Performance-Based Warrant Compensation Agreement between P-Com, Inc. and Sam Smookler

Summary

P-Com, Inc. has established a special compensation plan for its President and CEO, Sam Smookler, to encourage short-term business success. Under this plan, Sam may receive up to 5,000,000 warrants to purchase company stock at the current market price, depending on the company's cash balance and revenue for 2004. The warrants vest over time, provided certain financial targets are met and Sam remains employed. This plan is in addition to his existing compensation.

EX-10.1 4 v05681_ex10-1.txt June 25, 2004 Sam Smookler President and Chief Executive Officer P-Com, Inc. 3175 South Winchester Boulevard Campbell, CA 95008 Dear Sam: We are pleased to confirm that the Compensation Committee has approved a special performance-based compensation plan created to incentivize you to drive P-Com, Inc.'s short-term business success thereby helping to ensure the viability of P-Com, Inc. (the "Company"). The substantive terms of the plan are described below. If you agree to the terms outlined in this letter, please countersign the enclosed copy of this letter and return it to the Corporate Secretary. 1. Under the plan, the Company will issue 5,000,000 warrants to purchase the Company's Common Stock at the market price on the issuance date. After two performance criteria have been satisfied, the warrants will become exercisable. First, the cash balance at the end of the 2004 fiscal year must be at least $2,000,000. If this criterion is not satisfied, then none of the warrants shall become exercisable and they shall automatically expire. Once the cash level criterion is satisfied, the Company's revenue level achieved for the 2004 fiscal year shall determine the number of warrants that shall become executable. Therefore, if the revenue achieved: a. is at least $30,000,000, then 2,000,000 warrants will be eligible; or b. is at least $33,000,000, then 3,000,000 warrants will be eligible; or c. is at least $36,000,000, then 4,000,000 warrants will be eligible; or d. is at least $40,000,000, then 5,000,000 warrants will be eligible. The eligible warrants shall become executable in accordance with the following schedule: a. one-fourth of the warrants shall become executable upon the completion of twelve (12) months of continuous service measured from the date of grant (the "Initial Vesting Period"); and b. the balance of the warrants shall become executable in thirty-six (36) successive equal monthly installments subject to your continued services after the end of the Initial Vesting Period. This performance-based compensation plan is in addition to any other compensation to which you are entitled under your employment agreement with the Company. Sincerely, THE COMPENSATION COMMITTEE OF P-COM, INC. /s/ Frederick Fromm - ----------------------------------------- Frederick Fromm /s/ John Hawkins - ----------------------------------------- John Hawkins AGREED: /s/ Sam Smookler - ----------------------------------------- Sam Smookler President & Chief Executive Officer