EXHIBIT 10.18
TDC / MILLITECH
PURCHASE AGREEMENT
Dated as of June ___, 1988
MASSACHUSETTS TECHNOLOGY DEVELOPMENT CORPORATION
MILLITECH CORPORATION
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TABLE OF CONTENTS
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Page
Section 1. Terms of Investment..................................................................
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1.1 The Loan.............................................................................
1.2 The Stock Purchase Warrant...........................................................
Section 2. Use of Investment Proceeds...........................................................
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Section 3. Prepayment...........................................................................
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3.1 Optional Prepayment..................................................................
3.2 Mandatory Prepayment.................................................................
Section 4. Representations and Warranties of Company............................................
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4.1 Organization and Corporate Power.....................................................
4.2 Capitalization.......................................................................
4.3 Subsidiaries.........................................................................
4.4 Financial Statements.................................................................
4.5 Corporate Authority; Valid Agreement; Enforceability.................................
4.6 Title to Properties; Liens...........................................................
4.7 Patents, Trademarks, etc.............................................................
4.8 Litigation...........................................................................
4.9 Leases...............................................................................
4.10 Tax Returns and Payments.............................................................
4.11 Contracts............................................................................
4.12 Transactions with Affiliates.........................................................
4.13 Compliance with other Instruments, etc...............................................
4.14 Disclosure.........................................................................
4.15 Brokers............................................................................
4.16 ERISA..............................................................................
Section 5. Representations and Warranties of MTDC.............................................
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5.1 Corporate Authority; Valid Agreement; Enforceability...............................
5.2 Litigation.........................................................................
5.3 Investment Representation..........................................................
5.4 Confidentiality....................................................................
Section 6. Closing Date; Conditions to Closing................................................
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6.1 Closing Date.......................................................................
6.2 Conditions to Closing..............................................................
6.2.1 Representations and Warranties Correct......................................
6.2.2 Performance.................................................................
6.2.3 Opinion of Company's Counsel................................................
6.2.4 Other Agreements............................................................
6.2.5 Proceedings and Documents...................................................
Section 7. Affirmative Covenants of Company...................................................
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7.1 Maintenance of Corporate Existence.................................................
7.2 Maintenance of Property, Plant and Equipment.......................................
7.3 Maintenance of Casualty Insurance..................................................
7.4 Maintenance of Records.............................................................
7.5 Inspection Rights..................................................................
7.6 Furnishing Financial Statements and Related Reports................................
7.6.1 Annually....................................................................
7.6.2 Quarterly...................................................................
7.6.3 Monthly.....................................................................
7.6.4 Budgets.....................................................................
7.6.5 Discussions.................................................................
7.6.6 Consolidated and Consolidating Statements...................................
7.7 Prompt Payment of Taxes............................................................
7.8 Trade Obligations..................................................................
7.9 Notification of Default Under This or Other Financing Arrangements.................
7.10 Notification of Litigation.........................................................
7.11 Composition of Management..........................................................
7.12 Maintenance of Life Insurance......................................................
7.13 Record Retention Compliance........................................................
7.14 Civil Right Compliance.............................................................
7.15 Affirmative Action.................................................................
7.16 Plant Closing Compliance...........................................................
7.17 Statutory Compliance...............................................................
7.18 Observer Rights....................................................................
7.19 Noncompetition, Nondisclosure and Inventions Agreement.............................
7.20 Stock Option Plans.................................................................
7.21 New Developments...................................................................
7.22 Compliance by Subsidiaries.........................................................
7.23 Expiration and Waiver of Affirmative Covenants.....................................
7.24 Miscellaneous......................................................................
Section 8. Negative Covenants of Company......................................................
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8.1 Merger or Consolidation............................................................
8.2 Nature and Scope of Business.......................................................
8.3 Payment of Dividends and Redemption of Stock.......................................
8.4 Guarantees.........................................................................
8.5 Voluntary Prepayment of Other Indebtedness.........................................
8.6 Investments, Advances and Acquisitions.............................................
8.7 Liens and Mortgages................................................................
8.8 Sale or Disposition of Assets......................................................
8.9 Lease and Rental Obligations.......................................................
8.10 Capital Expenditures...............................................................
8.11 Executive Compensation.............................................................
8.12 Expiration and Waiver of Negative Covenants........................................
Section 9. Registration Rights................................................................
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9.1 Definitions........................................................................
9.2 Demand Registration................................................................
9.3 Company Registration...............................................................
9.4 Short-form Registration............................................................
9.5 Obligations of the Company.........................................................
9.6 Furnish Information................................................................
9.7 Indemnification....................................................................
9.8 Termination of Company's Obligations...............................................
9.9 Reports Under Securities Exchange Act of 1934......................................
9.10 Transfer of Registration Rights....................................................
9.11 Legends; Stop Transfer.............................................................
9.12 Lockup Agreement...................................................................
Section 10. Events of Default..................................................................
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Section 11. Reimbursement for Expenses.........................................................
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Section 12. Miscellaneous Provisions...........................................................
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12.1 Entire Agreement and Waivers.......................................................
12.2 Remedies Cumulative................................................................
12.3 Survival of Covenants..............................................................
12.4 Governing Law......................................................................
12.5 Assurance of Execution and Delivery of Additional Instruments......................
12.6 Extension of Time..................................................................
12.7 Notices............................................................................
12.8 Counterparts.......................................................................
Section 13. List of Schedules....................................................................
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SIGNATURES........................................................................................
PURCHASE AGREEMENT
This Purchase Agreement dated June ____, 1988, (the "Agreement") is between Massachusetts Technology Development Corporation ("MTDC"), a body politic and corporate and a public instrumentality of the Commonwealth of Massachusetts organized under G.L. c.40G (the "Act") having it principal place of business at 131 State Street, Boston, Massachusetts 02109, and Millitech Corporation (the "Company"), a Massachusetts corporation having its principal place of business at South Deerfield, Massachusetts.
Section 1. Terms of Investment.
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Subject to the terms and conditions of this Agreement:
1.1 The Loan. On the Closing Date, MTDC agrees to lend to the Company the
-------- sum of $250,000 (the "Loan"). The Loan shall be evidenced by a Subordinated Promissory Note in the principal amount of the Loan (the "Note"), in substantially the form attached hereto as Schedule 1.1.
1.2 The Stock Purchase Warrant. On the Closing Date, the Company agrees
-------------------------- to issue to MTDC a stock purchase warrant (the "Warrant") in substantially the form set forth in Schedule 1.2 attached hereto to subscribe for and purchase 20,000 shares of the Company's Convertible Preferred Stock (the "Stock") at an exercise price of $3.25 per share. The terms of the Stock shall be substantially as set forth in Schedule 1.2 attached hereto.
Section 2. Use of Investment Proceeds.
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The proceeds of MTDC'S investment in the Company shall be used by the Company for the development, refinement, and commercialization of a product or process and other working capital needs. The proceeds of the Loan shall not be used by the Company for projects and activities prohibited by the provisions of 13 CFR (S)(S)309.3 (Non-relocation) and 309.15 (Flood hazard).
Section 3. Prepayment.
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3.1 Optional Prepayment. From and only after the second anniversary of
------------------- the Closing Date, the Company may prepay the Loan at any time upon thirty (30) days' prior written notice to the holder of the Note in whole or in part in any multiple of $5,000 without premium or penalty; provided, however, if the Loan is prepaid directly or indirectly with proceeds obtained from or in anticipation of financing with a Lender other than MTDC, a premium of five percent (5%) of the portion of the Loan so prepaid shall be due and payable to MTDC at the time of the prepayment. All prepayments shall be accompanied by interest on the amount prepaid to the date of prepayment and shall be applied to the payment of installments of principal in inverse order or maturity.
3.2 Mandatory Prepayment. The Company shall immediately prepay the Loan
-------------------- in full, together with all interest accrued thereon to the date of prepayment, without premium or penalty, in the event that the Company's principal place of business ceases to be located in an area in Massachusetts qualified for designation as a Title IV redevelopment area under the Public Works and Economic Development Act of 1965, as amended.
Section 4. Representations and Warranties of the Company.
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The Company represents and warrants that:
4.1 Organization and Corporate Power. The Company is a corporation duly
-------------------------------- organized, validly existing and in good standing under the laws of Massachusetts and has the corporate power to own its property and to carry on its business as it is now conducted as it is described in its Business Plan submitted to MTDC. Attached hereto as Schedule 4.1A is a complete and correct copy of the Company's charter. Attached hereto as Schedule 4.1B is a complete and correct copy of the Company's bylaws. The Company is duly qualified to do business and is in good standing in the
Commonwealth of Massachusetts and in each jurisdiction in which the failure to qualify to do business would have a material adverse effect upon its financial condition, business or properties.
4.2 Capitalization. The authorized capital stock of the Company consists
-------------- of 6,000,000 shares of common stock, $.01 par value, of which 936,200 shares are issued and outstanding and 3,270,000 shares of Preferred Stock, $.01 par value, of which 2,855,112 shares are issued and outstanding. All of such issued and outstanding shares have been validly issued and are fully paid and non- assessable. Attached hereto as Schedule 4.2 is a complete and correct list of the present stockholders of the Company and of the holders of all options, warrants or other rights to purchase or otherwise acquire any shares of capital stock of the Company. Except as set forth in the Company's charter or bylaws, or as shown on Schedule 4.2, there are no restrictions on the disposition of capital stock of the Company by the holder thereof and the Company is not under any obligation to register under the Securities Act of 1933, as amended (the "Securities Act"), any of its presently outstanding capital stock other securities or any of its capital stock or other securities that may be issued in the future.
4.3 Subsidiaries. Each present Subsidiary of the Company (as defined
------------ below) is listed in Schedule 4.3 attached hereto. Except as shown in Schedule 4.3, all of the outstanding shares of stock of, or other interests in, each Subsidiary have been validly issued, are fully paid and non-assessable and are owned, beneficially and of record, free of any lien, encumbrance or claim, by the Company. For the purpose of this Agreement, "Subsidiary" means any corporation, trust or other entity, a majority of the outstanding voting power of which is owned, directly or indirectly, by the Company.
4.4 Financial Statements. The Company has delivered to MTDC its balance
-------------------- sheet as of December 31, 1987 together with statements of operations, stockholders' equity and cash flows for
its fiscal year then ended, certified by Touch Ross & Co., independent certified public accountants, and its unaudited balance sheet as of March 31, 1988, together with a statement of income for the three-month period then ended, certified by the chief financial officer of the Company (collectively, the "Financial Statements"). The Financial Statements have been prepared in accordance with generally accepted accounting principles consistently applied, fairly present the condition of the Company as at the respective dates and for the respective periods indicated (subject in the case of the unaudited statements to normal year-end audit adjustments), and reflect all material liabilities, contingent or otherwise, as at the respective dates indicated. No material adverse change has occurred in the financial condition, business or properties of the Company since December 31, 1987, and no material liabilities have been incurred by the Company since that date other than in the ordinary course of business.
4.5 Corporate Authority; Valid Agreement; Enforceability. The Company has
---------------------------------------------------- full corporate power and authority to enter into this Agreement, to borrow hereunder, to execute and deliver the Note, to execute and deliver the Warrant, and to incur the other obligations provided for herein, all of which have been duly authorized by all proper and necessary corporate action. All authorizations, approvals, consents and other actions by, and all notices to and filing with, any federal, state or other governmental authority or regulatory body required for the execution, delivery and performance of this Agreement by the Company have been, or prior to the Closing Date (as hereafter defined) will have been, obtained or given. The Agreement constitutes, and the Note and the Warrant when issued and delivered pursuant to this Agreement will constitute, the valid and legally binding obligations of the Company, enforceable in accordance with their terms. The Warrant Shares have been duly authorized and, when issued upon exercise of the Warrant, will be
validly issued, fully paid and nonassessable. Twenty Thousand (20,000) shares of preferred stock of the Company have been duly reserved for issuance upon exercise of the Warrant.
4.6 Title to Properties; Liens. Except as described in Schedule 4.6, (i)
--------------------------- the Company has good and sufficient title to all of its properties and assets, including all properties and assets reflected in the balance sheets included in the Financial Statements (except properties and assets deemed by the Company to be no longer useful in its business or which have been sold for fair consideration in the ordinary course of business), and (ii) none of its properties or assets is subject to any mortgage, pledge, lien, conditional sale or other title retention agreement, security interest, lease, charge or encumbrance.
4.7 Patents, Trademarks, etc. The Company owns or has a valid right to
------------------------ use the patents, patent rights, licenses, trade secrets, trademarks or trademark rights, trade names or trade name rights or franchises, copyrights, inventions and intellectual property rights used in its business as now conducted and as now proposed to be conducted (a complete list of which is attached hereto as Schedule 4.7). The business of the Company as now conducted and as now proposed to be conducted does not and will not conflict with patents, patent rights, licenses, trade secrets, trademarks, trademark rights, trade names or trade name rights or franchises, copyrights, inventions and intellectual property rights owned by other. The Company has no obligation to compensate any person, corporation or other organization for the use of any patents or rights and has granted to no person, corporation or other organization any license or other right to use in any manner any of the patents or rights of the Company, whether requiring the payment of royalties or not.
4.8 Litigation. Except as described in Schedule 4.8, there is no action,
---------- proceeding or investigation pending or, to the best knowledge of the Company, threatened which questions the validity of this Agreement or any action taken or to be taken pursuant hereto or contemplated
hereby, or which might result, either in any case or in the aggregate, in any material adverse change in the financial condition, business, or properties of the Company and its Subsidiaries. The foregoing includes, without limiting its generality, actions pending or threatened involving the prior employment of any employees of the Company or their use of any information or technique allegedly proprietary to their former employer.
4.9 Leases. All leases to which the Company is a party as lessee or
------ sublessee are valid and the Company is not in default thereunder, has not assigned or encumbered any of its rights thereunder and enjoys peaceful and undisturbed possession under each lease to which it is a party.
4.10 Tax Return and Payments. All tax returns and reports of the Company
----------------------- required by law to be filed have been duly filed and all taxes, fees and other governmental charges shown thereon which are due and payable have been paid (other than those being contested in good faith by appropriate proceedings diligently conducted and with respect to which adequate reserves have been established and no proceedings to foreclose have been commenced). The charges and reserves on the books of the Company in respect of all income and other taxes are adequate, and the Company knows of no additional assessment or any basis therefore.
4.11 Contracts. Set forth in Schedule 4.11 or another Schedule to the
--------- Agreement attached hereto is a list of all contracts and agreements, written or oral, which are of material importance to the business of the Company or any Subsidiary, including without limitation all contracts and agreements (i) not made in the ordinary course of business, (ii) having a value in excess of $25,000, whether or not made in the ordinary course of business, but excluding contracts for the purchase and sale of services and supplies made in the ordinary course of business, (iii) with any labor union, (iv) for the future purchase of fixed assets or for the future purchase of materials, supplies or equipment in excess of normal operating requirements, (v) for the employment of any officer, individual
employee or other person on a full-time basis or with any individual on a consulting basis pursuant to which the Company or any Subsidiary has ongoing obligations in excess of $10,000, (vi) setting forth bonus, pension, profit- sharing, retirement, stock purchase, or stock option plans in effect with respect to officers or employees, (vii) relating to the borrowing of money or to the mortgaging, pledging or otherwise placing a lien on any assets of the Company, (vii) constituting a guaranty of or pledge of property with respect to any obligation for borrowed money or otherwise, (ix) constituting a lease or agreement under which the Company is lessee or lessor of, or holds or operates, or permits a third party to hold or operate, any real or personal property, (x) constituting a license under which the Company sells or permits any third party to sell any product or service, or (xi) under which the Company is obligated to pay any broker's fees, finder's fees or any such similar fees, to any third party. No such contract or agreement, and no other contract or agreement to which the Company is a party or by which it is bound, contains any term which now has, or as far as can be foreseen may have, a material adverse effect on the financial condition, business or properties of the Company. The Company has furnished to MTDC true, correct and complete copies of all such contracts and agreements requested by MTDC.
4.12 Transactions with Affiliates. The only transactions in which the
---------------------------- Company and any person or entity controlling, controlled by or under common control with the Company or any Subsidiary is presently engaged or proposes to engage, directly or indirectly, are set forth in Schedule 4.12 attached hereto. The terms and conditions of each such transaction are fair and reasonable to the Company or the Subsidiary, as the case may be, and at least as favorable as would obtain in a comparable transaction with an unaffiliated person or entity.
4.13 Compliance with other Instruments, etc. The Company is not in
-------------------------------------- violation of any term of its charter or its bylaws, or of any agreement, instrument, judgment, decree or order, or, to
the best knowledge of the Company, any statute, rule or governmental regulation applicable to it. The execution, delivery and performance of this Agreement and the taking of action contemplated hereby will not result in any violation of or be in conflict with or constitute a default under any such term, or result in the creation of any mortgage, lien, charge or encumbrance upon any of the properties or assets of the Company pursuant to any such term.
4.14 Disclosure. Neither this Agreement nor any Schedule hereto, nor any
----------- certificate or other instrument furnished to MTDC b ...
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