigation. There is no material action, order, writ,
injunction, judgment or decree outstanding, or suit, litigation, proceeding,
labor dispute (other than routine grievance procedures or routine, uncontested
claims for benefits under any benefit plans for any officers, employees or
agents of the Buyer), arbitration, investigation or reported claim, pending or,
to the knowledge of the Buyer, threatened, before any court, governmental entity
or arbitrator, which seeks to delay or prevent the consummation of the
transactions contemplated by this Agreement or would, if successful, materially
and adversely affect the ability of the Buyer to consummate the transactions
contemplated by this Agreement.
5.6 Brokers. The Buyer has not employed, and is not subject to any
valid claim of, any broker, finder, investment banker, consultant or other
intermediary in connection with the transactions contemplated by this Agreement
who will be entitled to a fee or commission in connection with such
transactions.
5.7 Purchase for Resale. The Buyer is purchasing the Inventory
transferred herein for resale.
5.8 No Breach by the Seller. As of the date hereof, the Buyer does
not know of any condition or event which constitutes or may constitute a
material breach by the Seller of the warranties and representations set forth in
Article IV; provided, however, no right of recovery against the Buyer shall
accrue to the Seller under this Section 5.8; it being understood, however, that
the Seller may use such knowledge as a defense to any claim by the Buyer
alleging any breach of the Seller's representations and warranties under Article
IV.
5.9 Organizational Documents. Copies of the Certificate of
Incorporation and Bylaws of the Buyer have been delivered to the Seller and such
copies are accurate and complete, without any amendment, modification or
supplement, as of the date of this Agreement and the Closing Date.
5.10 Investigation and Evaluation. Execution of this Agreement shall
constitute the Buyer's representation that the Buyer has requested and been
provided with the opportunity to review and examine originals or copies of such
documents of or relating to the Business and the Transferred Assets and the
transactions contemplated by this Agreement as the Buyer has deemed necessary or
desirable to evaluate the merits of purchasing the Transferred Assets and
assuming the Assumed Liabilities and the Buyer has made its determination to do
so solely based upon its own analysis. The Buyer understands and agrees that the
Seller makes and has made no representations in connection with the purchase and
transfer by the Buyer of the Transferred Assets and Assumed Liabilities other
than those expressly contained herein, which have been relied upon by the Buyer
in entering into this Agreement.
5.11 SEC filings. PDYN has timely filed all SEC Reports required to
be filed by PDYN and has made such SEC Reports available to the Seller. The SEC
Reports (i) as of their respective dates were duly prepared in accordance with
the rules and regulations of the SEC applicable to such SEC Reports, and (ii)
did not at the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such later filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be
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stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
ARTICLE VI
ACTIONS BY SELLER AND BUYER PRIOR TO THE CLOSING
6.1 Conduct of Business. (a) The Seller covenants and agrees that,
from the date hereof through the Closing Date, the Seller shall conduct the
Business only in the ordinary course and in a manner consistent with the current
practice of the Business.
(b) Except as contemplated by this Agreement, from the date hereof
through the Closing Date, the Seller shall not, without the consent of the
Buyer, purchase or acquire any assets or properties, whether real or personal,
tangible or intangible, that if acquired would be a Transferred Asset hereunder,
and shall not sell, pledge, dispose of or encumber any of the Transferred
Assets, the sale, pledge, disposition or encumbrance of which would have a
Material Adverse Effect, except in the ordinary course and in a manner
consistent with current practice of the Business.
(c) The Seller covenants and agrees that, from the date hereof
through the Closing Date, the Seller shall maintain the Transferred Assets in
their present order and condition, reasonable wear and use excepted, and deliver
the Transferred Assets to the Buyer on the Closing Date in such condition.
(d) The Seller covenants and agrees that, from the date hereof
through the Closing Date, the Seller shall take all steps reasonably necessary
to maintain the Intellectual Property Rights and other intangible assets of the
Seller.
(e) From the date hereof through the Closing Date, the Seller will
not adopt any new plan, program, policy or arrangement that, if it existed as of
the Closing Date, would constitute a Plan, or substantially modify or amend any
existing Plan.
6.2 Access to Information. From the date hereof through the Closing
Date, upon reasonable notice, the Seller shall, and shall cause each of its
officers, employees, auditors and agents to (i) afford the Representatives of
the Buyer reasonable access, during normal business hours, to the offices,
properties, books and records of the Business and (ii) furnish to the
Representatives of the Buyer such additional financial and operating data and
other information regarding the Business and the Transferred Assets, as the
Buyer may from time to time reasonably request for the purpose of consummating
the transactions contemplated by this Agreement; provided, however, that such
investigation shall not unreasonably interfere with the business or operations
of the Seller; and provided further that the Seller shall not be required to
take any action which would constitute a waiver of the attorney-client
privilege.
6.3 Regulatory and Other Authorizations. (a) Each of the Seller and
the Buyer shall use its best efforts to obtain all authorizations, consents,
orders and approvals of all federal, state and foreign regulatory bodies and
officials that may be or become necessary for the performance of its obligations
pursuant to this Agreement and shall cooperate fully with the
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other party in promptly seeking to obtain all such authorizations, consents,
orders and approvals. Neither the Seller nor the Buyer shall take any action
that will have the effect of delaying, impairing or impeding the receipt of any
required approval.
(b) If, in order to properly prepare documents required to be filed
with governmental authorities or its financial statements, it is necessary that
either the Seller or the Buyer be furnished with additional information relating
to the Business, the Transferred Assets or Assumed Liabilities and such
information is in the possession of the other party, such party agrees to use
its best efforts to furnish such information in a timely manner to such other
party, at the cost and expense of the party being furnished such information.
6.4 Bulk Transfer Laws. The Buyer hereby waives compliance by the
Seller with the provisions of any so-called bulk transfer laws of any
jurisdiction in connection with the sale of the Transferred Assets to, and the
assumption of the Assumed Liabilities by, the Buyer.
6.5 Insurance. Through the Closing Date, the Seller or its
Affiliates will continue to maintain insurance policies providing insurance
coverage for the Business and Transferred Assets of the kinds, in the amounts
and against the risks substantially as are presently provided pursuant to the
policies set forth on Schedule 4.17 for the Business and the Transferred Assets.
After the Closing Date, the Buyer shall provide all insurance coverage for the
Business and Transferred Assets.
6.6 Release from Assumed Liabilities. The Buyer shall, at the
request of the Seller, use its best efforts to obtain promptly the release of
the Seller from any Assumed Liabilities if it can do so without incurring
expense (unless reimbursed by the Seller) or materially increasing its
obligations under any of the Assumed Liabilities.
6.7 Further Action. Each of the Seller and the Buyer shall execute
such documents and other papers and take such further actions as may be
reasonably required or desirable to carry out the transactions contemplated by
this Agreement. Upon the terms and subject to the conditions of this Agreement,
each of the parties shall use its best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all other things necessary, proper
or advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement.
6.8 Non-Assignable Leases, Contracts, and Permits. (a) Nothing in
this Agreement shall constitute an agreement to assign any Lease, Contract, or
Permit (i) which, by its terms or by law, is not assignable without the consent
of the other party or parties to such Lease, Contract, or Permit unless such
consent shall have been given, or (ii) if any attempted assignment thereof,
without the consent of the other party or parties, would constitute a breach
thereof, or would contravene any law or regulation. If any such consent shall
not be obtained, then the Seller and the Buyer shall, at the request of the
Buyer and at the Buyer's cost, do all things reasonably necessary and cooperate
with each other in any legal and reasonable arrangement designed to provide for
the Buyer the benefit of any such Lease, Contract, or Permit, including
maintaining the Seller's Permits (and any bond or other financial security
posted in connection with the issuance thereof) until issuance of similar
permits to the Buyer. With respect to any non-assignable customer contracts and
orders (including bids) made in the
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name of the Seller which the Buyer has assumed in accordance with Section 2.3,
the Buyer, acting in the capacity of subcontractor, shall complete and deliver
to customers the work and products represented by such contracts or orders. In
conjunction with the Buyer, and at the Buyer's direction and expense, the Seller
shall invoice and collect the accounts receivable for such orders for the
Buyer's account, segregate the funds and promptly pay to the Buyer any amounts
so collected.
(b) Notwithstanding the aforementioned, the Seller shall use
reasonable commercial efforts to obtain, at its sole cost and expense, prior to
the Closing all consents and estoppels which, in the reasonable judgment of the
Buyer, are necessary or appropriate for the transfer or assignment of each of
the material Transferred Assets and the Business to the Buyer and the
consummation of the transactions contemplated hereby. All such consents and
estoppels shall be in writing and in form and substance reasonably satisfactory
to the Buyer, and executed counterparts thereof will be delivered to the Buyer
promptly after receipt thereof but in no event later than the Closing Date.
6.9 Schedules. The Seller shall have the obligation to supplement or
amend the Schedules being delivered concurrently with the execution of this
Agreement and annexed hereto with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in the Schedules; provided, however,
that for the purpose of the rights and obligations of the parties, any such
supplemental or amended disclosure shall not be deemed to have been disclosed as
of the date of this Agreement unless so agreed to in writing by the Buyer or to
preclude the Buyer from seeking a remedy in damages for losses incurred as a
result of such supplemented or amended disclosure, subject to the offsets and
limitations set forth in Section 9.3(b). The Seller's obligation to amend or
supplement the Schedules shall terminate on the Closing Date.
6.10 Notification of Changes. Between the date hereof and the
Closing Date, the Seller shall promptly notify the Buyer in writing of any
change that would have a Material Adverse Effect on the financial condition of
the Business, any material damage to or loss of any of the Transferred Assets,
or the institution of or, if known by the Seller, the threat of institution of
legal, administrative, or other proceedings against the Seller, related to the
Business, or the occurrence or existence of any unasserted proceedings known to
the Seller that are probable of assertion.
6.11 Compliance with New Jersey Industrial Site Recovery Act. With
respect to the Leased Real Property, the Seller covenants and agrees that it
will comply with all applicable provisions of the New Jersey Industrial Site
Recovery Act, N.J.S.A. 13: 1K-6 et. seq. ("ISRA"), including, but not limited
to: (i) filing all necessary documents with the New Jersey Department of
Environmental Protection ("NJDEP") and receiving all necessary approval prior to
the Closing to allow the transactions contemplated hereby to proceed prior to
full compliance with ISRA; (ii) obtaining all necessary authorizations,
consents, orders and approvals from NJDEP; and (iii) completing all necessary
post-Closing and remedial activities, if any, required by NJDEP for its
approval. The Buyer shall grant the Seller and its representatives access during
business hours to conduct any required post-Closing remedial activities and the
Seller agrees to indemnify, defend and hold the Buyer harmless for any such
activities and take any necessary action to repair, rebuild, reconstruct or
otherwise correct, to the reasonable satisfaction of the
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Buyer, any further damages or destruction caused by the Seller or its
representatives while performing such activities.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions to Obligations of the Seller. The obligations of the
Seller to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, all or any of which may be waived, in whole or in part, by the
Seller:
(a) Representations and Warranties; Covenants. The representations
and warranties of the Buyer contained in this Agreement shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made on and as of the Closing Date, and all the covenants and other
obligations contained in this Agreement to be complied with by the Buyer on or
before the Closing Date shall have been complied with in all material respects,
and the Seller shall have received a certificate of the Buyer to such effect
signed by a duly authorized officer thereof;
(b) No Prohibition. There shall not exist any temporary restraining
order, preliminary or permanent injunction, final judgment, law or regulation
prohibiting the consummation of this Agreement or the transactions contemplated
hereby, or, to the knowledge of any party, any pending or threatened action by
any governmental authority or private party prohibiting or seeking to prohibit
the consummation of this Agreement or the transactions contemplated hereby;
(c) Employment Agreements. Effective as of the Closing, the Buyer
shall have entered into an employment agreement with each of ▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇ ▇▇▇▇ on terms reasonably acceptable to Messrs. ▇▇▇▇▇ and ▇▇▇▇,
respectively. In addition, the Buyer shall have made an employment offer to each
of the individuals whose name is set forth on Schedule 7.1(c) and such offers
shall have been accepted by substantially all such individuals; and
(d) Additional Documents. The Seller shall have received such
additional documents, certificates, payments, assignments, transfers and other
deliveries as it or its counsel may reasonably request and as are customary to
effect a closing of the matters herein contemplated.
(e) Employee Stock Options. On or before the Closing Date, the Buyer
shall have either (i) issued to each Hired Employee an option at a price of
$17.00 per share to purchase a number of shares of common stock of PDYN equal to
the number of outstanding unvested options that the Hired Employee had held on
the Closing Date granted under the P-COM 1995 Stock Option/Stock Issuance Plan
(as amended and restated effective as of April 1997), or (ii) assume such
outstanding unvested options along with such appropriate adjustments having been
made thereto to ensure that the Hired Employees' rights and benefits pursuant to
such option are maintained. No action or adjustment shall be taken or made to
any such assumed option which is an "incentive stock option" as defined in
Section 422 of the Code, which would result in a
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"modification" (as such term is defined in Section 424 of the Code) resulting in
such option ceasing to qualify as an incentive stock option. P-COM agrees not to
issue more options under the P-COM 1995 Stock Option/Stock Issuance Plan (as
amended and restated effective as of April 1997). Schedule 7.1(e) sets forth the
number of unvested options for each Hired Employee as of March 31, 2000.
7.2 Conditions to Obligations of the Buyer. The obligations of the
Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions, all or any of which may be waived, in whole or in part, by the
Buyer:
(a) Representations and Warranties; Covenants. The representations
and warranties of the Seller contained in this Agreement shall be true and
correct in all material respects as of the Closing, with the same force and
effect as if made on and as of the Closing, and all the covenants and other
obligations contained in this Agreement to be complied with by the Seller on or
before the Closing Date shall have been complied with in all material respects,
and the Buyer shall have received a certificate of the Seller to such effect
signed by a duly authorized officer thereof;
(b) No Prohibition. There shall not exist any temporary restraining
order, preliminary or permanent injunction, final judgment, law or regulation
prohibiting the consummation of this Agreement or the transactions contemplated
hereby or to obtain substantial damages from the Buyer, in respect of the
consummation of the transactions contemplated hereby, or, to the knowledge of
any party, any pending or threatened action by any governmental authority or
private party prohibiting or seeking to prohibit the consummation of this
Agreement or the transactions contemplated hereby or, which seeks to enjoin the
operation of all or a material portion of the Business or the Transferred
Assets, which, in the reasonable judgment of the Buyer, would make it
inadvisable to consummate the transactions contemplated by this Agreement;
(c) Consents. The Seller shall have obtained and delivered to the
Buyer the consents and approvals set forth on Schedule 4.8;
(d) Employment Agreements. Effective as of the Closing, ▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇ ▇▇▇▇ shall have each entered into an employment agreement with the
Buyer on terms reasonably acceptable to the Buyer;
(e) Additional Agreement. Effective as of the Closing, ▇▇▇▇▇ ▇'▇▇▇▇
shall have entered into an agreement with the Buyer, on terms reasonably
acceptable to the Buyer, whereby ▇▇. ▇'▇▇▇▇ agrees not to compete with the Buyer
or solicit employment for any Hired Employees or other employees of the Buyer.
(f) Leases. The Seller shall have obtained the written consent of
each lessor of the Leased Real Property to the assignment of the Leases to the
Buyer and the Seller shall have delivered copies of such consents to the Buyer;
(g) Certified Resolutions and Incumbency. The Buyer shall have
received a certificate of the Secretary or Assistant Secretary of the Seller
containing a true and correct copy
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of the resolutions duly adopted by the Seller's board of directors, approving
and authorizing the execution and delivery of this Agreement and related
documents and the transactions contemplated hereby and thereby. The Secretary or
Assistant Secretary of the Seller shall also certify that such resolutions have
not been rescinded, revoked, modified, or otherwise affected and remain in full
force and effect. In addition, the Buyer shall have received a certificate of
incumbency of each of the Seller and P-COM executed by an executive officer and
Secretary or Assistant Secretary of the Seller and P-COM, respectively, listing
the officers of the Seller and P-COM authorized to execute this Agreement and
the instruments of transfer on behalf of the Seller, certifying the authority of
each such officer to execute the agreements, documents, and instruments on
behalf of each of the Seller and P-COM in connection with the consummation of
the transactions contemplated herein;
(h) Instruments of Transfer. The Seller shall have delivered to the
Buyer such warranty deeds, quitclaim deeds, bills of sale, motor vehicle titles,
endorsements, assignments, licenses, and other good and sufficient instruments
of conveyance and transfer and any other instruments reasonably deemed
appropriate by counsel to the Buyer all in form and substance reasonably
satisfactory to counsel to the Buyer to vest in the Buyer all of the Seller's
rights, title, and interest with respect to the Transferred Assets, free and
clear of all liens, charges, encumbrances, pledges, or claims of any nature;
(i) Condition of Transferred Assets. On the Closing Date, all of the
Transferred Assets shall be in substantially the same condition as at the close
of business on the date hereof, except for ordinary use and wear thereof and
changes occurring in the ordinary course of business or expressly permitted by
this Agreement between the date hereof and the Closing Date, and the Buyer shall
have received a certificate dated as of the Closing Date, executed by an
authorized officer of the Seller to such effect; provided, however, if on or
prior to the Closing Date any of the Transferred Assets shall have suffered loss
or damage on account of fire, flood, accident, act of war, civil commotion, or
any other cause or event beyond the reasonable power and control of the Seller
(whether or not similar to the foregoing) to an extent which, in the reasonable
opinion of the Buyer, materially affects the value of the Transferred Assets,
taken as a whole, the Buyer shall have the right either (a) to terminate this
Agreement and all of the Buyer's obligations hereunder without incurring any
liability to the Seller as a result of such termination or (b) to consummate the
transactions provided for herein and be paid the full amount of all insurance
proceeds, if any, paid or payable to the Seller, in respect of such loss plus an
amount up to a maximum of $500,000 equal to any deductible or co-insurance
reserve applicable to such loss. If under the circumstances described in the
foregoing sentence, the Buyer shall elect to consummate the transactions
provided for herein, the Seller shall, on demand, pay to the Buyer the full
amount of any insurance proceeds received by the Seller in respect of any such
loss, together with up to a maximum of $500,000 of any deductible or
co-insurance reserve applicable to such loss; and
(j) Additional Documents. The Buyer shall have received such
additional documents, certificates, payments, assignments, transfers and other
deliveries as it or its counsel may reasonably request and as are customary to
effect a closing of the matters herein contemplated.
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(k) Certificate of Non-foreign status and State Tax Clearance
Certificates. The Seller shall have delivered to the Buyer a duly executed
certificate stating that the Seller is not a "foreign person" for purposes of
Section 1445 and Section 897 of the Code.
(l) Proprietary Information and Inventions Agreement of P-COM. P-COM
and the Seller shall have assigned and transferred to the Buyer any and all
Intellectual Property Rights they may own and be entitled to pursuant to the
terms of such Proprietary Information and Inventions Agreements P-COM and the
Seller have entered into with any employee of the Seller.
ARTICLE VIII
ACTIONS BY SELLER AND BUYER
AFTER THE CLOSING
8.1 Confidentiality. The Confidentiality Agreement dated February
16, 2000 between the Seller and the Buyer and attached as Exhibit 8.1 (the
"Confidentiality Agreement") is incorporated by reference herein and shall
continue in full force and effect through the Closing Date. The definition of
"Confidential Information" contained in the Confidentiality Agreement is hereby
amended to include this Agreement, all Schedules and Exhibits to this Agreement,
and all information obtained from the Seller pursuant to Section 8.3
8.2 Employment of Seller's Personnel. (a) The Buyer shall offer to
employ beginning immediately after the Closing Date, at rates of compensation
not less than the Seller's rates of compensation as in effect on the Closing
Date, but otherwise in accordance with the normal hiring practices and policies
of the Buyer and PDYN, all of the Seller's employees listed on Schedule 8.2(a)
and shall employ all of the Seller's employees who accept such offer of
employment. The Seller shall use its best efforts between the date hereof and
the Closing Date to make all of its employees available for employment by the
Buyer. Such employees who are hired by the Buyer shall be referred to herein as
"Hired Employees."
(b) Each Hired Employee of the Seller who, from and after the
Closing Date, is employed by the Buyer and who is subsequently involuntarily
terminated by the Buyer (other than for Cause) before the first anniversary of
the Closing Date, shall be subject to the terms and conditions of the
Paradyne/CRC Special Severance Plan, a description of which is attached hereto
as Exhibit 8.2(b)(i) (the "Severance Plan"). The terms of the Severance Plan
shall be applicable to the Hired Employees for a period of one year from the
date of beginning employment with the Buyer and during such time shall be
determinative of any severance arrangements for all Hired Employees. Following
the one year period from the date of employment by the Buyer, all such Hired
Employees shall then be subject to the Buyer's relevant severance plans and the
Severance Plan shall be of no further force and effect. For purposes of
computing any severance payments owed to a Hired Employee under this Section
8.2(b), it shall be deemed that such employee commenced his or her employment
with the Buyer on the date such employee commenced his or her employment with
the Seller, as determined from the employment records transferred to the Buyer
pursuant to this Agreement. In accordance with the Severance Plan, certain
severance payments described in the Severance Plan shall be conditioned upon the
affected Hired Employees' execution of a Termination Agreement, Waiver and
Release of Claims in the form attached hereto as Exhibit 8.2(b)(ii). The Buyer
agrees that (i) the
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principal office described in the Severance Plan is located in Fair Lawn, New
Jersey, (ii) for purposes of the Severance Plan, the Buyer does not now or
currently intend to have any facilities within 50 miles of Fair Lawn, New
Jersey, (iii) the Buyer will not materially amend, modify or terminate, the
Severance Plan, and (iv) the Buyer will not materially amend or modify the
Termination Agreement, Waiver and Release of Claims.
(c) In addition to any severance payments owed to any Hired Employee
pursuant to Section 8.2(b) above, if any Hired Employee who is named on Schedule
8.2(c) is involuntarily terminated by the Buyer (other than for Cause) before
the first anniversary of the Closing Date, such employee shall receive from the
Buyer at the time of such termination an additional severance payment equal to
the amount set forth opposite such Hired Employee's name on Schedule 8.2(c). The
costs incurred, directly or indirectly, in connection with the termination or
severance after the Closing Date of any Hired Employee shall be borne
exclusively by the Buyer. However, the Seller shall be responsible for any and
all costs incurred, directly or indirectly, in connection with the termination
or severance of any employee of the Seller set forth on Schedule 8.2 (a) who is
not a Hired Employee.
(d) The Seller shall be responsible for complying with the
requirements of Section 4980B of the Code and Part VI of Title I of ERISA for
the employees of the Seller or any Affiliate of the Seller (including the Hired
Employees) and their "qualified beneficiaries" whose "qualifying event" (as such
terms are defined in Section 4980B of the Code) occurs on or prior to the
Closing Date.
(e) The Buyer shall be solely responsible for employment-related
liabilities arising out of the Hired Employees' employment or working
relationship with the Buyer.
(f) As to any Plan that is a tax-qualified defined contribution
retirement plan, the Seller shall, effective no later than the Closing Date,
fully vest all Hired Employees in their benefits thereunder. Within 90 days
after the Closing Date, the Seller shall make eligible rollover distributions
(within the meaning of Section 402(c) of the Code) from any such plan available
to the Hired Employees, except that if the Seller elects to first file the plan
with the IRS for a favorable determination letter, the Seller must (i) do so
within 90 days after the Closing Date, (ii) comply with any reasonable
requirements the IRS imposes as a condition of issuing such letter; and (iii)
make eligible rollover distributions available within 90 days after the issuance
of such letter.
(g) If any Hired Employee has an unreimbursed balance in his or her
medical or dependent care reimbursement accounts as of the Closing Date, the
Seller shall continue to reimburse such Hired Employees from their respective
accounts for eligible claims the Hired Employee incurs prior to the Closing Date
(subject to paragraph (d) above). Any such claims shall be submitted to the
Seller or its designee in the manner specified by the Seller by February 28,
2001. Nothing in this Section 8.2(g) shall be deemed to require that the Seller
pay dependent care claims after the Closing Date that exceed the balance of the
dependent claim claimant's reimbursement account as of the Closing Date.
(h) The Seller shall be responsible for the payment of all earned
but unpaid salaries, bonus, vacation pay, sick pay, holiday pay, and other like
obligations (including related
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taxes) and payments to the employees of the Business for all periods ending on
or prior to the Closing Date, other than such of the foregoing that are included
in Assumed Liabilities, and the Buyer shall be responsible for all Assumed
Liabilities related to such employees. The Seller shall be responsible for the
payment of any amounts due to the employees pursuant to any Plans as a result of
the employment of its employees, and, in determining bonuses and other similar
payments due to the employees for any period ended on or prior to the Closing
Date, the Seller shall, if payment thereof will occur after the Closing Date,
waive any requirement that such employees be employees of the Seller on the date
such bonuses or other similar payments are paid. The Seller shall be responsible
for all incurred but unreported or unpaid medical claims occurring prior to the
Closing Date and for the cost associated with any hospital confinement which
commences prior to the Closing Date. The Buyer shall become responsible for all
costs and liabilities attributable to the employees accruing on and after the
Closing Date; provided, however, that the Buyer shall not be responsible for (a)
liabilities arising under the Plans other than to the extent reflected in the
Assumed Liabilities or (b) liabilities associated with any leaves taken prior to
the Closing Date in connection with the Family and Medical Leave Act of 1993.
Effective on the Closing Date, the Seller and P-COM shall, and hereby does,
release all the employees listed on Schedule 8.2(a) from any employment and/or
confidentiality agreement previously entered into between the Seller and such
employees relating to the Business to the extent (but only to the extent)
necessary for the Buyer to operate the Business in the same manner as operated
by the Seller prior to the Closing Date.
8.3 Books and Records; Access to Information. (a) The Seller agrees
that on and after the Closing Date it will permit the Buyer and its
Representatives, during normal business hours, to have access to and to examine
and take copies of all books and records of the Seller which are not delivered
to the Buyer pursuant to this Agreement and which relate to the Business or the
Transferred Assets, whether with respect to events occurring prior to the
Closing Date or to transactions or events occurring subsequent to the Closing
Date which arise out of transactions or events occurring prior to the Closing
Date. All books and records of the Seller relating to the Business or the
Transferred Assets and not delivered to the Buyer pursuant hereto will be
preserved by the Seller for a period of not less than seven years following the
Closing Date.
(b) The Buyer agrees that it shall preserve and keep all books and
records with respect to the Transferred Assets and Assumed Liabilities for a
period of at least seven years from the Closing Date. After such seven-year
period, the Buyer may discard all such books and records unless the Seller or
its Affiliates, 6 months prior to the termination of such seven-year period, has
given notice to the Buyer of its intent to remove and retain all or any part of
such books and records. During such seven-year period, duly authorized
Representatives of the Seller shall, upon reasonable notice, have access thereto
during normal business hours to examine, inspect and copy such books and
records.
(c) The Buyer agrees to receive, maintain and make available to the
Seller for inspection and photocopying during normal business hours all records,
data and analyses of the Business, including without limitation all records,
data and analyses relating to the Business prior to the Closing Date, with
respect to quality control, environmental rules and regulations and employee
health and safety, including, without limitation, all applicable documents and
records issued by or pertaining to regulations promulgated by the Occupational
Safety and Health Administration, the Environmental Protection Agency, or state
agencies.
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(d) The Seller and the Buyer will provide each other with such
cooperation and information as either of them reasonably may request of the
other in filing any Tax Return, amended Tax Return or claim for refund,
determining a liability for Taxes or a right to refund of Taxes, preparation for
litigation or investigation of claims in conducting any audit or other
proceeding in respect of Taxes. Such cooperation and information shall include
providing copies of all relevant Tax Returns, documents and records, or portions
thereof, relating exclusively to the Business (but not including income or
franchise Tax Returns or portions thereof). Each of the Seller and the Buyer
shall make its employees available on a mutually convenient basis to provide
explanation of any documents or information provided hereunder. Notwithstanding
Section 8.3(b), each of the Seller and the Buyer will retain all Tax Returns,
schedules and work papers and all material records or other documents relating
to Tax matters of the Business for the taxable year of the Seller ending on or
after the Closing Date and for all previous years, until the expiration of the
statute of limitations of the taxable years to which such Tax Returns and other
documents relate (and, to the extent notified by the other party in writing, any
extensions thereof). Any information obtained under this Section 8.3(d) shall be
kept confidential, except as may be otherwise necessary in connection with the
filing of Tax Returns or claims for refund or in conducting an audit or other
proceeding.
(e) After the Closing Date, the Seller and its Affiliates and the
Buyer shall cooperate with each other in all reasonable respects in connection
with the defense or assertion of any claim related to any Transferred Asset,
non-Transferred Asset or Assumed Liability or non-Assumed Liability, as the case
may be, including, without limitation, making available records relating to such
claim and furnishing, without expense, management employees of the party as may
be reasonably necessary for the preparation of the defense or assertion of any
such claim or for testimony as a witness in any proceeding relating to such
claim; provided, however, that the foregoing right to cooperation shall not be
exercisable by one party in such a manner as to interfere unreasonably with the
normal operations and business of the other party. The Seller and its Affiliates
shall reimburse the Buyer for all expenses incurred by the Buyer pursuant to
this Section 8.3(e), including salary expenses of employees who are required to
be away from their normal place of employment.
8.4 Mail Received After Closing. (a) In the event that the Buyer
receives after the Closing any mail or other communications addressed to the
Seller, the Buyer may open such mail or other communications and deal with the
contents thereof in its discretion to the extent that such mail or other
communications and the contents thereof relate to the Business or any of the
Transferred Assets or to any of the Assumed Liabilities, including the right to
endorse without recourse the name of the Seller on any check received by the
Buyer with respect to the Business or the Transferred Assets, and to deal with
the proceeds in accordance with the terms of this Agreement. The Buyer agrees to
deliver promptly or cause to be delivered to the Seller all other mail and the
contents thereof which does not relate to the Transferred Assets or the Assumed
Liabilities.
(b) In the event that the Seller or its Affiliates receives after
the Closing Date mail or other communications addressed to the Seller or its
Affiliates which relates to the Business, any of the Transferred Assets or any
of the Assumed Liabilities, the Seller or its Affiliates shall promptly deliver
or cause to be delivered all such mail and the contents thereof to the Buyer.
The Seller and its Affiliates agree to cooperate with the Buyer and to make
arrangements
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(including "lock box" and other banking arrangements) reasonably necessary in
order to properly deal with checks addressed to the Seller or its Affiliates but
which belong to the Buyer pursuant to this Agreement, and to properly direct the
proceeds thereof to the Buyer.
8.5 Other Employee Benefits. Effective as of the Closing Date, and
for a period of not less than 12 months following the Closing Date, the Buyer
shall (or shall cause an appropriate Subsidiary or Affiliate to) provide the
Hired Employees with benefits (including, without limitation, welfare benefits)
that are substantially similar to the benefits the Buyer provides to its other
similarly-situated employees, except that the short- and long-tem disability
plans available to the Hired Employees during the first 12 months following the
Closing Date will be comparable to the short-term and long-tem disability plans
the Seller made available to the Hired Employees prior to the Closing Date. In
addition, any such plan or arrangement of the Buyer shall cover all claims
relating to conditions which existed prior to the Closing Date.
8.6 No Solicitation. For a period of two years following the
Closing, the Seller and its Affiliates shall not, directly or indirectly,
solicit, induce to leave employment or offer employment to any Hired Employee of
the Buyer, or any Affiliate of the Buyer.
8.7 Discharge of Business Obligations. From and after the Closing
Date, the Seller shall pay and discharge, in accordance with past practice but
not less than on a timely basis, all obligations and liabilities incurred prior
to the Closing Date in respect of the Business, its operations or the assets and
properties used therein (except for those expressly assumed by the Buyer
hereunder), including without limitation any liabilities or obligations to
employees and clients of the Business.
8.8 UCC Matters. From and after the Closing Date, the Seller will
promptly refer all inquiries with respect to ownership of the Transferred Assets
or the Business to the Buyer. In addition, the Seller will execute such
documents and financing statements as the Buyer may reasonably request from time
to time to evidence transfer of the Transferred Assets to the Buyer, including
any necessary assignments of financing statements.
8.9 Tax Matters. (a) As soon as practicable after the Closing Date,
but in no event later than the final due date for the filing of a final Form 941
as required under the Code and applicable regulations thereunder, the Seller
shall provide a Form W-2 for each of its employees for the period beginning on
January 1, 2000 through the Closing Date, as required under the Code and the
regulations promulgated thereunder. Following the Closing Date, the Buyer shall
continue as the Successor Employer, as such term is defined in the applicable
regulations of the Code.
(b) The Seller and the Buyer shall cooperate with each other in all
reasonable respects in connection with the satisfaction of this provision,
including but not limited to, making the appropriate books and records available
as described under Section 8.3.
8.10 Sales and Transfer Taxes. The Buyer and the Seller shall
equally share the liability for and each shall pay one-half of any sales,
transfer and similar Taxes incurred as a result of the sale of the Transferred
Assets (the "Transfer Taxes"). The Seller will file all necessary Tax Returns
and other documents required to be filed with respect to all such Taxes.
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8.11 Change of Name. Immediately after the Closing, the Seller shall
change its name to "Control Liquidating Corp.".
ARTICLE IX
INDEMNIFICATION
9.1 Survival of Certain Representations and Warranties. The
representations and warranties set forth in Sections 4.18, 4.20 and 4.21 shall
survive the Closing for a period of six months after the Closing Date. The
representations and warranties set forth in Sections 4.1, 4.2, 4.3, 4.4,
4.5(c)-(e), 4.6, 4.7, 4.9, 4.10, 4.13, 4.15(b), 4.16 and 4.17 and in Sections
5.1, 5.2, 5.3, 5.5, 5.8 and 5.10 shall survive the Closing for a period of 12
months after the Closing Date. The representations and warranties set forth in
Sections 4.5(a) and (b), 4.12 and 4.15(d) shall survive the Closing for a period
of 24 months after the Closing Date. The representations and warranties set
forth in Section 4.15(a) and (c) shall survive the Closing for a period equal to
the applicable statute of limitations. The representations set forth in Section
4.14 and the covenants set forth in Section 8.9 shall survive the Closing for
the applicable statute of limitations period. All other representations and
warranties of the Seller and the Buyer contained in this Agreement shall
terminate at the Closing and shall be of no force and effect thereafter.
9.2 Indemnification by the Buyer. (a) The Buyer agrees, subject to
the other terms and conditions of this Agreement, to indemnify the Seller (and
the Seller's directors, officers, employees, Affiliates, successors and assigns)
against, and hold it harmless from all liabilities, costs and expenses
(including reasonable attorney and expert fees) of and damages to the Seller
arising out of (i) the breach of any representation, warranty, covenant or
agreement of the Buyer herein, (ii) the Assumed Liabilities, (iii) the operation
of the Business, as relates to the Transferred Assets, and the Transferred
Assets after the Closing Date, and (iv) the Environmental Liability of the
Buyer. No claim may be asserted nor may any action be commenced against the
Buyer for breach of any representation, warranty, covenant or agreement
contained herein, unless written notice of such claim or action is received by
the Buyer describing in detail the facts and circumstances with respect to the
subject matter of such claim or action on or prior to the date on which the
representation, warranty, covenant or agreement on which such claim or action is
based ceases to survive as set forth in Section 9.1, irrespective of whether the
subject matter of such claim or action shall have occurred before or after such
date. Nothing contained in this Section 9.2(a) shall in any manner alter or
modify the time of survival of the representations and warranties of the Seller
and the Buyer as set forth in Section 9.1 and/or the Excluded Liabilities
retained by the Seller pursuant to this Agreement.
(b) Except for claims with respect to Assumed Liabilities, as to
which the limitations of this sentence (including provisos) shall not apply, no
claim may be made against the Buyer for indemnification pursuant to this Section
9.2 unless the aggregate of all liabilities and damages of the Seller (exclusive
of legal fees incurred in connection with pursuing such claim) with respect to
this Section 9.2 shall exceed $100,000; provided that no indemnification shall
be available with respect to any liability or damage if the aggregate of all
liabilities and damages for which the Seller has received indemnification shall
have exceeded 100% of the aggregate purchase price set forth in Section 2.4. For
the purposes of this subsection (b), in computing such aggregate amount of
claims, the amount of each claim shall be deemed to be an
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amount (i) net of any Tax benefit to the Seller or any Affiliate thereof, and
(ii) net of any insurance proceeds and any indemnity, contributions or other
similar payment payable by any third party with respect thereto.
(c) Payments by the Buyer pursuant to subsection (a) of this Section
9.2 shall be limited to the amount of any liability or damage that remains after
deducting therefrom (i) any Tax benefit to the Seller or any Affiliate thereof,
arising from such liability or damage and (ii) any insurance proceeds and any
indemnity, contribution or other similar payment payable to the Seller or any
Affiliate from any third party with respect thereto. Tax benefits will be
considered to be realized by the Seller or any Affiliate thereof for purposes of
this Section 9.2 in the year in which a payment occurs, and the amount of the
Tax benefits shall be determined by assuming (i) the Seller is in the maximum
United States federal income tax bracket after any deduction reportable with
respect to a payment hereunder and (ii) the Seller's effective state and local
income tax rate is its effective rate for the most recent prior taxable year for
which such information is available.
(d) The Seller agrees to give the Buyer prompt written notice of any
claim, assertion, event or proceeding by or in respect of a third party of which
it has knowledge concerning any liability or damage as to which it may request
indemnification hereunder. The Buyer shall have the right to direct, through
counsel of its own choosing, the defense or settlement of any such claim or
proceeding; the Seller may participate in such defense, but in such case the
expenses of the Seller shall be paid by the Seller. The Seller shall provide the
Buyer with access to its records and personnel relating to any such claim,
assertion, event or proceeding during normal business hours and shall otherwise
cooperate with the Buyer and aid at the Buyer's request in the defense or
settlement thereof, and the Buyer shall reimburse the Seller for all its
reasonable out-of-pocket expenses in connection therewith. If the Buyer elects
to direct the defense of any such claim or proceeding, the Seller shall not pay,
or permit to be paid, any part of any claim or demand arising from such asserted
liability, unless the Buyer consents in writing to such payment or unless the
Buyer, subject to the last sentence of this subsection (d), withdraws from the
defense of such asserted liability, or unless a final judgment from which no
appeal may be taken by or on behalf of the Buyer is entered against the Seller
for such liability. If the Buyer shall fail to defend, or if, after commencing
or undertaking any such defense, fails to prosecute or withdraws from such
defense, the Seller shall have the right to undertake the defense or settlement
thereof, at the Buyer's expense. If the Seller assumes the defense of any such
claim or proceeding pursuant to this subsection (d) and proposes to settle such
claim or proceeding prior to a final judgment thereon or to forego appeal with
respect thereto, then the Seller shall give the Buyer prompt written notice
thereof, and the Buyer shall have the right to participate in the settlement or
assume or reassume the defense of such claim or proceeding.
(e) Except as set forth in this Agreement, the Buyer is not making
any representation, warranty, covenant or agreement with respect to the matters
contained herein. Anything herein to the contrary notwithstanding, no breach of
any representation, warranty, covenant or agreement contained herein shall give
rise to any right on the part of the Seller, after the consummation of the
purchase and sale of the Transferred Assets and assumption of Assumed
Liabilities contemplated hereby, to rescind this Agreement or any of the
transactions contemplated hereby.
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9.3 Indemnification by the Seller and P-COM. (a) The Seller and
P-COM, jointly and severally, agree, subject to the other terms and conditions
of this Agreement, to indemnify the Buyer (and the Buyer's directors, officers,
employees, Affiliates, successors and assigns) against, and hold it harmless
from all liabilities, costs and expenses (including reasonable attorney and
expert fees) of and damages to the Buyer, arising out of (i) the breach of any
representation, warranty, covenant or agreement of the Seller or P-COM herein,
(ii) the operation of the Business and the Transferred Assets prior to the
Closing Date, (iii) the failure to deliver good, valid and marketable title to
any of the Transferred Assets, (iv) the Excluded Liabilities, and (v) the
Environmental Liability of the Seller. No claim may be asserted nor may any
action be commenced against the Seller and/or P-COM for any patent infringement
arising in connection with (i) any engineering work relating to the design of
products which was not completed prior to the Closing Date (with such completion
evidenced by delivery to customers of such products or the existence of the
Seller's standard manufacturing control documentation for such products), (ii)
any patents which were granted after the Closing Date and for which there were
no claims as set forth in Section 4.12(e), except those patents issued or
issuable to the Seller or its Affiliates which are used in the Transferred
Assets at the time of the Closing, or (iii) third party patents (or patent
applications) of which the Seller had prior knowledge. In addition, no claim may
be asserted nor may any action be commenced against the Seller and/or P-COM for
breach of any representation, warranty, covenant or agreement contained herein,
or any Excluded Liabilities which are asserted against the Buyer, unless written
notice of such claim or action is received by the Seller or P-COM describing in
detail the facts and circumstances with respect to the subject matter of such
claim or action on or prior to the date on which the representation, warranty,
covenant or agreement on which such claim or action is based ceases to survive
as set forth in Section 9.1, irrespective of whether the subject matter of such
claim or action shall have occurred before or after such date. Nothing contained
in this Section 9.3(a) shall in any manner alter or modify the time of survival
of the representations and warranties of the Seller and the Buyer as set forth
in Section 9.1 and/or the liabilities assumed by the Buyer pursuant to this
Agreement and as set forth in Section 2.3 hereto.
(b) Except for claims with respect to the representations and
warranties set forth in Section 4.14 and the covenants set forth in Section 8.9,
as to which the limitations of this sentence (including provisos) shall not
apply, no claim may be made against the Seller or P-COM for indemnification
pursuant to this Section 9.3 unless the aggregate of all liabilities and damages
(exclusive of legal fees incurred in connection with pursuing such claim) of the
Buyer with respect to this Section 9.3 shall exceed $100,000; provided that no
indemnification shall be available with respect to any liability or damage if
the aggregate of all liabilities and damages for which the Buyer has received
indemnification shall have exceeded 100% of the aggregate purchase price set
forth in Section 2.4. For the purposes of this subsection (b), in computing such
aggregate amount of claims, the amount of each claim shall be deemed to be an
amount (i) net of any Tax benefit to the Buyer or any Affiliate thereof, and
(ii) net of any insurance proceeds and any indemnity, contributions or other
similar payment payable by any third party with respect thereto.
(c) Payments by the Seller or P-COM pursuant to subsection (a) of
this Section 9.3 shall be limited to the amount of any liability or damage that
remains after deducting therefrom (i) any Tax benefit to the Buyer or any
Affiliate thereof arising from such liability or damage, and (ii) any insurance
proceeds and any indemnity, contribution or other similar
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payment payable to the Buyer or any Affiliate from any third party with respect
thereto. Tax benefits will be considered to be realized by the Buyer for
purposes of this Section 9.3 in the year in which a payment occurs, and the
amount of the Tax benefits shall be determined by assuming (i) the Buyer is in
the maximum United States federal income tax bracket after any deduction
reportable with respect to a payment hereunder and (ii) the Buyer's effective
state and local income tax rate is its effective rate for the most recent prior
taxable year for which such information is available.
(d) The Buyer agrees to give the Seller or P-COM prompt written
notice of any claim, assertion, event or proceeding by or in respect of a third
party of which it has knowledge concerning any liability or damage as to which
it may request indemnification hereunder. The Seller and P-COM shall have the
right to direct, through counsel of its own choosing, the defense or settlement
of any such claim or proceeding; the Buyer may participate in such defense, but
in such case the expenses of the Buyer shall be paid by the Buyer. The Buyer
shall provide the Seller and P-COM with access to its records and personnel
relating to any such claim, assertion, event or proceeding during normal
business hours and shall otherwise cooperate with and aid at the Seller's or
P-COM's request the Seller and/or P-COM in the defense or settlement thereof,
and the Seller and/or P-COM shall reimburse the Buyer for all its reasonable
out-of-pocket expenses in connection therewith. If the Seller or P-COM elects to
direct the defense of any such claim or proceeding, the Buyer shall not pay, or
permit to be paid, any part of any claim or demand arising from such asserted
liability unless the Seller or P-COM consents in writing to such payment or
unless the Seller or P-COM, subject to the last sentence of this subsection (d),
withdraws from the defense of such asserted liability or unless a final judgment
from which no appeal may be taken by or on behalf of the Seller is entered
against the Buyer for such liability. If the Seller and/or P-COM shall fail to
defend, or if, after commencing or undertaking any such defense, fails to
prosecute or withdraws from such defense, the Buyer shall have the right to
undertake the defense or settlement thereof, at the Seller's and/or P-COM's
expense. If the Buyer assumes the defense of any such claim or proceeding
pursuant to this subsection (d) and proposes to settle such claim or proceeding
prior to a final judgment thereon or to forego appeal with respect thereto, then
the Buyer shall give the Seller and P-COM prompt written notice thereof, and the
Seller and P-COM shall have the right to participate in the settlement or assume
or reassume the defense of such claim or proceeding.
(e) Except as set forth in this Agreement, neither the Seller nor
P-COM is making a representation, warranty, covenant or agreement with respect
to the matters contained herein. Anything herein to the contrary
notwithstanding, no breach of any representation, warranty, covenant or
agreement contained herein shall give rise to any right on the part of the
Buyer, after the consummation of the purchase and sale of the Transferred Assets
and assumption of Assumed Liabilities contemplated hereby, to rescind this
Agreement or any of the transactions contemplated hereby.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Methods of Termination. The transactions contemplated herein
may be terminated and/or abandoned at any time but not later than the Closing:
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(a) by mutual written consent of the Buyer and the Seller; and
(b) by the Buyer or the Seller if the Closing has not occurred
within 90 days of the date hereof for any reason.
10.2 Procedure Upon Termination. In the event of termination and
abandonment by the Buyer or by the Seller, or both, pursuant to Section 10.1,
written notice thereof shall be given to the other party and the transactions
contemplated by this Agreement shall be terminated and/or abandoned, without
further action by the parties. If the transactions contemplated by this
Agreement are terminated and/or abandoned as provided herein:
(a) each party hereto will redeliver all documents, work papers and
other material (and all copies thereof) of the other party relating to the
transactions contemplated hereby, whether so obtained before or after the
execution hereof, to the party furnishing the same; and
(b) all confidential information received by either party hereto
with respect to the business of the other Party hereto shall be treated in
accordance with Section 8.1.
10.3 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 10.1, this Agreement shall thereafter become void
and have no effect, and no party hereto shall have any liability or obligation
to any other party hereto in respect of this Agreement, except that the
provisions of Section 8.1 (Confidentiality), Article XI (Miscellaneous) and this
Section 10.3 shall survive any such termination.
ARTICLE XI
MISCELLANEOUS
11.1 Specific Performance. It is expressly understood and agreed
that the material breach of any covenant contained in this Agreement will result
in irreparable injury to the other party and that therefore such other party
shall be entitled to specific performance thereof.
11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by the Seller without the prior written
consent of the Buyer, or by the Buyer without the prior written consent of the
Seller. Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, and no other Person shall have any right, benefit or obligation
hereunder.
11.3 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by any party to the other
parties shall be in writing and delivered in person or by courier or by
facsimile transmission as follows (or at such address or facsimile number of
which notice shall have been duly given in accordance with this Section 11.3):
-37-
If to the Seller or P-COM:P-Com, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
If to the Buyer or PDYN: Paradyne Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others. Any failure by any party to
deliver copies of any notice shall not, in itself, affect the validity of such
notice if otherwise properly made to the other party.
11.4 Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of Delaware, without regard to the conflict of law principles thereof.
11.5 Resolution of Conflicts; Arbitration. (a) In the event of any
dispute among the parties in connection with this Agreement, including without
limitation, disputes over a claim pursuant to Section 9.2 or Section 9.3, and
disputes over any amount payable pursuant to Section 2.4 hereof, the Seller and
the Buyer shall attempt in good faith to agree upon the rights of the respective
parties with respect to each of such claims. If the Seller and the Buyer should
so agree, a memorandum setting forth such agreement shall be prepared and signed
by both parties.
(b) If no such agreement can be reached after good faith negotiation
(or in any event after 60 days from the date of a notice setting forth such
dispute), either the Buyer or the Seller may demand arbitration of the matter
unless the amount of the damage or loss is at issue in pending litigation with a
third party, in which event arbitration shall not be commenced until such amount
is ascertained or both parties agree to arbitration; and in either such event
the matter shall be settled by arbitration conducted by three arbitrators. The
Buyer and the Seller shall each select one arbitrator, and the two arbitrators
so selected shall select a third arbitrator. The arbitrators shall set a limited
time period and establish procedures designed to reduce the cost and time for
discovery while allowing the parties an opportunity, adequate in the sole
judgment of the arbitrators, to discover relevant information from the opposing
parties about the subject matter of the dispute. The arbitrators shall rule upon
motions to compel or limit discovery and shall have the authority to impose
sanctions, including attorneys' fees and costs, to the same extent as a court of
law or equity, should the arbitrators determine that discovery was sought
without substantial justification or that discovery was refused or objected to
without substantial justification. The decision of a majority of the three
arbitrators as to the validity and amount of any claim shall be binding and
conclusive upon the parties to this Agreement. Such decision shall be written
and shall be supported by written findings of fact and conclusions which shall
set
-38-
forth the award, judgment, decree or order awarded by the arbitrators. The
arbitrators shall not be empowered to award punitive damages.
(c) Judgment upon any award rendered by the arbitrators may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Washington, D.C. under the rules then in effect of the American Arbitration
Association. The arbitrators shall determine how all expenses relating to the
arbitration shall be paid, including without limitation, the respective expenses
of each party, the fees of each arbitrator and the administrative fee of the
American Arbitration Association.
(d) The provisions set forth in Section 11.5(b) and (c) shall not
apply to disputes involving Environmental Liability or ISRA compliance, as
defined in this Agreement.
11.6 Entire Agreement; Amendments and Waivers. This Agreement
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. No supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by all parties. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
11.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.8 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of this Agreement or any other such instrument.
11.9 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
11.10 Expenses. Except as otherwise provided in this Agreement, the
Seller and the Buyer will each be liable for its own costs and expenses incurred
in connection with the negotiation, preparation, execution or performance of
this Agreement.
11.11 Publicity. The parties agree to notify each other prior to
issuing any press release or making any public statement regarding the
transactions contemplated hereby, and will attempt to obtain the reasonable
approval of the other party prior to making such release or statement,
including, without limitation, any press release issued by either or both of the
parties in connection with the Closing.
[Remainder of page intentionally left blank].
-39-
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
PARADYNE CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Sr. Vice President
Signed in Savannah G.A
PARADYNE NETWORKS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇. Vice President
Title: Signed in Savannah G.A
P-COM, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and CEO
CONTROL RESOURCES CORPORATION
By: /s/ ▇▇▇▇▇ ▇'▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇'▇▇▇▇
Title: CEO
Schedule 2.1(a)
Lease and Leased Real Property
Property Lease: Lease with ▇▇▇▇▇▇▇ Associates for facilities at ▇▇-▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇
Subordination
Agreement: For ▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ between Seller, ▇▇▇▇▇▇▇ Associates, and
Fleet Bank
Schedule 2.1(b)
Equipment
The attached list identifies all fixed assets by asset tag and description.
Schedule 2.1(c)
Assignable Contracts
Customer Contracts:
AT&T Global Network Services (assigned to AT&T from Sears Technology
Services)
Advantis/DSI Escrow Agreement
British Broadcasting Company
Electronic Data Services
Walgreen's
Board of Education - City of New York
Equipment Lease (assignable):
Vanguard
Assumable Equipment Leases:
Finova Leasing
Newcourt (assigned from AT&T Capital)
Green Tree
Patent and Trademark Licenses:
Agreement with Integrated Network Corp for Patent No. 4,862,480
Value Added Reseller Agreement:
Sybase, Inc.
Escrow Agreements:
Between BBC, Seller, and National Computing Center regarding RNETS
Between AGNS, Seller, and DSI regarding NAXS
License Agreements for Software:
----------------------------------------------------------------------------------------------------------
Name Licensor License Format
==========================================================================================================
Windows 3.1, 95, 98, NT Microsoft Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
DOS Microsoft Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Word Perfect Corel Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Noteworks On Technology Multi-user License
----------------------------------------------------------------------------------------------------------
Netware Novell Multi-user License
----------------------------------------------------------------------------------------------------------
ProComm Plus Datastorm Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
PCAnywhere Symantec Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
WinPort Lan Source Multi-user License
----------------------------------------------------------------------------------------------------------
Sygate Sybergen Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
LanShadow Global Data Security Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Norton AntiVirus Norton Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Quattro Corel Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Paradox Corel Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Visio Visio Corp Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Word Microsoft Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
Powerpoint Microsoft Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Excel Microsoft Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Project Manager Microsoft Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Time Line Corel Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
All Clear SPSS Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Real World RWC Multi-user License
----------------------------------------------------------------------------------------------------------
FAS Best Programs Finance Use
----------------------------------------------------------------------------------------------------------
Rapid Pay Rapid Pay Service agreement
----------------------------------------------------------------------------------------------------------
Solaris Sun Microsystems Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Adaptive Server Enterprise Sybase Development and VAR Distribution
----------------------------------------------------------------------------------------------------------
NetCharts Visual Mining a.k.a. NetFactory OEM license
----------------------------------------------------------------------------------------------------------
NetQuest Stack NetQuest Source Code and Distribution
License
----------------------------------------------------------------------------------------------------------
Intermetrics Compiler Tasking Inc Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Opus Make Opus Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
PC-lint for C/C++ ▇▇▇▇▇▇ Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Multi-edit for Win American Cybernetics Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Diab Compiler Diab Data Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
SDS Cross Code Software Development Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
SDS Single Step Software Development Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
pSOS+ Development Integrated Systems Distribution agreement
----------------------------------------------------------------------------------------------------------
Telesoft ISDN BRI/PRI/MLPPP stack Telesoft Development and distribution
----------------------------------------------------------------------------------------------------------
Comm++ ▇▇▇▇▇▇▇▇▇ Software Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
▇▇▇▇ Compiler ▇▇▇▇ Software Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
MS Visual C++ Microsoft Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
MS Visual Basic Microsoft Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Super X Frontier Technology Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
HoTMetaL Pro SoftQuad Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Java Workshop SunSoft Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Java Studio SunSoft Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Crisp Vital Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Visual workshop SunSoft Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Workshop Pro C SunSoft Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Workshop Compiler SunSoft Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
PVCS Intersolve Shrink wrap with key
----------------------------------------------------------------------------------------------------------
Schematic Capture Accel Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Spectra Accel Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
PCAD Accel Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
AutoCad LT AutoDesk Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
AutoCad AutoDesk Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Model Sim Model Tech Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Alliance Xilinx Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Foundation Xilinx Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Max Plus 2 Altera Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
SNMPC Castle Rock Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
HP OpenView HP Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Website O'Reilly Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
NetXray Cinco Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Super TCP Suite Frontier Tech Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Netwrx LanQuest Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------
HPUX HP Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
AIX/NetView IBM Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
IOS Cicso Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
MRS IBM Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Cascadeview Lucent Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
HP C++ Compiler HP Shrink Wrap with key
----------------------------------------------------------------------------------------------------------
Power J Sybase Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Frame Maker Adobe Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
PageMaker Adobe Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Page Mill Adobe Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Photoshop Adobe Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Illustrator Adobe Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Dimensions Adobe Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Hypersnap Hyperionics Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Kleptomainia StrucuRise Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
WinFrame Citrix Systems Standard Shrink Wrap
----------------------------------------------------------------------------------------------------------
Unfilled sales orders: as of 4/14/00
Customer PO # Open Amount
AGNS 1396 - NP64+IL-8-PDGB4 1,095,860
▇▇ - ▇▇▇▇▇▇▇-▇-▇▇▇▇▇ ▇▇▇,▇▇▇
▇▇▇ - ▇▇▇▇▇▇▇-▇-▇▇▇▇▇ 361,500
5 - NP100IL-8-PDYE8 12,050
Services Called for
Under Appendix L in
the minimum
Pathviewamount of 936,000
Associated Press 76902 68,225
TOTALS 2,642,335
Purchase Orders:
Attached is a list of open purchase orders as of April 14, 2000.
Schedule 2.1 (e)
Intellectual Property Rights
Trademarks
US Trademark registration number 2,237,909 for the trade name Access
Integrator (DOC S/N 75-059,632).
CRC has applied to the US DOC and EU OHIM for a Trade ▇▇▇▇ Registration
for NetPath
Patents:
United States patent "AA Programmable Bus For The Control of Electronic
Apparatus" (Patent No. 4,447,813) which was assigned to CRC by ▇▇▇▇▇ ▇.
▇'▇▇▇▇.
License Agreement with Integrated Network Corporation ("INC") for use of
their US Patent No. 4,862,480 relating to digital telecommunications
systems.
Copyrights:
CRC routinely marks for copyright all software and firmware as well as
printed circuit board artwork and publications including manuals and
brochures.
All ownership rights, including but not limited to schematics, source code,
specifications, other documentation, and know-how of the products on the
attached list.
Domain name:
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Licenses:
See License Agreements for Software on Schedule 2.1(c)
Parties With a Right to Seller's Source Code:
AGNS has a right to NAXS software under an escrow agreement BBC has a
right to RNETS under an escrow agreement
Protection of Intellectual Property:
Seller has had a policy of not devoting resources to patent applications,
has no applications planned, and makes no representations that the Intellectual
Property includes any inventions for which a patent may be applied.
Schedule 2.1(g)
Permits
CRC has been granted permits that are non-assignable from the following state
and local governing and/or regulatory bodies:
Certificate of Incorporation - State of Delaware
Certificate of Authority for sales and use tax - State of New York
Certificate of Registration for sales and use tax - Illinois Department of
Revenue
Certificate of Authority to do business - State of New Jersey
Certificate of Occupancy - Township of Fair Lawn, N.J. for the premises at
▇▇-▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇.
CRC has obtained the following products registrations which may be assigned:
FCC Part 68 for products which connect to the public switched telephone
network.
British Telecomm, BS 6301 - Model 8F Data Bridge
EC, Declaration of Conformity - Model 190 RNET
Canada, Department of Communications - IDRS, Model 1060 ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇-▇
IDRU
Industry Canada - NetPath ▇▇▇, ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇ 64+
Schedule 2.1(h)
Receivables
CRC Accounts Receivable Aging as of 4/14/2000
Customer Invoice # Invoice Date Amount Due Date
AT&T 14100 02/16/00 1,554.03 02/26/00
AT&T 14101 02/18/00 1,095.63 02/28/00
AT&T 14102 02/23/00 649.96 03/04/00
AT&T 14103 02/25/00 1,174.54 03/06/00
AT&T 14113 03/13/00 1,076.50 03/23/00
AT&T 14114 03/15/00 593.60 03/25/00
AT&T 14121 03/31/00 38,535.12 04/10/00
AT&T 14122 04/03/00 153,288.83 04/13/00
AT&T 14123 04/05/00 141,680.33 04/15/00
AT&T 14124 04/07/00 3,655.00 05/07/00
AT&T 14125 04/07/00 421.53 05/07/00
AT&T 14126 04/10/00 204,090.91 04/20/00
AT&T 14127 04/12/00 79,269.30 04/22/00
AT&T 14128 04/12/00 87,734.80 04/22/00
AT&T 14129 04/12/00 50,700.38 04/22/00
AT&T 14131 04/14/00 56.72 05/14/00
------------
Total AT&T 765,577.18
Garban 14112 03/10/00 194.85 04/09/00
Garban 14130 04/13/00 1,120.39 05/13/00
------------
Total Garban 1,315.24
Lucent 14120 03/31/00 79,071.70 04/30/00
DCI 14105 02/29/00 2,077.85 03/30/00
EOG, Inc. 200006 02/14/00 200.09 3/14/2000
EOG, Inc. 200009 03/06/00 161,437.20 4/6/2000
EOG, Inc. 2000010 03/13/00 454.28 4/13/2000
------------
Total EOG 162,091.57
Aimtronics 2000011 03/14/00 344.53 4/14/2000
Aimtronics 2000012 02/23/00 92.28 3/23/2000
Aimtronics 2000013 04/11/00 1,229.91 5/11/2000
Aimtronics 2000014 04/13/00 339.85 5/13/2000
Aimtronics 2000015 04/13/00 113.29 5/13/2000
------------
Total Aimtronics 2,119.86
Total CRC Aging 1,012,253.40
Schedule 2.1(i)
Computer Programs
Internally written software owned by CRC consisting of the Inventory Control
System.
Licensed accounting, invoicing, and auditing software used by CRC that is
assignable:
Real World
FAS
Quattro
Paradox
Excel
Rapid Pay (as part of service)
In addition some of the software items listed in Schedule 2.1(c) are used to
create the data processing infrastructure used in the conduct of the business.
There are no data processing programs necessary for the conduct of the Business
that are not assignable to Buyer.
Schedule 2.2
Excluded Assets
o Corporate minute books, corporate seals, consolidated financial
statements, and tax records of Seller.
o Seller's cash, cash equivalent and bank accounts.
o Seller's rights under the Leases in connection with any event occurring
prior to the Closing Date.
Schedule 2.3
Excluded Liabilities
The following categories of liabilities, as set forth in the Seller's Financial
Statements and records, are "Excluded Liabilities":
o Accrued interest to P-COM
o The intercompany account shown on the Seller's December 31, 1999 balance
sheet and all other liablities between the Seller and its Affiliates
o Notes payable
o All Tax liabilities
Any Environmental Liability of the Seller, as defined in the Agreement.
Schedule 4.5
Title Exceptions
(None)
Schedule 4.6(c)
Material Contract or Lease Defaults
The following contracts may not be assigned without prior written consent which
will not be unreasonably withheld:
▇▇▇▇▇▇▇ Associates (Landlord) (Consent received)
Customers:
AT&T Global Network Services (Consent received)
Electronics Data Services (Consent received)
Walgreen's
Board of Education, City of New York
The following license agreements may not be assigned without prior written
consent which will not be unreasonably withheld:
Novell
Lan Source (Consent received)
Sybase
NetQuest (Consent received)
The following equipment leases do not permit assignment but are assumable with
consent of lessor:
Lease Equipment Term Start End Value
Finova FB6000 FT Package 60 Oct-96 Oct-01 $ 15,490.40
Months
Test Equipment
Green Tree (▇) ▇▇▇▇▇ ▇▇ ▇ Port Processr Card 36 Feb-99 Feb-02 $ 43,181.00
Months
(1) 59012 ▇.▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇
(▇) ▇▇▇▇ ▇▇▇▇ Mutiplexer
Newcourt Test Equipment 36 Jun-98 Jun-01 $ 31,981.75
Months
Newcourt Postage Meter 51 Dec-97 Jan-03 $ 5,892.54
Months
Newcourt Test Equipment ▇▇ ▇▇▇-▇▇ ▇▇▇-▇▇ $ 7,995.00
Months
Schedule 4.6(d)
Contracts not in the Ordinary Course
Seller has verbally agreed with AT&T Network Solutions that warranty coverage
for all NetPath equipment sold to AT&T Network Solutions will be extended from
the one year provided for in the agreement to a term of five years.
Schedule 4.6(e)
Contracts with Threatened Termination or Cancellation
(None)
Schedule 4.7
Conflict or Violation
(None)
Schedule 4.8
Consents and Approvals
There are no consents or approvals required other than the lease and contract
assignment disclosed in Schedule 4.6(c).
Schedule 4.9
Litigation
(None)
Schedule 4.10(a)
Compliance with Law
(None)
Schedule 4.10(b)
Permits and Licenses
(None)
Schedule 4.12(a)
Intellectual Property Rights from Others
The following license agreements require consent to assign which may not be
unreasonably be withheld:
NetQuest (NetQuest Stack)
Sybase (Adaptive Service Enterprise)
Lan Source (Winport)
Novell (Netware)
The following license agreements may be assigned with notice:
Integrated Systems (pSOS+)
Visual Mining/NetFactory (NetCharts)
Telesoft (ISDN BRI/PRI/MLPPP)
Schedule 4.12 (h)
Fees and Royalties
Fees or royalties are payable by the Seller for software used in its products in
accordance with previously provided agreements with Sybase, Integrated Systems
(PSOS), and Visual Mining (NetCharts).
Schedule 4.12(i)
Exceptions to Intangible Rights
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇'▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, Jr. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
Cheyen, Chen Robibero, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, Jr.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
Gatulo, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Mahesh
▇▇▇▇▇, ▇▇▇▇▇ Tailor, ▇▇▇▇
▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, Ellieta
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
Schedule 4.14
Taxes
(None)
Schedule 4.15(a)
Environmental and Other Regulations
(None)
Schedule 4.15(b)
Employee Regulations
(None)
Schedule 4.16(b)
Labor Matters
(None)
Schedule 4.17
Insurance
Attached is a list of insurance policies.
Schedule 4.18
Sufficiency of Transferred Assets
(None)
Schedule 4.19
Inventory
Seller's inventory is disclosed in the attached list. Seller owns all inventory
free and clear of any liens, claims, charges, encumbrances and holds no
inventory on consignment.
All inventory in excess of reserves and reasonable estimated requirements for
the Seller based on current operations for the Calendar Year 2000 is set forth
below:
Finished Goods Legacy 63,202
NetPath 97,099
Work-in-Process Legacy 26,888
NetPath 0
Raw Materials Legacy 190,969
NetPath 120,770
TOTAL 498,928
As previously disclosed, most inventory with requirements in excess of one year
is associated with contracts which include ongoing support requirements.
Schedule 4.20
Suppliers
Attached is the list of suppliers of goods during the prior two years with a
value in excess of $10,000 per annum:
Schedule 4.21
Backlog
See Unfilled Orders - Schedule 2.1(c)
Schedule 4.22
Accounts Receivable
(None)
Schedule 7.1(e)
P-COM Stock Options
As of
3/31/2000
GRANT Shares Shares
DATE TOTAL Vested Unvested
▇▇▇▇▇▇▇▇, ▇▇▇▇ 07/03/97 6,000 3,250 2,750
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 05/23/97 800 467 333
BRANCHE, LINDEN 05/23/97 6,000 3,500 2,500
BRENCOVICH, ED 0 0 0
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ 05/23/97 9,000 5,250 3,750
▇▇▇▇▇, ▇▇▇▇▇▇▇ A 05/23/97 2,000 1,167 ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 05/23/97 800 467 333
▇▇▇▇▇▇▇, ▇▇▇▇▇ 0 0 0
▇▇▇▇, ▇▇▇▇▇▇ 05/23/97 9,000 5,250 3,750
▇▇▇▇▇, YOUNG 08/31/98 15,000 5,938 9,063
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ 05/23/97 2,000 1,167 833
▇▇▇▇▇▇, ▇▇▇▇▇ 05/23/97 3,000 1,750 1,250
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 05/23/97 800 467 333
▇▇▇▇▇, ▇▇▇▇▇▇▇ 05/23/97 12,000 7,000 5,000
▇▇ ▇▇▇▇, ▇▇▇▇▇ 05/23/97 10,000 5,833 4,167
▇▇▇▇▇, LINABEN D 05/23/97 800 467 333
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 05/23/97 1,500 875 625
▇▇▇▇▇▇▇, ▇▇▇▇▇ A 05/23/97 20,000 11,667 8,333
FIX, ▇▇▇▇▇▇ 0 0 0
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 05/23/97 9,000 5,250 3,750
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 05/23/97 15,000 8,750 6,250
▇▇▇▇▇▇▇, ▇▇▇▇▇ 04/23/99 10,000 2,292 7,708
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 05/23/97 13,000 7,583 5,417
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 05/23/97 800 467 333
▇▇▇▇, ▇▇▇▇▇ H 05/23/97 8,000 4,667 3,333
▇▇▇▇▇▇, ▇▇▇▇▇ ▇ 05/23/97 8,000 4,667 3,333
▇▇▇, ▇▇▇▇▇▇ 05/23/97 7,000 4,083 2,917
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 05/23/97 4,000 2,333 1,667
▇▇▇▇▇▇, ▇▇▇▇ 05/23/97 800 467 333
▇▇▇▇, ▇▇▇▇▇▇ ▇ 05/23/97 14,000 8,167 5,833
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 0 0 0
▇▇▇▇▇, ▇▇▇▇▇▇ 05/23/97 60,000 35,000 25,000
▇▇▇▇▇, ▇▇▇▇▇▇ 09/18/98 30,000 11,250 18,750
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ 07/03/97 6,000 3,250 2,750
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 05/23/97 1,500 875 625
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ J 05/23/97 14,000 8,167 5,833
▇▇▇, ▇▇▇▇▇▇▇ ▇.▇. 05/23/97 9,000 5,250 3,750
▇▇▇▇▇, ▇▇▇▇▇ 05/23/97 9,000 5,250 3,750
▇▇▇▇▇▇, ▇▇▇▇▇▇ 05/23/97 20,000 11,667 8,333
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇ 03/13/98 20,000 7,500 12,500
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ R 05/23/97 800 467 333
▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 05/23/97 800 467 333
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 05/23/97 800 467 333
▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ 05/23/97 1,500 875 625
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ A 05/23/97 2,000 1,167 ▇▇▇
▇▇▇▇▇, ▇▇▇▇ 05/23/97 9,000 5,250 3,750
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 05/23/97 7,000 4,083 2,917
-43-
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ 05/23/97 10,000 5,833 4,167
▇▇▇▇▇, ▇▇▇▇▇▇ 0 0 0
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 0 0 0
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ M 05/23/97 1,500 875 625
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 05/23/97 3,000 1,750 1,250
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 05/23/97 2,000 1,167 833
SONG, ▇▇▇▇▇▇ 05/23/97 12,000 7,000 5,000
STEEL, ▇▇▇▇▇▇ N 05/23/97 20,000 11,667 8,333
▇▇▇▇▇, ▇▇▇▇▇▇ H 05/23/97 800 467 333
TRAPANIS, NICK 05/23/97 5,000 2,917 2,083
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 05/23/97 7,000 4,083 2,917
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 01/02/98 20,000 8,333 11,667
▇▇▇▇▇, ▇▇▇▇▇▇▇ 05/23/97 10,000 5,833 4,167
471,000 254,146 216,854
Schedule 7.1(c)
Key Employees
The following employees shall have received and accepted offers of employment:
Young ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ Steel
Schedule 8.2(a)
Employees
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ SONG, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ STEEL, ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ TRAPANIS, ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, LINABEN D ZAKUR, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ A
FIX, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇
▇▇▇, ▇▇▇▇▇▇▇ ▇.▇.
▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Schedule 8.2(c)
Additional Severance
----------------------------------------------------
Employee Payment
====================================================
▇▇▇▇▇▇▇, ▇▇▇▇▇ $20,000
----------------------------------------------------
▇▇▇▇, ▇▇▇▇▇▇ 18,000
----------------------------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 75,000
----------------------------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 24,500
----------------------------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇ 25,000
----------------------------------------------------
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 2,500
----------------------------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 10,000
----------------------------------------------------
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 5,000
----------------------------------------------------
▇▇ ▇▇▇▇, ▇▇▇▇▇ 15,000
----------------------------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 10,000
----------------------------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 10,000
----------------------------------------------------
Financial Statements
CONTROL RESOURCES CORP.
Unaudited Statement of Income
Period: 12/01/97 to 12/31/1997
Reporting-period Year-to-date
Amount Amount
Sales - net $ 2,832,696 $ 12,684,949
Cost of goods sold 1,342,387 6,506,255
------------ ------------
Gross Profit $ 1,490,309 $ 6,178,694
Expenses:
Direct Sales $ 71,130 $ 681,653
Publications 10,478 137,138
Hardware development 101,382 1,400,419
Software development 94,620 1,100,551
Quality Assurance 61,078 723,420
Customer Service 6,520 74,062
Finance 23,322 229,398
Business/Tech development 13,864 193,678
General & Administrative 180,849 1,777,409
Total expenses $ 563,243 $ 6,317,728
------------ ------------
Operating profit (loss) $ 927,066 $ (139,034)
------------ ------------
PreTax profit (loss) $ 927,066 $ (139,034)
------------ ------------
Net Profit (loss) for period $ 927,066 $ (139,034)
CONTROL RESOURCES CORP
Unaudited Balance Sheet
As of 12/31/1997
ASSETS
Current Assets:
Cash $ 3,278,627
Accounts Receivable 3,230,612
Inventory 524,527
Prepaid expenses 101,718
-------------
Total current assets 7,135,484
Fixed assets $ 2,638,113
Less: accumulated depreciation (1,513,161)
Construction in process 22,350
Other Assets 429,112
Total Assets $ 8,711,898
=============
Liabilities and Equity (Deficit)
Current Liabilities:
Accounts Payable 337,448
Intercompany Account 5,772,309
Notes Payable 4,000,000
Employee Compensation 221,318
Other Accrued Liabilities 455,808
Total Current Liabilities $ 10,786,883
-------------
Total Liabilities $ 10,786,883
-------------
Stockholders Equity (Deficit):
Common Stock $ 28,248
Paid In Capital 1,412,566
Accumulated Retained earnings (3,515,799)
Total Stockholders Equity $ (2,074,985)
-------------
Total Liabilities & Equity $ 8,711,898
=============
CONTROL RESOURCES CORP
Unaudited Balance Sheet
As of 12/31/1998
1998
ACTUALS
All Sub Accounts
ASSETS
Current Assets:
Cash $ 192,114
Accounts Receivable 3,370,411
Inventory 2,125,815
Prepaid expenses 134,573
---------------------
Total current assets $ 5,822,913
Fixed assets $ 3,096,961
Less: accumulated depreciation (1,972,727)
Construction in Process 575,184
Other Assets 347,036
Total Assets $ 7,869,367
=====================
Liabilities and Equity (Deficit)
Current Liabilities:
Accounts Payable 1,082,976
Intercompany Account 7,468,603
Notes Payable 4,000,000
Employee Compensation 75,297
Other Accured Liabilities 523,291
Total Current Liabilities $ 13,150,167
---------------------
Total Liabilities $ 13,150,167
---------------------
Stockholders Equity (Deficit):
Common Stock $ 28,248
Paid In Capital 1,412,566
Accumulated Retained earnings (6,721,614)
Total Stockholders Equity $ (5,280,800)
---------------------
Total Liabilities & Equity $ 7,869,367
=====================
CONTROL RESOURCES CORP.
Unaudited Statement of Income
Period: 12/01/98 to 12/31/98
1998 CURRENT PERIOD 1998 YEAR-TO-DATE
ACTUALS ACTUALS
All Sub Accounts All Sub Accounts
Amount Amount
Sales - net $ 1,690,724 $ 6,829,853
Cost of goods sold 961,724 3,925,607
--------------------------------- ---------------------------
Gross Profit $ 729,000 $ 2,904,246
Expenses:
Direct Sales $ 94,992 $ 1,131,025
Marketing 10,596 166,486
Publications 22,748 264,243
Administration (70,888) (575,184)
Hardware developoment 209,173 1,310,318
Software development 99,082 1,070,564
Quality Assurance 61,657 677,063
Customer service 7,036 78,656
Lan Administration 5,547 68,209
Finance 19,701 244,231
General and administrative 106,749 1,235,447
--------------------------------- ---------------------------
Total expenses $ 566,393 $ 5,671,058
--------------------------------- ---------------------------
Operating profit (loss) $ 162,607 $ (2,766,812)
--------------------------------- ---------------------------
Interest expense $ 27,425 $ 358,521
Intangible Asset Amtz 6,715 80,481
--------------------------------- ---------------------------
PreTax profit (loss) $ 128,467 $ (3,205,814)
--------------------------------- ---------------------------
Net Profit (loss) for period $ 128,467 $ (3,205,814)
Exhibit 1.1
CONTROL RESOURCES CORP.
Unaudited Statement of Income
Period: 02/01/2000 to 02/20/2000
2000 CURRENT PERIOD 2000 YEAR-TO-DATE
ACTUALS ACTUALS
All Sub Accounts All Sub Accounts
Amount Amount
Sales - net $ 790,068 $ 2,066,126
Cost of goods sold 421,497 971,207
-------------------------- --------------------------
Gross Profit $ 368,571 $ 1,094,919
Expenses:
Direct Sales $ 68,662 $ 129,822
Marketing 8,391 15,844
Publications 22,880 47,470
Administration (41,078) (90,836)
Hardware developoment 92,365 219,129
Software development 79,268 168,863
Qualtiy Assurance 68,918 138,981
Customer service 6,846 14,889
Lan Administration 5,580 11,152
Finance 11,699 22,817
General and administrative 102,194 206,982
-------------------------- --------------------------
Total expenses $ 425,725 $ 885,113
-------------------------- --------------------------
Operating profit (loss) $ (57,154) $ 209,806
-------------------------- --------------------------
Interest expense $ 29,941 $ 60,775
Intangible Asset Amtz 18,825 37,650
-------------------------- --------------------------
PreTax profit (loss) $ (105,920) $ 111,381
-------------------------- --------------------------
Net Profit (loss) for period $ (105,920) $ 111,381
CONTROL RESOURCES CORP
Unaudited Balance Sheet
As of 2/29/2000
2000
ACTUALS
All Sub Accounts
ASSETS
Current Assets:
Cash $ 463,172
Accounts Receivable 940,471
Inventory 2,441,528
Prepaid expenses 63,791
-------------
Total current assets $ 3,908,962
Fixed assets $ 3,356,036
Less: accumulated depreciation (2,529,634)
Software/ Test Development 642,462
Total Capitalized Software 794,323
Other Assets 65,020
Total Assets $ 6,237,169
=============
Liabilities and Equity (Deficit)
Current Liabilities:
Accounts Payable $ 989,844
Intercompany Account 8,226,633
Accrued Interest P-Com 1,098,977
Notes Payable 4,000,000
Employee Compensation 124,109
Current Portion Long Term Debt 15,170
Other Accrued Liabilities 416,720
-------------
Total Current Liabilities $ 14,871,453
-------------
Long Term Debt $ 25,596
Total Liabilities $ 14,897,049
-------------
Stockholders Equity (Deficit):
Common Stock $ 28,248
Paid In Capital 1,412,566
Retained earnings - 01/01/00 (10,212,075)
Current period earnings $ 111,381
-------------
Total Stockholders Equity $ (8,659,880)
-------------
Total Liabilities & Equity $ 6,237,169
=============
CONTROL RESOURCES CORP
Unaudited Balance Sheet
As of 12/31/1999
1999
ACTUALS
All Sub Accounts
ASSETS
Current Assets:
Cash $ 15,693
Accounts Receivable 721,490
Inventory 2,391,293
Prepaid expenses 69,349
-------------
Total current assets $ 3,197,825
Fixed assets $ 3,354,105
Less: accumulated depreciation (2,452,391)
Software/ Test Development 531,386
Total Capitalized Software 831,974
Other Assets 65,020
Total Assets $ 5,527,919
=============
Liabilities and Equity (Deficit)
Current Liabilities:
Accounts Payable $ 557,533
Intercompany Account 8,186,310
Accrued Interest P-Com 1,037,310
Notes Payable 4,000,000
Employee Compensation 93,241
Current Portion Long Term Debt 15,170
Other Accrued Liabilities 381,653
-------------
Total Current Liabilities $ 14,271,217
-------------
Long Term Debt $ 27,962
Total Liabilities $ 14,299,179
-------------
Stockholders Equity (Deficit):
Common Stock $ 28,248
Paid In Capital 1,412,566
Retained earnings - 01/01/00 (6,721,614)
Current period earnings $ (3,490,460)
-------------
Total Stockholders Equity $ (8,771,260)
-------------
Total Liabilities & Equity $ 5,527,919
=============
CONTROL RESOURCES CORP.
Unaudited Statement of Income
Period: 12/01/1999 to12/31/1999
1999 CURRENT PERIOD 1999 YEAR-TO-DATE
ACTUALS ACTUALS
All Sub Accounts All Sub Accounts
Amount Amount
Sales - net $ 484,044 $ 6,155,495
Cost of goods sold 359,770 3,169,090
------------ ------------
Gross Profit $ 124,274 $ 2,986,405
Expenses:
Direct Sales $ 70,356 $ 1,059,903
Marketing 17,355 221,636
Publications 23,875 295,488
Administration (44,677) (556,269)
Hardware development 128,946 1,340,035
Software development 101,381 1,199,037
Quality Assurance 78,053 830,918
Customer service 7,312 86,473
Lan Administration 6,284 68,620
Finance (3,520) 146,182
General and administrative 91,252 1,263,277
------------ ------------
Total expenses $ 476,617 $ 5,955,300
------------ ------------
Operating profit (loss) $ (352,343) $ (2,968,895)
------------ ------------
Interest expense $ 31,843 $ 344,906
Intangible Asset Amtz 18,825 176,652
------------ ------------
PreTax profit (loss) $ (403,011) $ (3,490,453)
------------ ------------
Net Profit (loss) for period $ (403,011) $ (3,490,453)
Exhibit 2.4
Note
Exhibit 8.1
Confidentiality Agreement
Exhibit 8.2(b)(i)
Paradyne/CRC Special Severance Plan
Exhibit 8.2(b)(ii)
Termination Agreement, Waiver and Release
PROMISSORY NOTE
$4,667,573 April 14, 2000
Paradyne Corporation ("Paradyne"), FOR VALUE RECEIVED, hereby
promises to pay to the order of Control Resources Corporation, a Delaware
corporation ("CRC"), on September 15, 2000 (or sooner, as herein provided) at
the offices of P-COM, Inc., ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ or at
such location as the holder hereof may hereafter designate in writing, the
principal sum of US$4,667,573, as such amount may be adjusted as provided for in
Section 1 below (the "Principal Sum"). The Principal Sum from time to time
outstanding shall bear interest payable at a rate equal to the Prime Rate of US
commercial banks as published in the Wall Street Journal (Eastern edition) from
time to time (or if more than one such rate is published, the average of such
rates).
Paradyne has on the date hereof purchased certain of the assets of
CRC pursuant to the terms and conditions of the Asset Purchase Agreement, dated
April 5, 2000 by and between Paradyne, Paradyne Networks, Inc., P-COM, Inc. and
CRC (the "Purchase Agreement"). Capitalized words and phrases used and not
otherwise defined in this Note have the meanings provided in the Purchase
Agreement. Paradyne hereby covenants and agrees with CRC as follows:
1. The Principal Sum shall be increased or decreased, as the case
may be, as provided for in the Purchase Agreement.
2. Paradyne may prepay, in whole or in part, the Principal Sum in
cash by wire transfer of immediately available funds to CRC's account in an
amount equal to the full amount due, without penalty or premium, at any time
prior to September 15, 2000 on the condition that together with any such
prepayment Paradyne shall pay all accrued but unpaid interest on the amount
being prepaid.
3. On September 15, 2000 Paradyne may pay the Principal Sum and any
interest payable thereon by (a) the issuance to CRC of registered shares of
common stock of Paradyne Networks, Inc. with the number of such shares based on
the average closing price of Paradyne Networks, Inc.'s common stock on the 7
business days immediately preceding the day such shares of common stock of
Paradyne Networks, Inc. are delivered to CRC, and (b) delivery of a good check
to CRC for the difference between the total value of such shares and the full
amount due under this Note.
4. If any payments of principal or interest hereunder become due and
payable on a Saturday, Sunday or public holiday under the laws of the State of
Delaware, the due date of such payment shall be extended to the next succeeding
full business day and, in the case of principal, interest thereon shall be
payable at the applicable rate during such extension
5. This Promissory Note may not be changed or discharged orally, but
only by an agreement in writing and signed by the party against whom enforcement
of any waiver, change, modification or discharge is sought
6. Presentment or demand for payment, notice of dishonor, protest
and notice of protest are hereby waived.
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7. This Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of Delaware without reference to choice
of law doctrine.
IN WITNESS WHEREOF, this Promissory Note is executed and delivered
on the date first above written.
PARADYNE CORPORATION
By: ________________________________
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