-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LFa2m+YVmVAu6fQO9vAjtU0W8XrQhKrxDk7y7zwQaA4znoEX8S7mCBg5MobxpTwD r6Pk714UqpgxGIe6HNKsKg== 0001012870-02-003876.txt : 20020925 0001012870-02-003876.hdr.sgml : 20020925 20020925144911 ACCESSION NUMBER: 0001012870-02-003876 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20020925 FILER: COMPANY DATA: COMPANY CONFORMED NAME: P COM INC CENTRAL INDEX KEY: 0000935493 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 770289371 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-100080 FILM NUMBER: 02771998 BUSINESS ADDRESS: STREET 1: 3175 S WINCHESTER BLVD CITY: CAMPBELL STATE: CA ZIP: 95008 BUSINESS PHONE: 4088663666 MAIL ADDRESS: STREET 1: 3175 S WINCHESTER BLVD STREET 2: P-COM INC CITY: CAMPBELL STATE: CA ZIP: 95008 S-3 1 ds3.htm FORM S-3 Prepared by R.R. Donnelley Financial -- Form S-3
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As filed with the Securities and Exchange Commission on September 25, 2002
Registration No. 333-          
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM S-3
REGISTRATION STATEMENT
 
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED
 
 
P-COM, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
 
Delaware
  
77-0289371
(State or other jurisdiction of
incorporation or organization)
  
(I.R.S. Employer
Identification Number)
 
3175 S. Winchester Boulevard, Campbell, CA 95008
(408) 866-3666
(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)
 
 
George P. Roberts
Chairman of the Board and Chief Executive Officer
P-Com, Inc.
3175 S. Winchester Boulevard
Campbell, California 95008
(408) 866-3666
(Name and Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)
 
 
Copy to:
Hayden J. Trubitt, Esq.
Brobeck, Phleger & Harrison LLP
12390 El Camino Real
San Diego, California 92130
(858) 720-2500
 
 
Approximate date of commencement of proposed sale to the public:
 
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
 
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box.  ¨
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box.  x
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, as amended, check the following box and list the Securities Act of 1933, as amended, registration statement number of the earlier effective registration statement for the same offering.  ¨
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, as amended, check the following box and list the Securities Act of 1933, as amended, registration statement number of the earlier effective registration statement for the same offering.  ¨
 
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box.  ¨
 
 
CALCULATION OF REGISTRATION FEE
 
Title of Securities to be Registered
   
Amount to be Registered (2)
     
Proposed Maximum
Offering Price Per Share (3)
   
Proposed Maximum Aggregate Offering Price (3)
     
Amount of Registration Fee
Common Stock, $0.0001 par value (1)
   
600,000
     
$0.245
   
$147,000
     
$13.53
 
(1)
 
Each share of Common Stock is also paired with a stock purchase right under the Registrant’s Stockholder Rights Plan.
 
(2)
 
Pursuant to Rule 416, this registration statement also registers an indeterminate number of shares of Common Stock as may be issued upon outstanding shares upon stock splits, stock dividends or similar situations (and conversely, upon reverse stock splits).
 
(3)
 
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and based upon the average high and low prices of the Common Stock on September 24, 2002 as reported on the Nasdaq SmallCap Market.
 
The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until this registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 

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The information contained in this preliminary prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS
(SUBJECT TO COMPLETION, DATED SEPTEMBER 25, 2002)
 
 
600,000 Shares
 
 
LOGO
 
 
Common Stock
 
 
The prospectus relates to the resale of up to 600,000 shares of our common stock which is held by the selling stockholders identified in this prospectus. We are registering shares of our common stock for resale by the selling stockholders. The prices at which the selling stockholders may sell the shares will be determined by the prevailing market for the shares or in negotiated transactions. We will not receive any proceeds from the sale of shares offered under this prospectus.
 
Our common stock is traded on the Nasdaq SmallCap Market under the symbol “PCOM.” The last reported sales price of our common stock on September 24, 2002 was $0.23 per share.
 
 
The shares of our common stock offered or sold under this prospectus involve a high degree of risk. See “ Risk Factors” beginning on page 4 of this prospectus to read about important factors you should consider before buying the common stock.
 
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
 
 
The date of this prospectus is                                 , 2002.

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PROSPECTUS SUMMARY
 
This summary highlights some information from this prospectus, and it may not contain all of the information that is important to you. It is qualified in its entirety by the more detailed information and consolidated financial statements, including the notes to the consolidated financial statements, incorporated by reference in this prospectus. You should read the full text of, and consider carefully the more specific details contained in or incorporated by reference into this prospectus.
 
Our Business
 
We develop, manufacture and market point-to-multipoint, point-to-point and spread spectrum radio systems for the worldwide telecommunications market. Cellular and personal communications services, or PCS, providers employ our point-to-point systems for backhaul between remote tower sites and switching centers in their growing global markets. Network service providers and Internet service providers are able, through the deployment of our equipment and systems, to respond to the increasing global demands for high-speed wireless access services, such as Internet access associated with business-to-business and e-commerce business processes. Through deployment of our systems, network providers can quickly and efficiently establish integrated Internet, data, voice, and video services for their customers, and expand and grow those services as demand increases. Our market is a subset of the global telecom, cellular, PCS, wireless Internet access, and private network markets.
 
Our wholly-owned subsidiary, P-Com Network Services, Inc., or PCNS, provides engineering, installation support, program management and maintenance support services to the telecommunications industry in the United States. Network service providers, including wireless and traditional wireline, outsource these tasks to approved service suppliers on a project-by-project basis. Microwave service projects are typically short in duration, lasting one to two weeks, and primarily involve logistical installation or maintenance of millimeter wave radio systems. Central office services projects involve ordering materials and substantial man-hour commitments and can last up to three months.
 
Our executive offices are located at 3175 S. Winchester Boulevard, Campbell, California 95008, and our telephone number is (408) 866-3666.
 
The Offering
 
On March 1, 2002, we issued a warrant to purchase up to 600,000 shares of our common stock to Cagan McAfee Capital Partners, LLC for consideration of financial advisory services provided to us. The exercise price for the common stock underlying the warrant is $1.02 per share. The closing sale price of our common stock on September 24, 2002 was $0.23. The warrant is immediately exercisable and may be exercised either by payment of the exercise price or by net exercise. On July 11, 2002, Cagan McAfee Capital Partners, LLC transferred 20,000 shares underlying the warrant to Alta Partners Discount Convertible Arbitrage Holdings, Ltd. Under the terms of the warrant, we agreed to register all of the shares of common stock underlying the warrant. This prospectus relates to the resale of up to 600,000 shares of our common stock issuable upon the exercise of the warrant. The prices at which the selling stockholders may sell the shares will be determined by the prevailing market for the shares or in negotiated transaction. See “Selling Stockholders.”
 
Name of Selling Stockholders
     
Number of Shares
of Common Stock
Cagan McAfee Capital Partners, LLC
     
580,000
Alta Partners Discount Convertible Arbitrage Holdings, Ltd.
     
  20,000
 
Use of Proceeds
 
The selling stockholders will receive all of the proceeds from the sale of the common stock pursuant to this prospectus. We will not receive any of the proceeds from sales by the selling stockholders of the offered shares of common stock.
 

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RISK FACTORS
 
An investment in our common stock is subject to many risks. You should carefully consider the risks described below, together with all of the other information included or incorporated by reference into this prospectus, including the financial statements and the related notes, before you decide whether to purchase shares of our common stock. Our business, operating results and financial condition could be harmed by any of the following risks. The trading price of our common stock could decline due to any of these risks, and you could lose all or part of your investment.
 
Continuing uncertainty in the communications equipment industry and the United States economy may have serious implications for the growth and stability of our business and may negatively affect our financial condition and results of operations.
 
A severe worldwide slowdown in the telecommunications equipment and services sector is affecting us. Our customers, specifically systems operators and integrated system providers, are deferring capital spending and orders to suppliers such as our company, canceling orders, and, in general, not building out any significant additional infrastructure at this time because of the overall slowdown in incremental demand for services from consumers and businesses. In addition, our accounts receivable, inventory and stability can be jeopardized if our customers experience financial distress. Our services business’ largest customer began a slowdown and deferral of previously committed work orders as of the end of the second quarter of 2001. We do not think our own product sales levels can likely recover while an industry-wide slowdown in demand persists.
 
Our business and financial positions have deteriorated significantly.
 
Our business and financial positions have deteriorated significantly. From inception to June 30, 2002, our aggregate net loss to date is approximately $317 million. Our June 30, 2002 cash, working capital, accounts receivable, inventory, total assets, employee headcount, backlog and total stockholders’ equity were all substantially below levels of one year before. In addition to $1.7 million of 4.25% convertible subordinated notes maturing in November 2002, we have $22.4 million of 4.25% convertible subordinated notes maturing in November 2005 or 2007, depending upon the occurrence of certain events, that our current resources would not enable us to pay.
 
Our independent accountants’ opinion on our 2001 consolidated financial statements includes an explanatory paragraph indicating substantial doubt, on the basis described in that paragraph, about our ability to continue as a going concern. We currently are able generally to pay our debts and meet our obligations as they become due. Nevertheless, to continue long-term as a going concern, we will have to increase our sales, and possibly induce other creditors to forebear or to convert to equity, raise additional equity financing, and/or raise new debt financing. We cannot guarantee that we will be able to accomplish these tasks.
 
Our failure to comply with Nasdaq’s listing standards could result in our delisting by Nasdaq from the Nasdaq SmallCap Market and severely limit the ability to sell any of our common stock.
 
To maintain the listing of our common stock on the Nasdaq National Market, we were required to meet certain listing requirements, including a minimum bid price of $1.00 per share. We received a letter of notice dated June 20, 2001 from the Nasdaq National Market stating that due to our minimum bid price levels remaining under the $1.00 level for 30 consecutive trading days, we were therefore, on notice that we could be subject to a delisting procedure should the bid price continue to remain under the $1.00 level for an additional 90-day period, unless our stock attained a bid price of $1.00 or more for a period of 10 consecutive days during such 90-day period. Shortly after September 11, 2001, Nasdaq issued a moratorium on the delisting process until January 2, 2002. We received a new letter of notice on March 16, 2002 from Nasdaq stating that due to our minimum bid price levels remaining under $1.00 for 30 consecutive days, we are again on notice that we were subject to delisting procedures. We filed a request for an appeal of the letter of notice and a hearing of our appeal was heard on June 28, 2002. On May 21, 2002, we received an additional letter from Nasdaq stating that our net tangible assets and stockholders’ equity levels were being reviewed for eligibility for continued listing on the Nasdaq National Market. On July 5, 2002, we received an additional letter from Nasdaq indicating that we failed to comply with Rule 4350(i)(D)(ii), based upon the consummation of the equity financing in June 2002 as the issuance had the potential to result in a discounted issuance of 20% or greater of our total stock outstanding on a pre-issuance basis due to the inclusion of a price protection provision and the Company’s failure to obtain shareholder approval for such discounted issuance. It was also stated that a second violation may have occurred based on the restructured notes. We received stockholders’ approval for a reverse stock split calling for 1 newly issued share of common stock to be issued in place of each 5 outstanding shares of common stock as of the date at which the reverse stock split is effected. The reverse split was implemented in June 2002. Despite the reverse stock split, our stock price has continued to be below the required minimum $1.00 bid price. On August 26, 2002, we received stockholders’ approval for a second reverse split of our common stock for ratios up to 1 for 10. This reverse stock spit has not been implemented.
 
        On August 23, 2002, we received a letter from the Nasdaq Listings Qualification Panel (the “Panel”) outlining Nasdaq’s determination for our request for continued listing on the Nasdaq National Market, pursuant to an exception to the bid price, net tangible assets/shareholder’s equity/market value of listed securities/total assets and total revenue and shareholder approval requirements. The Panel acknowledged that as of June 30, 2002 we were in compliance with the $10,000,000 shareholder’s equity standard, but were concerned about our ability to sustain compliance with this requirement over the long term. Notwithstanding, the Panel felt the Company would be able to achieve and sustain compliance with all requirements of continued listing on the Nasdaq SmallCap Market. With respect to shareholder approval issues, the Panel determined that the violation did not warrant delisting.
 
The Panel’s overall determination was to transfer our listing to the Nasdaq SmallCap Market effective August 28, 2002, pursuant to the following exceptions: (1) on or before September 8, 2002, we must immediately notify the Hearings Department of the consummation of any transaction that may trigger the application of any price protection provision; (2) on or before November 18, 2002, we must publicly file the form 10-Q for the quarter ending September 30, 2002 with the SEC and Nasdaq evidencing shareholders equity of at least $2,500,000; and (3) on or before February 10, 2003, we must demonstrate a closing bid price of at least $1.00 per share; and immediately thereafter, we must evidence a closing bid price of at least $1.00 per share for a minimum of ten (10) consecutive trading days.

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In order to fully comply with the terms of the exception, we must be able to demonstrate compliance with all requirements for continued listing on the Nasdaq SmallCap Market. Even if we are able to comply with the minimum requirement for continued listing, there is no assurance that in the future we will continue to satisfy the Nasdaq listing requirements, with the result that our common stock will be delisted from the Nasdaq SmallCap Market, and if delisted from the Nasdaq SmallCap Market, would likely be traded on the so-called “pink sheets” or on the “Electronic Bulletin Board” of the National Association of Securities Dealers, Inc. However, this alternative could result in a less liquid market available for existing and potential shareholders to trade shares of our stock and could ultimately further depress the trading price of our common stock.
 
We have entered into a merger agreement with Telaxis Communications Corporation and there are significant uncertainties and risks associated with the consummation of the merger.
 
On September 9, 2002, we entered into an agreement and plan of merger with Telaxis Communications Corporation and our merger sub. Pursuant to the terms of the merger agreement, the merger sub will be merged with and into Telaxis, a public company currently listed on the Nasdaq National Market and operating in the fiber optic network industry.
 
In connection with the merger, each outstanding share of Telaxis common stock will be converted into the right to receive 1.117 shares of our common stock. The exchange ratio will not be adjusted for changes in the price of either Telaxis common stock or our common stock. Each outstanding option and warrant to purchase shares of Telaxis common stock will be assumed by us and converted into an option or warrant, as the case may be, to purchase shares of our common stock. The exercise price and number of shares obtainable upon exercise of each such option or warrant will be adjusted based on the exchange ratio.
 
We are exposed to a number of risks and uncertainties that may inhibit our ability to close the merger and realize any benefit from the merger, including, some or all of the following:
 
 
•
 
We may not be able to close the merger if all the conditions to the merger are not satisfied, including the approval of the merger and merger agreement by the stockholders of Telaxis, approval of the issuance of shares of our common stock in the merger by our stockholders, regulatory approvals and satisfaction of the other closing conditions set forth in the merger agreement.
 
 
•
 
If the merger is not completed, our stock price and future business and operations could be adversely affected. The price of our common stock may decline to the extent that the current market price of our common stock reflects a market assumption that the merger will be completed and the costs related to the merger, such as legal, accounting and some of the fees of our financial advisor, must be paid even if the merger is not completed.
 
 
•
 
We expect to incur significant costs associated with the merger. We will incur direct transaction costs in connection with the merger that will be expensed. The combined entity may incur charges to operations in the quarter in which the merger is completed or the following quarters, to reflect costs associated with integrating the two companies. There can be no assurance that the combined company will not incur additional material changes in subsequent quarters to reflect additional costs associated with the merger.
 
 
•
 
The combined company will continue to have the risks that each of P-Com and Telaxis were subject to before the merger. Telaxis will represent a substantial portion of the operations, businesses and results of the combined company. As a result, the combined company will be susceptible to the risks to which both P-Com and Telaxis are subject. The risks Telaxis is subject include the following: dependence on a limited number of customers, the expense of defending and the outcome of current and future stockholder litigation, newly created and developed narrow product initiatives and the delays and difficulties of establishing regulatory approval and market acceptance of such initiatives. You can learn more about the risks of Telaxis’ business by reviewing its publicly available 10-K annual report for the year-ended December 31, 2001 and 10-Q quarterly report for the quarter-ended June 30, 2002.
 
 
•
 
Customer and employee uncertainty related to the merger could harm the combined company if we are able to close the merger. Our customers may, in response to the announcement or consummation of the merger, delay or defer purchasing decisions. Any delay or deferral in purchasing decisions by our customers could adversely affect the business of the combined company. Similarly, our employees may experience uncertainty about their future role with the combined company until or after strategies with regard to Telaxis are announced or executed. This may adversely affect our ability to attract and retain key management, marketing and technical personnel.
 
 
•
 
We may not realize any benefits from the merger if we do not successfully meet the challenges necessary to realize any potential benefits of the merger, including the successful integration of the two companies. Achieving the benefits of the merger will depend in part on the integration of the technology, operations and personnel of P-Com and Telaxis. The integration process will be a complex, time-consuming and expensive process and may disrupt our business if not completed in a timely and efficient manner. Some of the specific challenges include the following: demonstrating to our customers that the merger will not result in adverse changes in client service standards or business focus, persuading our employees that our business cultures are compatible and timely release of products to market. There is no assurance that we will successfully integrate the business, operations or product lines of P-Com and Telaxis, or that we will realize any of the anticipated benefits of the merger.
 
Our stockholders will be substantially diluted in connection with the consummation of the merger.
 
We do not have the customer base or other resources of more established companies, which makes it more difficult for us to address the liquidity and other challenges we face.
 
We do not have the customer base or other resources of more established companies, which makes it more difficult for us to address the liquidity and other challenges we face. Although we have installed and have in operation over 150,000 radio units globally, we have not developed a large installed base of our equipment or the kind of close relationships with a broad base of customers of a type enjoyed by larger, more developed companies, which would provide a base of financial performance from which to launch strategic initiatives and withstand business reversals. In addition, we have not built up the level of capital often enjoyed by more established companies, so from time to time we may face serious challenges in financing our continued operation. We may not be able to successfully address these risks.

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Our prospects for obtaining additional financing, if required, are uncertain and failure to obtain needed financing could affect our ability to pursue future growth and harm our business operations.
 
Even if we resolve our short term going concern difficulties, our future capital requirements will depend upon many factors, including an inspired telecommunications market, development costs of new products and related software tools, potential acquisition opportunities, maintenance of adequate manufacturing facilities and contract manufacturing agreements, progress of research and development efforts, expansion of marketing and sales efforts, and status of competitive products. Additional financing may not be available in the future on acceptable terms or at all. The continued existence of a substantial amount of debt (including notes which come due November 1, 2002) could also severely limit our ability to raise additional financing. In addition, given the recent price for our common stock, if we raise additional funds by issuing equity securities, significant dilution to our stockholders could result.
 
If adequate funds are not available, we may be required to close business or product lines, restructure or refinance our debt or delay, scale back or eliminate our research and development program or manufacturing operations. We may also need to obtain funds through arrangements with partners or others that may require us to relinquish rights to certain of our technologies or potential products or other assets. Our inability to obtain capital, or our ability to obtain additional capital only upon onerous terms, could very seriously damage our business, operating results and financial condition and further erode our stock price.
 
Market acceptance of our products might suffer if we are unable to keep pace with rapid technological changes and industry standards.
 
Rapid technological change, frequency of new product introductions and enhancements, product obsolescence, changes in end-user requirements and period-to-period demand, and evolving industry standards characterize the communications market. Our ability to compete in this market will depend upon successful development, introduction and sale of new systems and enhancements and related software tools, on a timely and cost-effective basis, in response to changing customer requirements. Any success in developing new and enhanced systems and related software tools will depend upon a variety of factors. Such factors include:
 
 
•
 
new product development to respond to market demand;
 
 
•
 
integration of various elements of complex technology;
 
 
•
 
timely and efficient implementation of manufacturing and assembly processes at turnkey suppliers and design and manufacturing cost reduction programs for existing product lines;
 
 
•
 
development and completion of related software tools, system performance, quality and reliability of systems; and
 
 
•
 
timely, efficient and cost-effective completion of system design process.
 
We may not be successful in selecting, developing, manufacturing and marketing new systems or enhancements or related software tools. For example, to date, revenue generated through the sales of Point-to-Multipoint systems has not met original expectations, and sales were down sharply in all product categories in the second half of 2001 and the first half of 2002. Also, errors could be found in our systems after commencement of commercial quantity shipments. Such errors could result in the loss of or delay in market acceptance, as well as expenses associated with re-work of previously delivered equipment.
 
We rely on a limited number of customers for a material portion of our sales and the loss of sales to any of those customers could harm our business, financial conditions, and results of operation.
 
In the first half of 2002, sales to two customers accounted for approximately 28% of sales. Our ability to maintain or increase our sales in the future will depend, in part upon our ability to obtain orders from new customers as well as the financial condition and success of our customers, the telecommunications industry and the global economy. Our customer concentration also results in concentration of credit risk. As of June 30, 2002, two customers accounted for almost 38% of our total accounts receivable balances.
 
Many of our significant recurring customers are located outside of the United States, primarily in the United Kingdom, Europe and the Asia-Pacific rim. Some of these customers are implementing new networks and are themselves in the early stages of development. They may require additional capital to fully implement their planned networks, which may be unavailable to them on an as-needed basis, and which we cannot supply in terms of long-term financing.
 
        If our customers cannot finance their purchases of our products or services, this may materially adversely affect our business, operations and financial condition. Financial difficulties of existing or potential customers may also limit the overall demand for our products and services. Current customers in the telecommunications industry have, from time to time, reportedly undergone financial difficulties and may therefore limit their future orders or find it difficult to pay for products sold to them. Any cancellation, reduction or delay in orders or shipments, for example, as a result of manufacturing or supply difficulties or a customer’s inability to finance its purchases of our products or services, may materially adversely affect our business. Difficulties of this nature have occurred in the past and we believe they can occur in the future.
 
Finally, acquisitions in the telecommunications industry are common, which tends to further concentrate the potential customer base and in some cases may cause orders to be delayed or cancelled.
 
We expect our quarterly revenue and operating results to fluctuate, and it is difficult to predict our future revenue and results of operations.
 
We have experienced and will continue to experience significant fluctuations in sales, gross margins and operating results. The procurement process for most of our current and potential customers is complex and lengthy. As a result, the timing and amount of sales is often difficult to predict reliably. The sale and implementation of our

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products and services generally involves a significant commitment of senior management, as well as our sales force and other resources. The sales cycle for our products and services typically involve technical evaluation and commitment of our cash and other resources for extended periods of time prior to the realization of any significant sales, and delays often occur. Delays have been associated with, among other things:
 
 
•
 
customers’ seasonal purchasing and budgetary cycles, as well as their own buildout schedules;
 
 
•
 
compliance with customers’ internal procedures for approving large expenditures and evaluating and accepting new technologies;
 
 
•
 
compliance with governmental or other regulatory standards;
 
 
•
 
difficulties associated with customers’ ability to secure financing;
 
 
•
 
negotiation of purchase and service terms for each sale;
 
 
•
 
price negotiations required to secure purchase orders; and
 
 
•
 
education of customers as to the potential applications of our products and services, as well as related product-life cost savings.
 
Failure to maintain satisfactory shipping and delivery schedules could increase our costs, disrupt our supply chain, and result in our inability to deliver our products, which would adversely affect our results of operations.
 
Due to logistics of production and inventory, a delay in a shipment near the end of a particular quarter for any reason may cause sales in a particular quarter to fall significantly below our and stock market analysts’ expectations. A single customer’s order scheduled for shipment in a quarter can represent a large portion of our potential sales for the quarter. Such delays have occurred in the past due to unanticipated shipment rescheduling, cancellations or deferrals by customers, competitive and economic factors, unexpected manufacturing or other difficulties, delays in deliveries of components, subassemblies or services by suppliers and failure to receive anticipated orders. We cannot determine whether similar or other delays might occur in the future, but expect that some or all of such problems might recur.
 
Our operating results could be adversely affected by a continued decline in capital spending in the telecommunications market.
 
Although much of the anticipated growth in the telecommunications infrastructure is expected to result from the entrance of new service providers, many new providers do not have the financial resources of existing service providers. For example, in the United States most competitive local exchange carriers are experiencing financial distress, and some have declared bankruptcy. If these new service providers are unable to adequately finance their operations, they may cancel or delay orders. Moreover, purchase orders are often received and accepted far in advance of shipment and, as a result, we typically permit orders to be modified or canceled with limited or no penalties. Any failure to reduce actual costs to the extent anticipated when an order is received substantially in advance of shipment or an increase in anticipated costs before shipment could materially adversely affect our gross margin for such orders. Ordering materials and building inventory based on customer forecasts or non-binding orders can also result in large inventory write-offs, such as what occurred in 2000 and 2001.
 
Global economic conditions have had a depressing effect on sales levels in past years, including a significant slowdown in 1998. The soft economy and slowdown in capital spending in 2001 and into the first half of 2002 in the United States and the United Kingdom telecommunications markets again had a significant depressing effect on the sales levels of products and services for such periods and is continuing into the second half of 2002.

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Failure to maintain adequate levels of inventory could result in a reduction or delay in sales and harm our results of operations.
 
In a competitive industry such as broadband wireless, the ability to effect quick turnaround and delivery on customer orders can make the difference in maintaining an ongoing relationship with our customers. This competitive market condition requires us to keep inventory on hand to meet such market demands. Given the variability of customer requirements and purchasing power, it is difficult to closely predict the amount of inventory needed to satisfy demand. If we over or under-estimate inventory requirements to fulfill customer needs, our results of operations could continue to be adversely affected. If market conditions continue to change swiftly, as was the case in 2001, it may not be possible to terminate purchasing contracts in a timely fashion to prevent periodic inventory increases. In particular, increases in inventory could materially adversely affect operations if such inventory is ultimately not used or becomes obsolete. This risk was realized in the large inventory write-downs in 1999, 2000 and 2001.
 
Difficulties in reducing our operating expenses could harm our results of operations.
 
A material portion of our manufacturing related operating expenses is fixed. If we experience a reduction or delay in sales, we may find it difficult to reduce our manufacturing related operating expenses on a timely basis. Difficulties of this nature would adversely affect our financial condition and harm our operating results.
 
Our limited manufacturing capacity and sources of supply may affect our ability to meet customer demand, which would harm our sales and damage our reputation.
 
Our internal manufacturing capacity, by design, is very limited. Under certain market conditions, as for example when there is high capital spending and rapid system deployment, our internal manufacturing capacity will not be sufficient to fulfill customers’ orders. We would therefore rely on contract manufacturers to produce our systems, components and subassemblies. Our failure to manufacture, assemble and ship systems and meet customer demands on a timely and cost-effective basis could damage relationships with customers and have a material adverse effect on our business, financial condition and results of operations.
 
In addition, certain components, subassemblies and services necessary for the manufacture of our systems are obtained from a sole supplier or a limited group of suppliers. Our reliance on contract manufacturers and on sole suppliers or a limited group of suppliers involves risks. Currently, many of these suppliers are experiencing the same effects of the significant slowdown in the industry as we have. We have from time to time experienced an inability to obtain, or to receive in a timely manner, an adequate supply of finished products and required components and subassemblies. As a result, we have reduced control over the price, timely delivery, reliability and quality of finished products, components and subassemblies.
 
If we fail to effectively manage our growth, our infrastructure, management, and resources could be strained, our ability to effectively manage our business could be diminished, and our results of operations could suffer.
 
To maintain a competitive market position, we are required to continue to invest resources for growth. As a result, we continue to devote significant resources to the development of new products and technologies and are continuously conducting evaluations of these products. We will continue to invest additional resources in plant and equipment, inventory, personnel and other items, to begin production of these products and to provide any necessary marketing and administration to service and support bringing these products to commercial production stage. Accordingly, in addition to the effect our recent performance has had on gross profit margin and inventory levels, our gross profit margin and inventory management may be further adversely impacted in the future by start-up costs associated with the initial production and installation of these new products. Start-up costs may include additional manufacturing overhead, additional allowance for doubtful accounts, inventory and warranty reserve requirements and the creation of service and support organizations. Additional inventory on hand for new product development and customer service requirements also increases the risk of further inventory write-downs if such products do not gain reasonable market acceptance at normal gross profit margin. Although we, through monitoring our operating expense levels relative to business plan revenue levels, try to maintain a given level of operating results, there are many market condition changes which have and may continue to challenge our ability to maintain given levels of operating expenses to revenue ratios.

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Expansion of our operations and acquisitions in prior periods caused a significant strain on our management, financial, manufacturing and other resources and has from time to time disrupted our normal business operations. Our ability to manage any possible future growth may again depend upon significant expansion of our executive, manufacturing, accounting and other internal management systems and the implementation of a variety of systems, procedures and controls, including improvements or replacements to inventory and management systems designed to help control and monitor inventory levels and other operating decision criteria. In particular, we must successfully manage and control overhead expenses and inventories, the development, introduction, marketing and sales of new products, the management and training of our employee base, the integration and coordination of a geographically and ethnically diverse group of employees and the monitoring of third party manufacturers and suppliers. We cannot be certain that attempts to manage or again expand our marketing, sales, manufacturing and customer support efforts will be successful or result in future additional sales or profitability.
 
Any failure to coordinate and improve systems, procedures and controls, including improvements relating to inventory control and coordination with subsidiaries, at a pace consistent with our business, could cause inefficiencies, additional operational expenses and inherent risks, greater risk of billing delays, inventory write-downs and financial reporting difficulties.
 
A significant ramp-up of production of products and services could require us to make substantial capital investments in equipment and inventory, in recruitment and training additional personnel and possibly in investment in additional manufacturing facilities. If undertaken, we anticipate these expenditures would be made in advance of increased sales. In such event, gross margins would be adversely affected from time-to-time due to short-term inefficiencies associated with the addition of equipment and inventory, personnel or facilities, and such cost categories may periodically increase as a percentage of revenues.
 
A decline in the selling prices of our products would adversely affect our financial condition and results of operations.
 
We believe that average selling prices and gross margins for our systems and services will tend to decline in both the near and the long term relative from the point at which a product is initially marketed and priced. Reasons for such decline may include the maturation of such systems, the effect of volume price discounts in existing and future contracts and the intensification of competition.
 
If we cannot develop new products in a timely manner or fail to achieve increased sales of new products at a higher average selling price, then we would be unable to offset declining average selling prices. If we are unable to offset declining average selling prices, or achieve corresponding decreases in manufacturing operating expenses, our gross margins will decline.
 
Difficulties in receiving payment from customers could adversely affect our financial condition and results of operations.
 
We are subject to credit risk in the form of trade accounts receivable. We could be unable to enforce a policy of receiving payment within a limited number of days of issuing bills, especially for customers in the early phases of business development. Our current credit policy typically allows payment terms between 30 and 120 days depending upon the customer and the economic norms of the region. We could have difficulties in receiving payment in accordance with our policies, particularly from customers awaiting financing to fund their expansion and from customers outside of the United States.
 
Our business depends on the acceptance of our products and services, and it is uncertain whether the market will accept and demand our products and services at levels necessary for our success.
 
Our future operating results depend upon the continued growth and increased availability and acceptance of microcellular, personal communications networks/personal communications services, or PCN/PCS, and wireless local loop access telecommunications services in the United States and internationally. The volume and variety of wireless telecommunications services or the markets for and acceptance of such services may not continue to grow as expected. The growth of such services may also fail to create anticipated demand for our systems. Predicting

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which segments of these markets will develop and at what rate these markets will grow is difficult. In addition to our other products, we have recently invested significant time and resources in the development of Point-to-Multipoint radio systems. If the licensed millimeter wave, spread spectrum microwave radio or Point-to-Multipoint microwave radio market and related services for our systems fails to grow, or grows more slowly than anticipated, our business, financial condition and results of operations will be materially adversely affected.
 
Certain sectors of the telecommunications market will require the development and deployment of an extensive and expensive telecommunications infrastructure. In particular, the establishment of PCN/PCS networks requires very large capital expenditure levels. Communications providers may not make the necessary investment in such infrastructure, and the creation of this infrastructure may not occur in a timely manner. Moreover, one potential application of our technology, the use of our systems in conjunction with the provision of alternative wireless access in competition with the existing wireline local exchange providers, depends on the pricing of wireless telecommunications services at rates competitive with those charged by wireline operators. Rates for wireless access must become competitive with rates charged by wireline companies for this approach to be successful. Absent that, consumer demand for wireless access will be materially adversely affected. If we allocate resources to any market segment that does not grow, we may be unable to reallocate capital and other resources to other market segments in a timely manner, ultimately curtailing or eliminating our ability to enter such other segments.
 
Certain current and prospective customers are delivering services and features that use competing transmission media such as fiber optic and copper cable, particularly in the local loop access market. To successfully compete with existing products and technologies, we must offer systems with superior price/performance characteristics and extensive customer service and support. Additionally, we must supply such systems on a timely and cost-effective basis, in sufficient volume to satisfy such prospective customers’ requirements, in order to induce the customers to transition to our technologies. Any delay in the adoption of our systems and technologies may result in prospective customers using alternative technologies in their next generation of systems and networks.
 
Prospective customers may design their systems or networks in a manner which excludes or omits our products and technology. Existing customers may not continue to include our systems in their products, systems or networks in the future. Our technology may not replace existing technologies and achieve widespread acceptance in the wireless telecommunications market. Failure to achieve or sustain commercial acceptance of our currently available radio systems or to develop other commercially acceptable radio systems would materially adversely affect us.
 
We face substantial competition and may not be able to compete effectively.
 
We are experiencing intense competition worldwide from a number of leading telecommunications equipment and technology suppliers. Such companies offer a variety of competitive products and services and some offer broader telecommunications product lines, and include Alcatel Network Systems, Bosch Telekom, DMC Stratex Networks, Cerragon, Ericsson Limited, Harris Corporation-Farinon Division, Lucent T.R.T., NEC, Nokia Telecommunications, SIAE, Siemens, and Proxim/Western Multiplex Corporation.
 
Many of these companies have greater installed bases, financial resources and production, marketing, manufacturing, engineering and other capabilities than we do. We face actual and potential competition not only from these established companies, but also from start-up companies that are developing and marketing new commercial products and services.
 
Some of our current and prospective customers and partners have developed, are currently developing or could manufacture products competitive with our products. Nokia and Ericsson have developed competitive radio systems, and new technology featuring free space optical systems is now in the marketplace.
 
The principal elements of competition in our market and the basis upon which customers may select our systems include price, performance, software functionality, perceived ability to continue to be able to meet delivery requirements, and customer service and support. Recently, certain competitors have announced the introduction of new competitive products, including related software tools and services, and the acquisition of other competitors and

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competitive technologies. We expect competitors to continue to improve the performance and lower the price of their current products and services and to introduce new products and services or new technologies that provide added functionality and other features. New product and service offerings and enhancements by our competitors could cause a decline in sales or loss of market acceptance of our systems. New offerings could also make our systems, services or technologies obsolete or non-competitive. In addition, we are experiencing significant price competition and expect such competition to intensify.
 
International sales and operation risks could adversely affect our results of operations.
 
Because of our currently heavy dependence on international markets, we face economic, political and foreign currency fluctuations that are more volatile than those commonly experienced in the United States. The majority of our sales to date have been made to customers located outside of the United States.
 
Historically, our international sales have been denominated in British pounds sterling, Euros or United States dollars. A decrease in the value of foreign currencies relative to the United States dollar could result in decreased margins from those transactions if such decreases are not hedged. For international sales that are United States dollar-denominated, such a decrease in the value of foreign currencies could make our systems less price-competitive if competitors choose to price in other currencies and could have a material adverse effect upon our financial condition.
 
We fund our Italian subsidiary’s operating expenses which are denominated in Euro. An increase in the value of Euro currency if not hedged relative to the United States dollar could result in more costly funding for our Italian operations, and as a result higher cost of production to us as a whole. Conversely, a decrease in the value of Euro currency will result in cost savings for us.
 
Additional risks are inherent in our international business activities. Such risks include:
 
 
•
 
changes in regulatory requirements;
 
 
•
 
costs and risks of localizing systems (homologation) in foreign countries;
 
 
•
 
delays in receiving and processing components and materials;
 
 
•
 
availability of suitable export financing;
 
 
•
 
timing and availability of export licenses, tariffs and other trade barriers;
 
 
•
 
difficulties in staffing and managing foreign operations, branches and subsidiaries;
 
 
•
 
difficulties in managing distributors;
 
 
•
 
potentially adverse tax consequences;
 
 
•
 
the burden of complying with a wide variety of complex foreign laws and treaties;
 
 
•
 
difficulty in accounts receivable collections, if applicable; and
 
 
•
 
political and economic instability.
 
In addition, many of our customer purchase and other agreements are governed by foreign laws, which may differ significantly from United States laws. Therefore, we may be limited in our ability to enforce our rights under such agreements and to collect damages, if awarded.

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In many cases, local regulatory authorities own or strictly regulate international telephone companies. Established relationships between government-owned or government-controlled telephone companies and their traditional indigenous suppliers of telecommunications often limit access to such markets. The successful expansion of our international operations in certain markets will depend on our ability to locate, form and maintain strong relationships with established companies providing communication services and equipment in designated regions. The failure to establish regional or local relationships or to successfully market or sell our products in international markets could limit our ability to expand operations.
 
Some of our potential markets include developing countries that may deploy wireless communications networks as an alternative to the construction of a limited wireline infrastructure. These countries may decline to construct wireless telecommunications systems or construction of such systems may be delayed for a variety of reasons. Also, in developing markets, economic, political and foreign currency fluctuations may be even more volatile than conditions in developed areas.
 
Countries in the Asia-Pacific, African, and Latin American regions have recently experienced weaknesses in their currency, banking and equity markets. These weaknesses have adversely affected and could continue to adversely affect demand for our products.
 
Governmental regulation affecting markets in which we compete could adversely affect our business and results of operations.
 
Radio communications are extensively regulated by the United States and foreign governments as well as by international treaties. Our systems must conform to a variety of domestic and international requirements established to, among other things, avoid interference among users of radio frequencies and to permit interconnection of equipment.
 
Historically, in many developed countries, the limited availability of radio frequency spectrum has inhibited the growth of wireless telecommunications networks. Each country’s regulatory process differs. To operate in a jurisdiction, we must obtain regulatory approval for our systems and comply with differing regulations.
 
Regulatory bodies worldwide continue to adopt new standards for wireless communications products. The delays inherent in this governmental approval process may cause the cancellation, postponement or rescheduling of the installation of communications systems by us and our customers. The failure to comply with current or future regulations or changes in the interpretation of existing regulations could result in the suspension or cessation of operations. Such regulations or such changes in interpretation could require us to modify our products and services and incur substantial costs to comply with such regulations and changes.
 
In addition, we are also affected by domestic and international authorities’ regulation of the allocation and auction of the radio frequency spectrum. Equipment to support new systems and services can be marketed only if permitted by governmental regulations and if suitable frequency allocations are auctioned to service providers. Establishing new regulations and obtaining frequency allocation at auction is a complex and lengthy process. If personal communication services operators and others are delayed in deploying new systems and services, we could experience delays in orders. Similarly, failure by regulatory authorities to allocate suitable frequency spectrum could have a material adverse effect on our results. In addition, delays in the radio frequency spectrum auction process in the United States could delay our ability to develop and market equipment to support new services.
 
We operate in a regulatory environment subject to significant change. Regulatory changes, which are affected by political, economic and technical factors, could significantly impact our operations by restricting our development efforts and those of our customers, making current systems obsolete or increasing competition. Any such regulatory changes, including changes in the allocation of available spectrum, could have a material adverse effect on our business, financial condition and results of operations. We may also find it necessary or advisable to modify our systems and services to operate in compliance with such regulations. Such modifications could be expensive and time-consuming.

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Our inability to protect our intellectual property could impair our competitive advantage, reduce our revenue and increase our costs.
 
We rely on a combination of patents, trademarks, trade secrets, copyrights and other measures to protect our intellectual property rights. We generally enter into confidentiality and nondisclosure agreements with service providers, customers and others to limit access to and distribution of proprietary rights. We also enter into software license agreements with customers and others. However, such measures may not provide adequate protection for our trade secrets or other proprietary information for a number of reasons.
 
Any of our patents could be invalidated, circumvented or challenged, or the rights granted thereunder may not provide competitive advantages to us. Any of our pending or future patent applications might not be issued within the scope of the claims sought, if at all. Furthermore, others may develop similar products or software or duplicate our products or software. Similarly, others might design around the patents owned by us, or third parties may assert intellectual property infringement claims against us. In addition, foreign intellectual property laws may not adequately protect our intellectual property rights abroad. A failure or inability to protect proprietary rights could have a material adverse effect on our business, financial condition and results of operations.
 
Even if our intellectual property rights are adequately protected, litigation may be necessary to enforce patents, copyrights and other intellectual property rights, to protect our trade secrets, to determine the validity of and scope of proprietary rights of others or to defend against claims of infringement or invalidity. Litigation, even if wholly without merit, could result in substantial costs and diversion of resources, regardless of the outcome. If any claims or actions are asserted against us, we may choose to seek a license under a third party’s intellectual property rights. However, such a license may not be available under reasonable terms or at all.
 
We depend on key personnel who would be difficult to replace and our business will likely be harmed if we lose their services or cannot hire additional qualified personnel.
 
Our future operating results depend in significant part upon the continued contributions of key technical and senior management personnel, many of who would be difficult to replace. Future operating results also depend upon the ability to attract and retain qualified management and technical personnel. Competition for such personnel is intense, and we may not be successful in attracting or retaining such personnel. Only a limited number of persons with the requisite skills to serve in these positions may exist and it may be increasingly difficult for us to hire such personnel.
 
We have experienced and may continue to experience employee turnover due to several factors, including the first quarter of 2002 and 2001 layoffs at our United States and United Kingdom locations. Such turnover could adversely impact our business.
 
Our stock price has been volatile and has experienced a significant decline, and may continue to be volatile and decline.
 
In recent years, the stock market in general, and the market for shares of small capitalization, technology stocks in particular, have experienced extreme price fluctuations. Such fluctuations have often been unrelated to the operating performance of individual affected companies. Companies with liquidity problems also often experienced stock price volatility. We believe that factors such as announcements of developments related to our business (including any financings or any resolution of liabilities), announcements of technological innovations or new products or enhancements by us or our competitors, developments in the emerging countries’ economies, sales by competitors, sales of our common stock into the public market, developments in our relationships with customers, partners, lenders, distributors and suppliers, shortfalls or changes in revenues, gross margins, earnings or losses or other financial results that differ from analysts’ expectations, regulatory developments, fluctuations in results of operations and general conditions in our market, or the economy, could cause the price of our common stock to fluctuate. The market price of our common stock may continue to decline substantially, or otherwise continue to experience significant fluctuations in the future, including fluctuations that are unrelated to our performance.

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We have never declared or paid cash dividends on our common stock nor do we anticipate doing so in the future.
 
We have never declared or paid cash dividends on our common stock, and we anticipate that any future earnings will be retained for investment in the business. Any payment of cash dividends in the future will be at the discretion of our board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, extent of indebtedness and contractual restrictions with respect to the payment of dividends.
 
We have adopted anti-take over defenses that could delay or prevent an acquisition of the company.
 
Our stockholders rights plan, certificate of incorporation, equity incentive plans, bylaws and Delaware law may have a significant effect in delaying, deferring or preventing a change in control and may adversely affect the voting and other rights of other holders of common stock.
 
The rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of any other preferred stock that may be issued in the future, including the Series A junior participating preferred stock that may be issued pursuant to the stockholders rights plan, upon the occurrence of certain triggering events. In general, the stockholders rights plan provides a mechanism by which the share position of anyone that acquires 15% or more, or 20% or more in the case of the State of Wisconsin Investment Board and Firsthand Capital Management, of our common stock will be substantially diluted. Future issuance of stock or any additional preferred stock could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock.
 
Future sales of our securities in the public market could lower our stock price and impair our ability in new stock offerings to raise funds to continue operations.
 
Future sales of our common stock, including shares issued upon the exercise of outstanding options and warrants or other derivative transactions with respect to our stock, could have a significant negative effect on the market price of our common stock. These sales might also make it more difficult for us to sell equity securities or equity-related securities in the future at a time and price that we would deem appropriate.

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FORWARD-LOOKING STATEMENTS
 
This prospectus contains forward-looking statements that involve substantial risks and uncertainties. In some cases you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” and “would” or similar words. You should read statements that contain these words carefully because they may discuss our future expectations, contain projections of our future results of operations or of our financial position or state other forward-looking information. We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control. The factors listed above in the section captioned “Risk Factors,” as well as any cautionary language in this prospectus, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from any expectations we describe. Actual results or outcomes may differ materially from those predicted in our forward-looking statements due to the risks and uncertainties inherent in our business, including risks and uncertainties in:
 
 
•
 
market acceptance of and continuing demand for our products;
 
 
•
 
our ability to protect our intellectual property;
 
 
•
 
the impact of competitive products, pricing and customer service and support;
 
 
•
 
our ability to obtain additional financing to support our operations;
 
 
•
 
obtaining and maintaining regulatory approval where required; and
 
 
•
 
changing market conditions and other risks detailed in this prospectus.
 
You should also consider carefully the statements under “Risk Factors” beginning on page 4 and other sections of this prospectus and in the other documents filed with the SEC, which address factors that could cause our actual results to differ from those set forth in the forward-looking statements. You should not place undue reliance on any forward-looking statements, which reflect our management’s view only as of the date of this prospectus. We will not update any forward-looking statements to reflect events or circumstances that occur after the date on which such statement is made.
 
 
WHERE YOU CAN FIND MORE INFORMATION
 
We file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any document we file at the SEC’s public reference rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available to the public from our Web site at http://www.p-com.com or at the SEC’s Web site at http://www.sec.gov.

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INFORMATION INCORPORATED BY REFERENCE
 
The SEC allows us to “incorporate by reference” into this prospectus the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus, and information we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, until the sale of all of the shares of common stock that are part of this offering. The documents we are incorporating by reference are as follows:
 
 
(1)
 
our annual report on Form 10-K for the fiscal year ended December 31, 2001 filed on April 1, 2002;
 
 
(2)
 
our quarterly reports on Form 10-Q for the quarterly periods ended March 31, 2002 and June 30, 2002 filed on May 15, 2002 and August 14, 2002, respectively;
 
 
(3)
 
our current reports on form 8-K filed on June 26, 2002, July 9, 2002 and September 12, 2002;
 
 
(4)
 
the description of our common stock contained in our registration statement on Form 8-A filed on January 12, 1995, including any amendments or reports filed for the purpose of updating such descriptions; and
 
 
(5)
 
the description of our preferred stock purchase rights, contained in our registration statement on Form 8-A filed on October 9, 1997, including any amendments or reports filed for the purpose of updating such descriptions.
 
Any statement contained in a document incorporated by reference will be modified or superseded for all purposes to the extent that a statement contained in this prospectus (or in any other document that is subsequently filed with the SEC and incorporated by reference) modifies or is contrary to that previous statement. Any statement so modified or superseded will not be deemed a part of this prospectus except as so modified or superseded.
 
Upon written or oral request, we will provide without charge a copy of these filings, and a copy of any and all of the information that has been or may be incorporated by reference in this prospectus. Requests for these copies should be directed to Corporate Secretary, P-Com, Inc., 3175 S. Winchester Boulevard, Campbell, California 95008, telephone (408) 866-3666.
 
You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement or amendment. We have not authorized anyone to provide you with different information. No selling stockholder is authorized to make an offer of these securities in any state where the offer is not permitted. You should not assume the information in this prospectus is accurate as of any date other than the date on the front of this prospectus.

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SELLING STOCKHOLDERS
 
The following table sets forth the name of the selling stockholders and the number of shares being registered for sale as of the date of this prospectus and sets forth the number of shares of common stock known by us to be beneficially owned by the selling stockholders. The following table assumes that the selling stockholders will sell all of the shares being offered for its account by this prospectus. However, we are unable to determine the exact number of shares that actually will be sold. In December 2001, we engaged Cagan McAfee Capital Partners, LLC as our financial advisor with respect to certain matters involving our business. Other than as stated above, the selling stockholders have not had a material relationship with us within the past three years other than as a result of their ownership of our securities. The shares offered by this prospectus may be offered from time to time by the selling stockholders. This information is based upon information provided by the selling stockholders and public documents filed with the SEC, and is not necessarily indicative of beneficial ownership for any other purpose. The number of shares of common stock beneficially owned by the selling stockholders is determined in accordance with the rules of the SEC. The term “selling stockholders” includes the stockholders listed below and their respective transferees, assignees, pledgees, donees or other successors. The percent of beneficial ownership for the stockholders is based on 30,021,000 shares of common stock outstanding as of September 16, 2002.
 
Name of Selling Stockholders
   
Number of Shares of Common Stock Beneficially Owned Before Offering
     
Percent of Outstanding Shares Beneficially Owned Before Offering
     
Number of Shares
to be Sold Pursuant
to this Prospectus
     
Number of Shares Beneficially Owned After the Offering (1)
     
Percent of Outstanding Shares Beneficially Owned After the Offering (1)
Cagan McAfee Capital Partners, LLC
   
580,000
     
1.9
%
   
580,000
     
—
     
—
Alta Partners Discount Convertible Arbitrage Holdings, Ltd.
   
20,000
     
*
 
   
20,000
     
—
     
—
*
 
Less than one percent.
(1)
 
Assumes that all shares being offered by the selling stockholders under this prospectus are sold, and that the selling stockholders acquire no additional shares of common stock before the completion of this offering.
 
 
USE OF PROCEEDS
 
We will not receive any of the proceeds from the sale of the common stock by the selling stockholders. All proceeds will be received by the selling stockholders.

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PLAN OF DISTRIBUTION
 
We are registering all 600,000 shares on behalf of the selling stockholders. The selling stockholders named in the table above or pledgees, donees, transferees or other successors-in-interest selling shares received from the selling stockholders as a gift, partnership distribution or other non-sale related transfer after the date of this prospectus may sell the shares from time to time. The selling stockholders will act independently of us in making decisions regarding the timing, manner and size of each sale. The sales may be made on the Nasdaq Stock Market, in the over-the-counter market, through put or call option transactions relating to the shares, in negotiated transactions, or a combination of such methods of sale or otherwise, at prices and on terms then prevailing or at prices related to the then current market price. The selling stockholders may effect these transactions by selling the shares to or through broker-dealers, or not. The shares may be sold by one or more of, or a combination of, the following:
 
 
•
 
a block trade in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
 
 
•
 
purchases by a broker-dealer as principal and resale by such broker-dealer for its account under this prospectus;
 
 
•
 
an exchange distribution in accordance with the rules of the respective exchange;
 
 
•
 
ordinary brokerage transactions and transactions in which the broker solicits purchasers; and
 
 
•
 
in privately negotiated transactions.
 
To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution. In effecting sales, broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in the resales.
 
The selling stockholders may enter into hedging transactions with broker-dealers in connection with distributions of the shares or otherwise. In these transactions, broker-dealers may engage in short sales of the shares in the course of hedging the positions they assume with the selling stockholders. The selling stockholders also may sell shares short and redeliver the shares to close out such short positions. The selling stockholders may enter into options or other transactions with broker-dealers that require the delivery to the broker-dealer of the shares. The broker-dealer may then resell or otherwise transfer such shares covered by this prospectus. The selling stockholders also may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the shares so loaned, or upon default the broker-dealer may sell the pledged shares under this prospectus.
 
Broker-dealers or agents may receive compensation in the form of commissions, discounts or concessions from the selling stockholders. Broker-dealers or agents may also receive compensation from the purchasers of the shares for whom they act as agents or to whom they sell as principals, or both. Compensation as to a particular broker-dealer might be in excess of customary commissions and will be in amounts to be negotiated in connection with the sale. Broker-dealers or agents and any other participating broker-dealers or the selling stockholders may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act of 1933, as amended, in connection with sales of the shares. Accordingly, any such commission, discount or concession received by them and any profit on the resale of the shares purchased by them may be deemed to be underwriting discounts or commissions under the Securities Act. Because the selling stockholders may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act, the selling stockholders will be subject to the prospectus delivery requirements of the Securities Act. In addition, any securities covered by this prospectus which qualify for sale in compliance with Rule 144 promulgated under the Securities Act may be sold under Rule 144 rather than under this prospectus. The selling stockholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their securities and that there is no underwriter or coordinating broker acting in connection with the proposed sale of shares by the selling stockholders.

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The shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states the shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.
 
Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended, any person engaged in the distribution of the shares may not simultaneously engage in market making activities with respect to our common stock for a restricted period before the commencement of such distribution. In addition, the selling stockholders will be subject to applicable provisions of the Securities Exchange Act and the associated rules and regulations under the Securities Exchange Act, including Regulation M, which provisions may limit the timing of purchases and sales of shares of our common stock by the selling stockholders.
 
We will make copies of this prospectus available to the selling stockholders and have informed the selling stockholders of the need to deliver copies of this prospectus to purchasers at or before the time of any sale of the shares.
 
Upon being notified by the selling stockholders that a donee or pledgee intends to sell more than 500 shares, we will file a supplement to this prospectus. We will bear all costs, expenses and fees in connection with the registration of the shares. The selling stockholders will bear all commissions and discounts, if any, attributable to the sales of the shares. The selling stockholders may agree to indemnify any broker-dealer or agent that participates in transactions involving sales of the shares against various liabilities, including liabilities arising under the Securities Act of 1933.
 
 
LEGAL MATTERS
 
The validity of the common stock offered in this prospectus will be passed upon for us by Brobeck, Phleger & Harrison LLP, San Diego, California. As of the date of this prospectus, attorneys of Brobeck, Phleger & Harrison LLP and family members thereof beneficially owned an aggregate of approximately 8,000 shares of our common stock.
 
 
EXPERTS
 
The consolidated financial statements incorporated in this Prospectus by reference to the Annual Report on Form 10-K for the year ended December 31, 2001 have been so incorporated in reliance on the report (which contains an explanatory paragraph relating to the Company’s ability to continue as a going concern as described in Note 1 to the consolidated financial statements) of PricewaterhouseCoopers LLP, independent accountants, given on the authority of said firm as experts in auditing and accounting.

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You should rely only on the information contained in or incorporated by reference in this prospectus. We have not authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. This prospectus should not be considered an offer of these securities in any state where the offer is not permitted. You should not assume that the information contained in or incorporated by reference in this prospectus is accurate as of any date other than the date on the front of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.
 
 
600,000 Shares
 
 
 
 
LOGO
 
 
 
 
Common Stock
 
 
 
 
PROSPECTUS
 
 
 
 
September     , 2002
 
 
 
 
 
 

Table of Contents
 
PART II
 
INFORMATION NOT REQUIRED IN PROSPECTUS
 
Item 14.    Other Expenses of Issuance and Distribution.
 
All costs and expenses incurred in connection with the issuance and distribution of the securities being registered for sale will be paid by the Registrant. The following is an itemized statement of these costs and expenses. All amounts are estimates except the Securities and Exchange Commission registration fee.
 
SEC registration fee
   
$13.53
Printing and engraving
   
$5,000.00
Legal fees and expenses
   
$10,000.00
Accounting fees and expenses
   
$7,500.00
    
Total
   
$22,513.53
    
 
Item 15.    Indemnification of Directors and Officers.
 
Section 145 of the Delaware General Corporation Law authorizes a court to award or a corporation’s board of directors to grant indemnification to directors and officers in terms sufficiently broad to permit that indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act. Article VII of the Registrant’s bylaws provides for mandatory indemnification of its directors and permissible indemnification of its officers, employees and other agents to the maximum extent permitted by the Delaware General Corporation Law. The Registrant has entered into Indemnification Agreements with its officers and directors which are intended to provide the Registrant’s officers and directors with further indemnification to the maximum extent permitted by the Delaware General Corporation Law.
 
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
 
Item 16.    Exhibits.
 
 
Exhibit Number
   
Description of Document
  4.1
   
Common Stock Warrant, dated March 1, 2002, by and among P-Com, Inc. and Cagan McAfee Capital Partners, LLC.
  4.2
   
Common Stock Warrant, dated March 1, 2002, by and among P-Com, Inc. and Cagan McAfee Capital Partners, LLC.
  4.3
   
Common Stock Warrant, dated March 1, 2002, by and among P-Com, Inc. and Alta Partners Discount Convertible Arbitrage Holdings, Ltd.
  5.1
   
Opinion of Brobeck, Phleger & Harrison LLP.
23.1
   
Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2
   
Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
24.1
   
Power of Attorney (included on the Signature Page of this registration statement).
 
Item 17.    Undertakings.
 
The undersigned Registrant hereby undertakes:
 
(1)  To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to that information in the registration statement;

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(2)  That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and
 
(3)  To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
 
The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
 
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

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SIGNATURES
 
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant, P-Com, Inc., certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Campbell, State of California, on this 25th day of September, 2002.
 
P-COM, INC.
By:
  
/s/    GEORGE P. ROBERTS
   
George P. Roberts
Chairman of the Board and Chief Executive Officer
 
By:
  
/s/    LEIGHTON J. STEPHENSON
   
Leighton J. Stephenson
Vice President and Chief Financial Officer
 
 
POWER OF ATTORNEY
 
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitute and appoint George P. Roberts, the undersigned’s true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for the undersigned and in his name, place and stead, in any and all capacities (including the undersigned’s capacity as a director and/or officer of P-Com, Inc.), to sign a Registration Statement on Form S-3 of P-Com, Inc. to be filed under the Securities Act of 1933, as amended, for the registration of the resale of 600,000 shares of Common Stock of P-Com, Inc. by the selling stockholders named herein, and any and all amendments (including post-effective amendments) to such Registration Statement, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
 
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and on the date indicated.
 
Name
   
Title
   
Date
/s/    GEORGE P. ROBERTS
George P. Roberts
   
Chairman of the Board and Chief Executive Officer
(Principal Executive Officer)
   
September 25, 2002
/s/    LEIGHTON J. STEPHENSON
Leighton J. Stephenson
   
Vice President and Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
   
September 25, 2002
/s/    FREDERICK R. FROMM
Frederick R. Fromm
   
Director of the Company
   
September 25, 2002
/s/    BRIAN T. JOSLING
Brian T. Josling
   
Director of the Company
   
September 25, 2002

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/s/    JOHN A. HAWKINS
John A. Hawkins
   
Director of the Company
   
September 25, 2002
/s/    GEN. HAROLD R. JOHNSON (RET.)
Gen. Harold R. Johnson (Ret.)
   
Director of the Company
   
September 25, 2002
 

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INDEX TO EXHIBITS
 
Exhibit No.
   
Description
  4.1
   
Common Stock Warrant, dated March 1, 2002, by and among P-Com, Inc. and Cagan McAfee Capital Partners, LLC.
  4.2
   
Common Stock Warrant, dated March 1, 2002, by and among P-Com, Inc. and Cagan McAfee Capital Partners, LLC.
  4.3
   
Common Stock Warrant, dated March 1, 2002, by and among P-Com, Inc. and Alta Partners Discount Convertible Arbitrage Holdings, Ltd.
  5.1
   
Opinion of Brobeck, Phleger & Harrison LLP.
23.1
   
Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.2
   
Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
24.1
   
Power of Attorney (included on the Signature Page of this registration statement).
EX-4.1 3 dex41.htm COMMON STOCK WARRANT, AMONG P-COM AND CAGAN MCAFEE Prepared by R.R. Donnelley Financial -- Common Stock Warrant, among P-Com and Cagan McAfee
Exhibit 4.1
 
P-COM, INC.
 
 
Issue Date:    March 1, 2002
  
(1)    Aggregate Price:  $40,800
   
(2)    Initial Warrant Price:  $1.02
   
(3)    Number of Shares Initially Subject to Warrant 40,000
 
NEITHER THIS WARRANT, NOR THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF, HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“1933 SECURITIES ACT”), OR QUALIFIED OR REGISTERED UNDER CALIFORNIA OR OTHER APPLICABLE SECURITIES LAWS (“STATE SECURITIES LAWS”), AND THIS WARRANT HAS BEEN, AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER DISPOSITION MAY BE MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 SECURITIES ACT AND COMPLIANCE WITH THE APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER AND ITS COUNSEL, THAT SAID REGISTRATION IS NOT REQUIRED UNDER THE 1933 SECURITIES ACT AND THAT APPLICABLE STATE SECURITIES LAWS HAVE BEEN SATISFIED.
 
COMMON STOCK WARRANT
 
This warrant is issued pursuant to an agreement entered into in December, 2001 between Cagan McAfee Capital Partners, LLC and P-Com, Inc., a Delaware corporation, (the “Company”). This certifies that Cagan McAfee Capital Partners, LLC whose address for notice is 10600 N. De Anza Boulevard, Suite 250, Cupertino, CA 95014, or any party to whom this Warrant is assigned in compliance with the terms hereof (Purchaser and any such assignee being hereinafter sometimes referenced as “Holder”), is entitled to subscribe for and purchase, during the period commencing at the issue date set forth above and ending at 5:00 p.m., California, local time, on the Tenth (10th) anniversary of such issue date, the number of shares of fully paid and nonassessable unregistered, restricted Common Stock (“Common Stock”) of the Company, that have an aggregate purchase price equal to the Aggregate Price as defined below. The purchase price of each such share shall be equal to the Warrant Price, as defined below.
 
ARTICLE 1
 
DEFINITIONS
 
1.1  “Aggregate Price” shall be $40,800.
 
1.2  “Warrant Price” shall be One Dollar and two Cents ($1.02) per share, as adjusted herein.
 
ARTICLE 2
 
EXERCISE AND PAYMENT
 
2.1  Cash Exercise.    The purchase rights represented by this Warrant may be exercised by Holder, in whole or in part, by the surrender of this Warrant at the principal office of the Company, located at the address set forth on the signature page hereof, accompanied by the form of Notice of Cash Exercise attached hereto as Exhibit “A-1”, and by the payment to the Company, by cash or by certified, cashier’s or other check acceptable to the Company, or by delivery to the Company of evidence of cancellation of

 
indebtedness of the Company to such Holder, or by wire transfer to the account of the Company, of an amount equal to the aggregate Warrant Price of the shares being purchased.
 
2.2  Net Issue Exercise.    In lieu of exercising this Warrant pursuant to Section 2.1, Holder may elect to receive shares of Common Stock equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant at the principal office of the Company together with the form of Notice of Cashless Exercise attached hereto as Exhibit “A-2”, in which event the Company shall issue to Holder a number of shares of the Company’s Common Stock computed using the following formula:
 
X
  
=
  
Y (A-B)
       
A
 
Where X = the number of shares of Common Stock to be issued to Holder.
 
Y = the number of shares of Common Stock purchasable under this Warrant (at the date of such calculation).
 
A = the fair market value of one share of the Company’s Common Stock (at the date of such calculation).
 
B = Warrant Price.
 
2.3  Fair Market Value.    For purposes of this Article II, fair market value of one share of the Company’s Common Stock shall mean:
 
(i)  The average of the closing bid and asked prices of the Common Stock quoted in the Over-The-Counter Market Summary, the last reported sale price of the Common Stock or the closing price quoted on the Nasdaq National Market System (“NMS”) or on any exchange on which the Common Stock is listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal for the trading day prior to the date of determination of fair market value; or
 
(ii)  If the Common Stock is not traded Over-The-Counter, on the NMS or on an exchange, the per share fair market value of the Common Stock shall be as determined by mutual agreement of the Company and the Holder; provided, however that if such agreement cannot be reached within twenty (20) calendar days, such value shall be determined by an independent appraiser appointed in good faith by the Company’s Board of Directors. The cost of such appraisal shall be borne equally by the Company and the Holder. Such appraiser shall meet the following criteria: (a) it shall not be associated or affiliated with the Company in any fashion and shall not have previously provided services to the Company; (b) the appraiser shall have reasonable qualifications to appraise the value of the Common Stock; (c) it is not (and none of its affiliates is) a promoter, director or officer of the Company or any of its affiliates or an underwriter with respect to any of the securities of the Company; and (d) it does not provide any advice or opinions of the Company except as an appraiser under this section. In the event such an appraisal is required it should be conducted under the following procedures: the Company shall select the appraiser within ten (10) days of receipt of written notice from the Holder that agreement cannot be reached and the Company shall submit the name of such appraiser to Holder. Twenty (20) days after selection of the appraiser, the Company and the Holder shall each submit to the appraiser a single value representing such party’s contention as to the fair market value of one share of the Company’s Common Stock. Within fifteen (15) days after receipt of the submission of the Company and the Holder, the appraiser shall select one of the two values submitted by the parties, and such value shall be the fair market value of one share of the Common Stock for purpose of this Warrant. The appraiser shall have no discretion to take any action other than selection of one of the two values submitted to the appraiser. The parties may submit to the appraiser and one another, at the time they submit their respective single values, such supporting documentation as they deem necessary or appropriate. The parties shall have the opportunity seven (7) business days after receipt of the other party’s proposed valuation and supporting documentation to provide the appraiser and each other with supplemental written information. The appraiser may, in its discretion, hold a single six (6) hour hearing on valuation issues. If a hearing is held, each party shall be allocated three (3) hours. The appraiser may conduct the hearing in accordance with

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any rules of procedure it deems appropriate. The value selected by the appraiser shall be final and binding upon the parties without any further right of appeal.
 
2.4  Stock Certificates.    In the event of any exercise of the rights represented by this Warrant, certificates for the shares of Common Stock so purchased shall be delivered to Holder within a reasonable time and, unless this Warrant has been fully exercised or has expired, a new Warrant representing the remaining unexercised Aggregate Price shall also be issued to Holder at such time.
 
2.5  Automatic Exercise.    To the extent this Warrant is not previously exercised, and if the fair market value of one share of the Company’s Common Stock is greater than the Warrant Price, as adjusted, this Warrant shall be deemed automatically exercised in accordance with Section 2.2 hereof (even if not surrendered) immediately before its expiration. For purposes of such automatic exercise, the fair market value of one share of the Company’s Common Stock upon such expiration shall be the fair market value determined pursuant to Section 2.3 above. To the extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this Section 2.5, the Company agrees to notify Holder within a reasonable period of time of the number of shares of the Company’s Common Stock, if any, Holder is to receive by reason of such automatic exercise.
 
2.6  Stock Fully Paid; Reservation of Shares.    The Company covenants and agrees that all Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof (excluding taxes based on the income of Holder). The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for issuance a sufficient number of shares of its Common Stock or other securities as would be required upon the full exercise of the rights represented by this Warrant.
 
2.7  Fractional Shares.    No fractional share of Common Stock will be issued in connection with any exercise hereof; in lieu of a fractional share upon complete exercise hereof, Holder may purchase a whole share by delivering payment equal to the appropriate portion of the then effective Warrant Price.
 
ARTICLE 3
 
CERTAIN ADJUSTMENTS OF NUMBER OF SHARES PURCHASABLE AND WARRANT PRICE
 
The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the happening of certain events, as follows:
 
3.1  Reclassification, Consolidation or Merger.    In case of: (i) any reclassification or change of outstanding securities issuable upon exercise of this Warrant; (ii) any consolidation or merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification, change or exchange of outstanding securities issuable upon exercise of this Warrant); or (iii) any sale or transfer to another corporation of all, or substantially all, of the property of the Company, then, and in each such event, the Company or such successor or purchasing corporation, as the case may be, shall execute a new Warrant of like form, tenor and effect and which will provide that Holder shall have the right to exercise such new Warrant and purchase upon such exercise, in lieu of each share of Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of securities, money and property receivable upon such reclassification, change, consolidation, merger, sale or transfer by a holder of one share of Common Stock issuable upon exercise of this Warrant had this Warrant been exercised immediately prior to such reclassification, change, consolidation, merger, sale or transfer. Such new Warrant shall be as nearly equivalent in all substantive respects as practicable to this Warrant and the adjustments provided in this Article III and the provisions of this Section 3.1, shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales and transfers.
 
3.2  Subdivision or Combination of Shares.    If the Company shall at any time while this Warrant remains outstanding and less than fully exercised: (i) divide its Company Stock, the Warrant Price shall

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be proportionately reduced; or (ii) shall combine shares of its Common Stock, the Warrant Price shall be proportionately increased.
 
3.3  Stock Dividends.    If the Company, at any time while this Warrant is outstanding and unexpired, shall pay a dividend payable in, or make any other distribution to holders of, Common Stock (except any distribution described in Sections 3.1 and 3.2 hereof) then the Warrant Price shall be adjusted to that price determined by multiplying the Warrant Price then in effect by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution.
 
3.4  Other Action Affecting Common Stock.    If the Company takes any action affecting its Common Stock after the date hereof (including dividends and distributions), other than an action described in any of Sections 3.1 and 3.2 hereof, which would have an adverse effect upon Holder’s rights hereunder, the Warrant Price shall be adjusted downward in such manner and at such time as the Board of Directors of the Company shall in good faith determine to be equitable under the circumstances.
 
3.5  Time of Adjustments to the Warrant Price.    All adjustments to the Warrant Price and the number of shares purchasable hereunder, unless otherwise specified herein, shall be effective as of the earlier of:
 
(i)  the date of issue of the security causing the adjustment;
 
(ii)  the date of sale of the security causing the adjustment;
 
(iii)  the effective date of a division or combination of shares;
 
(iv)  the record date of any action of holders of any class of the Company’s capital stock taken for the purpose of entitling shareholders to receive a distribution or dividend payable in equity securities, provided that such division, combination, distribution or dividend actually occurs.
 
3.6  Notice of Adjustments.    In each case of an adjustment in the Warrant Price and the number of shares purchasable hereunder, the Company, at its expense, shall cause the Chief Financial Officer of the Company to compute such adjustment and prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based. The Company shall promptly mail a copy of each such certificate to Holder pursuant to Section 6.7 hereof.
 
3.7  Duration of Adjusted Warrant Price.    Following each adjustment of the Warrant Price, such adjusted Warrant Price shall remain in effect until a further adjustment of the Warrant Price.
 
3.8  Adjustment of Number of Shares.    Upon each adjustment of the Warrant Price pursuant to this Article III, the number of shares of Common Stock purchasable hereunder shall be adjusted to the nearest whole share, to the number obtained by dividing the Aggregate Price by the Warrant Price as adjusted.
 
ARTICLE 4
 
TRANSFER, EXCHANGE AND LOSS
 
4.1  Securities Laws.    Upon any issuance of shares of Common Stock upon exercise of this Warrant, if required by the Company, in connection with each issuance of shares of Common Stock upon exercise of this Warrant, the Holder will give: (i) assurances in writing, satisfactory to the Company, that such shares are not being purchased with a view to the distribution thereof in violation of applicable laws, (ii) sufficient information, in writing, to enable the Company to rely on exemptions from the registration or qualification requirements of applicable laws, if available, with respect to such exercise, and (iii) its cooperation to the Company in connection with such compliance.

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4.2  Exchange.    This Warrant is exchangeable at the principal office of the Company for Warrants which represent, in the aggregate, the Aggregate Price hereof; each new Warrant to represent the right to purchase such portion of the Aggregate Price as Holder shall designate at the time of such exchange. Each new Warrant shall be identical in form and content to this Warrant, except for appropriate changes in the number of shares of Common Stock covered thereby, the percentage stated in Section 4.1 above, and any other changes which are necessary in order to prevent the Warrant exchange from changing the respective rights and obligations of the Company and the Holder as they existed immediately prior to such exchange.
 
4.3  Loss or Mutilation.    Upon receipt by the Company of evidence satisfactory to it of the ownership of, and the loss, theft, destruction or mutilation of, this Warrant and (in the case of loss, theft, or destruction) of indemnity satisfactory to it, and (in the case of mutilation) upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant.
 
ARTICLE 5
 
HOLDER RIGHTS
 
5.1  No Shareholder Rights Until Exercise.    No Holder hereof, solely by virtue hereof, shall be entitled to any rights as a shareholder of the Company. Holder shall have all rights of a shareholder with respect to securities purchased upon exercise hereof at the time: (i) the cash exercise price for such securities is delivered pursuant to Section 2.1 hereof and this Warrant is surrendered, (ii) of delivery of notice of cashless exercise pursuant to Section 2.2 hereof and this Warrant is surrendered, or (iii) of automatic exercise hereof (even if not surrendered) pursuant to Section 2.5 hereof.
 
5.2  Registration Rights.    The Company is obligated to register the shares of Common Stock underlying the Warrant upon the earlier of: 1) six months after the date of this Warrant, or 2) any registration of other securities by the Company, including but not limited to shares, warrants or options.
 
ARTICLE 6
 
MISCELLANEOUS
 
6.1  GOVERNING LAWS.    IT IS THE INTENTION OF THE PARTIES HERETO THAT EXCEPT AS SET FORTH BELOW, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A. (IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS WARRANT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO.
 
6.2  Binding Upon Successors and Assigns.    Subject to, and unless otherwise provided in, this Warrant, each and all of the covenants, terms, provisions, and agreements contained herein shall be binding upon, and inure to the benefit of the permitted successors, executors, heirs, representatives, administrators and assigns of the parties hereto.
 
6.3  Severability.    If any one or more provisions of this Warrant, or the application thereof, shall for any reason and to any extent be invalid or unenforceable, the remainder of this Warrant and the application of such provisions to other persons or circumstances shall be interpreted so as best to reasonably effect the intent of the parties hereto. The parties further agree to replace any such void or unenforceable provisions of this Warrant with valid and enforceable provisions which will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provisions.
 
6.4  Default, Amendment and Waivers.    This Warrant may be amended upon the written consent of the Company and the Holder. The waiver by a party of any breach hereof for default in payment of any amount due hereunder or default in the performance hereof shall not be deemed to constitute a waiver of any other default or any succeeding breach or default. The failure to cure any breach of any term of this Warrant within ten (10) days of written notice thereof shall constitute an event of default under this Warrant.

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6.5  No Waiver.    The failure of any party to enforce any of the provisions hereof shall not be construed to be a waiver of the right of such party thereafter to enforce such provisions.
 
6.6  Attorneys’ Fees.    Should suit be brought to enforce or interpret any part of this Warrant, the prevailing party shall be entitled to recover, as an element of the costs of suit and not as damages, reasonable attorneys’ fees to be fixed by the court (including without limitation, costs, expenses and fees on any appeal). The prevailing party shall be the party entitled to recover its costs of suit, regardless of whether such suit proceeds to final judgment. A party not entitled to recover its costs shall not be entitled to recover attorneys’ fees. No sum for attorneys’ fees shall be counted in calculating the amount of a judgment for purposes of determining if a party is entitled to recover costs or attorneys’ fees.
 
6.7  Notices.    Whenever any party hereto desires or is required to give any notice, demand, or request with respect to this Warrant, each such communication shall be in writing and shall be effective only if it is delivered by personal service or mailed, United States certified mail, postage prepaid, return receipt requested, addressed as follows:
 
Company:
  
P-COM, Inc.
   
3175 S. Winchester Boulevard
   
Campbell, CA 95008
 
Holder:
  
Cagan McAfee Capital Partners, LLC
   
10600 N. De Anza Boulevard
   
Suite 250
   
Cupertino, CA 95014
 
Such communications shall be effective when they are received by the addressee thereof; but if sent by certified mail in the manner set forth above, they shall be effective three (3) business days after being deposited in the United States mail. Any party may change its address for such communications by giving notice thereof to the other party in conformity with this Section.
 
6.8  Time.    Time is of the essence of this Warrant.
 
6.9  Construction of Agreement.    A reference in this Warrant to any Section shall include a reference to every Section the number of which begins with the number of the Section to which reference is specifically made (e.g., a reference to Section 3 shall include a reference to Sections 3.5 and 3.7). The titles and headings herein are for reference purposes only and shall not in any manner affect the interpretation of this Warrant.
 
6.10  No Endorsement.    Holder understands that no federal or state securities administrator has made any finding or determination relating to the fairness of investment in the Company or purchase of the Common Stock hereunder and that no federal or state securities administrator has recommended or endorsed the offering of securities by the Company hereunder.
 
6.11  Pronouns.    All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity or entities may require.

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6.12  Further Assurances.    Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurances, as may be reasonably requested by any other party to better evidence and reflect the transactions described herein and contemplated hereby, and to carry into effect the intents and purposes of this Warrant.
 
6.13  Amendment and Supersession.    This Warrant, executed on July 1, 2002, amends and supersedes, in respect of the 40,000 shares of Common Stock covered hereby, that certain Warrant issued March 1, 2002 to Cagan McAfee Capital Partners, LLC, after giving effect to the reverse 1 for 5 stock split that the Company effected on June 27, 2002.
 
P-COM, INC.,
a Delaware Corporation
By:
  
/s/    LEIGHTON J. STEPHENSON        
   
Leighton J. Stephenson
Chief Financial Officer
 
CAGAN MCAFEE CAPITAL PARTNERS, LLC
By:
  
/s/    LAIRD Q. CAGAN        
   
Laird Q. Cagan
Managing Director

7

 
Exhibit A-1
 
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
BY CASH PAYMENT OF WARRANT PRICE
 
DATE:                            
 
P-Com, Inc.
3175 S. Winchester Boulevard
Campbell, CA 95008
Attn: Chief Financial Officer
   
Aggregate Price of Warrant
Before Exercise:
Aggregate Price
Being Exercised:
   
$                                
$                                
$                                
$                                
    
Warrant Price: $                        per share
Number of Shares of Common Stock to be Issued
Under this Notice:                                
Remainder Aggregate
Price (if any) After Issuance: $            
    
    
 
CASH EXERCISE
 
Gentlemen:
 
The undersigned registered Holder of the Common Stock Warrant delivered herewith (“Warrant”), hereby irrevocably exercises such Warrant for, and purchases thereunder, shares of the Common Stock of P-Com, Inc., a Delaware corporation, as provided below. Capitalized terms used herein, unless otherwise defined herein, shall have the meanings given in the Warrant. The portion of the Aggregate Price (as defined in the Warrant) to be applied toward the purchase of Common Stock pursuant to this Notice of Exercise is $            , thereby leaving a remainder Aggregate Price (if any) equal to $            . Such exercise shall be pursuant to the cash exercise provisions of Section 2.1 of the Warrant. Therefore, Holder makes payment with this Notice of Exercise by way of                           in the amount of $            . Such amount is payment in full under the Warrant for shares of Common Stock based upon the Warrant Price of $ per share, as currently in effect under the Warrant. Holder requests that the certificates for the purchased shares of Common Stock be issued in the name of and delivered to “                “. To the extent the foregoing exercise is for less than the full Aggregate Price, a Replacement Warrant representing the remainder of the Aggregate Price and otherwise of like form, tenor and effect should be delivered to Holder along with the share certificates evidencing the Common Stock issued in response to this Notice of Exercise.
 
By:
    
   
   
[NAME]
 
NOTE
 
The execution to the foregoing Notice of Exercise must exactly correspond to the name of the Holder on the Warrant.
 

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Exhibit A-2
 
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
PURSUANT TO NET ISSUE (“CASHLESS”) EXERCISE PROVISIONS
 
DATE                
 
P-Com, Inc.
  
            Aggregate Price of Warrant
  
$                                
3175 S. Winchester Boulevard
  
            Before Exercise:
  
$                                
Campbell, CA 95008
  
            Aggregate Price
  
$                                
Attn: Chief Financial Officer
  
            Being Exercised:
  
$                                
   
Warrant Price: $                         per share
   
Number of Shares of Common Stock to be Issued
Under this Notice:                                         
   
Remainder Aggregate
Price (if any) After Issuance: $                    
 
CASHLESS EXERCISE
 
Gentlemen:
 
The undersigned, registered Holder of the Common Stock Warrant delivered herewith (“Warrant”), hereby irrevocably exercises such Warrant for, and purchases thereunder, shares of the Common Stock of P-Com, Inc., a Delaware corporation, as provided below. Capitalized terms used herein, unless otherwise defined herein, shall have the meanings given in the Warrant. The portion of the Aggregate Price (as defined in the Warrant) to be applied toward the purchase of Common Stock pursuant to this Notice of Exercise is $            , thereby leaving a remainder Aggregate Price (if any) equal to $            . Such exercise shall be pursuant to the net issue exercise provisions of Section 2.2 of the Warrant; therefore, Holder makes no payment with this Notice of Exercise. The number of shares to be issued pursuant to this exercise shall be determined by reference to the formula in Section 2.2 of the Warrant which, by reference to Section 2.3, requires the use of the current per share fair market value of the Company’s Common Stock. The current fair market value of one share of the Company’s Common Stock shall be determined in the manner provided in Section 2.3, which amount has been determined or agreed to by Holder and the Company to be $            , which figure is acceptable to Holder for calculations of the number of shares of Common Stock issuable pursuant to this Notice of Exercise. Holder requests that the certificates for the purchased shares of Common Stock be issued in the name of and delivered to “            ”. To the extent the foregoing exercise is for less than the full Aggregate Price of the Warrant, a replacement Warrant representing the remainder of the Aggregate Price (and otherwise of like form, tenor and effect) shall be delivered to Holder along with the share certificate evidencing the Common Stock issued in response to this Notice of Exercise.
 
By:
  
 
   
[NAME]
 
NOTE
 
The execution to the foregoing Notice of Exercise must exactly correspond to the name of the Holder on the Warrant.

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INVESTMENT REPRESENTATION STATEMENT
 
PURCHASER:
   
CAGAN MCAFEE CAPITAL PARTNERS, INC.
COMPANY:
   
P-COM, INC.
SECURITY:  
   
WARRANTS FOR COMMON STOCK
AMOUNT:  
   
40,000 WARRANTS
DATE:
   
JULY 1, 2002
 
In connection with the purchase of the Securities, the Purchaser represents to P-COM, Inc. the following:
 
(a)  I am aware of P-COM, Inc.’s business affairs and financial condition, and have acquired sufficient information about P-COM, Inc. to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933 (“Securities Act”).
 
(b)  I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein.
 
(c)  I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Purchaser satisfactory to P-COM, Inc. or receipt of a no-action letter from the Securities and Exchange Commission.
 
(d)  I am aware of the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions, if applicable, including, among other things: the availability of certain public information about the Partnership; the resale occurring not less than one year after the party has purchased and paid for the securities to be sold; the sale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and the amount of securities being sold during any three month period not exceeding the specified limitations stated therein.
 
(e)  I further understand that at the time I wish to sell the Securities there may be no public market upon which to make such a sale, and that, even if such a public market then exists, P-COM, Inc. may not be satisfying the current public information requirements of Rule 144, and that, in such event, I may be precluded from selling the Securities under Rule 144 even if the one-year minimum holding period had been satisfied.
 
(f)  I further understand that in the event all of the requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
 
Cagan McAfee Capital Partners, LLC
 
Date:  July 1, 2002

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EX-4.2 4 dex42.htm COMMON STOCK WARRANT, AMONG P-COM AND CAGAN MCAFEE Prepared by R.R. Donnelley Financial -- Common Stock Warrant, among P-Com and Cagan McAfee
 
Exhibit 4.2
 
P-COM, INC.
 
Issue Date: March 1, 2002
  
(1)  Aggregate Price: $469,200
   
(2)  Initial Warrant Price: $1.02
   
(3)  Number of Shares Initially Subject to Warrant 460,000
 
NEITHER THIS WARRANT, NOR THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF, HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“1933 SECURITIES ACT”), OR QUALIFIED OR REGISTERED UNDER CALIFORNIA OR OTHER APPLICABLE SECURITIES LAWS (“STATE SECURITIES LAWS”), AND THIS WARRANT HAS BEEN, AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER DISPOSITION MAY BE MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 SECURITIES ACT AND COMPLIANCE WITH THE APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER AND ITS COUNSEL, THAT SAID REGISTRATION IS NOT REQUIRED UNDER THE 1933 SECURITIES ACT AND THAT APPLICABLE STATE SECURITIES LAWS HAVE BEEN SATISFIED.
 
COMMON STOCK WARRANT
 
This warrant is issued pursuant to an agreement entered into in December, 2001 between Cagan McAfee Capital Partners, LLC and P-Com, Inc., a Delaware corporation, (the “Company”). This certifies that Cagan McAfee Capital Partners, LLC whose address for notice is 10600 N. De Anza Boulevard, Suite 250, Cupertino, CA 95014, or any party to whom this Warrant is assigned in compliance with the terms hereof (Purchaser and any such assignee being hereinafter sometimes referenced as “Holder”), is entitled to subscribe for and purchase, during the period commencing at the issue date set forth above and ending at 5:00 p.m., California, local time, on the Tenth (10th) anniversary of such issue date, the number of shares of fully paid and nonassessable unregistered, restricted Common Stock (“Common Stock”) of the Company, that have an aggregate purchase price equal to the Aggregate Price as defined below. The purchase price of each such share shall be equal to the Warrant Price, as defined below.
 
ARTICLE 1
 
DEFINITIONS
 
1.1  “Aggregate Price” shall be $469,200.
 
1.2  “Warrant Price” shall be One Dollar and two Cents ($1.02) per share, as adjusted herein.
 
ARTICLE 2
 
EXERCISE AND PAYMENT
 
2.1  Cash Exercise.    The purchase rights represented by this Warrant may be exercised by Holder, in whole or in part, by the surrender of this Warrant at the principal office of the Company, located at the address set forth on the signature page hereof, accompanied by the form of Notice of Cash Exercise attached hereto as Exhibit “A-1”, and by the payment to the Company, by cash or by certified, cashier’s or other check acceptable to the Company, or by delivery to the Company of evidence of cancellation of

 
indebtedness of the Company to such Holder, or by wire transfer to the account of the Company, of an amount equal to the aggregate Warrant Price of the shares being purchased.
 
2.2  Net Issue Exercise.    In lieu of exercising this Warrant pursuant to Section 2.1, Holder may elect to receive shares of Common Stock equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant at the principal office of the Company together with the form of Notice of Cashless Exercise attached hereto as Exhibit “A-2”, in which event the Company shall issue to Holder a number of shares of the Company’s Common Stock computed using the following formula:
 
X
  
=
  
Y (A-B)
       
A
 
Where X = the number of shares of Common Stock to be issued to Holder.
 
Y = the number of shares of Common Stock purchasable under this Warrant (at the date of such calculation).
 
A = the fair market value of one share of the Company’s Common Stock (at the date of such calculation).
 
B = Warrant Price.
 
2.3  Fair Market Value.    For purposes of this Article II, fair market value of one share of the Company’s Common Stock shall mean:
 
(i)  The average of the closing bid and asked prices of the Common Stock quoted in the Over-The-Counter Market Summary, the last reported sale price of the Common Stock or the closing price quoted on the Nasdaq National Market System (“NMS”) or on any exchange on which the Common Stock is listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal for the trading day prior to the date of determination of fair market value; or
 
(ii)  If the Common Stock is not traded Over-The-Counter, on the NMS or on an exchange, the per share fair market value of the Common Stock shall be as determined by mutual agreement of the Company and the Holder; provided, however that if such agreement cannot be reached within twenty (20) calendar days, such value shall be determined by an independent appraiser appointed in good faith by the Company’s Board of Directors. The cost of such appraisal shall be borne equally by the Company and the Holder. Such appraiser shall meet the following criteria: (a) it shall not be associated or affiliated with the Company in any fashion and shall not have previously provided services to the Company; (b) the appraiser shall have reasonable qualifications to appraise the value of the Common Stock; (c) it is not (and none of its affiliates is) a promoter, director or officer of the Company or any of its affiliates or an underwriter with respect to any of the securities of the Company; and (d) it does not provide any advice or opinions of the Company except as an appraiser under this section. In the event such an appraisal is required it should be conducted under the following procedures: the Company shall select the appraiser within ten (10) days of receipt of written notice from the Holder that agreement cannot be reached and the Company shall submit the name of such appraiser to Holder. Twenty (20) days after selection of the appraiser, the Company and the Holder shall each submit to the appraiser a single value representing such party’s contention as to the fair market value of one share of the Company’s Common Stock. Within fifteen (15) days after receipt of the submission of the Company and the Holder, the appraiser shall select one of the two values submitted by the parties, and such value shall be the fair market value of one share of the Common Stock for purpose of this Warrant. The appraiser shall have no discretion to take any action other than selection of one of the two values submitted to the appraiser. The parties may submit to the appraiser and one another, at the time they submit their respective single values, such supporting documentation as they deem necessary or appropriate. The parties shall have the opportunity seven (7) business days after receipt of the other party’s proposed valuation and supporting documentation to provide the appraiser and each other with supplemental written information. The appraiser may, in its discretion, hold a single six (6) hour hearing on valuation issues. If a hearing is held, each party shall be allocated three (3) hours. The appraiser may conduct the hearing in accordance with

2

any rules of procedure it deems appropriate. The value selected by the appraiser shall be final and binding upon the parties without any further right of appeal.
 
2.4  Stock Certificates.    In the event of any exercise of the rights represented by this Warrant, certificates for the shares of Common Stock so purchased shall be delivered to Holder within a reasonable time and, unless this Warrant has been fully exercised or has expired, a new Warrant representing the remaining unexercised Aggregate Price shall also be issued to Holder at such time.
 
2.5  Automatic Exercise.    To the extent this Warrant is not previously exercised, and if the fair market value of one share of the Company’s Common Stock is greater than the Warrant Price, as adjusted, this Warrant shall be deemed automatically exercised in accordance with Section 2.2 hereof (even if not surrendered) immediately before its expiration. For purposes of such automatic exercise, the fair market value of one share of the Company’s Common Stock upon such expiration shall be the fair market value determined pursuant to Section 2.3 above. To the extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this Section 2.5, the Company agrees to notify Holder within a reasonable period of time of the number of shares of the Company’s Common Stock, if any, Holder is to receive by reason of such automatic exercise.
 
2.6  Stock Fully Paid; Reservation of Shares.    The Company covenants and agrees that all Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof (excluding taxes based on the income of Holder). The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for issuance a sufficient number of shares of its Common Stock or other securities as would be required upon the full exercise of the rights represented by this Warrant.
 
2.7  Fractional Shares.    No fractional share of Common Stock will be issued in connection with any exercise hereof; in lieu of a fractional share upon complete exercise hereof, Holder may purchase a whole share by delivering payment equal to the appropriate portion of the then effective Warrant Price.
 
ARTICLE 3
 
CERTAIN ADJUSTMENTS OF NUMBER OF SHARES PURCHASABLE AND WARRANT PRICE
 
The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the happening of certain events, as follows:
 
3.1  Reclassification, Consolidation or Merger.    In case of: (i) any reclassification or change of outstanding securities issuable upon exercise of this Warrant; (ii) any consolidation or merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification, change or exchange of outstanding securities issuable upon exercise of this Warrant); or (iii) any sale or transfer to another corporation of all, or substantially all, of the property of the Company, then, and in each such event, the Company or such successor or purchasing corporation, as the case may be, shall execute a new Warrant of like form, tenor and effect and which will provide that Holder shall have the right to exercise such new Warrant and purchase upon such exercise, in lieu of each share of Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of securities, money and property receivable upon such reclassification, change, consolidation, merger, sale or transfer by a holder of one share of Common Stock issuable upon exercise of this Warrant had this Warrant been exercised immediately prior to such reclassification, change, consolidation, merger, sale or transfer. Such new Warrant shall be as nearly equivalent in all substantive respects as practicable to this Warrant and the adjustments provided in this Article III and the provisions of this Section 3.1, shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales and transfers.
 
3.2  Subdivision or Combination of Shares.    If the Company shall at any time while this Warrant remains outstanding and less than fully exercised: (i) divide its Company Stock, the Warrant Price shall

3

be proportionately reduced; or (ii) shall combine shares of its Common Stock, the Warrant Price shall be proportionately increased.
 
3.3  Stock Dividends.    If the Company, at any time while this Warrant is outstanding and unexpired, shall pay a dividend payable in, or make any other distribution to holders of, Common Stock (except any distribution described in Sections 3.1 and 3.2 hereof) then the Warrant Price shall be adjusted to that price determined by multiplying the Warrant Price then in effect by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution.
 
3.4  Other Action Affecting Common Stock.    If the Company takes any action affecting its Common Stock after the date hereof (including dividends and distributions), other than an action described in any of Sections 3.1 and 3.2 hereof, which would have an adverse effect upon Holder’s rights hereunder, the Warrant Price shall be adjusted downward in such manner and at such time as the Board of Directors of the Company shall in good faith determine to be equitable under the circumstances.
 
3.5  Time of Adjustments to the Warrant Price.    All adjustments to the Warrant Price and the number of shares purchasable hereunder, unless otherwise specified herein, shall be effective as of the earlier of:
 
(i)  the date of issue of the security causing the adjustment;
 
(ii)  the date of sale of the security causing the adjustment;
 
(iii)  the effective date of a division or combination of shares;
 
(iv)  the record date of any action of holders of any class of the Company’s capital stock taken for the purpose of entitling shareholders to receive a distribution or dividend payable in equity securities, provided that such division, combination, distribution or dividend actually occurs.
 
3.6  Notice of Adjustments.    In each case of an adjustment in the Warrant Price and the number of shares purchasable hereunder, the Company, at its expense, shall cause the Chief Financial Officer of the Company to compute such adjustment and prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based. The Company shall promptly mail a copy of each such certificate to Holder pursuant to Section 6.7 hereof.
 
3.7  Duration of Adjusted Warrant Price.    Following each adjustment of the Warrant Price, such adjusted Warrant Price shall remain in effect until a further adjustment of the Warrant Price.
 
3.8  Adjustment of Number of Shares.    Upon each adjustment of the Warrant Price pursuant to this Article III, the number of shares of Common Stock purchasable hereunder shall be adjusted to the nearest whole share, to the number obtained by dividing the Aggregate Price by the Warrant Price as adjusted.
 
ARTICLE 4
 
TRANSFER, EXCHANGE AND LOSS
 
4.1  Securities Laws.    Upon any issuance of shares of Common Stock upon exercise of this Warrant, if required by the Company, in connection with each issuance of shares of Common Stock upon exercise of this Warrant, the Holder will give: (i) assurances in writing, satisfactory to the Company, that such shares are not being purchased with a view to the distribution thereof in violation of applicable laws, (ii) sufficient information, in writing, to enable the Company to rely on exemptions from the registration or qualification requirements of applicable laws, if available, with respect to such exercise, and (iii) its cooperation to the Company in connection with such compliance.

4

 
4.2  Exchange.    This Warrant is exchangeable at the principal office of the Company for Warrants which represent, in the aggregate, the Aggregate Price hereof; each new Warrant to represent the right to purchase such portion of the Aggregate Price as Holder shall designate at the time of such exchange. Each new Warrant shall be identical in form and content to this Warrant, except for appropriate changes in the number of shares of Common Stock covered thereby, the percentage stated in Section 4.1 above, and any other changes which are necessary in order to prevent the Warrant exchange from changing the respective rights and obligations of the Company and the Holder as they existed immediately prior to such exchange.
 
4.3  Loss or Mutilation.    Upon receipt by the Company of evidence satisfactory to it of the ownership of, and the loss, theft, destruction or mutilation of, this Warrant and (in the case of loss, theft, or destruction) of indemnity satisfactory to it, and (in the case of mutilation) upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant.
 
ARTICLE 5
 
HOLDER RIGHTS
 
5.1  No Shareholder Rights Until Exercise.    No Holder hereof, solely by virtue hereof, shall be entitled to any rights as a shareholder of the Company. Holder shall have all rights of a shareholder with respect to securities purchased upon exercise hereof at the time: (i) the cash exercise price for such securities is delivered pursuant to Section 2.1 hereof and this Warrant is surrendered, (ii) of delivery of notice of cashless exercise pursuant to Section 2.2 hereof and this Warrant is surrendered, or (iii) of automatic exercise hereof (even if not surrendered) pursuant to Section 2.5 hereof.
 
5.2  Registration Rights.    The Company is obligated to register the shares of Common Stock underlying the Warrant upon the earlier of: 1) six months after the date of this Warrant, or 2) any registration of other securities by the Company, including but not limited to shares, warrants or options.
 
ARTICLE 6
 
MISCELLANEOUS
 
6.1  GOVERNING LAWS.    IT IS THE INTENTION OF THE PARTIES HERETO THAT EXCEPT AS SET FORTH BELOW, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A. (IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS WARRANT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO.
 
6.2  Binding Upon Successors and Assigns.    Subject to, and unless otherwise provided in, this Warrant, each and all of the covenants, terms, provisions, and agreements contained herein shall be binding upon, and inure to the benefit of the permitted successors, executors, heirs, representatives, administrators and assigns of the parties hereto.
 
6.3  Severability.    If any one or more provisions of this Warrant, or the application thereof, shall for any reason and to any extent be invalid or unenforceable, the remainder of this Warrant and the application of such provisions to other persons or circumstances shall be interpreted so as best to reasonably effect the intent of the parties hereto. The parties further agree to replace any such void or unenforceable provisions of this Warrant with valid and enforceable provisions which will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provisions.
 
6.4  Default, Amendment and Waivers.    This Warrant may be amended upon the written consent of the Company and the Holder. The waiver by a party of any breach hereof for default in payment of any amount due hereunder or default in the performance hereof shall not be deemed to constitute a waiver of any other default or any succeeding breach or default. The failure to cure any breach of any term of this Warrant within ten (10) days of written notice thereof shall constitute an event of default under this Warrant.

5

 
6.5  No Waiver.    The failure of any party to enforce any of the provisions hereof shall not be construed to be a waiver of the right of such party thereafter to enforce such provisions.
 
6.6  Attorneys’ Fees.    Should suit be brought to enforce or interpret any part of this Warrant, the prevailing party shall be entitled to recover, as an element of the costs of suit and not as damages, reasonable attorneys’ fees to be fixed by the court (including without limitation, costs, expenses and fees on any appeal). The prevailing party shall be the party entitled to recover its costs of suit, regardless of whether such suit proceeds to final judgment. A party not entitled to recover its costs shall not be entitled to recover attorneys’ fees. No sum for attorneys’ fees shall be counted in calculating the amount of a judgment for purposes of determining if a party is entitled to recover costs or attorneys’ fees.
 
6.7  Notices.    Whenever any party hereto desires or is required to give any notice, demand, or request with respect to this Warrant, each such communication shall be in writing and shall be effective only if it is delivered by personal service or mailed, United States certified mail, postage prepaid, return receipt requested, addressed as follows:
 
Company:
  
P-COM, Inc.
   
3175 S. Winchester Boulevard
   
Campbell, CA 95008
 
Holder:
  
Cagan McAfee Capital Partners, LLC
   
10600 N. De Anza Boulevard
   
Suite 250
   
Cupertino, CA 95014
 
Such communications shall be effective when they are received by the addressee thereof; but if sent by certified mail in the manner set forth above, they shall be effective three (3) business days after being deposited in the United States mail. Any party may change its address for such communications by giving notice thereof to the other party in conformity with this Section.
 
6.8  Time.    Time is of the essence of this Warrant.
 
6.9  Construction of Agreement.    A reference in this Warrant to any Section shall include a reference to every Section the number of which begins with the number of the Section to which reference is specifically made (e.g., a reference to Section 3 shall include a reference to Sections 3.5 and 3.7). The titles and headings herein are for reference purposes only and shall not in any manner affect the interpretation of this Warrant.
 
6.10  No Endorsement.    Holder understands that no federal or state securities administrator has made any finding or determination relating to the fairness of investment in the Company or purchase of the Common Stock hereunder and that no federal or state securities administrator has recommended or endorsed the offering of securities by the Company hereunder.
 
6.11  Pronouns.    All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity or entities may require.

6

 
6.12  Further Assurances.    Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurances, as may be reasonably requested by any other party to better evidence and reflect the transactions described herein and contemplated hereby, and to carry into effect the intents and purposes of this Warrant.
 
6.13  Amendment and Supersession.    This Warrant, executed on July 1, 2002, amends and supersedes, in respect of the 460,000 shares of Common Stock covered hereby, that certain Warrant issued March 1, 2002 to Cagan McAfee Capital Partners, LLC, after giving effect to the reverse 1 for 5 stock split that the Company effected on June 27, 2002.
 
P-COM, INC.,
a Delaware Corporation
By:
  
/s/    LEIGHTON J. STEPHENSON        
   
Leighton J. Stephenson
Chief Financial Officer
 
CAGAN MCAFEE CAPITAL PARTNERS, LLC
By:
  
/s/    LAIRD Q. CAGAN        
   
Laird Q. Cagan
Managing Director

7

 
Exhibit A-1
 
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
BY CASH PAYMENT OF WARRANT PRICE
 
 
DATE:                        
 
P-Com, Inc.
  
Aggregate Price of Warrant
  
$                                
3175 S. Winchester Boulevard
  
Before Exercise:
  
$                                
Campbell, CA 95008
  
Aggregate Price
  
$                                
Attn: Chief Financial Officer
  
Being Exercised:
  
$                                
   
Warrant Price: $                         per share
   
Number of Shares of Common Stock to be Issued
Under this Notice:                                             
   
Remainder Aggregate
Price (if any) After Issuance: $                        
 
CASH EXERCISE
 
Gentlemen:
 
The undersigned registered Holder of the Common Stock Warrant delivered herewith (“Warrant”), hereby irrevocably exercises such Warrant for, and purchases thereunder, shares of the Common Stock of P-Com, Inc., a Delaware corporation, as provided below. Capitalized terms used herein, unless otherwise defined herein, shall have the meanings given in the Warrant. The portion of the Aggregate Price (as defined in the Warrant) to be applied toward the purchase of Common Stock pursuant to this Notice of Exercise is $                        , thereby leaving a remainder Aggregate Price (if any) equal to $                        . Such exercise shall be pursuant to the cash exercise provisions of Section 2.1 of the Warrant. Therefore, Holder makes payment with this Notice of Exercise by way of                           in the amount of $                        . Such amount is payment in full under the Warrant for                         shares of Common Stock based upon the Warrant Price of $                          per share, as currently in effect under the Warrant. Holder requests that the certificates for the purchased shares of Common Stock be issued in the name of and delivered to “                                ”. To the extent the foregoing exercise is for less than the full Aggregate Price, a Replacement Warrant representing the remainder of the Aggregate Price and otherwise of like form, tenor and effect should be delivered to Holder along with the share certificates evidencing the Common Stock issued in response to this Notice of Exercise.
 
By:
  
   
[NAME]
 
NOTE
 
The execution to the foregoing Notice of Exercise must exactly correspond to the name of the Holder on the Warrant.
 

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Exhibit A-2
 
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
BY CASH PAYMENT OF WARRANT PRICE
 
 
DATE                              
 
P-Com, Inc.
  
            Aggregate Price of Warrant
  
$                            
3175 S. Winchester Boulevard
  
            Before Exercise:
  
$                            
Campbell, CA 95008
  
            Aggregate Price
  
$                            
Attn: Chief Financial Officer
  
            Being Exercised:
  
$                            
   
Warrant Price: $                         per share
   
Number of Shares of Common Stock to be Issued
Under this Notice:                                             
   
Remainder Aggregate
Price (if any) After Issuance: $                        
 
CASHLESS EXERCISE
 
Gentlemen:
 
The undersigned, registered Holder of the Common Stock Warrant delivered herewith (“Warrant”), hereby irrevocably exercises such Warrant for, and purchases thereunder, shares of the Common Stock of P-Com, Inc., a Delaware corporation, as provided below. Capitalized terms used herein, unless otherwise defined herein, shall have the meanings given in the Warrant. The portion of the Aggregate Price (as defined in the Warrant) to be applied toward the purchase of Common Stock pursuant to this Notice of Exercise is $                    , thereby leaving a remainder Aggregate Price (if any) equal to $                        . Such exercise shall be pursuant to the net issue exercise provisions of Section 2.2 of the Warrant; therefore, Holder makes no payment with this Notice of Exercise. The number of shares to be issued pursuant to this exercise shall be determined by reference to the formula in Section 2.2 of the Warrant which, by reference to Section 2.3, requires the use of the current per share fair market value of the Company’s Common Stock. The current fair market value of one share of the Company’s Common Stock shall be determined in the manner provided in Section 2.3, which amount has been determined or agreed to by Holder and the Company to be $                        , which figure is acceptable to Holder for calculations of the number of shares of Common Stock issuable pursuant to this Notice of Exercise. Holder requests that the certificates for the purchased shares of Common Stock be issued in the name of and delivered to “                        ”. To the extent the foregoing exercise is for less than the full Aggregate Price of the Warrant, a replacement Warrant representing the remainder of the Aggregate Price (and otherwise of like form, tenor and effect) shall be delivered to Holder along with the share certificate evidencing the Common Stock issued in response to this Notice of Exercise.
 
By:
  
   
[NAME]
 
NOTE
 
The execution to the foregoing Notice of Exercise must exactly correspond to the name of the Holder on the Warrant.

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INVESTMENT REPRESENTATION STATEMENT
 
PURCHASER:
   
CAGAN MCAFEE CAPITAL PARTNERS, INC.
COMPANY:
   
P-COM, INC.
SECURITY:
   
WARRANTS FOR COMMON STOCK
AMOUNT:
   
460,000 WARRANTS
DATE:
   
JULY 1, 2002
 
In connection with the purchase of the Securities, the Purchaser represents to P-COM, Inc. the following:
 
(a)  I am aware of P-COM, Inc.’s business affairs and financial condition, and have acquired sufficient information about P-COM, Inc. to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933 (“Securities Act”).
 
(b)  I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein.
 
(c)  I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Purchaser satisfactory to P-COM, Inc. or receipt of a no-action letter from the Securities and Exchange Commission.
 
(d)  I am aware of the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions, if applicable, including, among other things: the availability of certain public information about the Partnership; the resale occurring not less than one year after the party has purchased and paid for the securities to be sold; the sale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and the amount of securities being sold during any three month period not exceeding the specified limitations stated therein.
 
(e) I further understand that at the time I wish to sell the Securities there may be no public market upon which to make such a sale, and that, even if such a public market then exists, P-COM, Inc. may not be satisfying the current public information requirements of Rule 144, and that, in such event, I may be precluded from selling the Securities under Rule 144 even if the one-year minimum holding period had been satisfied.
 
(f)  I further understand that in the event all of the requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
 
Cagan McAfee Capital Partners, LLC
 
Date: July 1, 2002
 

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EX-4.3 5 dex43.htm COMMON STOCK WARRANT, AMONG P-COM AND ALTA PARTNERS Prepared by R.R. Donnelley Financial -- Common Stock Warrant, among P-Com and Alta Partners
 
Exhibit 4.3
 
P-COM, Inc.
 
Issue Date: March 1, 2002
  
(1)  Aggregate Price: $102,000
   
(2)  Initial Warrant Price: $1.02
   
(3)  Number of Shares Initially Subject to Warrant
        100,000
 
NEITHER THIS WARRANT, NOR THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF, HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (“1933 SECURITIES ACT”), OR QUALIFIED OR REGISTERED UNDER CALIFORNIA OR OTHER APPLICABLE SECURITIES LAWS (“STATE SECURITIES LAWS”), AND THIS WARRANT HAS BEEN, AND THE COMMON STOCK TO BE ISSUED UPON EXERCISE HEREOF WILL BE, ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR FOR RESALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF. NO SUCH SALE OR OTHER DISPOSITION MAY BE MADE WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 SECURITIES ACT AND COMPLIANCE WITH THE APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE ISSUER AND ITS COUNSEL, THAT SAID REGISTRATION IS NOT REQUIRED UNDER THE 1933 SECURITIES ACT AND THAT APPLICABLE STATE SECURITIES LAWS HAVE BEEN SATISFIED.
 
COMMON STOCK WARRANT
 
This warrant is issued pursuant to an agreement entered into in December, 2001 between Alta Partners Discount Convertible Arbitrage Holdings, Ltd. and P-Com, Inc., a Delaware corporation, (the “Company”). This certifies that Alta Partners Discount Convertible Arbitrage Holdings, Ltd. (assignee of Cagan McAfee Capital Partners, LLC) whose address for notice is 123 Second Street, Suite 120, Sausalito, CA 94965, or any party to whom this Warrant is assigned in compliance with the terms hereof (Purchaser and any such assignee being hereinafter sometimes referenced as “Holder”), is entitled to subscribe for and purchase, during the period commencing at the issue date set forth above and ending at 5:00 p.m., California, local time, on the Tenth (10th) anniversary of such issue date, the number of shares of fully paid and nonassessable unregistered, restricted Common Stock (“Common Stock”) of the Company, that have an aggregate purchase price equal to the Aggregate Price as defined below. The purchase price of each such share shall be equal to the Warrant Price, as defined below.
 
ARTICLE 1
 
DEFINITIONS
 
1.1  “Aggregate Price” shall be $102,000.
 
1.2  “Warrant Price” shall be One Dollar and two Cents ($1.02) per share, as adjusted herein.
 
ARTICLE 2
 
EXERCISE AND PAYMENT
 
2.1  Cash Exercise.    The purchase rights represented by this Warrant may be exercised by Holder, in whole or in part, by the surrender of this Warrant at the principal office of the Company, located at the address set forth on the signature page hereof, accompanied by the form of Notice of Cash Exercise attached hereto as Exhibit “A-1”, and by the payment to the Company, by cash or by certified, cashier’s or other check acceptable to the Company, or by delivery to the Company of evidence of cancellation of

indebtedness of the Company to such Holder, or by wire transfer to the account of the Company, of an amount equal to the aggregate Warrant Price of the shares being purchased.
 
2.2  Net Issue Exercise.    In lieu of exercising this Warrant pursuant to Section 2.1, Holder may elect to receive shares of Common Stock equal to the value of this Warrant determined in the manner described below (or of any portion thereof remaining unexercised) by surrender of this Warrant at the principal office of the Company together with the form of Notice of Cashless Exercise attached hereto as Exhibit ”A-2”, in which event the Company shall issue to Holder a number of shares of the Company’s Common Stock computed using the following formula:
 
X
  
=
  
Y (A-B)
       
A
 
Where X = the number of shares of Common Stock to be issued to Holder.
 
Y  =  the number of shares of Common Stock purchasable under this Warrant (at the date of such calculation).
 
A  =  the fair market value of one share of the Company’s Common Stock (at the date of such calculation).
 
B  =  Warrant Price.
 
2.3  Fair Market Value.    For purposes of this Article II, fair market value of one share of the Company’s Common Stock shall mean:
 
(i)  The average of the closing bid and asked prices of the Common Stock quoted in the Over-The-Counter Market Summary, the last reported sale price of the Common Stock or the closing price quoted on the Nasdaq National Market System (“NMS”) or on any exchange on which the Common Stock is listed, whichever is applicable, as published in the Western Edition of The Wall Street Journal for the trading day prior to the date of determination of fair market value; or
 
(ii)  If the Common Stock is not traded Over-The-Counter, on the NMS or on an exchange, the per share fair market value of the Common Stock shall be as determined by mutual agreement of the Company and the Holder; provided, however that if such agreement cannot be reached within twenty (20) calendar days, such value shall be determined by an independent appraiser appointed in good faith by the Company’s Board of Directors. The cost of such appraisal shall be borne equally by the Company and the Holder. Such appraiser shall meet the following criteria: (a) it shall not be associated or affiliated with the Company in any fashion and shall not have previously provided services to the Company; (b) the appraiser shall have reasonable qualifications to appraise the value of the Common Stock; (c) it is not (and none of its affiliates is) a promoter, director or officer of the Company or any of its affiliates or an underwriter with respect to any of the securities of the Company; and (d) it does not provide any advice or opinions of the Company except as an appraiser under this section. In the event such an appraisal is required it should be conducted under the following procedures: the Company shall select the appraiser within ten (10) days of receipt of written notice from the Holder that agreement cannot be reached and the Company shall submit the name of such appraiser to Holder. Twenty (20) days after selection of the appraiser, the Company and the Holder shall each submit to the appraiser a single value representing such party’s contention as to the fair market value of one share of the Company’s Common Stock. Within fifteen (15) days after receipt of the submission of the Company and the Holder, the appraiser shall select one of the two values submitted by the parties, and such value shall be the fair market value of one share of the Common Stock for purpose of this Warrant. The appraiser shall have no discretion to take any action other than selection of one of the two values submitted to the appraiser. The parties may submit to the appraiser and one another, at the time they submit their respective single values, such supporting documentation as they deem necessary or appropriate. The parties shall have the opportunity seven (7) business days after receipt of the other party’s proposed valuation and supporting documentation to provide the appraiser and each other with supplemental written information. The appraiser may, in its discretion, hold a single six (6) hour hearing on valuation issues. If a hearing is held, each party shall be allocated three (3) hours. The appraiser may conduct the hearing in accordance with

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any rules of procedure it deems appropriate. The value selected by the appraiser shall be final and binding upon the parties without any further right of appeal.
 
2.4  Stock Certificates.    In the event of any exercise of the rights represented by this Warrant, certificates for the shares of Common Stock so purchased shall be delivered to Holder within a reasonable time and, unless this Warrant has been fully exercised or has expired, a new Warrant representing the remaining unexercised Aggregate Price shall also be issued to Holder at such time.
 
2.5  Automatic Exercise.    To the extent this Warrant is not previously exercised, and if the fair market value of one share of the Company’s Common Stock is greater than the Warrant Price, as adjusted, this Warrant shall be deemed automatically exercised in accordance with Section 2.2 hereof (even if not surrendered) immediately before its expiration. For purposes of such automatic exercise, the fair market value of one share of the Company’s Common Stock upon such expiration shall be the fair market value determined pursuant to Section 2.3 above. To the extent this Warrant or any portion thereof is deemed automatically exercised pursuant to this Section 2.5, the Company agrees to notify Holder within a reasonable period of time of the number of shares of the Company’s Common Stock, if any, Holder is to receive by reason of such automatic exercise.
 
2.6  Stock Fully Paid; Reservation of Shares.    The Company covenants and agrees that all Common Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof (excluding taxes based on the income of Holder). The Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized and reserved for issuance a sufficient number of shares of its Common Stock or other securities as would be required upon the full exercise of the rights represented by this Warrant.
 
2.7  Fractional Shares.    No fractional share of Common Stock will be issued in connection with any exercise hereof; in lieu of a fractional share upon complete exercise hereof, Holder may purchase a whole share by delivering payment equal to the appropriate portion of the then effective Warrant Price.
 
ARTICLE 3
 
CERTAIN ADJUSTMENTS OF NUMBER OF SHARES PURCHASABLE AND WARRANT PRICE
 
The number and kind of securities purchasable upon the exercise of this Warrant and the Warrant Price shall be subject to adjustment from time to time upon the happening of certain events, as follows:
 
3.1  Reclassification, Consolidation or Merger.    In case of: (i) any reclassification or change of outstanding securities issuable upon exercise of this Warrant; (ii) any consolidation or merger of the Company with or into another corporation (other than a merger with another corporation in which the Company is a continuing corporation and which does not result in any reclassification, change or exchange of outstanding securities issuable upon exercise of this Warrant); or (iii) any sale or transfer to another corporation of all, or substantially all, of the property of the Company, then, and in each such event, the Company or such successor or purchasing corporation, as the case may be, shall execute a new Warrant of like form, tenor and effect and which will provide that Holder shall have the right to exercise such new Warrant and purchase upon such exercise, in lieu of each share of Common Stock theretofore issuable upon exercise of this Warrant, the kind and amount of securities, money and property receivable upon such reclassification, change, consolidation, merger, sale or transfer by a holder of one share of Common Stock issuable upon exercise of this Warrant had this Warrant been exercised immediately prior to such reclassification, change, consolidation, merger, sale or transfer. Such new Warrant shall be as nearly equivalent in all substantive respects as practicable to this Warrant and the adjustments provided in this Article III and the provisions of this Section 3.1, shall similarly apply to successive reclassifications, changes, consolidations, mergers, sales and transfers.
 
3.2  Subdivision or Combination of Shares.    If the Company shall at any time while this Warrant remains outstanding and less than fully exercised: (i) divide its Company Stock, the Warrant Price shall

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be proportionately reduced; or (ii) shall combine shares of its Common Stock, the Warrant Price shall be proportionately increased.
 
3.3  Stock Dividends.    If the Company, at any time while this Warrant is outstanding and unexpired, shall pay a dividend payable in, or make any other distribution to holders of, Common Stock (except any distribution described in Sections 3.1 and 3.2 hereof) then the Warrant Price shall be adjusted to that price determined by multiplying the Warrant Price then in effect by a fraction, the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution.
 
3.4  Other Action Affecting Common Stock.    If the Company takes any action affecting its Common Stock after the date hereof (including dividends and distributions), other than an action described in any of Sections 3.1 and 3.2 hereof, which would have an adverse effect upon Holder’s rights hereunder, the Warrant Price shall be adjusted downward in such manner and at such time as the Board of Directors of the Company shall in good faith determine to be equitable under the circumstances.
 
3.5  Time of Adjustments to the Warrant Price.    All adjustments to the Warrant Price and the number of shares purchasable hereunder, unless otherwise specified herein, shall be effective as of the earlier of:
 
(i)  the date of issue of the security causing the adjustment;
 
(ii)  the date of sale of the security causing the adjustment;
 
(iii)  the effective date of a division or combination of shares;
 
(iv)  the record date of any action of holders of any class of the Company’s capital stock taken for the purpose of entitling shareholders to receive a distribution or dividend payable in equity securities, provided that such division, combination, distribution or dividend actually occurs.
 
3.6  Notice of Adjustments.    In each case of an adjustment in the Warrant Price and the number of shares purchasable hereunder, the Company, at its expense, shall cause the Chief Financial Officer of the Company to compute such adjustment and prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based. The Company shall promptly mail a copy of each such certificate to Holder pursuant to Section 6.7 hereof.
 
3.7  Duration of Adjusted Warrant Price.    Following each adjustment of the Warrant Price, such adjusted Warrant Price shall remain in effect until a further adjustment of the Warrant Price.
 
3.8  Adjustment of Number of Shares.    Upon each adjustment of the Warrant Price pursuant to this Article III, the number of shares of Common Stock purchasable hereunder shall be adjusted to the nearest whole share, to the number obtained by dividing the Aggregate Price by the Warrant Price as adjusted.
 
ARTICLE 4
 
TRANSFER, EXCHANGE AND LOSS
 
4.1  Securities Laws.    Upon any issuance of shares of Common Stock upon exercise of this Warrant, if required by the Company, in connection with each issuance of shares of Common Stock upon exercise of this Warrant, the Holder will give: (i) assurances in writing, satisfactory to the Company, that such shares are not being purchased with a view to the distribution thereof in violation of applicable laws, (ii) sufficient information, in writing, to enable the Company to rely on exemptions from the registration or qualification requirements of applicable laws, if available, with respect to such exercise, and (iii) its cooperation to the Company in connection with such compliance.

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4.2  Exchange.    This Warrant is exchangeable at the principal office of the Company for Warrants which represent, in the aggregate, the Aggregate Price hereof; each new Warrant to represent the right to purchase such portion of the Aggregate Price as Holder shall designate at the time of such exchange. Each new Warrant shall be identical in form and content to this Warrant, except for appropriate changes in the number of shares of Common Stock covered thereby, the percentage stated in Section 4.1 above, and any other changes which are necessary in order to prevent the Warrant exchange from changing the respective rights and obligations of the Company and the Holder as they existed immediately prior to such exchange.
 
4.3  Loss or Mutilation.    Upon receipt by the Company of evidence satisfactory to it of the ownership of, and the loss, theft, destruction or mutilation of, this Warrant and (in the case of loss, theft, or destruction) of indemnity satisfactory to it, and (in the case of mutilation) upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant.
 
ARTICLE 5
 
HOLDER RIGHTS
 
5.1  No Shareholder Rights Until Exercise.    No Holder hereof, solely by virtue hereof, shall be entitled to any rights as a shareholder of the Company. Holder shall have all rights of a shareholder with respect to securities purchased upon exercise hereof at the time: (i) the cash exercise price for such securities is delivered pursuant to Section 2.1 hereof and this Warrant is surrendered, (ii) of delivery of notice of cashless exercise pursuant to Section 2.2 hereof and this Warrant is surrendered, or (iii) of automatic exercise hereof (even if not surrendered) pursuant to Section 2.5 hereof.
 
5.2  Registration Rights.    The Company is obligated to register the shares of Common Stock underlying the Warrant upon the earlier of: 1) six months after the date of this Warrant, or 2) any registration of other securities by the Company, including but not limited to shares, warrants or options.
 
ARTICLE 6
 
MISCELLANEOUS
 
6.1  GOVERNING LAWS.    IT IS THE INTENTION OF THE PARTIES HERETO THAT EXCEPT AS SET FORTH BELOW, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, U.S.A. (IRRESPECTIVE OF ITS CHOICE OF LAW PRINCIPLES) SHALL GOVERN THE VALIDITY OF THIS WARRANT, THE CONSTRUCTION OF ITS TERMS, AND THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES HERETO.
 
6.2  Binding Upon Successors and Assigns.    Subject to, and unless otherwise provided in, this Warrant, each and all of the covenants, terms, provisions, and agreements contained herein shall be binding upon, and inure to the benefit of the permitted successors, executors, heirs, representatives, administrators and assigns of the parties hereto.
 
6.3  Severability.    If any one or more provisions of this Warrant, or the application thereof, shall for any reason and to any extent be invalid or unenforceable, the remainder of this Warrant and the application of such provisions to other persons or circumstances shall be interpreted so as best to reasonably effect the intent of the parties hereto. The parties further agree to replace any such void or unenforceable provisions of this Warrant with valid and enforceable provisions which will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provisions.
 
6.4  Default, Amendment and Waivers.    This Warrant may be amended upon the written consent of the Company and the Holder. The waiver by a party of any breach hereof for default in payment of any amount due hereunder or default in the performance hereof shall not be deemed to constitute a waiver of any other default or any succeeding breach or default. The failure to cure any breach of any term of this Warrant within ten (10) days of written notice thereof shall constitute an event of default under this Warrant.

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6.5  No Waiver.    The failure of any party to enforce any of the provisions hereof shall not be construed to be a waiver of the right of such party thereafter to enforce such provisions.
 
6.6  Attorneys’ Fees.    Should suit be brought to enforce or interpret any part of this Warrant, the prevailing party shall be entitled to recover, as an element of the costs of suit and not as damages, reasonable attorneys’ fees to be fixed by the court (including without limitation, costs, expenses and fees on any appeal). The prevailing party shall be the party entitled to recover its costs of suit, regardless of whether such suit proceeds to final judgment. A party not entitled to recover its costs shall not be entitled to recover attorneys’ fees. No sum for attorneys’ fees shall be counted in calculating the amount of a judgment for purposes of determining if a party is entitled to recover costs or attorneys’ fees.
 
6.7  Notices.    Whenever any party hereto desires or is required to give any notice, demand, or request with respect to this Warrant, each such communication shall be in writing and shall be effective only if it is delivered by personal service or mailed, United States certified mail, postage prepaid, return receipt requested, addressed as follows:
 
Company:
  
P-COM, Inc.
   
3175 S. Winchester Boulevard
   
Campbell, CA 95008
 
Holder:
  
Alta Partners Discount Convertible Arbitrage Holdings, Ltd.
   
123 Second Street
   
Suite 120
   
Sausalito, CA 94965
 
Such communications shall be effective when they are received by the addressee thereof; but if sent by certified mail in the manner set forth above, they shall be effective three (3) business days after being deposited in the United States mail. Any party may change its address for such communications by giving notice thereof to the other party in conformity with this Section.
 
6.8  Time.    Time is of the essence of this Warrant.
 
6.9  Construction of Agreement.    A reference in this Warrant to any Section shall include a reference to every Section the number of which begins with the number of the Section to which reference is specifically made (e.g., a reference to Section 3 shall include a reference to Sections 3.5 and 3.7). The titles and headings herein are for reference purposes only and shall not in any manner affect the interpretation of this Warrant.
 
6.10  No Endorsement.    Holder understands that no federal or state securities administrator has made any finding or determination relating to the fairness of investment in the Company or purchase of the Common Stock hereunder and that no federal or state securities administrator has recommended or endorsed the offering of securities by the Company hereunder.
 
6.11  Pronouns.    All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine or neuter, singular or plural, as the identity of the person, persons, entity or entities may require.

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6.12  Further Assurances.    Each party agrees to cooperate fully with the other parties and to execute such further instruments, documents and agreements and to give such further written assurances, as may be reasonably requested by any other party to better evidence and reflect the transactions described herein and contemplated hereby, and to carry into effect the intents and purposes of this Warrant.
 
6.13  Amendment and Supersession.    This Warrant, executed on September 11, 2002, pursuant to an assignment on July 11, 2002 from Cagan McAfee Capital Partners, LLC to Alta Partners Discount Convertible Arbitrage Holdings, Ltd. replaces that certain Warrant executed on July 1, 2002 that amended and superseded, in respect of the 100,000 shares of Common Stock covered hereby, that certain Warrant issued March 1, 2002 to Cagan McAfee Capital Partners, LLC, after giving effect to the reverse 1 for 5 stock split that the Company effected on June 27, 2002.
 
P-COM, INC.,
a Delaware Corporation
By:
  
/s/    LEIGHTON J. STEPHENSON        
   
Leighton J. Stephenson
Chief Financial Officer
 
ALTA PARTNERS DISCOUNT CONVERTIBLE ARBITRAGE HOLDINGS, LTD.
By:
  
/s/    DAVID GOLDSTEIN        
   
David Goldstein
Chief Financial Officer
Creedon Keller Partners

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Exhibit A-1
 
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
BY CASH PAYMENT OF WARRANT PRICE
 
DATE:                        
 
P-Com, Inc.
  
Aggregate Price of Warrant
  
$                                
3175 S. Winchester Boulevard
  
Before Exercise:
  
$                                
Campbell, CA 95008
  
Aggregate Price
  
$                                
Attn: Chief Financial Officer
  
Being Exercised:
  
$                                
   
Warrant Price: $                         per share
   
Number of Shares of Common Stock to be Issued
Under this Notice:                                             
   
Remainder Aggregate
Price (if any) After Issuance: $                        
 
CASH EXERCISE
 
Gentlemen:
 
The undersigned registered Holder of the Common Stock Warrant delivered herewith (“Warrant”), hereby irrevocably exercises such Warrant for, and purchases thereunder, shares of the Common Stock of P-Com, Inc., a Delaware corporation, as provided below. Capitalized terms used herein, unless otherwise defined herein, shall have the meanings given in the Warrant. The portion of the Aggregate Price (as defined in the Warrant) to be applied toward the purchase of Common Stock pursuant to this Notice of Exercise is $            , thereby leaving a remainder Aggregate Price (if any) equal to $                        . Such exercise shall be pursuant to the cash exercise provisions of Section 2.1 of the Warrant. Therefore, Holder makes payment with this Notice of Exercise by way of                          in the amount of $                        . Such amount is payment in full under the Warrant for                          shares of Common Stock based upon the Warrant Price of $                     per share, as currently in effect under the Warrant. Holder requests that the certificates for the purchased shares of Common Stock be issued in the name of and delivered to “                            ”. To the extent the foregoing exercise is for less than the full Aggregate Price, a Replacement Warrant representing the remainder of the Aggregate Price and otherwise of like form, tenor and effect should be delivered to Holder along with the share certificates evidencing the Common Stock issued in response to this Notice of Exercise.
 
By:
  
   
[NAME]
 
NOTE
 
The execution to the foregoing Notice of Exercise must exactly correspond to the name of the Holder on the Warrant.

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Exhibit A-2
 
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
PURSUANT TO NET ISSUE (“CASHLESS”) EXERCISE PROVISIONS
 
DATE                              
 
P-Com, Inc.
  
            Aggregate Price of Warrant
  
$                            
3175 S. Winchester Boulevard
  
            Before Exercise:
  
$                            
Campbell, CA 95008
  
            Aggregate Price
  
$                            
Attn: Chief Financial Officer
  
            Being Exercised:
  
$                            
   
Warrant Price: $                         per share
   
Number of Shares of Common Stock to be Issued
Under this Notice:                                             
   
Remainder Aggregate
Price (if any) After Issuance: $                        
 
CASHLESS EXERCISE
 
Gentlemen:
 
The undersigned, registered Holder of the Common Stock Warrant delivered herewith (“Warrant”), hereby irrevocably exercises such Warrant for, and purchases thereunder, shares of the Common Stock of P-Com, Inc., a Delaware corporation, as provided below. Capitalized terms used herein, unless otherwise defined herein, shall have the meanings given in the Warrant. The portion of the Aggregate Price (as defined in the Warrant) to be applied toward the purchase of Common Stock pursuant to this Notice of Exercise is $                    , thereby leaving a remainder Aggregate Price (if any) equal to $                    .Such exercise shall be pursuant to the net issue exercise provisions of Section 2.2 of the Warrant; therefore, Holder makes no payment with this Notice of Exercise. The number of shares to be issued pursuant to this exercise shall be determined by reference to the formula in Section 2.2 of the Warrant which, by reference to Section 2.3, requires the use of the current per share fair market value of the Company’s Common Stock. The current fair market value of one share of the Company’s Common Stock shall be determined in the manner provided in Section 2.3, which amount has been determined or agreed to by Holder and the Company to be $                        , which figure is acceptable to Holder for calculations of the number of shares of Common Stock issuable pursuant to this Notice of Exercise. Holder requests that the certificates for the purchased shares of Common Stock be issued in the name of and delivered to “                        ”. To the extent the foregoing exercise is for less than the full Aggregate Price of the Warrant, a replacement Warrant representing the remainder of the Aggregate Price (and otherwise of like form, tenor and effect) shall be delivered to Holder along with the share certificate evidencing the Common Stock issued in response to this Notice of Exercise.
 
By:
  
   
[NAME]
 
NOTE
 
The execution to the foregoing Notice of Exercise must exactly correspond to the name of the Holder on the Warrant.

9

 
INVESTMENT REPRESENTATION STATEMENT
 
PURCHASER:
  
ALTA PARTNERS DISCOUNT CONVERTIBLE ARBITRAGE HOLDINGS, LTD.
COMPANY:
  
P-COM, INC.
SECURITY:
  
WARRANTS FOR COMMON STOCK
AMOUNT:
  
100,000 WARRANTS
DATE:
  
JULY 1, 2002
 
In connection with the purchase of the Securities, the Purchaser represents to P-COM, Inc. the following:
 
(a)  I am aware of P-COM, Inc.’s business affairs and financial condition, and have acquired sufficient information about P-COM, Inc. to reach an informed and knowledgeable decision to acquire the Securities. I am purchasing these Securities for my own account for investment purposes only and not with a view to, or for the resale in connection with, any “distribution” thereof for purposes of the Securities Act of 1933 (“Securities Act”).
 
(b)  I understand that the Securities have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of my investment intent as expressed herein.
 
(c)  I further understand that the Securities must be held indefinitely unless subsequently registered under the Securities Act or unless an exemption from registration is otherwise available. In addition, I understand that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel for the Purchaser satisfactory to P-COM, Inc. or receipt of a no-action letter from the Securities and Exchange Commission.
 
(d)  I am aware of the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions, if applicable, including, among other things: the availability of certain public information about the Partnership; the resale occurring not less than one year after the party has purchased and paid for the securities to be sold; the sale being made through a broker in an unsolicited “broker’s transaction” or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and the amount of securities being sold during any three month period not exceeding the specified limitations stated therein.
 
(e)  I further understand that at the time I wish to sell the Securities there may be no public market upon which to make such a sale, and that, even if such a public market then exists, P-COM, Inc. may not be satisfying the current public information requirements of Rule 144, and that, in such event, I may be precluded from selling the Securities under Rule 144 even if the one-year minimum holding period had been satisfied.
 
(f)  I further understand that in the event all of the requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the SEC has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.
 
 
Alta Partners Discount Convertible Arbitrage Holdings, Ltd.
 
Date: July 1, 2002

10
EX-5.1 6 dex51.htm OPINION OF BROBECK, PHLEGER AND HARRISON LLP Prepared by R.R. Donnelley Financial -- Opinion of Brobeck, Phleger and Harrison LLP
 
EXHIBIT 5.1
 
[BROBECK, PHLEGER & HARRISON LLP LETTERHEAD]
 
September 25, 2002
 
P-Com, Inc.
3175 S. Winchester Boulevard
Campbell, CA 95008
 
 
Re:
 
P-Com, Inc. Registration Statement on Form S-3 for Resale of 600,000 Shares of Common Stock
 
Ladies and Gentlemen:
 
We have acted as counsel to P-Com, Inc., a Delaware corporation (the “Company”), in connection with the registration for resale of 600,000 shares of Common Stock (the “Shares”), as described in the Company’s Registration Statement on Form S-3 (“Registration Statement”) filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Act”).
 
This opinion is being furnished in accordance with the requirements of Item 16 of Form S-3 and Item 601(b)(5)(i) of Regulation S-K.
 
We have reviewed the Company’s charter documents, the corporate proceedings taken by the Company in connection with the original issuance and sale of the Shares, and a certificate of a Company officer regarding (among other things) the Company’s receipt of consideration upon the original issuance and sale of the Shares. Based on such review, we are of the opinion that the Shares are duly authorized, validly issued, fully paid and nonassessable.
 
We consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to this firm under the caption “Legal Matters” in the prospectus, which is part of the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Act, the rules and regulations of the Securities and Exchange Commission promulgated thereunder, or Item 509 of Regulation S-K.
 
This opinion letter is rendered as of the date first written above and we disclaim any obligation to advise you of facts, circumstances, events or developments which hereafter may be brought to our attention and which may alter, affect or modify the opinion expressed herein. Our opinion is expressly limited to the matters set forth above and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company or the Shares.
 
Very truly yours,
/s/    Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
EX-23.1 7 dex231.htm CONSENT OF PRICEWATERHOUSECOOPERS LLP Prepared by R.R. Donnelley Financial -- Consent of PricewaterhouseCoopers LLP
 
EXHIBIT 23.1
 
CONSENT OF INDEPENDENT ACCOUNTANTS
 
We hereby consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated March 29, 2002 relating to the consolidated financial statements and financial statement schedule, which appears in P-Com, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2001. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
 
/s/    PricewaterhouseCoopers LLP
 
PricewaterhouseCoopers LLP
San Jose, California
September 19, 2002
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