exv10w12



 





Exhibit 10.12



EXECUTION COPY




AGREEMENT AND PLAN OF
MERGER




by and among




RADYNE COMSTREAM INC., a Delaware corporation,




XICOM ACQUISITION INC.,

a California corporation,




XICOM TECHNOLOGY INC.,

a California corporation,




THE XICOM SHAREHOLDERS SIGNATORY HERETO,




and




WALTER C. WOOD, solely in his capacity as the Shareholders’ Representative




Dated as of March 2, 2005








 









 







MERGER AGREEMENT




     This MERGER AGREEMENT (the “Agreement”) is made as of March 2, 2005 (to be effective
in accordance with Section 1.8) by and among Radyne ComStream Inc., a Delaware corporation
(“Radyne”); Xicom Acquisition Inc., a California corporation wholly owned by Radyne
(“Merger Sub”); Xicom Technology Inc., a California corporation (“Xicom”); Walter
C. Wood and Ronald J. Sterns (collectively, the “Shareholders”); the additional
shareholders of Xicom listed on Appendix I hereto for purposes of Section 1.12 and
Article 4 only (collectively with the Shareholders, the “Xicom Shareholders”); and Walter C. Wood, solely in his
capacity as the Shareholders’ Representative (as defined in Section 1.12).




RECITALS




     A. Radyne wishes to acquire all of the capital stock of Xicom from the Xicom Shareholders.



     B. Radyne has caused the formation of Merger Sub for the purpose of accomplishing a triangular
merger with Xicom.



     C. The parties have determined that it is in their respective best interests to merge Merger
Sub with and into Xicom (the “Merger”) and to undertake such other actions described
herein, all on the terms and subject to the conditions set forth in this Agreement.



     D. The Board of Directors of Xicom has (i) determined that the Merger is fair to, and in the
best interests of, Xicom and the Xicom Shareholders; (ii) unanimously approved and adopted this
Agreement, the Merger, and the other transactions contemplated by this Agreement; and (iii)
determined to unanimously recommend that the Xicom Shareholders approve and adopt this Agreement
and the Merger. The Shareholders have executed this Agreement and this Agreement and the Merger
will be submitted for approval by the other Xicom Shareholders.



     E. The Boards of Directors of each of Radyne and Merger Sub have (i) determined that the
Merger is consistent with and in furtherance of the long-term business strategy of Radyne and fair
to, and in the best interests of, Radyne, Merger Sub and their respective stockholders, and (ii)
approved and adopted this Agreement, the Merger, and the other transactions contemplated by this
Agreement.



STATEMENT OF AGREEMENT




     NOW, THEREFORE, for good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:



ARTICLE 1




THE MERGER




     In connection with the Merger, the respective boards of directors of Radyne, Merger Sub and
Xicom have, by resolutions duly adopted, approved the following provisions of this Article
1 as the agreement and plan of merger required by the applicable provisions of the California
Corporations Code (“California Law”):



     1.1 The Merger. At the Effective Time (as defined in Section 1.3), in
accordance with this Agreement and California Law, Merger Sub shall be merged with and into Xicom,
the separate existence of Merger Sub (except as such existence may be continued by operation of
law) shall cease, and Xicom shall continue as the surviving corporation under the corporate name



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it possesses immediately prior to the Effective Time. Xicom, in its capacity as the
corporation surviving the Merger, sometimes is referred to herein as the “Surviving
Corporation.”




     1.2 Effect of the Merger. The Surviving Corporation shall possess all the rights,
privileges, immunities and franchises, of a public as well as of a private nature, of each of
Merger Sub and Xicom (collectively, the “Constituent Corporations”); all property, real,
personal and mixed, and all accounts payable arising in the ordinary course of business and accrued
expenses due on whatever account, and all debts, liabilities and duties due to each of the
Constituent Corporations shall be transferred to and vested in the Surviving Corporation without
further act or deed; and the Surviving Corporation shall be responsible and liable for all
liabilities and obligations of each of the Constituent Corporations, in each case in accordance
with California Law, but subject, as between the parties, to the provisions below.



     1.3 Consummation of the Merger. As soon as is practicable after the satisfaction or
waiver of the conditions set forth in Article 7, and in no event later than five business
days after such satisfaction or waiver, the parties hereto will cause an agreement of merger (the
“Agreement of Merger”), along with certificates of approval of the Agreement of Merger, to
be filed with the Secretary of State of the State of California in accordance with California Law.
The Merger shall be effective at such time as the Agreement of Merger is duly filed. The date and
time when the Merger shall become effective is referred to as the “Effective Time.”



     1.4 Articles of Incorporation and Bylaws; Directors and Officers. The Articles of
Incorporation of the Surviving Corporation, as in effect immediately prior to the Effective Time,
shall be amended and restated to read the same as the Articles of Incorporation of Merger Sub as in
effect immediately prior to the Effective Time, except that Section 1 of the amended and restated
Articles of Incorporation of the Surviving Corporation, instead of reading the same as Section 1 of
the Articles of Incorporation of Merger Sub, shall read as follows: “The name of this corporation
is Xicom Technology Inc.” The Bylaws of Xicom as the Surviving Corporation shall be amended to
read the same as the Bylaws of Merger Sub as in effect immediately prior to the Effective Time,
except that all references to Merger Sub in the Bylaws of the Surviving Corporation shall be
changed to refer to Xicom Technology Inc. The directors of Merger Sub holding office immediately
prior to the Effective Time shall be the directors of the Surviving Corporation immediately after
the Effective Time, together with Walter C. Wood. The officers of Xicom holding office immediately
prior to the Effective Time shall be the officers (holding the same offices as they held with
Xicom) of the Surviving Corporation immediately after the Effective Time, except that Robert C.
Fitting shall become the Chairman of the Board of the Surviving Corporation and Malcolm C. Persen
shall become the Secretary of the Surviving Corporation.



     1.5 Conversion of Securities. At the Effective Time, by virtue of the Merger and
without any action on the part of Merger Sub, Xicom or the holders of any of the following
securities:



          (a) Each share of common stock, no par value per share, of Xicom (the “Xicom Common
Stock”) issued and outstanding immediately prior to the Effective Time shall automatically be
canceled and extinguished and converted into and become a right to receive an




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amount equal to the Merger Consideration divided by the number of shares of Xicom Common Stock
outstanding as of the Effective Time.




The “Merger Consideration,” in the aggregate, means (i) $39,028,700 in cash (the “Cash
Consideration”), subject to adjustment as set forth in Section 1.6, plus (ii) the
number of shares of Radyne Common Stock equal to (A) $2,000,000 divided by (B) the Share Closing
Price (the “Merger Shares”).




The “Share Closing Price” shall be equal to the average reported closing price for Radyne
Common Stock on the Nasdaq National Market as reflected in the Western Edition of the Wall Street
Journal starting 20 trading days prior to and ending on the date of this Agreement.




          (b) The Merger Shares shall be adjusted to reflect fully the effect of any stock split,
reverse split, stock dividend (including any dividend or distribution of securities convertible
into Radyne Common Stock), reorganization, recapitalization or other like change with respect to
Radyne Common Stock occurring after the date hereof and prior to the Effective Time.




          (c) No fraction of a share of Radyne Common Stock will be issued, but in lieu thereof each
holder of shares of Xicom Common Stock who would otherwise be entitled to a fraction of a share of
Radyne Common Stock (after aggregating all fractional shares of Radyne Common Stock to be received
by such holder) shall receive from Radyne an amount of cash (rounded to the nearest whole cent)
equal to the product of (i) such fraction, multiplied by (ii) the Share Closing Price.




          (d) Each share of Xicom Common Stock issued and outstanding immediately prior to the Effective
Time and held in the treasury of Xicom shall automatically be canceled and extinguished and no
payment shall be made with respect thereto.




          (e) Each share of common stock, par value $.001 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall automatically be converted into and
become one validly issued, fully paid and nonassessable share of common stock, par value $.001 per
share, of the Surviving Corporation.




     1.6 Adjustments to the Merger Consideration.



          (a) The Merger Consideration shall be increased or decreased by the sum of the following:




               (i) Increased or decreased, as the case may be, by the amount by which the net working capital
(total current assets less total current liabilities) less long term debt (“Net Working
Capital”) reflected on the Final Closing Balance Sheet (defined below) is greater or less than
$5,701,855, as calculated consistent with the calculations reflected in the Computation of Net
Working Capital attached hereto as Appendix II;



               (ii) Decreased by the amount of any bonus payments and related payroll taxes to be paid to
employees of Xicom as set forth on Schedule 1.6(a)(ii); and



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               (iii) Decreased by the amount of costs and expenses incurred by Xicom or the Xicom
Shareholders in connection with the preparation of this Agreement and the Merger, but only to the
extent that such amounts are accounted for in the Final Closing Balance Sheet (without
duplication).



          (b) Any adjustment shall be made to the Cash Consideration.




          (c) For the purpose of making an initial determination of Net Working Capital, Xicom will
deliver to Radyne by April 11, 2005, a balance sheet as of April 2, 2005, prepared on a basis
consistent with the October Balance Sheet (as defined in Section 3.5), and in accordance
with generally accepted accounting principles (“GAAP”) (the “Preliminary Closing
Balance Sheet”).




          (d) Within 75 days from the date the Preliminary Closing Balance Sheet is delivered to Radyne
(subject to extension as provided in Section 5.1(i)), Radyne will deliver to Xicom a
balance sheet reflecting its determination of actual balances for Xicom as of April 2, 2005,
prepared on a basis consistent with the October Balance Sheet and the Preliminary Closing Balance
Sheet, in accordance with GAAP and SEC Regulation S-X, and audited or reviewed (at Radyne’s
election) by Radyne’s independent public accounting firm (the “Final Closing Balance
Sheet”), together with a calculation of Net Working Capital and the final Merger Consideration.




          (e) The Final Closing Balance Sheet will become final and binding on the parties, absent
fraud, mistake or concealment, unless within five business days following delivery thereof to
Xicom, Xicom notifies Radyne in writing that Xicom objects to it. If Xicom does not object to the
Final Closing Balance Sheet, the parties shall promptly (within five business days) consummate the
Merger.




          (f) If Xicom does object to the Final Closing Balance Sheet, and the difference between (i)
the Net Working Capital disclosed on the Final Balance Sheet and (ii) the Net Working Capital set
forth on the Preliminary Closing Balance Sheet, is an amount that is less than or equal to
$500,000, then the parties shall consummate the Merger within five business days, and the amount in
dispute shall be subject to arbitration in the manner set forth in Section 1.6(h) below.




          (g) If Xicom does object to the Final Closing Balance Sheet, and the difference between (i)
the Net Working Capital disclosed on the Final Balance Sheet and (ii) the Net Working Capital set
forth on the Preliminary Closing Balance Sheet, is an amount that is greater than $500,000, then
(A) the parties may mutually agree to consummate the Merger within five business days, and the
amount in dispute shall be subject to arbitration in the manner set forth in Section 1.6(h)
below, or (B) either party may, by written notice within five business days of the delivery of the
Final Closing Balance Sheet, terminate this Agreement, in which event the cost of the audit thereof
shall be borne by Xicom (and all other expenses incurred by Xicom in accordance with Section
6.1).




          (h) Any dispute under this Section 1.6 shall be submitted to an independent accounting
firm of national reputation mutually acceptable to the Shareholders’ Representative and Radyne
(other than the firm then currently serving as auditors for Radyne or Xicom) (the




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“Independent Accountant”). If the Shareholders’ Representative and Radyne are unable
to agree on the Independent Accountant, then, within 45 days following the delivery of the Final
Closing Balance Sheet to the Shareholders’ Representative, the Shareholders’ Representative and
Radyne shall request the American Arbitration Association (“AAA”) to appoint the
Independent Accountant. The determination of the Independent Accountant will be final and binding
on all parties, and judgment on the determination may be enforced in any court having jurisdiction.
If the results of the arbitration indicate that the amount of Net Working Capital set forth in the
Final Closing Balance Sheet was understated by the greater of $100,000 or 10% of the difference
between Net Working Capital disclosed in the Final Closing Balance Sheet and the amount determined
by the Independent Accountant, then the expenses of such arbitration shall be paid entirely by
Raydne. If the results of the arbitration indicate that the amount of Net Working Capital set
forth in the Preliminary Closing Balance Sheet was overstated by the greater of $100,000 or 10% of
the difference between Net Working Capital disclosed in the Preliminary Closing Balance Sheet and
the amount determined by the Independent Accountant, then the expenses of such arbitration shall be
paid entirely by the Shareholders. In all other cases, the expenses of the arbitration shall be
shared by the parties, and each will bear its own attorneys fees and costs. Upon determination of
the Final Closing Balance Sheet pursuant to this Section 1.6, Radyne will pay the Xicom
Shareholders any additional payment required by Section 1.5(a) or, if payment is due to
Radyne pursuant hereto, Radyne and the Shareholders’ Representative will instruct the escrow agent
pursuant to the Escrow Agreement (as defined in Section 1.7) to release such funds to
Radyne.




     1.7 Escrow.



          (a) At Closing, Radyne, the Shareholders, the Shareholders’ Representative and an escrow
agent, to be chosen by mutual agreement of the Radyne and the Shareholders’ Representative, shall
enter into an escrow agreement in substantially the form attached hereto as Exhibit A (the
“Escrow Agreement”). The escrow agent will hold [ * ] (the “Escrow Amount”) in
escrow (the “Escrow Fund”) as security to cover potential losses or other claims for which
Radyne is entitled to indemnification or recovery pursuant to Article 8, and for
adjustments to the Merger Consideration in accordance with Section 1.6 above. Subject to
any claims made by Radyne, the Escrow Amount will be released to the Xicom Shareholders on the
second anniversary of the Closing.




          (b) The parties hereto hereby acknowledge and agree that the Escrow Amount is intended to be
treated as an installment obligation for purposes of Section 453 of the Code and, unless
required by applicable law, no party shall take any action or filing position inconsistent with
such characterization. The parties hereto further agree that, subject to any future Treasury
Regulations or other changes in the law, pursuant to Proposed Treasury Regulation Section 1.468B-8,
for tax reporting purposes, all items of income, deduction and credit relating to the Escrow Amount
or any portion thereof in any tax year shall be reported as allocated to Radyne with respect to all
periods on or prior to the date that the distribution of the Escrow Amount (or portion thereof) is
determined, and with respect to all periods thereafter to Radyne and the Xicom Shareholders in
accordance with their respective interests in the










	*   Confidential information on this page has been omitted
and filed separately with the Securities Exchange Commission pursuant to a
Confidential Treatment Request.




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distribution in accordance with Proposed Treasury Regulation Section 1.468B-8. Any portion of
the Escrow Amount paid to the Xicom Shareholders shall be included as a payment of the purchase
consideration for tax purposes (to the extent not treated as imputed interest).




     1.8 Effectiveness and Closing.



          (a) The parties acknowledge that Xicom has not delivered complete disclosure schedules, as
contemplated in Article 3, nor has Radyne interviewed employees or third parties (such as
customers, suppliers, dealers, sales representatives, lenders and lessors). Xicom agrees that (i)
within five business days of the date hereof (the “Due Diligence Delivery Date”), it will
provide complete disclosure schedules, together with all underlying documentation or information to
Radyne and (ii) it will provide access to its employees and third parties for the purpose of Radyne
completing interviews thereof.




          (b) This Agreement will become effective only if Radyne provides the notice set forth in
subsection (c) below (the “Effectiveness Notice”), which it must deliver, if at
all, within five business days of the Due Diligence Delivery Date.




          (c) If issued, the Effectiveness Notice shall provide as follows:



“To:   Walter C. Wood, CEO of Xicom Technology Inc.

From: Robert C. Fitting, CEO of Radyne ComStream Inc.




     By signing below, Radyne confirms that it has completed its review of the
disclosure schedules provided by Xicom to Radyne and Merger Sub, and the
underlying documentation and information set forth on such disclosure
schedules, as contemplated in that certain Agreement and Plan of Merger dated
March 2, 2005, without prejudice to our other right thereunder.


Dated: __________, 2005





Robert C.
Fitting”



The parties agree that the purpose of the above notice is merely to define the date of the
effectiveness of this Agreement and that Radyne’s provision of such notice in no way alters,
modifies or diminishes the representations, warranties, covenants or agreements of Xicom or the
Xicom Shareholders and the conditions to Radyne’s obligation to close contained in this Agreement
and the agreements delivered hereunder.




          (d) If the Effectiveness Notice is not provided within the time set forth in subsection
(b) above, or if Radyne determines not pursue this transaction and provides written notice
to this effect to Xicom within such period, then this Agreement shall terminate, as provided in
Article 9, and each party shall bear their own expenses in accordance with Section
6.1.




          (e) The closing (the “Closing”) of the transactions contemplated by this Agreement
shall occur as soon as each of the conditions to Closing contained in Article 7 are




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fulfilled or waived at the offices of Snell & Wilmer L.L.P., One Arizona Center, Phoenix,
Arizona 85004, or at such other place or at such other time as the parties may mutually agree upon.
The Closing shall take place on the same date as the Effective Time.




     1.9 Intentionally omitted.



     1.10 Delivery of Certificates; Payment of the Cash Consideration; Delivery of Escrow
Amount. At the Closing, Radyne shall (i) instruct its transfer agent to issue a stock
certificate or certificates representing the Merger Shares to each Xicom Shareholder entitled
thereto pursuant to Section 1.5(a); (ii) instruct its transfer agent to provide the Cash
Consideration that each Xicom Shareholder is entitled to pursuant to Section 1.5(a), and
any payment of cash in lieu of fractional shares pursuant to Section 1.5(c) (less any
amounts required to be withheld from such cash under foreign, federal, state or local laws) only
against receipt for cancellation of such Xicom Shareholder’s certificate or certificates
representing shares of Xicom Common Stock or an affidavit acceptable to Radyne from such Xicom
Shareholder; and (iii) deliver the Escrow Amount to the escrow agent pursuant to the terms of the
Escrow Agreement.



     1.11 Taking of Necessary Action; Further Action. Radyne and Merger Sub, on the one
hand, and Xicom and the Shareholders, on the other hand, shall use all reasonable efforts to take
all such actions (including without limitation actions to cause the satisfaction of the conditions
of the other to effect the Merger) as may be necessary or appropriate in order to effectuate the
Merger as promptly as possible. If, at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full possession of all the rights, privileges, immunities and franchises of the
Constituent Corporations, or fully subject the Surviving Corporation to all debts and obligations
of the Constituent Corporations, the officers and directors of the Surviving Corporation are fully
authorized in the name of the Constituent Corporations or otherwise to take, and shall take, all
such actions.



     1.12 Shareholders’ Representative.



          (a) The Xicom Shareholders hereby irrevocably constitute and appoint Walter C. Wood (the
“Representative” or the “Shareholders’ Representative”) to act as their true and
lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him and
in his name, place and stead, in any and all capacities, to execute any and all agreements and
documents required or contemplated by this Agreement, including any amendments or waivers hereto,
on behalf of the Xicom Shareholders, and to deal with all claims under this Agreement, including
any claims for indemnification, and settlements in respect thereto and to notify, negotiate and
resolve any and all issues concerning the Final Closing Balance Sheet with Radyne. If, for any
reason, Mr. Wood is incapacitated or unable to act, Ronald J. Sterns is hereby appointed as his
successor to act as the Representative. Radyne shall be entitled to send all notices to, and to
rely upon all consents and approvals given, and all other actions taken by the incumbent
Representative until such time as Radyne receives actual notice of such Representative’s death or
incapacity. Radyne shall be entitled to rely upon the response of the Representative in all
matters pertaining to the subject matter hereof, including, without limitation, any consent or
approval provided or contemplated hereunder to be given by or on behalf of, or obtained from, the
Xicom Shareholders. Notice to or service upon the




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Representative shall be deemed to constitute good and sufficient notice or service upon all of
the Xicom Shareholders for all matters, including without limitation, all notices of or demands for
legal processes.




          (b) The following represents an agreement solely among the Xicom Shareholders and the
Shareholders’ Representative, and none of Radyne, Merger Sub or Xicom is a party hereto: Neither
the Shareholders’ Representative nor any of its directors, officers, agents or employees, if any,
shall be liable to any person for any error of judgment, or any action taken, suffered or omitted
to be taken under this Agreement or the Escrow Agreement, except in the case of its gross
negligence, bad faith or willful misconduct. The Shareholders’ Representative may consult with
legal counsel, independent public accountants and other experts selected by it. The Shareholders’
Representative shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or the Escrow Agreement.
As to any matters not expressly provided for in this Agreement or the Escrow Agreement, the
Shareholders’ Representative shall not exercise any discretion or take any action. Each Xicom
Shareholder shall indemnify and hold harmless and reimburse the Shareholders’ Representative from
and against such Xicom Shareholder’s ratable share of any and all liabilities, losses, damages,
claims, costs or expenses suffered or incurred by the Shareholders’ Representative arising out of
or resulting from any action taken or omitted to be taken by the Shareholders’ Representative under
this Agreement or the Escrow Agreement, other than such liabilities, losses, damages, claims, costs
or expenses arising out of or resulting from the Shareholders’ Representative’s gross negligence,
bad faith or willful misconduct.




ARTICLE 2




REPRESENTATIONS AND WARRANTIES OF RADYNE AND MERGER SUB




     Radyne and Merger Sub hereby represent and warrant to Xicom and the Shareholders that, as of
the date hereof, and again at the Effective Time:



     2.1 Organization and Qualification. Each of Radyne and Merger Sub is a corporation
duly organized, validly existing and in good standing under the laws of the State of Delaware, and
has the requisite corporate power and authority to own and operate its properties and to carry on
its business as now conducted in every jurisdiction where the failure to do so would cause a Radyne
Material Adverse Change. The term “Radyne Material Adverse Change” as used in this
Agreement means any change in or effect on the business that is materially adverse to the business,
operations, condition (financial or otherwise), customer, employee, supplier or franchise
relations, assets (tangible or intangible), liabilities or results of operations taken as a whole,
except for any such changes or effects principally resulting from or principally arising in
connection with (i) any occurrence or condition affecting Radyne’s industry generally; (ii) any
changes in general economic conditions; or (iii) the effect of the public announcement or pendency
of the transactions contemplated by this Agreement on customers, suppliers, advertisers, employees
or revenues of Radyne.



     2.2 Authority Relative to This Agreement. Each of Radyne and Merger Sub has the
requisite corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement by Radyne and Merger



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Sub and the consummation by Radyne and Merger Sub of the transactions contemplated hereby have
been duly authorized by Radyne and Merger Sub, and no other corporate proceedings on the part of
Radyne or Merger Sub are necessary to authorize this Agreement and such transactions. This
Agreement has been duly executed and delivered by Radyne and Merger Sub and constitutes a valid and
binding obligation of each, enforceable in accordance with its terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or other similar laws relating to
the enforcement of creditors’ rights generally and by general principles of equity. Neither Radyne
nor Merger Sub is subject to, or obligated under, any provision of (a) its Certificate of
Incorporation or its Bylaws; (b) any agreement, arrangement or understanding; (c) any license,
franchise or permit; or (d) any law, regulation, order, judgment or decree, that would be breached,
or violated, or in respect of which a right of termination or acceleration would arise or any
encumbrance on any of its or any of its subsidiaries’ assets would be created, by its execution,
delivery and performance of this Agreement and the consummation by it of the transactions
contemplated hereby.




     2.3 Validity of Stock. The Merger Shares shall, when issued: (i) be duly authorized,
validly issued, fully paid and nonassessable, and (ii) free of liens and encumbrances created by
any person or entity other than the Xicom Shareholders, except for restrictions on transfer under
applicable federal securities laws, including Rule 144 promulgated under the Securities Act of 1933
(the “Securities Act”).



     2.4 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any federal, state or local
governmental authority on the part of Radyne or Merger Sub is required in connection with the
consummation of the transactions contemplated by this Agreement, except the filing of the Agreement
of Merger under California Law and filings to be made pursuant to Nasdaq National Market rules and
federal and state securities laws, all of which shall be timely made.



     2.5 SEC Documents. Since January 1, 2004, Radyne has filed with the Securities and
Exchange Commission (the “SEC”) and made publicly available various Reports on Form 8-K,
10-Q and 10-K and a definitive proxy statement for its 2004 Annual Meeting of Stockholders (such
documents, as amended, the “Radyne SEC Documents”). As of their respective dates, the
Radyne SEC Documents complied in all material respects with the requirements of the Securities Act,
the Securities Exchange Act of 1934 (the “Exchange Act”), and the rules and regulations of
the SEC applicable thereto, and none of Radyne SEC Documents contained, at the time they were
filed, any untrue statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.



     2.6 Nasdaq National Market. The Radyne Common Stock is listed on the Nasdaq National
Market. Neither Radyne, nor Merger Sub has knowledge of any events, facts or circumstances
currently in existence which will result in a delisting of the Radyne Common Stock from the Nasdaq
National Market.



     2.7 Financial Statements. The financial statements included in the Radyne SEC
Documents complied as to form in all material respects with the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with GAAP and fairly and



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accurately present in all material respects in accordance with applicable requirements of GAAP
the consolidated financial position of Radyne and its consolidated subsidiaries as of their
respective dates and the consolidated results of operations and the consolidated cash flows of
Radyne and its consolidated subsidiaries for the periods presented therein (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as permitted by Rule 10-01
of SEC Regulation S-X and subject, in the case of unaudited statements, to normal recurring
adjustments, none of which were or are expected, individually or in the aggregate, to be material
in amount, and except as may be disclosed in any filing made by Radyne with the SEC prior to the
Effective Time).




     2.8 Sufficient Funds. Radyne has available sufficient funds to pay the Cash
Consideration and sufficient authorized but unissued shares of Radyne Common Stock to issue the
Merger Shares.



ARTICLE 3




REPRESENTATIONS AND WARRANTIES OF XICOM




     Xicom, hereby represents and warrants to Radyne and Merger Sub that the statements contained
in this Article 3 are true and correct except as set forth in the disclosure schedules
delivered by Xicom to Radyne and Merger Sub concurrently with the execution of this Agreement (or
within five business days of the date of execution of this Agreement as contemplated under
Section 1.8), as of the date hereof and again at the Effective Time (with representations
“to Xicom’s Knowledge” meaning to the knowledge of Xicom, and Walter C. Wood and Ronald J. Sterns,
solely in their capacity as officers of Xicom):



     3.1 Organization and Qualification. Xicom is a corporation duly organized, validly
existing and in good standing under the laws of the State of California, and has the requisite
corporate power and authority to own and operate its properties and to carry on its business as now
conducted, except where the failure to be so organized, existing or in good standing or to have
such corporate power and authority have not had, individually or in the aggregate, a Xicom Material
Adverse Change. Xicom is duly qualified to do business in every jurisdiction where the failure to
do so would cause a Xicom Material Adverse Change. The copies of Xicom’s Articles of Incorporation
and Bylaws which have been furnished by Xicom to Radyne prior to the date of this Agreement reflect
all amendments made thereto and are correct and complete. The term “Xicom Material Adverse
Change” as used in this Agreement means any change in or effect on the business that is
materially adverse to the business, operations, condition (financial or otherwise), customer,
employee, supplier or franchise relations, assets (tangible or intangible), liabilities or results
of operations taken as a whole, except for any such changes or effects principally resulting from
or principally arising in connection with (i) any occurrence or condition affecting Xicom’s
industry generally; (ii) any changes in general economic conditions; (iii) the effect of the public
announcement or pendency of the transactions contemplated by this Agreement on customers,
suppliers, advertisers, employees or revenues of Xicom; or (iv) matters specifically identified on
the disclosure schedules provided by Xicom to Radyne.



     3.2 Authority Relative to this Agreement. Xicom has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations hereunder. The



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execution and delivery of this Agreement by Xicom and the consummation by Xicom of the
transactions contemplated hereby have been duly authorized by the board of directors of Xicom and
have been duly approved by the Xicom Shareholders, and no other corporate proceedings on the part
of Xicom are necessary to authorize this Agreement and such transactions. This Agreement has been
duly executed and delivered by Xicom and, assuming the due authorization, execution and delivery by
Raydne and Merger Sub, constitutes a valid and binding obligation of Xicom, enforceable in
accordance with its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws relating to the enforcement of creditors’ rights
generally and by general principles of equity. Xicom is not subject to, or obligated under, any
provision of (a) its Articles of Incorporation or Bylaws; (b) any material agreement, arrangement
or understanding; (c) any license, franchise or permit; or (d) any law, regulation, order, judgment
or decree, that would be breached or violated, or in respect of which a right of termination or
acceleration would arise or any encumbrance on any of its assets would be created, by its
execution, delivery and performance of this Agreement and the consummation by it of the
transactions contemplated hereby.




     3.3 Capitalization and Voting Rights.



          (a) The authorized capital stock of Xicom consists of 20,000,000 shares of Xicom Common Stock
of which 10,060,000 will be issued and outstanding immediately prior to Effective Time.




          (b) As of the Effective Time, the shares of Xicom Common Stock will be owned of record by the
Xicom Shareholders, to Xicom’s Knowledge free and clear of all liens, encumbrances and security
interests, in the amounts as set forth on Schedule 3.3(b).




          (c) As of the Effective Time, the outstanding shares of Xicom Common Stock will have been duly
and validly authorized and issued, fully paid and nonassessable, and issued in accordance with the
registration or qualification provisions of the Securities Act and any relevant state securities
laws, or pursuant to valid exemptions therefrom.




          (d) There are no shares of preferred stock of Xicom authorized, issued or outstanding. There
are no outstanding options, warrants, rights (including conversion or preemptive rights) or
agreements for the purchase or acquisition from Xicom of any shares of its capital stock. Xicom is
not a party or subject to any agreement or understanding and, to Xicom’s Knowledge, there is no
agreement or understanding between any persons or entities, that affect or relate to the voting or
giving of written consents with respect to any security of Xicom.




     3.4 Governmental Consents. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any federal, state or local
governmental authority on the part of Xicom is required in connection with the consummation of the
transactions contemplated by this Agreement, except the filing of the Agreement of Merger under
California Law.



     3.5 Balance Sheet and Financial Statements. Xicom has provided Radyne with an audited
balance sheet of Xicom (the “October Balance Sheet”), dated as of October 3, 2004 (the
“Balance Sheet Date”), and statements of profit and loss, and cash flows for the periods
then



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ended (together, the “Financial Statements”). The Financial Statements were prepared
in accordance with GAAP and present fairly in all material respects the information purported to be
presented therein, subject to normal year-end accounting adjustments and the absence of footnote
disclosure. Except as set forth in the October Balance Sheet, Xicom has no liabilities or
obligations (whether accrued, absolute, contingent, unliquidated, known, unknown or otherwise),
other than (i) liabilities incurred in the ordinary course of business, and (ii) obligations under
contracts and commitments incurred in the ordinary course of business, which, in the case of both
subsection (i) and (ii), individually or in the aggregate, are not material to the
financial condition or operating results of Xicom.




     3.6 No Xicom Material Adverse Changes. Except as set forth on Schedule 3.6,
since the Balance Sheet Date, there has not been a Xicom Material Adverse Change in the business,
assets or prospects of Xicom. Without limiting the foregoing, since the Balance Sheet Date there
has not been:



          (a) any change in the assets, liabilities, financial condition, operating results or prospects
of Xicom from that reflected in the October Balance Sheet, except changes in the ordinary course of
business that have not been, in the aggregate, materially adverse;




          (b) any damage, destruction or loss, whether or not covered by insurance, materially and
adversely affecting the assets, properties, financial condition, operating results or business of
Xicom;




          (c) any waiver by Xicom of a material right or of a material debt owed to it;




          (d) any satisfaction or discharge of any lien, claim, or encumbrance in favor of Xicom, except
in the ordinary course of business and not material in amount or scope;




          (e) any termination of or amendment to a material contract or arrangement by which Xicom or
any of its assets or properties is bound;




          (f) any change in any compensation arrangement or agreement with any employee, except changes
made in the ordinary course of business and not material in amount or scope;




          (g) any sale, assignment or transfer of any patents, trademarks, copyrights, trade secrets or
other intangible assets other than nonexclusive licenses under its standard license terms in the
ordinary course of business;




          (h) any resignation or termination of employment of any key employee or officer of Xicom; or,
to Xicom’s Knowledge, any impending resignation or termination of employment of any key employee or
officer;




          (i) any loss of, material change in relationship with, or order cancellation by, any major
customer of Xicom;




          (j) any borrowing, or any mortgage, pledge, security interest, or lien with respect to any
material property or asset, except liens for taxes not yet due or payable;




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          (k) any sale or transfer of intangible assets or properties, except for inventory in the
ordinary course of business;




          (l) any loans or guarantees made by Xicom to or for the benefit of any person or entity,
including its employees, officers or directors, any members of their immediate families, or any
business in which any of them have an interest, other than travel and other advances to employees
made in the ordinary course of its business;




          (m) any declaration, setting aside or payment or other distribution in respect of any of
Xicom’s capital stock, or any direct or indirect redemption, purchase or other acquisition of any
of such stock by Xicom;




          (n) any agreement or commitment by Xicom to do any of the things described in this Section
3.6; or




          (o) any other event or condition of any character that might be reasonably expected at the
time of such event or condition to cause a Xicom Material Adverse Change.




     3.7 Litigation. Except as set forth on Schedule 3.7, there are no actions,
suits, proceedings, orders or investigations pending, or to Xicom’s Knowledge, threatened against
Xicom, at law or in equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or foreign (a “Legal
Proceeding”), and, to Xicom’s Knowledge, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that could be reasonably expected to give rise to or serve as a
basis of the commencement of any Legal Proceeding.



     3.8 Subsidiaries. Schedule 3.8 sets forth the name of any entity of which a
majority of the outstanding voting securities or other voting equity interests are owned, directly
or indirectly, by Xicom (each a “Subsidiary”), and, with respect to each Subsidiary, the
jurisdiction in which it is incorporated or organized, the jurisdictions, if any, in which it is
qualified to do business, the number of shares of its authorized capital stock, the number and
class of shares thereof duly issued and outstanding, the names of all stockholders or other equity
owners and the number of shares of stock owned by each stockholder or the amount of equity owned by
each equity owner. Each Subsidiary is a duly organized and validly existing corporation or other
entity in good standing under the laws of the jurisdiction of its incorporation or organization and
is duly qualified or authorized to do business as a foreign corporation or entity and is in good
standing under the laws of each jurisdiction in which the conduct of its business or the ownership
of its properties requires such qualification or authorization. Each Subsidiary has all requisite
corporate or entity power and authority to own its properties and carry on its business as
presently conducted. The outstanding shares of capital stock or equity interests of each
Subsidiary are validly issued, fully paid and non-assessable, and all such shares or other equity
interests represented as being owned by Xicom are owned by it free and clear of any and all
encumbrances or liens. No shares of capital stock are held by any Subsidiary as treasury stock.
There is no existing option, warrant, call, right or contract to which any Subsidiary is a party
requiring, and there are no convertible securities of any Subsidiary outstanding which upon
conversion would require, the issuance of any shares of capital stock or other equity interests of



14









 





any Subsidiary or other securities convertible into shares of capital stock or other equity
interests of any Subsidiary.




     3.9 Patents and Trademarks. To Xicom’s Knowledge, Xicom has sufficient ownership or
rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets,
information, proprietary rights and processes necessary for its business as now conducted (the
“Intellectual Property”), without any conflict with or infringement of the rights of
others. Except as set forth in Schedule 3.9, Xicom has not licensed its Intellectual
Property to any third party (except for nonexclusive licenses under its standard license terms in
the ordinary course), nor has it licensed or purchased any Intellectual Property from any third
party under any arrangement requiring continuing royalty, license or other payments exceeding
$50,000. Xicom has taken commercially reasonable action necessary to protect its Intellectual
Property. To Xicom’s Knowledge, Xicom has not violated the Intellectual Property of any other
person or entity, and has not received any written communication alleging such violation. To
Xicom’s Knowledge, its employees are not obligated under any contract (including licenses,
covenants or commitments of any nature), or subject to any judgment, decree or order of any court
or administrative agency, that would interfere with their duties to Xicom or that would conflict
with Xicom’s business as now conducted. Each employee and officer of Xicom has executed a
non-disclosure agreement in substantially the form provided to Radyne. To Xicom’s Knowledge, no
employees or officers are in violation thereof.



     3.10 Compliance with Charter Documents and Instruments. Xicom is not in violation or
default of any provision of its Articles of Incorporation or Bylaws, and is not in violation or
default of, in each case, in any material respect, (i) any instrument, judgment, order, writ, or
decree to which it is a party or by which it is bound or (ii) any provision of any federal or state
statute, rule or regulation applicable to Xicom.



     3.11 Agreements; Action.



          (a) Except as set forth on Schedules 3.8, 3.9, 3.14, or 3.19, or Schedule
3.11, there are no agreements, understandings, instruments, contracts, proposed transactions,
judgments, orders, writs or decrees to which Xicom is a party or by which it is bound that may
involve (i) customer or supplier obligations of, or payments to, Xicom in excess of $200,000; (ii)
leases of realty or buildings; (iii) leases of personal property, plant or equipment representing
an obligation of Xicom exceeding $25,000 in any given year; (iv) credit agreements or other
borrowings, and any guarantees, mortgages or security interests; (v) material dealer or sales
representative agreements; (vi) restrictions on the development, manufacture or distribution of
Xicom’s products or services; (vii) indemnification by Xicom with respect to infringements of
proprietary rights or otherwise, other than customer intellectual property indemnifications
provided to Xicom’s customers in its standard license agreement in the ordinary course of business;
or (viii) other material agreements, including obligations and commitments, in excess of $500,000.
True and correct copies of all scheduled agreements and commitments, written or oral, have been
provided to Radyne, together with all amendments thereto. For purposes of analyzing dollar
thresholds, agreements or commitments with a third party (contingent or fixed) shall be aggregated
with those of any affiliate or subsidiary of such party.




15









 








          (b) Xicom is not a party to any sales contracts or purchase orders that will produce an
operating loss. Xicom is not in material default, and, to Xicom’s Knowledge, no circumstances
exist that could result in such default, under any of such contracts, agreements or instruments,
nor, to Xicom’s Knowledge, is any other party to any of such contracts, agreements or instruments
in material default.




     3.12 Related Party Transactions. Except as set forth on Schedule 3.12, no
employee, officer, or director of Xicom or member of his or her immediate family is indebted to
Xicom, nor is Xicom indebted (or committed to make loans or extend or guarantee credit) to any of
them. To Xicom’s Knowledge, none of such persons, directly or indirectly (including through any
ownership interest in any entity), competes against or does business with Xicom (except that
employees, officers, or directors of Xicom and members of their immediate families may own up to
one percent (1%) of the stock in each publicly traded company that may compete with Xicom). No
member of the immediate family of any officer or director of Xicom, is directly or indirectly,
interested in any material contract with Xicom.



     3.13 Permits. Xicom has all governmental franchises, permits, licenses, and any
similar authority necessary for the conduct of its business as now being conducted by it, the lack
of which could cause a Xicom Material Adverse Change. Xicom is not in default in any material
respect under any of such franchises, permits, licenses, or other authority.



     3.14 Employee Benefit Plans.



          (a) Employee Benefit Plans. Except as set forth on Schedule 3.14, Xicom does
not have, has not maintained and has no liability with respect to, (a) any Employee Benefit Plan
(defined below) intended to qualify under Sections 401(a) or 403(a) of the Code; (b) any
multi-employer plan, as defined in Section 3(37) of the Employee Retirement Income Security Act of
1974 (“ERISA”); or (c) any employee pension benefit plan, as defined in Section 3(2) of
ERISA. Schedule 3.14 contains a list setting forth each employee benefit plan or
arrangement of Xicom including, but not limited to, employee welfare benefit plans, deferred
compensation plans, stock option plans, bonus plans, stock purchase plans, hospitalization,
disability and other insurance plans, severance or termination pay plans and policies, whether or
not described in Section 3(3) of ERISA, in which employees, their spouses or dependents, of Xicom
participate (“Employee Benefit Plans”) (true and accurate copies of which, together with
the most recent annual reports on Form 5500, copies of the latest determination letters and summary
plan descriptions with respect thereto, if applicable, were furnished to Radyne). With respect to
each Employee Benefit Plan (i) each has been administered in compliance in all material respects
with its terms and with all applicable laws, including, but not limited to, ERISA and the Code, and
each Employee Benefit Plan intended to qualify under Sections 401(a) or 403(a) of the Code has
received a favorable determination letter from the Internal Revenue Service; (ii) no actions,
suits, claims (other than benefit claims in the ordinary course of business) or disputes are
pending, or, to Xicom’s Knowledge, threatened; (iii) no audits, inquiries, reviews, proceedings,
claims, or demands are pending with any governmental or regulatory agency; (iv) there are no facts
which could give rise to any liability in the event of any such investigation, claim, action, suit,
audit, review, or other proceeding; (v) all material reports, returns, and similar documents
required to be filed with any governmental agency or distributed to any plan participant have been
duly or timely filed or distributed; and (vi) to Xicom’s Knowledge, no “prohibited transaction” or
breach




16









 








of fiduciary duty has occurred within the meaning of the applicable provisions of ERISA or the
Code.




          (b) Welfare Plans. (i) Xicom is not obligated under any employee welfare benefit plan
as described in Section (3)(1) of ERISA (“Welfare Plan”) to provide medical or death
benefits with respect to any employee or former employee of Xicom or its predecessors after
termination of employment, except as required by the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended (“COBRA”) and any other applicable statute; (ii) Xicom has complied with the
notice and continuation coverage requirements of Section 4980B of the Code and the regulations
thereunder with respect to each Welfare Plan that is, or was during any taxable year for which the
statute of limitations on the assessment of federal income taxes remains, open, by consent or
otherwise, a group health plan within the meaning of Section 5000(b)(1) of the Code; (iii) there
are no reserves, assets, surplus or prepaid premiums under any Welfare Plan that is an Employee
Benefit Plan; and (iv) Xicom has complied in all material respects with all applicable HIPAA
portability and privacy rules. The consummation of the transactions contemplated by this Agreement
will not entitle any individual to severance pay, and will not accelerate the time of payment or
vesting, or increase the amount of compensation, due to any individual.




          (c) Other Liabilities. (i) None of the Employee Benefit Plans obligates Xicom to pay
separation, severance, termination or similar benefits solely as a result of any transaction
contemplated by this Agreement or solely as a result of a “change of control” (as such term is
defined in Section 280G of the Code); (ii) all required or discretionary (in accordance with
historical practices) payments, premiums, contributions, reimbursements or accruals for all periods
ending prior to or as of the Effective Time shall have been made or properly accrued on the
Preliminary and Final Closing Balance Sheets; and (iii) none of the Employee Benefit Plans has any
unfunded liabilities that are not reflected on the October Balance Sheet or the books and records
of Xicom.




     3.15 Taxes.



          (a) Xicom has timely filed all Tax Returns required to be filed and such Tax Returns are true
and correct in all material respects. Xicom has paid, or will pay prior to the date due, all Taxes
incurred as of the Balance Sheet Date. Since the Balance Sheet Date, Xicom has not, and will not
incur any Taxes other than in the ordinary course of business, and Xicom will timely pay or make
adequate provisions in the Preliminary and Final Closing Balance Sheets for all Taxes with respect
to its business, properties and operations through and including the dates thereof. Xicom will
accrue on its books and records, or timely pay, as appropriate, any Taxes relating to the period up
to and including the Effective Time.




          (b) Xicom has not requested or been granted an extension of the time for filing any Tax Return
with respect to Taxes payable by or attributable to Xicom.




          (c) Intentionally omitted.




          (d) Xicom has not elected pursuant to the Code to be treated as an S corporation pursuant to
Section 1362(a) of the Code.




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          (e) There is no tax deficiency assessed or, to Xicom’s Knowledge, proposed against Xicom
and Xicom has not executed any waiver of any statute of limitations on the assessment or
collection of any tax or governmental charge, nor have any of Xicom’s Tax Returns ever been audited
by governmental authorities nor, to Xicom’s Knowledge, are any such audits proposed.




          (f) Xicom has withheld or collected from each payment made to each of its employees,
independent contractor, creditor, shareholder or other person or entity, the amount of all Taxes
required to be withheld or collected therefrom, and has paid such amounts to the proper tax
authorities.




          (g) No written claim has ever been made by an authority in a jurisdiction where Xicom does not
file tax returns that Xicom is or may be subject to taxation by that jurisdiction.




          (h) There are no liens for taxes (other than taxes not yet due and payable) upon any assets of
Xicom. Xicom is not a United States real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code.




          (i) Xicom has disclosed on its tax returns all positions taken therein that could give rise to
a substantial understatement of federal income tax within the meaning of Sections 6662 or 6662A of
the Code (or similar provision of state, local, or foreign law).




          (j) Schedule 3.15(j) sets forth the following information with respect to Xicom as of
the most recent practicable date: (i) the basis of Xicom in its assets; (ii) the amount of any net
operating loss, net capital loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to Xicom; and (iii) the amount of any deferred gain or loss
allocable to Xicom arising out of any intercompany transaction. Xicom makes no representation
regarding whether any of Xicom’s carryforwards are limited under Sections 382, 383 or 384 of the
Code.




          (k) Xicom is not a party to or bound by any tax allocation or sharing agreement.




          (l) Xicom (i) is not a member of an affiliated group filing a consolidated federal income tax
return (other than a group consisting solely of Xicom and its Subsidiaries), and (ii) does not have
any liability for the taxes of any person or entity (other than for Xicom or any of its
Subsidiaries) under Treas. Reg. Section 1.1502-6 (or similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.




          (m) Xicom has not distributed stock of another person or entity, or has had its stock
distributed by another person or entity, in a transaction that was purported or intended to be
governed in whole or in part by Sections 355 or 361 of the Code.




          (n) Xicom has not received a written ruling from any taxing authority, nor entered into any
closing agreement pursuant to Section 7121 of the Code (or similar provision of state, local or
foreign law).




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          (o) Xicom is not a party to any agreement, contract, arrangement or plan that has resulted or
could result, separately or in the aggregate, in the payment of (i) any “excess parachute payment”
within the meaning of Section 280G of the Code (or any corresponding provision of state, local or
foreign Tax law), and (ii) any amount that will not be fully deductible as a result of Section
162(m) of the Code (or any corresponding provision of state, local or foreign Tax law).




          (p) For the purpose of this Agreement:




               (i) “Tax Return” means any return (including any information return), report, statement,
schedule, notice, form, declaration, claim for refund or other document or information filed with
or submitted to, or required to be filed with or submitted to, any governmental authority in
connection with the determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any applicable law
relating to any Tax.



               (ii) “Tax” means any income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, property, environmental, windfall profit, customs, vehicle, airplane,
boat, vessel or other title or registration, capital stock, franchise, employees’ income
withholding, foreign or domestic withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, value added, alternative, add-on minimum and
other tax, fee, assessment, levy, tariff, charge or duty of any kind whatsoever and any interest,
penalty, addition or additional amount thereon imposed, assessed or collected by or under the
authority of any governmental authority or payable under any tax-sharing agreement or any other
contract.



     3.16 Labor Agreements and Actions; Employee Compensation. Xicom is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any contract,
commitment or arrangement with any labor union, and no labor union has requested or, to Xicom’s
Knowledge, has sought to represent any of the employees, representatives or agents of Xicom. There
is no strike or other labor dispute involving Xicom pending, or to Xicom’s Knowledge, threatened,
that could cause a Xicom Material Adverse Change, nor is Xicom aware of any labor organization
activity involving its employees. Xicom is not aware that any officer or key employee, or that any
group of key employees, intends to terminate their employment with Xicom, nor does Xicom have a
present intention to terminate the employment of any of the foregoing. The employment of each
officer and employee of Xicom is terminable at the will of Xicom. Xicom has complied in all
material respects with all applicable state and federal equal employment opportunity and other laws
related to employment. Except as set forth on Schedule 3.16, Xicom is not a party to or
bound by any employment contract, deferred compensation agreement, or other employee compensation
agreement.



     3.17 Environmental. To Xicom’s Knowledge, Xicom is not in material violation of any
law or legal requirement relating to the environment. To Xicom’s Knowledge, no material
expenditures are or will be required in order to comply with any such law or legal requirement. No
Hazardous Materials (defined below) are used or have been used, stored, or disposed of by Xicom or,
to Xicom’s Knowledge, by any other person or entity on any property owned, leased or used by Xicom,
except in material compliance with applicable law or legal requirements.



19









 





“Hazardous Material” shall include: (a) any petroleum, waste oil, crude oil,
asbestos, urea formaldehyde or polychlorinated biphenyl; (b) any waste, gas or other substance or
material that is explosive or radioactive; (c) any “hazardous substance,” or “toxic chemical” as
designated, listed or defined (whether expressly or by reference) in any statute, regulation or
other legal requirement (including CERCLA (the Comprehensive Environmental Response, Compensation
and Liability Act) and any other so-called “superfund” or “superlien” law and the respective
regulations promulgated thereunder); (d) any other substance or material (regardless of physical
form) or form of energy that is subject to any legal requirement which regulates or establishes
standards of conduct in connection with, or which otherwise relates to, the protection of human
health, plant life, animal life, natural resources, property or the enjoyment of life or property
from the presence in the environment of any solid, liquid, gas, odor, noise or form of energy; and
(e) any compound, mixture, solution, product or other substance or material that contains any
substance or material referred to in clause “(a)”, “(b)”, “(c)” or “(d)” above.




     3.18 Title to Property and Assets.



          (a) Xicom owns good and marketable title to its properties and assets reflected on the October
Balance Sheet or acquired since the date thereof, free and clear of all liens and encumbrances,
except for (i) liens for current taxes not yet due and payable and assets disposed of since the
October Balance Sheet in the ordinary course of business, and (ii) liens and encumbrances that
secure debt reflected on the October Balance Sheet.




          (b) (i) Xicom does not own any real estate; (ii) the properties subject to the real property
leases set forth on Schedule 3.18 constitute all of the real estate used or occupied by
Xicom (the “Xicom Real Estate”); and (iii) the Xicom Real Estate has access, sufficient for
the conduct of Xicom’s business, to public roads and to all utilities, including electricity,
sanitary and storm sewer, potable water, natural gas and other utilities, used in the business of
Xicom.




          (c) The real property leases described on Schedule 3.18 are in full force and effect,
and Xicom has a valid and existing leasehold interest under each such lease for the term set forth
therein. Xicom has delivered to Radyne complete and accurate copies of each of the leases and none
of such leases has been modified in any respect, except to the extent that such modifications are
disclosed by the copies delivered to Radyne. Xicom is not in material default, and, to Xicom’s
Knowledge, no circumstances exist that could result in such material default, under any of such
leases, nor, to Xicom’s Knowledge, is any other party to any of such leases in default.




          (d) All of the buildings, material machinery, material equipment and other tangible assets
necessary for the conduct of Xicom’s business are in good condition and repair, ordinary wear and
tear excepted, and are usable in the ordinary course of business. Xicom owns, or leases under
valid leases, all such buildings, such machinery, such equipment and other tangible assets
necessary for the conduct of its business. Xicom has delivered to Radyne complete and accurate
copies of all equipment leases. None of such equipment leases has been modified in any respect,
except to the extent that such modifications are disclosed by the copies delivered to Radyne.
Xicom is not in material default, and no circumstances exist that could result in such default,
under any of such equipment leases, nor, to Xicom’s Knowledge, is any other party to any of such
equipment leases in default.




20









 








          (e) Xicom is not in material violation of any applicable zoning ordinance or other law,
regulation or requirement relating to the operation of any properties used in the operation of its
business, and has not received any written notice of any such violation, or of the existence of any
condemnation proceeding with respect to any properties owned or leased by Xicom.




     3.19 Insurance. Xicom has in full force and effect the fire and casualty insurance
policies set forth on Schedule 3.19, with extended coverage, sufficient in amount (subject
to reasonable deductibles) to allow it to replace any of its covered properties that might be
damaged or destroyed. Xicom has in full force and effect product liability and errors and
omissions insurance set forth on Schedule 3.19 in amounts customary for companies similarly
situated.



     3.20 Disclosure. Neither this Agreement nor any of the exhibits hereto contains any
untrue statement of a material fact or omits a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which they were made, not misleading,
and there is no fact which has not been disclosed to Radyne that causes, or could reasonably be
anticipated to cause, a Xicom Material Adverse Change.



ARTICLE 4




REPRESENTATIONS AND WARRANTIES OF

THE XICOM SHAREHOLDERS




     Each Xicom Shareholder, severally and jointly, represents and warrants to Radyne and Merger
Sub only with respect to itself and its own circumstances as of the date hereof and again at the
Effective Time, the following:



     4.1 Authority. Each Xicom Shareholder has the power and authority to enter into this
Agreement and to carry out its obligations hereunder. This Agreement has been duly executed by the
Xicom Shareholder and constitutes a valid and binding obligation of the Xicom Shareholder,
enforceable in accordance with its terms, including under any laws requiring spousal consent,
except as the enforceability thereof may be limited by bankruptcy, insolvency, reorganization or
other similar laws relating to the enforcement of creditors’ rights generally and by general
principles of equity. Each Xicom Shareholder is not subject to, or obligated under, any agreement,
arrangement or understanding, or any law, regulation, order, judgment or decree, that would be
breached or violated, or in respect of which a right of termination or acceleration would arise or
any encumbrance on any of its assets would be created, by its execution, delivery and performance
of this Agreement and the consummation by it of the transactions contemplated hereby. No
authorization, consent or approval of, or filing with, any public body, court or authority is
necessary on the part of the Xicom Shareholder for the consummation by it of the transactions
contemplated by this Agreement.



     4.2 Security Ownership. Each Xicom Shareholder represents that it is the legal and
beneficial owner of the number of shares of Xicom Common Stock set forth opposite its name on
Schedule 3.3(b), free and clear of all restrictions, liens and encumbrances, other than
restrictions under federal and state securities laws.



21









 





     4.3 Purchase Entirely for Own Account. The Merger Shares to be received by each
respective Xicom Shareholder will be acquired for investment for the Xicom Shareholder’s own
account, not as a nominee or agent, and not with a view to the resale or distribution of any part
thereof, and the Xicom Shareholder has no present intention of selling, granting any participation
in, or otherwise distributing the same. Each Xicom Shareholder is not a party to any contract,
undertaking, agreement or arrangement with any person or entity to sell, transfer or grant
participations in the Merger Shares.



     4.4 Disclosure of Information. Each Xicom Shareholder acknowledges that he/she/it has
been provided with or has had access to the Radyne SEC Documents. Each Xicom Shareholder believes
it has received all the information it considers necessary or appropriate for deciding whether to
purchase the Merger Shares. Each Xicom Shareholder further represents that it has had an
opportunity to ask questions and receive answers from Radyne regarding the business, properties,
prospects and financial condition of Radyne.



     4.5 Investment Experience; Advisors. Each Xicom Shareholder represents that he/she/it
can bear the economic risk of its investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and risks of owning the Merger Shares.
Each Xicom Shareholder represents that he/she/it has had an opportunity to consult with tax and
legal counsel with respect to the terms of this Agreement and specifically with respect to the
allocation of consideration and any tax consequences to such shareholder that may occur in
connection with this Agreement. Each Xicom Shareholder acknowledges and agrees that Radyne is not
making any representations in this Agreement and has not otherwise made any representations with
respect to any tax consequences that may occur in connection with this Agreement.



     4.6 Restricted Securities. Each Xicom Shareholder understands that the Merger Shares
it is acquiring are characterized as “restricted securities” under the federal securities laws
inasmuch as it is being acquired from Radyne in a transaction not involving a public offering, and
that under such laws and applicable regulations such securities may be resold without registration
under the Securities Act only in certain limited circumstances. In this connection, each Xicom
Shareholder represents that the Xicom Shareholder is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the Securities Act.



     4.7 Legends. Each Xicom Shareholder understands that the certificates evidencing the
Merger Shares will bear the following legend:




“These securities have not been registered under the Securities Act of 1933,
as amended. They may not be sold, offered for sale, pledged or hypothecated
in the absence of a registration statement in effect with respect to the
securities under such Act or an opinion of counsel reasonably satisfactory
to Radyne that such registration is not required or unless sold pursuant to
Rule 144 of such Act.”




22










 






ARTICLE 5




CONDUCT OF BUSINESS PENDING THE MERGER




     5.1 Conduct of Business Pending the Merger. Xicom covenants and agrees that, prior to
the Effective Time, unless Radyne otherwise agrees in writing or as otherwise expressly
contemplated or permitted by this Agreement:



          (a) The businesses of Xicom shall be conducted in the ordinary course, on an arm’s length
basis and in accordance in all material respects with all applicable laws, rules and regulations
and past custom and practice; Xicom shall maintain its facilities in good operating condition,
ordinary wear and tear excepted; and Xicom shall use its reasonable best efforts to preserve intact
its business organization and goodwill, keep available the services of its officers and employees
as a group and maintain satisfactory relationships with suppliers, distributors, customers and
others having business relationships with it;




          (b) Xicom shall not, directly or indirectly, do or permit to occur any of the following: (i)
issue, sell, pledge, dispose of or encumber (A) any additional shares of, or any options, warrants,
conversion privileges or rights of any kind to acquire any shares of, any of its capital stock, or
(B) any of its assets, except in the ordinary course of business; (ii) amend or propose to amend
its Articles of Incorporation or Bylaws; (iii) split, combine or reclassify any outstanding shares
of Xicom Common Stock, or declare, set aside or pay any dividend or other distribution payable in
cash, stock, property or otherwise with respect to shares of Xicom Common Stock; (iv) redeem,
purchase or acquire or offer to acquire any shares of Xicom Common Stock or other securities of
Xicom; (v) acquire (by merger, exchange, consolidation, acquisition of stock or assets or
otherwise) any corporation, partnership, joint venture or other business organization or division
or material assets thereof; (vi) incur any indebtedness for borrowed money or issue any debt
securities, except the borrowing of working capital in the ordinary course of business and
consistent with past practice, or grant any mortgages, liens or security interests; (vii) make any
investments other than short-term United States Treasury obligations or short-term certificates of
deposit of a commercial bank or trust company; or (viii) enter into or propose to enter into, or
modify or propose to modify, any agreement, arrangement or understanding with respect to any of the
matters set forth in this Section 5.1(b);




          (c) Xicom shall not, directly or indirectly, enter into or modify any contract, agreement or
understanding, written or oral, fixed or contingent, individually or in the aggregate as to any
third party and its affiliates or subsidiaries as a group, that involves consideration or
performance of Xicom of a value exceeding $100,000 or a term exceeding one year;




          (d) Except as required by law, rule or regulation and except for an amendment to the
employment agreement for Gary Gianatasio to eliminate any equity right he may have in Xicom, Xicom
shall not (i) enter into or modify any employment, severance or similar agreements or arrangements
with, or grant any bonuses, salary increases, severance or termination pay to, any officers or
directors or consultants or (ii) other than as set forth on Schedule 1.6 and the amendment
to the employment agreement for Gary Gianatasio, take any action with respect to the grant of any
bonuses, salary increases, severance or termination pay or with respect to any increase of benefits
payable in effect on the date hereof;




23









 








          (e) Other than as set forth on Schedule 1.6 and the amendment to the employment
agreement for Gary Gianatasio, Xicom shall not adopt or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation, employment or other
employee benefit plan, trust, fund or group arrangement for the benefit or welfare of any employees
or any bonus, profit sharing, compensation, stock option, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund or arrangements for
the benefit or welfare of any director;




          (f) Neither Xicom nor any Shareholder, officer, director, employee, agent or representative
thereof shall, for a period expiring on the earlier of (i) the termination of this Agreement
pursuant to the terms of Article 9 herein or (ii) May 31, 2005, solicit, negotiate,
consider or encourage the possible sale to any other person or entity of all or any portion of the
business or of the assets of Xicom, whether by merger, sale of stock, sale, license or lease of
assets, or otherwise; nor shall they provide any confidential information to any person or entity.
Xicom will promptly notify Radyne if any of them is approached by any person or entity interested
in acquiring or investing in Xicom, and will provide Radyne with the name of the person and the
details of such inquiry or proposal;




          (g) Neither Xicom nor any Shareholder shall take any action that would render, or that
reasonably may be expected to render, any representation or warranty made by it in this Agreement
untrue at, or at any time prior to, the Effective Time. Xicom and each Shareholder agree to
promptly notify Radyne (i) of any emergency or other change in the normal course of Xicom’s
business or of any governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated); (ii) the occurrence or failure to
occur of any event, which occurrence or failure would be likely to cause any representation or
warranty on Xicom’s or any Shareholder’s part contained in this Agreement to be untrue or
inaccurate in any material respect at, or at any time prior to, the Effective Time; and (iii) any
material failure of Xicom or any Shareholder to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; and




          (h) Without the consent of Radyne, which consent shall not be unreasonably withheld,
Xicom shall not make or change any election, change an annual accounting period, adopt or
change any accounting method, file any amended Tax Return, enter into any closing agreement, settle
any Tax claim or assessment relating to Xicom, surrender any right to claim a refund of Taxes,
consent to any extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to Xicom, or take any other similar action relating to the filing of any Tax
Return or the payment of any Tax, if such election, adoption, change, amendment, agreement,
settlement, surrender, consent or other action would have the effect of increasing the Tax
liability of Xicom for any period ending after the Effective Time or decreasing any Tax attribute
of Xicom existing on the Effective Time.




          (i) Xicom shall take all steps necessary to facilitate the preparation by Radyne of (i) the
audited or reviewed Final Closing Balance Sheet of Xicom under Section 1.6(d), and (ii) an
unqualified opinion of the independent auditors of Radyne that the financial statements referred to
and the Final Closing Balance Sheet are in accordance with GAAP and SEC Regulation S-X. Radyne
shall instruct its independent auditors to complete their audit no later than 75 days after the
date hereof; provided, however, that the 75 day period as to the Final




24









 








Closing Balance Sheet shall be extended to the extent the inability of the auditors to
complete the audit relates to the records or acts of Xicom or the Xicom Shareholders, including,
without limitation, a lack of or the incompleteness of records or cooperation.




ARTICLE 6




ADDITIONAL AGREEMENTS




     6.1 Expenses. Each party to this Agreement shall bear their own expenses in
connection with this Agreement and the transactions contemplated herein; provided,
however, that the expenses of Xicom or the Xicom Shareholders shall be handled in
accordance with Section 1.6(a)(iii) if the Merger is consummated. Notwithstanding the
foregoing, in the event that Xicom or the Shareholders (or their representatives) violate
Section 5.1(f) and they agree to sell Xicom or its assets, or a controlling interest
therein, within nine months thereof, then Xicom and the Shareholders, jointly and severally, agree
to pay Radyne an amount equal to all of the expenses incurred by Radyne and Merger Sub in
connection with the preparation and negotiation of this Agreement and any other matters otherwise
related to the transactions contemplated herein, including but not limited to all fees and expenses
of accountants and attorneys, up to a maximum of $200,000. Nothing herein shall be deemed to limit
the right or remedy of a party in the event of a willful breach of this Agreement by the other
party.



     6.2 Taxes. The Shareholders shall be responsible for any sales, transfer or other
similar taxes incurred by them or Xicom arising out of the Merger.



     6.3 Confidentiality. Each party agrees to honor the existing confidentiality
agreement between them.



     6.4 Access to Information. From the date of this Agreement to the earlier of the
termination of this Agreement or the Effective Time, Xicom shall: (i) provide to Radyne (and its
officers, directors, employees, accountants, consultants, legal counsel, advisors, agents and other
representatives (collectively, “Representatives”)) reasonable access to, upon prior notice
and during normal business hours, the directors, officers, employees, agents, suppliers,
properties, offices and other facilities of Xicom and the Subsidiaries and to the books and records
thereof and (ii) furnish promptly such information concerning the business, properties, contracts,
assets, liabilities, personnel and other aspects of Xicom and the Subsidiaries as Radyne or its
Representatives may reasonably request.



ARTICLE 7




CONDITIONS




     7.1 Conditions to Obligations of Each Party To Effect the Merger. The respective
obligations of each party to effect the Merger shall be subject to the fulfillment or waiver at or
prior to the Effective Time of the following conditions:



          (a) there shall not be pending by or before any court or other governmental body an order or
injunction restraining or prohibiting the transactions contemplated hereby; and




25









 








          (b) no party hereto shall have terminated this Agreement as permitted herein.




     7.2 Additional Conditions to Obligation of Xicom and the Shareholders. The obligation
of Xicom and the Shareholders to effect the Merger is also subject to the fulfillment or waiver at
or prior to the Effective Time of the following conditions:



          (a) the representations and warranties of Radyne and Merger Sub set forth in Article 2
that are qualified by materiality shall be true and correct and the representations and warranties
of Radyne and Merger Sub that are not so qualified shall be true and correct in all material
respects on and as of the Effective Time with the same force and effect as if made on and as of the
Effective Time, and each of Radyne and Merger Sub shall in all material respects have performed
each obligation and agreement and complied with each covenant to be performed and complied with by
it hereunder at or prior to the Effective Time;




          (b) Radyne shall have furnished to Xicom a certificate in which Radyne and Merger Sub shall
certify that the conditions set forth in Section 7.2(a) have been fulfilled or waived;




          (c) Radyne shall have furnished to Xicom (i) a copy of the text of the resolutions by which
the corporate action on the part of Radyne and Merger Sub necessary to approve this Agreement, the
Merger and the issuance of the Merger Shares were taken, and (ii) certificates executed on behalf
of Radyne certifying, in each case, that such copy is a true, correct and complete copy of such
resolutions and that such resolutions were duly adopted and have not been amended or rescinded; and




          (d) Radyne shall have made arrangements to pay each Xicom Shareholder by check or wire
transfer the amount of the Cash Consideration, and any payment of cash in lieu of fractional shares
pursuant to Section 1.5(c) (less any amounts required to be withheld from such cash under
foreign, federal, state or local laws), and shall have instructed its transfer agent to issue
certificates for the Merger Shares to which the Xicom Shareholders are entitled pursuant to
Section 1.5(a) hereof, in each case against receipt for cancellation of such Xicom
Shareholder’s certificate or certificates representing shares of Xicom Common Stock.




     7.3 Additional Conditions to Obligations of Radyne and Merger Sub. The obligations of
Radyne and Merger Sub to effect the Merger are also subject to the fulfillment or waiver at or
prior to the Effective Time of the following conditions:



          (a) the representations and warranties of Xicom and the Xicom Shareholders set forth in
Articles 3 and 4 respectively that are qualified by materiality shall be true and
correct and the representations and warranties of Xicom and the Xicom Shareholders that are not so
qualified shall be true and correct in all material respects on and as of the Effective Time with
the same force and effect as if made on and as of the Effective Time, and each of Xicom and the
Xicom Shareholders shall in all material respects have performed each obligation and agreement and
complied with each covenant to be performed and complied with by it or them hereunder at or prior
to the Effective Time;




          (b) Xicom shall have furnished to Radyne a certificate in which Xicom shall certify that the
conditions set forth in Section 7.3(a) have been fulfilled or waived;




26









 








          (c) Xicom shall have furnished to Radyne (i) a copy of the text of the resolutions by which
the board of directors of Xicom and the Xicom Shareholders, if applicable, approved this Agreement
(including, without limitation, the plan of merger contained herein) and the Merger; (ii) a
certified copy of Xicom’s Articles of Incorporation and Bylaws; and (iii) a certificate executed on
behalf of Xicom by its corporate secretary certifying to Radyne that such resolutions are true,
correct and complete, were duly adopted and have not been amended or rescinded, and that prior to
the Effective Time, the Articles of Incorporation and Bylaws of Xicom have not been amended or
rescinded;




          (d) Xicom and each of the Shareholders shall have obtained each consent and approval necessary
in order that the Merger and the transactions contemplated herein not constitute a breach or
violation of, or result in a right of termination or acceleration or any encumbrance on any of
Xicom’s assets pursuant to the provisions of, any agreement, arrangement or understanding,
judgment, decree or order, law, rule or regulation, or license, franchise or permit;




          (e) Between the date hereof and the Effective Time, (i) there shall have been no Xicom
Material Adverse Change, and (ii) Xicom and the Shareholders’ Representative shall have delivered
to Radyne a certificate, dated as of the Effective Time to the foregoing effect;




          (f) Walter C. Wood and Ronald J. Sterns shall have each executed and delivered to Radyne a
non-disclosure and non-compete agreement in the form attached as Exhibit B, and Walter C.
Wood and Gary Gianatasio shall have executed and delivered to Radyne an employment agreement in a
form to be mutually agreed upon the parties;




          (g) Radyne shall have received an opinion letter from Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP, on behalf of Xicom and the Shareholders, in the forms reasonably
satisfactory to the parties;




          (h) The Xicom Shareholders shall have approved this Agreement and the Merger and none shall
have asserted any appraisal or dissenters’ rights, and each shall have executed a counterpart
signature page to become party to this Agreement;




          (i) Radyne shall have provided to Xicom the written notice as contemplated under Section
1.8;




          (j) The Final Closing Balance Sheet shall have been prepared and accepted by the parties,
except as otherwise permitted under Section 1.6; and




          (k) All corporate and other proceedings in connection with the transactions contemplated at
the Closing and all documents incident thereto shall be reasonably satisfactory in form and
substance to Radyne’s counsel, and Radyne and its counsel shall have received all such counterpart
original and certified or other copies of such documents as they may reasonably request.




27









 








ARTICLE 8




INDEMNITIES




     8.1 Survival of Representations and Warranties. All representations and warranties
made by Radyne, Merger Sub, Xicom and the Xicom Shareholders in this Agreement shall survive for [
* ] from the date of this Agreement and no claim for any breach thereof may be made unless notice
thereof is given to the other party prior to such date; provided, however, that the
limitations on survival shall not apply to any breach of this Agreement constituting fraud or
intentional misrepresentation or omission. The parties agree that reliance shall not be an element
of any claim for misrepresentation or indemnification under this Agreement.



     8.2 Shareholders Agreement to Indemnify.



          (a) Subject to the limitations in this Article 8, the Shareholders, jointly and
severally, agree to indemnify and hold harmless Radyne and Merger Sub and their respective
directors, officers, employees and agents from and against all proceedings, judgments, decrees,
demands, claims, actions, losses, damages, liabilities, costs and expenses, including, without
limitation, reasonable attorneys’ fees and costs (collectively referred to as “Losses”)
asserted against or incurred by Radyne, Merger Sub or their respective directors, officers,
employees or agents resulting from (i) a breach of any covenant, agreement, representation or
warranty of Xicom or the Xicom Shareholders contained in this Agreement or the exhibits or
schedules hereto; (ii) any lawsuit, open tax matter, employee dispute or other similar contingency
disclosed on a schedule (or that should have been disclosed on a schedule or in the Financial
Statements) in excess of litigation, tax or related reserves; or (iii) any claim based on the
respective equity ownership of the Xicom Shareholders or the allocation of the consideration set
forth in this Agreement; provided, however, that any liability of a Shareholder for
such Shareholder’s breach of his non-disclosure and non-compete agreement delivered under
Section 7.3(f) shall be several and not joint.




          (b) For purposes of assessing indemnification for any breach of warranty, representation,
covenant or agreement, any materiality (including any “Material Adverse Change”) or knowledge
qualifiers shall be eliminated, except knowledge qualifiers with respect to “threatened” matters.




          (c) The Shareholders will not be obligated to indemnify Radyne or its directors, officers,
employees or agents for any Loss except to the extent that such Loss, alone or when aggregated with
all other Losses, exceeds [ * ] (the “Indemnity Basket”), unless such Loss results from the
matters referenced in subsections (a)(ii) or (a)(iii) above, in which case the
Shareholders will be responsible for all Losses.




          (d) Further, the Shareholders shall not be obligated to indemnify Radyne and its directors,
officers, employees and agents to the extent that any Loss, alone or when










	*      Confidential information on this page has been omitted
and filed separately with the Securities Exchange Commission pursuant to a
Confidential Treatment Request.




28









 






aggregated with all other Losses, exceeds [ * ] (the “Indemnity Ceiling”), and
Radyne’s sole remedy for damages (except as provided in subsection (e) below) shall be
limited to [ * ].




          (e) The Indemnity
Basket, the Indemnity Ceiling and the limitation on seeking damages solely
from [ * ] will not apply under this Section 8.2 in the event any Loss is based
on the fraud or intentional misrepresentation or omission of Xicom or any of the Xicom
Shareholders.




     8.3 Radyne and Merger Sub’s Agreement to Indemnify. Subject to the limitations in
this Article 8, Radyne and Merger Sub hereby agree to indemnify and hold harmless the Xicom
Shareholders and their agents from and against all Losses asserted against or incurred by the Xicom
Shareholders or their agents resulting from a breach of any covenant, agreement, representation or
warranty of Radyne or Merger Sub contained in this Agreement or the exhibits hereto. Radyne will
not be obligated to indemnify the Xicom Shareholders or any of their agents for any Loss except to
the extent that such Loss, alone or when aggregated with other Losses, exceeds the Indemnity
Basket. Further, Radyne shall not be obligated to indemnify the Xicom Shareholders or any of their
agents to the extent that any Loss, alone or when aggregated with other Losses, exceeds the
Indemnity Ceiling. Neither the Indemnity Basket nor the Indemnity Ceiling will apply under this
Section 8.3 in the event any Loss is based on the fraud or intentional misrepresentation or
omission of Radyne or Merger Sub. Xicom and the Xicom Shareholders agree that any claim for
indemnification against Radyne or Merger Sub under this Article 8 shall be made solely
through the Shareholder’s Representative, and that any and all actions with respect to the rights
of the Xicom Shareholders under this Article 8 and the Escrow Agreement shall be exercised
solely through the Shareholder’s Representative.



     8.4 Notice of Claim. Any party who has a claim which would give rise to liability
pursuant to this Article 8 shall give prompt notice to all other parties of such claim,
together with a reasonable description thereof; provided, that Radyne and Merger Sub shall
provide such notice only to the Shareholders’ Representative. With respect to any claim by a third
party which is covered by the indemnifications contained hereunder, the party obligated to
indemnify shall be afforded the opportunity, at its expense, to defend or settle such claim if,
within 10 days of notice thereof, it acknowledges in writing its indemnification obligation
hereunder, utilizes counsel reasonably satisfactory to the indemnified party, commences such
defense promptly and pursues such defense with diligence; provided, however, that
such indemnifying party shall secure the consent of the indemnified party to any settlement, which
consent shall not be unreasonably withheld, unless the amount of the settlement (together with
other settlements) is below the Indemnity Basket. If an indemnified party defends any claim
hereunder, such party shall use reasonable efforts in such defense to mitigate Losses arising
thereunder, and shall not settle any claim without the consent of the indemnifying party, which
shall not be unreasonably withheld; provided, that any consent by the Shareholders’
Representative shall constitute adequate consent on behalf of any Xicom Shareholder under this
Section 8.4. Notwithstanding the foregoing, (i) if a claim seeks relief other than the
payment of monetary damages; (ii) if the subject matter of a claim relates to the ongoing business
of the indemnified party (including with









	*    Confidential information on this page has been omitted
and filed separately with the Securities Exchange Commission pursuant to a
Confidential Treatment Request.




29









 










out limitation, any relationship with continuing suppliers, customers or other persons or
entities with whom the indemnified party does business), which claim, if decided against the
indemnified party, could materially adversely affect the ongoing business or reputation of the
indemnified party or its relationship to such other party; or (iii) the indemnified party may not
be fully indemnified with respect to such claim, then, in each such case, the indemnified party
alone shall be entitled to contest, defend and settle such claim in the first instance and, if the
indemnified party does not contest, defend or settle such claim, the indemnifying party shall then
have the right to contest and defend such claim, but not settle such claim without the consent of
the indemnified party, which consent will not be unreasonably withheld.




     8.5 Satisfaction of Obligations. If an indemnifying party becomes obligated to
indemnify another party with respect to any claim for indemnification hereunder and the amount of
liability with respect thereto shall have been finally determined, the indemnified party, and in
the event the indemnified party is a Xicom Shareholder, the Shareholders’ Representative, shall
deliver a notice to the indemnifying party and the escrow agent demanding payment pursuant to the
Escrow Agreement. Additional provisions regarding the procedures for indemnification are as set
forth in the Escrow Agreement.



     8.6 Exclusive Remedy. The rights and remedies provided for in this Agreement shall be
exclusive and no other rights and remedies that may exist at law may be asserted against any party;
provided, however, that the foregoing will not limit the right of Radyne or Merger
Sub to pursue equitable remedies, including equitable remedies related to the enforcement of any
non-compete agreement described under Section 7.3(f), nor in the case of fraud or
intentional misrepresentation or omission.



ARTICLE 9




TERMINATION, AMENDMENT AND WAIVER




     9.1 Termination. This Agreement may be terminated at any time prior to the Effective
Time:



          (a) by mutual consent of a duly authorized officer of Radyne and Xicom and the Shareholders’
Representative;




          (b) by Radyne or Merger Sub, on the one hand, or Xicom, on the other hand, if the other party
breaches any of its material representations, warranties or covenants contained herein and, if such
breach is curable, is not cured within 15 business days after notice thereof;




          (c) by Radyne or Merger Sub, on the one hand, or Xicom, on the other hand, if obligations to
close the transactions contemplated by this Agreement shall become incapable of satisfaction;




          (d) by Radyne or Merger Sub, on the one hand, or Xicom, on the other hand, if the Merger shall
not have been consummated by May 31, 2005 or such later date as may be agreed upon by Radyne,
Merger Sub and the Shareholders’ Representative; provided, however, that the right
to terminate this Agreement under this Section 9(d) shall not be available to any




30









 








party whose failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective time to occur on or before May 31, 2005; or




          (e) as provided in Sections 1.6 or 1.8.




     9.2 Effect of Termination. In the event of termination of this Agreement as provided
in Section 9.1, this Agreement shall become void and there shall be no liability or further
obligation hereunder on the part of the parties or their respective securityholders, officers or
directors, except as set forth in Sections 1.6, 1.8, 6.1 and 6.3,
and except for liability arising from a willful breach of this Agreement.



     9.3 Amendment. This Agreement may not be amended except by an instrument in writing
approved by Radyne, Merger Sub and Xicom.



     9.4 Waiver. At any time prior to the Effective Time, Radyne or Merger Sub may extend
the time for the performance of any of the obligations or other acts of any other party hereto and
Xicom may extend the time for performance of any of the obligations of Radyne or Merger Sub. In
addition, Radyne and Merger Sub, on the one hand, and Xicom, on the other hand, may waive
compliance with any of the agreements of any other party or with any conditions to its own
obligations, in each case only to the extent such obligations, agreements and conditions are
intended for its benefit.



ARTICLE 10




TAX MATTERS




     The following provisions shall govern the allocation of responsibility as between Radyne and
the Shareholders for certain tax matters following the Effective Time:



     10.1 Responsibility for Filing Tax Returns. Radyne shall prepare or cause to be
prepared and file or cause to be filed all Tax Returns for Xicom that are required to be filed
after the Effective Time.



     10.2 Cooperation on Tax Matters. Radyne, Xicom and the Shareholders (through the
Shareholders’ Representative) shall cooperate fully, as and to the extent reasonably requested by
the other party, in connection with the filing of Tax Returns pursuant to this Article 10
and any audit, litigation or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other party’s request) the provision of records and information
that are reasonably relevant to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and explanation of any
material provided hereunder.



     10.3 Control of Tax Proceedings. If any claim, suit or proceeding shall be made by
any taxing authority that could give rise to an additional payment of Taxes, the party responsible
for the payment of such Taxes shall control all proceedings arising in connection with such claim,
suit or proceeding; provided, however, that if the subject matter of a claim, suit
or proceeding relates to the ongoing business of Xicom (including without limitation, its



31









 







employees, suppliers, customers or other persons or entities with whom Xicom does business),
which claim, suit or proceeding, if decided against the Xicom, could materially adversely affect
the ongoing business or reputation of Xicom or its relationship with such party after the Effective
Time, then Radyne or Xicom, at their election, shall be entitled to contest, defend and settle such
claim, suit or proceeding. For purposes of the foregoing, the Shareholders’ Representative shall
be deemed the party responsible for any Taxes the payment of which would result in a claim against
[*].



ARTICLE 11




GENERAL PROVISIONS




     11.1 Public Statements. Except as required by applicable law, rule or regulation,
including of the Nasdaq National Market, prior to the Effective Time, no party shall make any
public announcement or statement with respect to the Merger, this Agreement or any related
transaction without the approval of the other parties, which approval will not be unreasonably
withheld. Each party agrees to consult with the other parties prior to issuing any such public
announcement or statement.



     11.2 Notices. All notices and other communications hereunder shall be in writing and
shall be sufficiently given if made by hand delivery, by facsimile, by recognized overnight courier
service, or by registered or certified mail (postage prepaid and return receipt requested) to the
parties at the following addresses (or at such other address for a party as shall be specified by
it by like notice):



	 	 	 
	If to Radyne or Merger Sub:

	 	Radyne ComStream Inc.
	

	 	3138 E. Elwood Street
	

	 	Phoenix, Arizona 85034
	

	 	FAX: (602) 437-4811
	

	 	Attn.: Robert C. Fitting
	 
	 	 
	With a copy to:

	 	Snell & Wilmer L.L.P.
	

	 	One Arizona Center
	

	 	Phoenix, Arizona 85004
	

	 	FAX: (602) 382-6070
	

	 	Attn.: Steven D. Pidgeon
	 
	 	 
	If to Xicom or the Shareholders
or the Xicom Shareholders (via
the Shareholders’
Representative):

	 	Xicom Technology Inc.

3550 Basset Street

Santa Clara, California 95054

FAX: (408) 213-3106

Attn.: Walter C. Wood











	*    Confidential information on this page has been omitted
and filed separately with the Securities Exchange Commission pursuant to a
Confidential Treatment Request.




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	With a copy to:

	 	Gunderson Dettmer Stough Villeneuve
	

	 	Franklin & Hachigian, LLP
	

	 	155 Constitution Drive
	

	 	Menlo Park, California 94025
	

	 	FAX: (650) 321-2800
	

	 	Attn: Bennett L. Yee, Esq.






     All such notices and other communications shall be deemed to have been duly given: when
delivered by hand, if personally delivered; three business days after being deposited in the mail,
postage prepaid, if delivered by mail; the next business day, if by recognized overnight courier
service; and when receipt acknowledged, if faxed; provided, however, notice to a
party’s attorney shall not constitute notice to such party.



     11.3 Dispute Resolution. Except as provided in Section 1.6(h), all claims,
disputes and other matters in controversy (herein called a “Dispute”) arising directly or
indirectly out of or related to this Agreement, or the breach thereof, whether contractual or
noncontractual, and whether during the term or after the termination of this Agreement, will be
resolved exclusively according to the procedures set forth in this Section 11.3.



          (a) Negotiation. The parties will attempt to settle Disputes arising out of or
relating to this Agreement, or the breach thereof, by a meeting of two designated representatives
of each party within five days after a request by either of the parties to the other party asking
for the same.




          (b) Mediation. If such Dispute cannot be settled at such meeting, either party within
five days of such meeting may give a written notice (a “Dispute Notice”) to the other party
setting forth the nature of the Dispute. The parties will attempt in good faith to resolve the
Dispute by mediation in Phoenix, Arizona under the Commercial Mediation Rules of AAA in effect on
the date of the Dispute Notice. The parties will select a person who will act as the mediator
under this subsection (b) within 60 days of the date of this Agreement. If the Dispute has
not been resolved by mediation as provided above within 30 days after delivery of the Dispute
Notice, then the Dispute will be determined by arbitration in accordance with the provisions of
subsection (c) below.




          (c) Arbitration. Any Dispute that is not settled through mediation as provided in
subsection (b) above will be resolved by arbitration in Phoenix, Arizona, governed by the
Federal Arbitration Act, 9 U.S.C. § 1 et seq., and administered by the AAA under its Commercial
Arbitration Rules in effect on the date of the Dispute Notice, as modified by the provisions of
this subsection (c), by a single arbitrator. The arbitrator selected, in order to be
eligible to serve, will be a lawyer with at least 15 years experience specializing in business
matters. In the event the parties cannot agree on a mutually acceptable single arbitrator from the
list submitted by the AAA, AAA will appoint the arbitrator who will meet the foregoing criteria.
The arbitrator will base the award on applicable law and judicial precedent and, unless both
parties agree otherwise, will include in such award the findings of fact and conclusions of law
upon which the award is based. Judgment on the award rendered by the arbitrator may be entered in
any court having jurisdiction thereof.




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          (d) Notwithstanding the foregoing or anything in this Agreement to the contrary:




               (i) Upon the application by either party to a court for an order confirming, modifying or
vacating the award, the court will have the power to review whether, as a matter of law based on
the findings of fact determined by the arbitrator, the award should be confirmed, modified or
vacated in order to correct any errors of law made by the arbitrator. In order to effectuate such
judicial review limited to issues of law, the parties agree (and will stipulate to the court) that
the findings of fact made by the arbitrator will be final and binding on the parties and will serve
as the facts to be submitted to and relied on by the court in determining the extent to which the
award should be confirmed, modified or vacated; and



               (ii) Either party will have the right to apply to any court for an order to specifically
enforce their rights under this Agreement and the other agreements contemplated by this Agreement,
including but not limited to a party’s obligation to close the transaction and the confidentiality
provisions contained in this Agreement.



          (e) Costs and Attorneys’ Fees. If either party fails to proceed with mediation or
arbitration as provided herein or unsuccessfully seeks to stay such mediation or arbitration, or
fails to comply with any arbitration award, or is unsuccessful in vacating or modifying the award
pursuant to a petition or application for judicial review, the other party will be entitled to be
awarded costs, including reasonable attorneys’ fees, paid or incurred by such other party in
successfully compelling such arbitration or defending against the attempt to stay, vacate or modify
such arbitration award and/or successfully defending or enforcing the award.




          (f) Tolling of Statute of Limitations. All applicable statutes of limitations and
defenses based upon the passage of time will be tolled while the procedures specified in this
Section 11.3 are pending. The parties will take such action, if any, required to
effectuate such tolling.




     11.4 Interpretation. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement.
References to Sections and Articles refer to sections and articles of this Agreement unless
otherwise stated. Words such as “herein,” “hereinafter,” “hereof,” “hereto,” “hereby” and
“hereunder,” and words of like import, unless the context requires otherwise, refer to this
Agreement (including the exhibits and attachments hereto). As used in this Agreement, the
masculine, feminine and neuter genders shall be deemed to include the others if the context
requires. The term “Agreement” means collectively this Agreement and the agreements,
certificates and other documents delivered hereunder. For purposes of this Agreement,
“Xicom” means Xicom and its Subsidiaries, where appropriate (including, without limitation,
Section 3.15).



     11.5 Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated and the parties shall negotiate in



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good faith to modify this Agreement to preserve each party’s anticipated benefits under this
Agreement.



     11.6 Miscellaneous. This Agreement (together with all other documents and instruments
referred to herein): (a) constitutes the entire agreement, and supersedes all other prior
agreements, representations, warranties and undertakings, both written and oral, among the parties,
with respect to the subject matter hereof; (b) is not intended to confer upon any other person any
rights or remedies hereunder; (c) shall not be assigned by operation of law or otherwise, except
that Radyne and Merger Sub may assign all or any portion of their rights under this Agreement to
any wholly-owned subsidiary, but no such assignment shall relieve Radyne and Merger Sub of their
obligations hereunder, and except that this Agreement may be assigned by operation of law to any
corporation with or into which Radyne may be merged or otherwise sold, including through a sale of
assets or stock; and (d) shall be governed in all respects, including validity, interpretation and
effect, by the internal laws of the State of Arizona, without giving effect to the principles of
conflict of laws thereof. This Agreement may be executed in two or more counterparts (including
counterpart signature pages to be executed by the Xicom Shareholders referenced in Section
7.3(h)), which together shall constitute a single agreement.



[SIGNATURE PAGES FOLLOW]




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MERGER AGREEMENT




SIGNATURE PAGES




          IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date first
written above.



	 	 	 	 	 
	 	RADYNE COMSTREAM INC., a Delaware 

corporation

 	 
	 	By:  	 	 
	 	Name: Robert C. Fitting 	 
	 	Title: Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	XICOM ACQUISITION INC., a California 

corporation

 	 
	 	By:  	 	 
	 	Name: Robert C. Fitting 	 
	 	Title: President and Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	XICOM TECHNOLOGY INC., a California 

corporation

 	 
	 	By:  	 	 
	 	Name: Walter C. Wood 	 
	 	Title: Chief Executive Officer 	 
	 



	 	 	 	 	 
	 	THE SHAREHOLDERS:

 	 
	 	By:  	 	 
	 	 	Walter C. Wood 	 



	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	 	Ronald J. Sterns 	 



	 	 	 	 	 
	 	 	 
	 	By:  	 	 
	 	 	Judith R. Sterns 	 
	 	 	 	 
	 



	 	 	 	 	 
	 	WALTER C. WOOD, solely in his capacity as 

the Shareholders’ Representative

 	 
	 	By:  	 	 
	 	 	Walter C. Wood 	 
	 	 	 	 
	 





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APPENDIX I




Additional Xicom Shareholders




	 
	Kevin Sterns

	Oralee Murillo

	Jennifer Rivers

	Jonathan Sterns

	Stephen Ludvik

	Stephen C. McIntyre

	Bruce McLeod

	Raul Ochoa

	Wilson Sonsini Investment WS96B

	Jack L. Hancock

	Ailsa E. Ludvik

	Gregory M. Ludvik

	George Vendelin

	Algis Joudikis








 









 








APPENDIX II




Computation of Net Working Capital




[Attached]