<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13D-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO 13D-2(a)
(AMENDMENT NO. 1)
RF Micro Devices, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock
- --------------------------------------------------------------------------------
(Title of Class of Securities)
749941 10 0
- --------------------------------------------------------------------------------
(CUSIP Number)
William B. Lawrence
TRW Inc.
1900 Richmond Road, 3E
Cleveland, Ohio 44124
(216) 291-7230
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 15, 1998
- --------------------------------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box __.
(Continued on following pages)
(Page 1 of 9 Pages)
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13D
<TABLE>
<CAPTION>
CUSIP NO. 749941 10 0 Page 2 of 9 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
TRW Inc. ("TRW"), I.D. #34-0575430
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) ___
(b) ___
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) ____
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Ohio
NUMBER OF SHARES 7 SOLE VOTING POWER 2,937,557(a)
BENEFICIALLY OWNED ----------------------
BY EACH REPORTING 8 SHARED VOTING POWER 2,683,930(b)
PERSON WITH ----------------------
9 SOLE DISPOSITIVE POWER 2,937,557(a)
----------------------
10 SHARED DISPOSITIVE POWER 2,683,930(b)
----------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,621,487
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
____
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
34.8 percent
14 TYPE OF REPORTING PERSON
CO
(a) Pursuant to Rule 13d-3(d), this number includes 1,000,000 shares of RF
Micro Devices, Inc. ("RFMD") common stock which TRW has the right to
acquire on exercise of Warrant No. 4 issued to TRW on June 6, 1996 (the
"TRW Warrant"). The TRW Warrant first became exercisable on June 15, 1998,
and must be exercised on or before September 14, 1998.
(b) These shares are subject to a Restricted Stock Agreement, dated June
6, 1996, between TRW and RFMD pursuant to which TRW has granted to the
president of RFMD an irrevocable proxy to vote the shares in favor of any
measure approved by the RFMD board of directors. The agreement also
provides that the shares may not be transferred by TRW without RFMD's
prior written consent. The restrictions on these shares imposed by the
Restricted Stock Agreement will lapse in accordance with the terms of the
agreement on July 15, 1998.
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SCHEDULE 13D
This Amendment No. 1 on Schedule 13D amends the beneficial ownership statement
initially filed by TRW Inc., an Ohio corporation, on February 12, 1998, on a
Schedule 13G pursuant to Rule 13d-1(d) under the Securities Exchange Act of
1934, as amended. This statement is being filed to reflect the beneficial
ownership of shares which TRW Inc. has the right to acquire on exercise of a
currently exercisable Warrant No. 4 issued by RF Micro Devices, Inc. on June 6,
1996 (the "TRW Warrant").
Item 1. Security and Issuer.
The title of the class of securities which is the subject of this
report is common stock, no par value ("Common Stock") of RF Micro Devices, Inc.
("RFMD"). RFMD is a North Carolina corporation which has its principal executive
offices at 7625 Thorndike Road, Greensboro, North Carolina 27409-9421.
Item 2. Identity and Background.
(a)-(c), (f) This statement is filed on behalf of TRW Inc. ("TRW"), an
Ohio corporation, with its principal business address at 1900 Richmond Road,
Cleveland, Ohio 44124. TRW is an international company that provides advanced
technology products and services. The principal businesses of TRW and its
subsidiaries are the design, manufacture and sale of products and the
performance of systems engineering, research and technical services for industry
and the United States Government in two industry segments: Automotive and Space,
Defense & Information Systems. Attached and incorporated herein by reference is
Schedule A, which sets forth certain information concerning the directors and
executive officers of TRW.
(d) During the last five years, neither TRW nor, to the best knowledge
of TRW, any of its directors and executive officers, has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, neither TRW nor, to the best knowledge
of TRW, any of its directors and executive officers has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The securities which are the subject of this statement have been
acquired by TRW using a combination of working capital, funds generated from the
issuance of commercial paper and a substantial amount of in-kind value received
in exchange for TRW's technology transfer and technical assistance, as
described more fully below. TRW acquired 826,446 shares of RFMD Class C
Preferred Stock for a purchase price of $5 million in cash, pursuant to a
Securities Purchase Agreement between TRW and RFMD, dated June 6, 1996
(attached as Exhibit 3.1, and incorporated herein by reference). These shares
were converted into 826,446 shares of Common Stock in connection with the
completion of RFMD's initial public offering on June 6, 1997. TRW acquired an
additional 1,111,111 shares of Common Stock on conversion of a Subordinated
Convertible Promissory Note, dated
(Page 3 of 9 Pages)
<PAGE> 4
June 6, 1996 (the "Note") (attached as Exhibit 3.2, and incorporated herein by
reference). The Note provided for the conversion of the then outstanding
principal of $10 million into shares of Common Stock in full satisfaction of
RFMD's obligations under the Note, in connection with RFMD's initial public
offering. Finally, TRW acquired (i) 2,683,930 shares of restricted Common Stock
pursuant to a Restricted Stock Agreement (attached as Exhibit 3.3, and
incorporated herein by reference) and (ii) the TRW Warrant (attached as Exhibit
3.4, and incorporated herein by reference ) to acquire 1,000,000 shares of
Common Stock, each in consideration of the execution, delivery and performance
by TRW of a License and Technical Assistance Agreement (attached as Exhibit
3.5, and incorporated herein by reference). Each of these agreements was
entered into by TRW and RFMD, and dated June 6, 1996. Pursuant to the License
and Technical Assistance Agreement, TRW agreed to provide RFMD with certain
rights to its patents on Gallium Arsenide ("GaAs") technology and to provide
RFMD with technical assistance to design, construct, start-up, test and operate
a foundry for the manufacture of GaAs transistors and products.
Item 4. Purpose of Transaction.
TRW made its initial investments in the securities of RFMD as a part of
a strategic alliance with RFMD to develop high volume commercialization of TRW's
GaAs technology for use in telecommunications markets. TRW intends to review on
a continuing basis its investment in the Common Stock of RFMD and to take such
actions with respect to its investment as it deems appropriate in light of the
circumstances existing from time to time. Such actions could include, among
other things, acquiring additional shares of Common Stock or disposing of the
shares, in whole or in part, at any time, subject to compliance with applicable
securities laws and the various agreements between TRW and RFMD discussed
herein. Any such decision would be based on an assessment by TRW of a number of
different factors, including, but not limited to, the business, prospects and
affairs of RFMD, the market for the Common Stock, the condition of the
securities markets, general economic and industry conditions and other
opportunities available to TRW.
Except as set forth in the preceding paragraph, TRW does not have any
current plans or proposals which relate to or would result in: (a) the
acquisition by any person of additional securities of RFMD, or the disposition
of securities of RFMD; (b) an extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving RFMD or any of its
subsidiaries; (c) the sale or transfer of a material amount of assets of RFMD or
of any of its subsidiaries; (d) any change in the present board of directors or
management of RFMD, including any plans or proposals to change the number or
term of directors or to fill any existing vacancies on the board; (e) any
material change in the present capitalization or dividend policy of RFMD; (f)
any other material change in RFMD's business or corporate structure; (g) changes
in RFMD's charter, bylaws or instruments corresponding thereto or other actions
which may impede the acquisition of control of RFMD by any person; (h) causing a
class of securities of RFMD to be delisted from a national securities exchange
or to cease to be authorized to be quoted in an inter-dealer quotation system of
a registered national securities association; (i) a class of equity securities
of RFMD becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Securities Exchange Act of 1934, as amended; or (j) any action
similar to any of those enumerated above.
(Page 4 of 9 Pages)
<PAGE> 5
Item 5. Interest in Securities of the Issuer.
(a) TRW beneficially owns 5,621,487 shares of Common Stock, including
1,000,000 shares that TRW has the right to acquire pursuant to the TRW Warrant
(attached as Exhibit 3.4, and incorporated herein by reference). The TRW
Warrant first became exercisable on June 15, 1998, and must be exercised on or
before September 14, 1998. The number of shares of Common Stock beneficially
owned by TRW represents 34.8 percent of the 16,141,141 shares of Common Stock
outstanding as of June 15, 1998, as reported in RFMD's Annual Report on Form
10-K for the fiscal year ended March 28, 1998. The directors and executive
officers of TRW disclaim beneficial ownership of these shares.
(b) TRW has sole voting and dispositive power with respect to 2,937,557
shares. Pursuant to the Restricted Stock Agreement (attached as Exhibit 3.3, and
incorporated herein by reference), TRW shares power to vote or dispose of
2,683,930 shares with David A. Norbury, the President and Chief Executive
Officer of RFMD, whose business address is 7625 Thorndike Road, Greensboro,
North Carolina 27409-9421. Mr. Norbury is a citizen of the United States. During
the last five years, to the best knowledge of TRW, Mr. Norbury has not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), nor has he been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
(c) No transactions have been effected in the Common Stock of RFMD by
TRW or, to the best knowledge of TRW, by its directors and executive officers
within the past 60 days.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
Two million, six hundred and eighty three thousand, nine hundred and
thirty (2,683,930) shares of Common Stock are subject to the Restricted Stock
Agreement (attached as Exhibit 3.3, and incorporated herein by reference),
pursuant to which TRW has granted to the president of RFMD an irrevocable proxy
to vote the shares in favor of any measure approved by the RFMD board of
directors. The agreement also provides that the shares may not be transferred
by TRW without RFMD's prior written consent. The restrictions on these shares
imposed by the Restricted Stock Agreement will lapse in accordance with the
terms of the agreement on July 15, 1998.
(Page 5 of 9 Pages)
<PAGE> 6
RFMD and certain shareholders, including TRW, also entered into the
Second Amended and Restated Registration Rights Agreement, dated June 6,
1996 (attached as Exhibit 3.6, and incorporated herein by reference),
pursuant to which TRW acquired registration rights with respect to certain
Shares of Common Stock held by it. In return, TRW agreed that, before the fifth
anniversary of the closing of RFMD's initial public offering, TRW would not (i)
acquire any voting securities or rights or options to acquire any assets of
RFMD in excess of 40% of RFMD's equity securities, calculated on a fully
diluted basis; (ii) make any public announcement with respect to, or submit any
proposal for, any extraordinary transaction involving RFMD or its securities or
assets; (iii) make or participate in any solicitation of proxies to vote, or
seek to advise or influence any person or entity with respect to the voting of,
any voting securities of RFMD; (iv) form, join or participate in a "group"
within the meaning of the Securities Exchange Act of 1934, as amended, with
respect to any voting securities of RFMD; and (v) solicit or encourage any
person to propose a business combination or similar transaction with, or a
change in control of, RFMD.
As discussed in response to Item 3 of this Schedule 13D, TRW and RFMD
are also parties to a Securities Purchase Agreement, a Subordinated Convertible
Promissory Note, a License and Technical Assistance Agreement and the TRW
Warrant, each attached as exhibits hereto and incorporated herein by reference.
Please see the response to Item 3 of this Schedule 13D with respect to each of
these instruments and agreements, which information is incorporated into this
response to Item 6 of this Schedule 13D by reference.
Item 7. Material to be Filed as Exhibits.
EXHIBIT
NO. DOCUMENT
3.1 Securities Purchase Agreement, by and between TRW Inc. and RF
Micro Devices, Inc., dated June 6, 1996
3.2 Subordinated Convertible Promissory Note, dated June 6, 1996
3.3 Restricted Stock Agreement, by and between TRW Inc. and RF
Micro Devices, Inc., dated June 6, 1996
3.4 Warrant No. 4, issued by RF Micro Devices, Inc. to TRW Inc.,
dated June 6, 1996
3.5 License and Technical Assistance Agreement, by and between TRW
Inc. and RF Micro Devices, Inc., dated June 6, 1996
3.6 Second Amended and Restated Registration Rights Agreement,
between RF Micro Devices, Inc. and certain shareholders, dated
June 6, 1996
(Page 6 of 9 Pages)
<PAGE> 7
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: June 26, 1998
TRW INC.
By: /s/ William B. Lawrence
----------------------------------
William B. Lawrence
Executive Vice President,
General Counsel and Secretary
(Page 7 of 9 Pages)
<PAGE> 8
Schedule A
The name and present principal occupation or employment of each director and
executive officer of TRW and certain other information are set forth below. The
business address of each such director and executive officer is 1900 Richmond
Road, Cleveland, Ohio 44124. Unless otherwise indicated, each occupation set
forth opposite an individual's name refers to employment with TRW. All directors
and executive officers listed below are citizens of the United States, except
that Dr. Blankenstein is a citizen of Germany and Dr. Hahn is a citizen of
Austria.
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
- ------------------------------------------------------------------------------
Michael H. Armacost Director of TRW and President of the
Brookings Institution.
Martin Feldstein Director of TRW, Professor of Economics at
Harvard University, and President and Chief
Executive Officer of the National Bureau of
Economic Research.
Robert M. Gates Director of TRW, consultant, author,
lecturer and former Director of Central
Intelligence of the United States.
Joseph T. Gorman Director, Chairman of the Board and Chief
Executive Officer.
Carl H. Hahn Director of TRW and former Chairman of the
Board of Volkswagen AG.
George H. Heilmeier Director of TRW and Chairman Emeritus of
Bell Communications Research Inc.
(Bellcore).
Peter S. Hellman Director, President and Chief Operating
Officer.
Karen N. Horn Director of TRW and Senior Managing Director
and Head of International Private Banking of
Bankers Trust New York Corporation.
E. Bradley Jones Director of TRW and former Chairman and
Chief Executive Officer of Republic Steel
Corporation and its successor LTV Steel
Company.
William S. Kiser Director of TRW and Vice Chairman and Chief
Medical Officer of Primary Health Systems,
Inc.
David B. Lewis Director of TRW and Chairman of the Board of
Lewis & Munday, a Detroit law firm.
James T. Lynn Director of TRW.
(Page 8 of 9 Pages)
<PAGE> 9
NAME PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
Lynn M. Martin Director of TRW and Chair of Deloitte &
Touche's Council on the Advancement of Women
and advisor to the firm and Davee Chair at
the J. L. Kellogg Graduate School of
Management, Northwestern University.
John D. Ong Director of TRW and Chairman Emeritus of The
BFGoodrich Company.
Richard W. Pogue Director of TRW and senior advisor to Dix &
Eaton, a public relations firm.
Bernd Blankenstein Executive Vice President & General Manager,
TRW Steering, Suspension & Engine Group.
Timothy W. Hannemann Executive Vice President & General
Manager, TRW Space & Electronics Group.
Howard V. Knicely Executive Vice President, Human Resources &
Communications.
William B. Lawrence Executive Vice President, General Counsel &
Secretary.
Carl G. Miller Executive Vice President & Chief Financial
Officer.
Philip A. Odeen Executive Vice President & General Manager,
TRW Systems & Information Technology Group.
James S. Remick Executive Vice President & General Manager,
TRW Occupant Restraint Systems Group.
Peter Staudhammer Vice President, Science & Technology.
John P. Stenbit Executive Vice President,
Telecommunications.
Ronald D. Sugar Executive Vice President & General Manager,
TRW Automotive Electronics Group.
- --------------------------------------------------------------------------------
(Page 9 of 9 Pages)
<PAGE> 1
EXHIBIT 3.1
SECURITIES PURCHASE AGREEMENT
BETWEEN
RF MICRO DEVICES, INC.
AND
TRW INC.
JUNE 6, 1996
<PAGE> 2
<TABLE>
<CAPTION>
Page
TABLE OF CONTENTS
Section Page
<S> <C> <C>
1. DEFINITIONS..............................................................................................1
-----------
2. AUTHORIZATION OF ISSUANCE OF PURCHASER SECURITIES........................................................4
-------------------------------------------------
3. PURCHASE AND SALE OF SECURITIES..........................................................................4
-------------------------------
4. CONDITIONS OF CLOSING....................................................................................5
---------------------
(a) Consent of Third Parties, etc...................................................................5
-----------------------------
(b) Authorization and Reservation...................................................................5
-----------------------------
(c) Financial Information...........................................................................5
---------------------
(d) Certain Agreements..............................................................................5
------------------
(e) Amendment to Amended and Restated Articles of Incorporation.....................................6
-----------------------------------------------------------
(f) Amendment to Bylaws.............................................................................6
-------------------
(g) Amendment to Stock Option Plan..................................................................6
------------------------------
(h) Opinion of Counsel..............................................................................6
------------------
(i) Delivery of Closing Documents...................................................................6
-----------------------------
(j) Delivery of Purchase Price and Initial Advance Under the Loan...................................8
-------------------------------------------------------------
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................................8
---------------------------------------------
(a) Organization and Good Standing..................................................................8
------------------------------
(b) Affiliations....................................................................................8
------------
(c) Authorized and Issued Capital...................................................................8
-----------------------------
(d) Authorization...................................................................................9
-------------
(e) Good Title to All Properties....................................................................9
----------------------------
(f) Litigation......................................................................................9
----------
(g) Taxes..........................................................................................10
-----
(h) Other Contracts................................................................................10
---------------
(i) Articles of Incorporation and Bylaws...........................................................10
------------------------------------
(j) Financial Statements; Certain Changes..........................................................10
-------------------------------------
(k) Offering of Purchaser Securities...............................................................11
--------------------------------
(l) Governmental Approval..........................................................................11
---------------------
(m) Untrue Statements..............................................................................11
-----------------
(n) Patents, Licenses, Trademarks, etc.............................................................11
----------------------------------
(o) Compliance with Law............................................................................12
-------------------
(p) Brokerage Fees.................................................................................12
--------------
(q) No Crimes, etc.................................................................................12
--------------
(r) Related Transactions...........................................................................13
--------------------
(s) Leased Real Property...........................................................................13
--------------------
(t) Noncompetition Agreements......................................................................13
-------------------------
(u) Registration Exemption.........................................................................14
----------------------
</TABLE>
i
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<TABLE>
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6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.........................................................14
-----------------------------------------------
(a) Investment Purpose.............................................................................14
------------------
(b) Exemptions.....................................................................................14
----------
(c) Rule 144.......................................................................................14
--------
(d) No Broker......................................................................................14
---------
(e) Investment Decision............................................................................14
-------------------
(f) Accredited Investor............................................................................15
-------------------
(g) Restriction on Sale or Transfer................................................................15
-------------------------------
(h) Legend.........................................................................................15
------
(i) Authorization..................................................................................15
-------------
7. AFFIRMATIVE COVENANTS...................................................................................16
---------------------
(a) Conversion.....................................................................................16
----------
(b) Redemption of Preferred Stock..................................................................16
-----------------------------
(c) Use of Proceeds................................................................................16
---------------
(d) Payment of Redemption Notes....................................................................16
---------------------------
(e) Payment of Convertible Note....................................................................16
---------------------------
(f) Preparation and Approval of Budgets, Etc.......................................................16
----------------------------------------
(g) Taxes and Liens................................................................................17
---------------
(h) Insurance......................................................................................17
---------
(i) Financial Statements...........................................................................17
--------------------
(j) Other Information; Examination.................................................................19
------------------------------
(k) Meetings.......................................................................................19
--------
(l) Executive Personnel............................................................................20
-------------------
(m) Books of Account...............................................................................20
----------------
(n) Corporate Existence............................................................................20
-------------------
(o) Comply with Laws...............................................................................20
----------------
(p) Maintain Property..............................................................................20
-----------------
(q) Notice of Default..............................................................................20
-----------------
(r) Amend Bylaws...................................................................................20
------------
(s) Director Liability.............................................................................20
------------------
(t) SBA Repurchase Obligation......................................................................20
-------------------------
8. NEGATIVE COVENANTS OF THE COMPANY.......................................................................21
---------------------------------
(a) Dividends and Redemption of Stock..............................................................21
---------------------------------
(b) Loans to, Investments in, and Liabilities of Others............................................21
---------------------------------------------------
(c) Disposal of Assets.............................................................................22
------------------
(d) Subsidiary Corporation.........................................................................22
----------------------
(e) Character of Business..........................................................................22
---------------------
(f) Payment for Services or Property Not Delivered.................................................22
----------------------------------------------
(g) Sale and Leaseback.............................................................................22
------------------
</TABLE>
ii
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<TABLE>
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Section Page
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(h) Capital Expenditures and Leasehold Obligations.................................................22
----------------------------------------------
(i) Discount or Sale of Notes and Accounts Receivable..............................................22
-------------------------------------------------
(j) Conflict of Interest Transactions With Restricted Persons......................................22
---------------------------------------------------------
(k) No Amendments to Bylaws or Noncompetition Agreements...........................................23
----------------------------------------------------
(l) Setting or Changing Compensation...............................................................23
--------------------------------
(m) Indebtedness...................................................................................23
------------
(n) "Off Balance Sheet Financing...................................................................23
----------------------------
(o) Assignment of Rights...........................................................................23
--------------------
(p) Employee Benefit Plans.........................................................................23
----------------------
(q) Stock Option Plans.............................................................................23
------------------
9. GENERAL.................................................................................................24
-------
(a) Entire Agreement...............................................................................24
----------------
(b) Survival of Agreements and Representations and Warranties......................................24
---------------------------------------------------------
(c) No Waiver......................................................................................24
---------
(d) Binding Effect.................................................................................24
--------------
(e) Initial Holder.................................................................................24
--------------
(f) Cumulative Powers..............................................................................25
-----------------
(g) Loss of Securities; Reissuance in Lesser Denominations.........................................25
------------------------------------------------------
(h) Communications.................................................................................25
--------------
(i) Governing Law..................................................................................25
-------------
(j) Headings.......................................................................................25
--------
(k) Multiple Originals.............................................................................26
------------------
(l) Amendment or Waiver............................................................................26
-------------------
(m) Third Party Beneficiaries......................................................................26
-------------------------
(n) Obligations of Company to Certain Investors....................................................27
-------------------------------------------
(o) Obligations of Purchaser to Pay Its Expenses...................................................27
--------------------------------------------
</TABLE>
INDEX TO EXHIBITS
INDEX TO SCHEDULES
iii
<PAGE> 5
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT is made as of this 6th day of June,
1996, by and between RF MICRO DEVICES, INC. (the "Company"), and TRW INC. (the
"Purchaser").
WHEREAS, the Purchaser desires to purchase certain securities of the
Company as herein provided (the "Purchaser Securities"); and
WHEREAS, the Company and the Purchaser have reached certain agreements
with regard to the purchase of the Purchaser Securities, all upon the terms and
conditions more particularly described herein; and
WHEREAS, the parties desire to set forth their agreements and
understandings in writing, in consideration of the promises, covenants, matters
and things hereinafter set forth, the parties mutually covenant, contract and
agree, each with the other, as follows:
1. DEFINITIONS.
For the purpose of this Agreement, the following terms shall have the
following meanings:
(a) An "Affiliate" of the Company or any Subsidiary means any Person
that, directly or indirectly, owns or controls, or is owned or controlled by, or
is under common control with, the Company or such Subsidiary, or is an officer,
director or employee of the Company or such Subsidiary or of any company which
is an Affiliate thereof, or any spouse or other relative of such Person who is
an officer, director or employee of the Company, Subsidiary or Affiliate
company, or is any customer or supplier of the Company or such Subsidiary, or
any officer, director or employee thereof (or spouse or other relative of any
such officer, director or employee).
(b) "Class C Preferred Stock" means the Company's Class C Convertible
Preferred Stock, no par value.
(c) "Common Stock" means the Company's common stock, no par value.
(d) "Convertible Note" means the Company's subordinated convertible
promissory note in the form of Exhibit 1(d) hereto.
(e) "Deficit Warrant" means the warrant to purchase shares of Common
Stock or Preferred Stock (the class of which is determined by reference to the
timing of a Public Offering) in the form of Exhibit 1(e) hereto.
(f) "Environmental Laws" means any and all federal, state and local
laws, duties, legal obligations (including obligations of common law), rules,
regulations, ordinances, codes and orders governing, establishing, limiting or
otherwise affecting the discharge of Hazardous Materials. For
1
<PAGE> 6
purposes of this definition, "Hazardous Materials" shall mean (i) "solid waste"
(as that term is defined under the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901, et seq., and the regulations adopted pursuant to that Act),
(ii) "hazardous waste" (as that term is defined under the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., and the regulations adopted
pursuant to that Act), (iii) "hazardous substances" (as that term is defined in
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 6901, et seq., and the regulations adopted pursuant to that Act)
and (iv) other pollutants, including without limitation any solid,
liquid, gaseous or thermal irritant or contaminant, such as smoke, vapor, soot,
fumes, acids, alkalis or chemicals.
(g) "Financial Statements" has the meaning set forth in Section 5(j)
hereof.
(h) "Investors" means those Persons listed on Exhibit 1(h) hereto and
the Purchaser, collectively. Investor means any of the Investors individually.
(i) "Intellectual Property Rights" means all industrial, commercial and
intellectual property rights, including, without limitation, patents, patent
applications, patent rights, trademarks, trade names, service marks, copyrights,
computer programs, certificates of public convenience and necessity, franchises,
licenses, trade secrets, proprietary processes, formulae, circuit designs and
masks.
(j) "Key Employee" means (i) each officer of the Company, (ii) each
employee of the Company whose annual salary exceeds $50,000, (iii) each employee
of the Company generating revenues or expenses for or on behalf of the Company
of $50,000 or more per annum, or who manages or supervises a group or area of
employees of the Company involving the generation of revenues or expenses in the
per annum amount of $50,000 or more, (iv) each employee of the Company
considered by the Board of Directors to possess significant decision-making
authority and (v) each employee of the Company considered by the Board of
Directors to be a key engineer.
(k) "Noncompetition Agreements" means, collectively, the Noncompetition
and Confidentiality Agreements between the Company and each of William J. Pratt,
Powell T. Seymour, Jerry D. Neal, William A. Priddy and David A. Norbury.
(l) "Officer's Certification" means a certificate executed by the
Chairman of the Board, Chief Executive Officer, Chief Financial Officer,
President, a Vice President, or the Secretary or the Treasurer of the Company.
(m) "Person" includes both the singular and the plural and shall means
any individual, partnership, corporation, trust, unincorporated organization, or
government or department or agency thereof.
(n) "Preferred Stock" means the Company's Class A-1 Convertible
Preferred Stock, no par value, the Company's Class A-2 Convertible Preferred
Stock, no par value, the Company's Class B Convertible Preferred Stock, no par
value, the Company's Class C Preferred Stock and any
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other class of the Company's convertible preferred stock issued upon conversion
of the Convertible Note or the Deficit Warrant.
(o) "Public Offering" shall mean closing of an underwritten public
offering pursuant to an effective registration statement under the Securities
Act, covering the offer and sale to the public of Common Stock resulting in
gross proceeds to the Company (before deduction of underwriters' commissions and
expenses) of not less than $15,000,000 and at a price per share to the public
which implies a pre-financing fully diluted valuation of the Company of at least
$75,000,000.
(p) "Purchaser Securities" means, collectively, the following
securities: the Class C Preferred Stock to be issued to the Purchaser pursuant
to this Agreement; the Restricted Common Stock to be issued to the Purchaser
pursuant to this Agreement; the Convertible Note to be issued to the Purchaser
pursuant to this Agreement; the Deficit Warrant to be issued to the Purchaser
pursuant to this Agreement; and the Warrant to be issued to the Purchaser
pursuant to this Agreement.
(q) "Redemption Notes" has the meaning set forth in Article 2, Section
D, Paragraph (6) of the Articles of Incorporation.
(r) "Required Investors" means those Investors holding an aggregate
ownership interest of sixty percent (60%) of the securities of the Company held
by all Investors. For purposes of this definition, the ownership interest of
each Investor shall include (i) the number of shares of Common Stock (excluding
any shares of Restricted Common Stock unless and until such shares are no longer
subject to forfeiture as provided in the Restricted Stock Agreement) held by
such Investor, (ii) the number of shares of Common Stock issuable to such
Investor pursuant to the conversion of the Preferred Stock held by such
Investor, and (iii) following the redemption of an Investor's Preferred Stock,
the number of shares of Common Stock that would have been issuable to such
Investor if such Investor had converted its Preferred Stock immediately prior to
redemption; provided, however, that the ownership interest of an Investor
determined pursuant to this clause (iii) shall be deemed to be reduced
proportionately in accordance with the repayment of the Redemption Note held by
such Investor. If at any time an Investor, alone or together with one or more of
its Affiliates or any other person for whom such Investor serves as the Related
Investor (as provided in Section 9(n)), owns 20% or more of the Company's then
outstanding equity securities (calculated on a fully diluted basis), then the
reference above to "sixty percent (60%) of the securities of the Company held by
all Investors" shall thereafter be deemed a reference to "more than fifty
percent (50%) of the securities of the Company held by all Investors."
(s) "Restricted Common Stock" means those shares of the Company's
Common Stock issued to the Purchaser as provided herein and as further subject
to the restrictions contained in the Restricted Stock Agreement in the form of
Exhibit 1(s) hereto.
(t) "Securities Act" means the Securities Act of 1933, 15 U.S.C.
Section 77a et seq., as from time to time amended.
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<PAGE> 8
(u) "Securities Purchase Agreement" or "Agreement" means and includes
this Securities Purchase Agreement (including any Exhibits or Schedules which
are attached hereto, each of which are deemed incorporated herein by reference
and made a part hereof) and any amendments thereto authorized in the manner
provided herein.
(v) "Subsidiary" means any corporation with respect to which the
Company owns, directly or indirectly, a majority of the voting shares, or shares
or other interests entitling the Company to elect a majority of the Board of
Directors.
(w) "Warrant" means the warrant to purchase shares of Common Stock in
the form of Exhibit 1(w) hereto.
(x) To the extent not specifically defined herein, any accounting term
used herein has the meaning ordinarily accorded to it under generally accepted
accounting principles consistent with those followed in the preparation of the
financial statements of the Company.
2. AUTHORIZATION OF ISSUANCE OF PURCHASER SECURITIES
The Company has authorized the issuance to the Purchaser of (i) 826,446
shares of Class C Preferred Stock, (ii) 2,683,930 shares of Restricted Common
Stock; (iii) the Convertible Note; (iv) the Deficit Warrant; and (v) the
Warrant.
3. PURCHASE AND SALE OF SECURITIES.
Subject to the terms and conditions herein set forth, and in reliance
upon the representations and warranties of the Company and the Purchaser
contained herein, upon the closing of this Agreement (the "Closing"), the
Company shall sell to the Purchaser and the Purchaser shall purchase from the
Company:
(a) a total of 826,446 shares of Class C Preferred Stock at an
aggregate purchase price of $5,000,000, which purchase price shall be
paid by delivery to the Company of immediately available funds at the
Closing;
(b) the Convertible Note in the principal amount of
$10,000,000 pursuant to which the Company may borrow, and the Purchaser
agrees to lend, up to $10,000,000 as more particularly provided in such
Convertible Note; and
(c) the Deficit Warrant which shall entitle the Purchaser to
purchase up to 1,111,111 shares of Common Stock or Preferred Stock (the
class of which is determined by reference to the timing of a Public
Offering) at an aggregate purchase price of $10,000,000; provided that
both the number of shares and the purchase price therefor shall be
subject to adjustment as provided in the Deficit Warrant.
The Company shall also sell to the Purchaser and the Purchaser shall purchase at
the Closing, in consideration of the execution, delivery and performance by the
Purchaser of the License and
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<PAGE> 9
Technical Assistance Agreement in the form of Exhibit 3 hereto (the "License
Agreement"), the following additional Purchaser Securities:
(d) the Warrant which shall entitle the Purchaser to purchase
1,000,000 shares of Common Stock at an aggregate purchase price of
$10,000,000; provided that both the number of shares and the purchase
price therefor shall be subject to adjustment as provided in the
Warrant; and
(e) a total of 2,683,930 shares of Restricted Common Stock.
4. CONDITIONS OF CLOSING.
The Purchaser's obligation to purchase and pay for the Purchaser
Securities as set forth under Section 3 above is subject to the satisfaction (or
waiver, in the Purchaser's sole discretion), on or before the date hereof of the
following conditions:
(A) CONSENT OF THIRD PARTIES, ETC. The Company shall have presented
evidence reasonably satisfactory to the Purchaser and its counsel to the effect
that (i) all consents and waivers required in connection with the consummation
of the transactions related to this investment have been obtained, (ii) the
transactions related to this investment shall not violate, or constitute or
trigger the occurrence of an event of default with respect to, any lease,
promissory note, loan agreement or any other agreement or understanding with
respect to which the Company is a party, and (iii) the Company is not in
violation of or default under or with respect to any lease, promissory note,
loan agreement or any other agreement or understanding to which it is a party.
(B) AUTHORIZATION AND RESERVATION. The Company shall have taken all
necessary actions in order to authorize and reserve for issuance up to (i)
826,446 shares of its Common Stock to be issued upon the conversion of the Class
C Preferred Stock; (ii) 1,000,000 shares of its Common Stock to be issued upon
exercise of the Warrant; and (iii) 1,111,111 shares of its Common Stock to be
issued upon conversion of the Convertible Note and/or exercise of the Deficit
Warrant.
(C) FINANCIAL INFORMATION. The Company shall have provided the
Purchaser with such financial information relative to the Company's consolidated
financial condition which may be reasonably requested by the Purchaser, which
information shall include, at a minimum, (i) audited financial statements of the
Company consisting of its balance sheet as of April 1, 1995 and its statements
of income and retained earnings and cash flow for the fiscal year ended April 1,
1995, and (ii) the Company's internally prepared financial statements consisting
of its balance sheet as at March 30, 1996 and its statements of income and
retained earnings and cash flow for the 12-month period ended March 30, 1996.
(D) CERTAIN AGREEMENTS. The following agreements shall have been
entered into by the appropriate parties and shall be in full force and effect:
(i) Second Amended and Restated Registration Rights Agreement
in the form of Exhibit 4(d)(i) hereto (the "Registration Rights
Agreement");
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<PAGE> 10
(ii) Second Amended and Restated Shareholders' Agreement in
the form of Exhibit 4(d)(ii) hereto (the "Shareholders' Agreement");
(iii) Restricted Stock Agreement in the form of Exhibit 1(s)
hereto;
(iv) License Agreement in the form of Exhibit 3 hereto; and
(v) Supply Agreement in the form of Exhibit 4(d)(v) hereto.
(E) AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION. The
Company shall have amended its Amended and Restated Articles of Incorporation as
heretofore amended in the manner provided in Exhibit 4(e) hereto.
(F) AMENDMENT TO BYLAWS. The Company shall have amended its Bylaws as
heretofore amended in the manner provided in Exhibit 4(f) hereto.
(G) AMENDMENT TO STOCK OPTION PLAN. The Company shall have amended its
1992 Stock Option Plan as heretofore amended in the manner provided in Exhibit
4(g) hereto. The Company hereby covenants to the Purchaser that it will make
additional option grants pursuant to such plan or otherwise provide appropriate
incentives to certain key employees of the Company involved in the transfer of
the technology and the organization and operation of the Foundry to be used to
manufacture Licensed Products as described in the License Agreement as the
Company's Boardof Directors shall in good faith determine; provided that nothing
herein shall constitute a right of any person not party to this Agreement to any
economic or other incentive and/or continued employment by the Company.
(H) OPINION OF COUNSEL. The Purchaser shall have received from Womble
Carlyle Sandridge & Rice, PLLC, legal counsel for the Company, a favorable
opinion as of the date hereof in form and substance reasonably satisfactory to
the Purchaser and its counsel and to the effect set forth in Exhibit 4(h).
(I) DELIVERY OF CLOSING DOCUMENTS. The Purchaser shall have received
the following closing documents, in form and substance satisfactory to the
Purchaser and its counsel:
(1) Three executed counterparts of this Securities Purchase
Agreement, including all Exhibits and Schedules hereto.
(2) Certificates representing the shares of Restricted Common
Stock and the Class C Preferred Stock being purchased by the
Purchaser.
(3) Three executed counterparts of the Registration Rights
Agreement.
(4) Three executed counterparts of the Shareholders' Agreement.
(5) The Convertible Note.
(6) The Deficit Warrant.
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<PAGE> 11
(7) The Warrant.
(8) Three executed counterparts of the License Agreement.
(9) Three executed counterparts of the Supply Agreement.
(10) The opinion of counsel in the form described in subsection
4(h) hereof.
(11) Certificate of the Secretary of State of North Carolina as to
the good standing of the Company in such jurisdiction as of a
recent date.
(12) Copy of the Articles of Incorporation of the Company, as
amended to date, certified by the Secretary of State of North
Carolina to be true and correct.
(13) Copy of the Bylaws of the Company, as amended to date,
certified by the Secretary of the Company to be true and
correct.
(14) Copies of resolutions of the Board of Directors of the Company
authorizing the transactions contemplated by this Agreement,
which resolutions shall have been certified by the Secretary
of the Company to be true and correct.
(15) A copy or copies of the consents and waivers to be obtained by
the Company pursuant to the provisions of subsection 4(a)
hereof, if any.
(16) A copy of the financial information to be provided by the
Company pursuant to the provisions of subsection 4(c) hereof,
which financial statements shall be certified by the chief
executive officer or the chief financial officer of the
Company to be true and correct and to have been prepared in
accordance with generally accepted accounting principles,
consistently applied.
(17) Incumbency Certificates with respect to the Company's officers
and directors.
(18) A true copy of all stock option plans, as amended, and related
arrangements reserving shares for issuance to executives and
employees of the Company, all of which plans are described in
Schedule 5(c) attached hereto.
(19) A true copy of all agreements in which the Company has granted
or agreed to grant a security interest, pledge, mortgage, deed
of trust, encumbrance, lien or charge on any of its property
or assets, whether now owned or hereafter acquired, all of
which agreements are listed on Schedule 5(h) attached hereto;
provided, however, that the Company shall not be required to
provide the Purchaser with a copy of the capital leases listed
on Schedule 5(h) attached hereto.
(20) A true copy of all leases of real property naming the Company
as either lessor or lessee, all of which leases are listed on
Schedule 5(s) attached hereto.
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<PAGE> 12
(21) To the extent not otherwise provided for herein, and if
requested by the Purchaser, such Purchaser shall have received
a true copy of all material contracts to which the Company is
a party, all of which contracts are listed on Schedule 5(h)
attached hereto; provided, however, that the Company shall not
be required to deliver contracts which contain competitively
sensitive information.
(22) Any and all other documents, certificates and assurances which
may be reasonably requested by the Purchaser in connection
with its commitments as set forth herein.
(J) DELIVERY OF PURCHASE PRICE AND INITIAL ADVANCE UNDER THE LOAN. The
Purchaser shall have transferred to the trust account of Womble Carlyle
Sandridge & Rice, PLLC, the $5,000,000 cash purchase price for the Class C
Preferred Stock.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to the Purchaser that, as of
the date hereof:
(A) ORGANIZATION AND GOOD STANDING. The Company is a corporation duly
organized and validly existing under the laws of the State of North Carolina,
and is in good standing under such laws. The Company is qualified and authorized
to do business in, and is in good standing as a foreign corporation in, all
other states in which such qualification or authorization is necessary for the
conduct of the business in which the Company is now engaged, and has all
necessary licenses and permits required by all governmental authorities to carry
on such business. A complete list of all states in which the Company (i) owns or
leases property or has employees and (ii) has qualified to do business, is set
forth at Schedule 5(a) hereto.
(B) AFFILIATIONS. The Company has no Subsidiaries. The Company does not
own or control any shares of stock or any other investments in any other Person.
(C) AUTHORIZED AND ISSUED CAPITAL. The authorized capital stock of the
Company consists of 15,000,000 shares of Common Stock, no par value per share,
of which 585,000 shares are issued and outstanding; 1,000,000 shares of Class
A-1 Preferred Stock, of which 975,000 shares are issued and outstanding;
1,100,000 shares of Class A-2 Preferred Stock, of which 1,034,091 shares are
issued and outstanding; 3,700,000 shares of Class B Preferred Stock, of which
3,300,000 shares are issued and outstanding, and 2,700,000 shares of Class C
Preferred Stock, of which 1,818,783 shares are issued and outstanding prior to
the Closing. The Company is also authorized to issue up to 1,200,000 shares of
a class of Preferred Stock to be designated by its Board of Directors for
purposes of satisfying the Company's obligations under the Convertible Note and
the Deficit Warrant. Set forth on Schedule 5(c) is a list of all shareholders
of the Company and the number of shares held by each. There are no further
subscriptions, contracts or agreements for the issuance or purchase of any
other or additional shares of the Company's capital stock, either in the form
of stock option or purchase agreements, warrants, calls or convertible
debentures, other than (i) the Purchaser Securities to be issued pursuant to
the terms hereof and the Common Stock or Preferred Stock issuable upon
conversion or exercise thereof, (ii) the Common Stock to be issued upon the
conversion of any Preferred Stock, (iii) 926,000 shares of Common Stock
reserved for
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issuance pursuant to the stock option plan described in Schedule 5(c), and (iv)
the options and other arrangements described in Schedule 5(c). The number of
shares of its Common Stock reserved for issuance as set forth in Schedule 5(c)
is not subject to adjustment by reason of the issuance of the Purchaser
Securities or the issuance of the Common Stock pursuant to the 1992 Stock Option
Plan or upon the conversion of any of the Preferred Stock. Except as disclosed
in Schedule 5(c), there are no preemptive or similar rights to purchase or
otherwise acquire shares of the Company's capital stock pursuant to any
provision of law, the Articles of Incorporation or Bylaws of the Company, or any
agreement to which the Company is a party, or otherwise.
(D) AUTHORIZATION. The execution and delivery of this Securities
Purchase Agreement, the Convertible Note, the Deficit Warrant, the Warrant and
the other agreements described in Section 4(d) to which the Company is party
(collectively, the "Company Agreements") and the issuance to the Purchaser of
the Purchaser Securities, as herein provided, have been duly authorized by all
necessary corporate action of the Company so that when issued and delivered (i)
the Purchaser Securities and the Common Stock or Preferred Stock issuable upon
conversion or exercise thereof will be validly authorized and issued, fully paid
and nonassessable, (ii) the Company Agreements will constitute the legal, valid
and binding agreements of the Company enforceable against it in accordance with
their respective terms and (iii) neither the execution and delivery of the
Company Agreements, nor the issuance of the Purchaser Securities, or upon
conversion or exercise thereof, any Preferred Stock or Common Stock, will be in
contravention of law or of any order, rule or regulation applicable to the
Company or of its Articles of Incorporation, Bylaws or, except as set forth on
Schedule 5(d), any other contract, agreement or instrument to which the Company
is a party.
(E) GOOD TITLE TO ALL PROPERTIES. The Company has good title to all the
properties and assets used in its businesses or reflected in the Financial
Statements, and to all patents, trademarks, trademark rights, trade names,
copyrights or licenses either developed by or assigned to the Company for its
use, subject to no lien, mortgage, pledge, security interest, encumbrance or
charge of any kind, except for: (a) inchoate liens for current taxes not yet
delinquent, (b) liens imposed by law and incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen, laborers,
materialmen and the like, (c) liens in respect of pledges or deposits under
workers' compensation laws or similar legislation, (d) minor defects in title,
none of which, individually or in the aggregate, materially interferes with the
use of such property, (e) those reflected in the Financial Statements and (f)
such matters as described on Schedule 5(e).
(F) LITIGATION. Except as described on Schedule 5(f), there is no
litigation or other proceeding before any court, commission or other
administrative authority pending, or, to the knowledge of the Company,
threatened, against or affecting the Company or its officers or directors, which
involves the possibility of any judgment or liability which may materially and
adversely affect any of the property or assets of the Company or the right of
the Company to conduct its businesses as now engaged. To the best knowledge of
the Company, none of the officers or employees of the Company is subject to any
contract, prohibition, non-compete, trade secret or any other restrictive
agreement which would impair his ability to provide services to the Company. To
the best knowledge of the Company, no third party may assert any valid claim
under any agreement or arrangement or any laws governing unfair competition,
trade secrets or proprietary information
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<PAGE> 14
against the Company, or its employees, that might have the effect of prohibiting
the Company or such employees from using such information.
(G) TAXES. The Company has filed all Federal, state and local tax
returns and reports which are required by law to be filed as of the date hereof,
and has paid all taxes which have become due pursuant to such returns or
relating to any assessments, if any and is not a party to any pending action or
proceeding by any taxing authority for the collection of any tax, interest,
penalty, assessment or deficiency.
(H) OTHER CONTRACTS. The Company has furnished to the Purchaser copies
or access to copies of all contracts and agreements of the Company each of which
result in annual revenues or expenses to the Company of at least $25,000 or
which are otherwise material to the business of the Company, all of which are
listed on Schedule 5(h). The Company is not a party to any other contract or
agreement which in the judgment and opinion of the Company would materially or
adversely affect the business, properties, assets or financial condition of the
Company. The Company is not in default of any such material contracts and
agreements.
(I) ARTICLES OF INCORPORATION AND BYLAWS. The Articles of
Incorporation, as amended pursuant to Section 4(e) hereof, and Bylaws of the
Company, as amended pursuant to Section 4(f) hereof, copies of which have been
furnished to the Purchaser, are in full force and effect, without further
changes, amendments or modifications.
(J) FINANCIAL STATEMENTS; CERTAIN CHANGES.
(i) The Company has furnished to the Purchaser the financial
statements described in subsection 4(c) hereof (the "Financial
Statements"). The Financial Statements are true and correct and were
prepared in accordance with generally accepted accounting principles,
consistently applied, except that interim financial statements are
subject to routine year-end adjustments and do not contain footnotes.
(ii) In addition, except as set forth on Schedule 5(j), and
except for the amendment to the Articles of Incorporation required
pursuant to subsection 4(e) hereof and the amendment to the Bylaws
required pursuant to subsection 4(f) hereof or otherwise contemplated
by this Agreement, since February 24, 1996, the Company has conducted
its business in the ordinary course in a manner consistent with its
past practices, and has not (a) issued or sold, or contracted to sell,
any of its stock, notes, bonds or other securities, or any option,
warrant or other right to purchase the same, or entered into any
agreement with respect thereto; (b) amended its Articles of
Incorporation or Bylaws; (c) declared, set aside or paid any dividend
or other distribution in respect of its capital stock; (d) redeemed,
repurchased or otherwise acquired any of its capital stock or
securities convertible into or exchangeable for its capital stock or
entered into any agreement to do so; (e) made any capital expenditures
or commitments for the acquisition or construction of any single item
of property, plant or equipment in excess of $5,000; (f) incurred any
damage, destruction or similar loss of property in an amount exceeding
$5,000, whether or not covered by insurance; (g) experienced any
materially adverse change in its business, operations, assets,
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earnings or financial condition; (h) made any sale of accounts
receivable or any accrual of liabilities not in the ordinary course of
business; (i) purchased or disposed of, or contracted to purchase or
dispose of, or granted or received an option to purchase or sell, any
properties or assets, except in the ordinary course of business; (j)
disposed of any inventories other than in the ordinary course of
business; (k) except for increases resulting from the application of
existing formulas or policies under existing plans, agreements or
policies relating to employee compensation, increased the rate of
compensation payable or to become payable to any of its employees or
officers or increased the amounts paid or payable to such employees or
officers under any bonus, insurance, pension or other benefit plan, or
any arrangements therefor made for or with any of said employees or
officers; or (l) changed any accounting principle, procedure or
practice or the method of applying such principle, procedure or
practice.
(K) OFFERING OF PURCHASER SECURITIES. Neither the Company nor any agent
acting on its behalf has taken any action which would require the issuance or
sale of the Purchaser Securities to be registered under the provisions of
Section 5 of the Securities Act.
(L) GOVERNMENTAL APPROVAL. No consent or approval of any governmental
agency or authority is required in the making or performance of this Agreement
by the Company.
(M) UNTRUE STATEMENTS. Neither this Agreement nor any other agreements,
Financial Statements, reports, certificates, or any other documents furnished to
the Purchaser by the Company in connection herewith contains any untrue or
misleading statement of material fact or omits to state a fact material to the
business of the Company or necessary to make the statements contained therein
not misleading.
(N) PATENTS, LICENSES, TRADEMARKS, ETC. Set forth on Schedule 5(n) is a
list of all Intellectual Property Rights in which the Company has an interest.
With respect thereto:
(i) the Company possesses all Intellectual Property Rights
which are necessary to conduct its respective business as now conducted
or as contemplated to be conducted, without conflict with any patent,
license, trademark, trade name, copyright or other Intellectual
Property Right of any other Person;
(ii) no royalties, honorariums or fees are payable by the
Company to other Persons by reason of the ownership or use of the
Intellectual Property Rights;
(iii) no product manufactured, marketed or sold by the Company
will, to the best knowledge of the Company, violate any license or
infringe any Intellectual Property Rights or assumed name of another;
and
(iv) there is no pending or, to the best knowledge of the
Company, threatened claim or litigation against the Company (nor, to
the best knowledge of the Company, does there exist any basis therefor)
contesting the validity or right to use of any of the foregoing. The
Company has not received any notice that any of the Intellectual
Property Rights or the
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operation or proposed operation of its business conflicts, or will
conflict, with the asserted rights of others, and to the best knowledge
of the Company, there exists no basis for any such conflict.
(O) COMPLIANCE WITH LAW. Except as set forth on Schedule 5(o), the
Company is not in violation of any law, regulation, authorization, or order of
any public authority including, without limitation any Environmental Laws
relevant to the ownership of its properties or the carrying on of its present or
contemplated business.
(P) BROKERAGE FEES. There are no claims against the Company or any of
its officers for brokerage commissions, finders' fees or other similar
compensation in connection with the trans actions contemplated by this Agreement
based on any arrangement or agreement made by or on behalf of the Company, or
such officer. Neither the Company nor any of its officers has employed any
broker or finder in connection with the transactions contemplated by this
Agreement.
(Q) NO CRIMES, ETC. Neither the Company nor, to the best knowledge of
the Company, any of its current executive officers or directors, nor any of its
promoters currently connected with it in any capacity, has since October 1,
1985:
(i) filed a petition, or had a petition filed against it or
them, under the Federal bankruptcy laws or any state insolvency law, or
had a receiver, fiscal agent or similar officer appointed by a court
for its or their business or property, or for any partnership in which
it or they were a general partner or any corporation or business
association of which it or they were an executive officer at or within
two years before such filing or appointment;
(ii) been arrested, indicted or convicted in a criminal
proceeding or been named the subject of a pending criminal proceeding
(excluding traffic violations and other minor offenses);
(iii) been the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction permanently or temporarily enjoining it or them from, or
otherwise limiting the following activities:
(A) acting as a futures commission merchant,
introducing broker, commodity trading advisor, commodity pool
operator, floor broker, leverage transaction merchant, any
other Person regulated by the Commodity Futures Trading
Commission ("CFTC"), or an associated Person of any of the
foregoing, an investment advisor, underwriter, broker or
dealer in securities, or as an affiliated Person, director or
employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing
any conduct or practice in connection with such activity;
(B) engaging in any type of business practice; or
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<PAGE> 17
(C) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection
with any violation of Federal or state securities law or
Federal commodities law;
(iv) been the subject of any order, judgment or decree,
not subsequently reversed, suspended or vacated, of any Federal
or State authority barring, suspending or otherwise limiting its or
their right to engage in any activity described in (iii) above, or to
be associated with Persons engaged in any such activity;
(v) been found by a court of competent jurisdiction in
a civil action or by the Securities and Exchange Commission
(the "Commission") or CFTC or any state securities administrator or
commissioner to have violated any Federal or state securities law or
Federal commodities law, and the judgment in such civil action or
finding by the Commission or the CFTC or any state securities
administrator or commissioner has not been subsequently reversed,
suspended or vacated; or
(vi) filed a registration statement or applications for
qualification of securities which is the subject of a currently
effective stop order entered pursuant to any state's law.
(R) RELATED TRANSACTIONS. Except as disclosed on Schedule 5(r), no
"Conflict of Interest Transactions" with "Restricted Persons" of the Company, as
such terms are defined in subsection 8(j) hereof, have occurred within the past
twelve months.
(S) LEASED REAL PROPERTY. Schedule 5(s) sets forth a list of all leases
or subleases of all real property or interests therein currently leased by the
Company (the "Real Property Leases"). Complete and correct copies of all such
Real Property Leases have been delivered to the Purchaser. Except as set forth
in Schedule 5(s), no alterations are being made or are planned with respect to
any of the real property covered by the Real Property Leases. Each Real Property
Lease is legal, valid and binding and the Company is a tenant in good standing,
free of any default or breach whatsoever and quietly enjoys the premises
provided for therein. Each rental and other payment due under each Real Property
Lease has been duly made; each act required to be performed which, if not
performed, would constitute a material breach thereof has been duly performed;
and no act forbidden to be performed has been performed thereunder which, if
performed, would constitute a material breach thereof. The Company has the legal
right (without the consent or other approval of any other party) to possess and
quietly enjoy each of the premises and properties under each of the Real
Property Leases. All real property covered by the Real Property Leases is zoned
for the purposes for which each of such properties is currently being used. None
of the real property covered by the Real Property Leases has been condemned or
otherwise taken by any public authority, and, to the best knowledge of the
Company, no condemnation or taking is threatened or contemplated. None of the
real property is subject to any claim, contract or law which might affect its
use or value for the purposes now made of it during the terms of the respective
Real Property Leases.
(T) NONCOMPETITION AGREEMENTS. To the best knowledge of the Company, no
individual party thereto is in default of his respective Noncompetition
Agreement and such Noncompetition Agreements remain in full force and effect.
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(U) REGISTRATION EXEMPTION. Based upon the representations contained in
Section 6 hereof, the issuance by the Company of the Purchaser Securities and,
upon conversion or exercise thereof, the Common Stock and Preferred Stock so
obtained, is exempt from the registration requirements under the securities laws
of the United States and the State of North Carolina and any other applicable
state securities laws.
6. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
The Purchaser represents and warrants to the Company as follows:
(A) INVESTMENT PURPOSE. In making the purchases contemplated herein, it
is specifically understood and agreed that the Purchaser is acquiring the
Purchaser Securities (and the Common Stock and Preferred Stock to be obtained
upon the conversion or exercise of the Convertible Note, the Deficit Warrant or
the Warrant) for the purpose of investment for its own account, not as a nominee
or agent, and not with a view towards the sale or distribution thereof within
the meaning of the Securities Act; provided, however, that the disposition of
the Purchaser's property shall at all times be and remain within its control.
The Purchaser does not have any contract, undertaking, agreement or arrangement
with any Person to sell, transfer or grant a participation in to such Person, or
to any third Person, the Purchaser Securities, or, upon conversion or exercise
thereof, the Common Stock or Preferred Stock so obtained. The Purchaser has no
immediate plans to liquidate ordissolve or effect any other transaction the
effect of which would be to distribute any of the Purchaser Securities, or, upon
conversion or exercise thereof, the Common Stock and Preferred Stock so
obtained, to its equity holders.
(B) EXEMPTIONS. The Purchaser understands that the Purchaser Securities
and the Common Stock or Preferred Stock obtained upon conversion or exercise
thereof will not be registered under the Securities Act or any applicable state
securities law, by reason of their issuance by the Company in transactions
exempt from the registration requirements of the Securities Act and such laws,
and that it must hold such securities indefinitely unless a subsequent
disposition thereof is registered under the Securities Act and applicable state
securities laws or is exempt from registration.
(C) RULE 144. The Purchaser understands that the exemption from
registration afforded by Rule 144 (the provisions of which are known to the
Purchaser) promulgated by the Commission under the Securities Act depends on the
satisfaction of various conditions, including the requirement that the Company
has been subject to the reporting requirements of Section 13 or Section 15 of
the Securities Exchange Act of 1934 for at least 90 days, and that, if
applicable, Rule 144 affords the basis for sales only in limited amounts and
that the Company does not now qualify under Rule 144 and may not ever qualify.
(D) NO BROKER. The Purchaser has not employed any broker or finder in
connection with the transactions contemplated by this Agreement.
(E) INVESTMENT DECISION. The Purchaser is experienced in evaluating and
investing in recently organized companies such as the Company, is able to fend
for itself in the transactions
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contemplated by this Agreement, has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of its
investment, and has the ability to bear the economic risks of an entire loss of
its investment. The Purchaser has been furnished with or has had access to the
information it has requested from the Company and has had an opportunity to
discuss with management of the Company the business and financial affairs of the
Company; provided, however, that the foregoing shall in no way affect, diminish
or derogate from the representations and warranties made by the Company
hereunder or the right of the Purchaser to rely thereon and to seek
indemnification hereunder.
(F) ACCREDITED INVESTOR. The Purchaser is an "accredited investor" as
that term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act.
(G) RESTRICTION ON SALE OR TRANSFER. The Purchaser agrees that in no
event will it sell, transfer or otherwise dispose of any of the Purchaser
Securities, or any Common Stock or Preferred Stock issuable upon conversion or
exercise thereof (other than pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws), unless and
until the Purchaser or its proposed transferee shall have furnished to the
Company an opinion, reasonably satisfactory to the Company, of counsel
reasonably satisfactory to the Company (which may be in- house counsel of the
Purchaser), prepared at the expense of the Purchaser or its transferee, to the
effect that such transfer may be made without registration under the Securities
Act and all applicable state securities laws.
(H) LEGEND. All certificates evidencing the Purchaser Securities and
any Common Stock or Preferred Stock issued upon conversion or exercise thereof
shall bear a legend substantially to the following effect until the same is no
longer required under the Securities Act:
"These securities have not been registered under the
Securities Act of 1933, as amended, or any applicable state
securities laws. They may not be sold, offered for sale,
pledged, hypothecated or otherwise disposed of absent
registration of such securities under said Act and said laws
unless the Company receives an opinion of counsel satisfactory
to the Company that such registration is not required."
The certificates evidencing the Purchaser Securities and any
Common Stock or Preferred Stock issued upon conversion or exercise thereof shall
also bear any legend required by any applicable state securities law. In
addition, the Company shall make a stop transfer notation regarding the
foregoing restrictions on transfer in its records, and the Purchaser Securities
and any Common Stock or Preferred Stock issued upon conversion thereof shall be
transferred on the books of the Company only if transferred or sold pursuant to
an effective registration statement under the Securities Act covering such
shares or pursuant to and in compliance with the provisions of subsection 6(g)
hereof.
(I) AUTHORIZATION. The execution and delivery of this Agreement and the
other agreements described in Section 4(d) to which the Purchaser is party
(collectively, the "Purchaser Agreements") have been duly authorized by all
necessary action of the Purchaser, do not conflict
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with or result in a breach of any of the Purchaser's governing documents or any
agreement to which the Purchaser is a party or is subject or any judgment,
order, writ, injunction, decree, rule or regulation of any court or
administrative agency, and constitute legal, valid and binding agreements of the
Purchaser enforceable against it in accordance with their respective terms.
7. AFFIRMATIVE COVENANTS.
The Company covenants and agrees that, prior to the occurrence of a
Public Offering, for so long as (i) any of the Investors owns any Preferred
Stock or Common Stock or (ii) any part of the principal or interest on the
Redemption Notes remains unpaid:
(A) CONVERSION. The Company shall at all times maintain a sufficient
number of authorized but unissued shares of its Common Stock and Preferred Stock
to allow for the full conversion by the Investors of the Preferred Stock and for
the full conversion or exercise, as the case may be, by the Purchaser of the
Purchaser Securities, and shall promptly accomplish such conversion or exercise
upon the request of any of the Investors and the presentation of such Investor's
securities in accordance with their respective terms and conditions.
(B) REDEMPTION OF PREFERRED STOCK. The Company will duly and punctually
redeem the Preferred Stock in accordance with the provisions of Articles of
Incorporation, as such Articles of Incorporation may from time to time be
amended.
(C) USE OF PROCEEDS.
(i) Unless otherwise agreed by the Purchaser, the Company
shall (A) utilize the proceeds received by it from the issuance of the
Purchaser Securities exclusively for the planning and construction and
the operational, working capital and related requirements of the
Foundry to be used to manufacture Licensed Products, as defined in the
License Agreement and (B) use its reasonable best efforts to obtain any
additional financial or other commitments necessary to complete such
venture on terms acceptable to the Company.
(ii) The Company shall continue to expend the remaining
proceeds received from the issuance of the Class C Preferred Stock in
November 1995 in accordance with the budgets delivered pursuant to
subsections 4(c) and 7(f) hereof.
(D) PAYMENT OF REDEMPTION NOTES. The Company will duly and punctually
pay the principal and interest on the Redemption Notes on the dates and in the
manner provided therein.
(E) PAYMENT OF CONVERTIBLE NOTE. The Company will duly and punctually
pay the principal and interest on the Convertible Note on the date and in the
manner provided therein.
(F) PREPARATION AND APPROVAL OF BUDGETS, ETC. The Company will, no
later than 30 days before the commencement of each of its fiscal years, prepare
and submit to its Board of Directors and each of the Investors, and will obtain
the approval of the Required Investors with respect thereto, consolidated
capital and operating expense budgets, projections of sources and
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applications of funds, balance sheets and profit and loss projections, all for
each month of such fiscal year, all itemized in reasonable detail (including
itemization of provisions for officers' compensation). Each Investor shall, in
addition, be furnished any material revisions made in the budgets, projections
or other information furnished pursuant to this subsection, within 10 days after
the adoption of such revisions. All financial statements and reports furnished
to the Investors pursuant to subsection 7(i) and pursuant to the preceding
sentence with respect to which a budget, projections or other information has
been submitted shall set forth, to the extent practicable, in comparative form,
figures for such budget, projection or other information for the applicable
preceding accounting period.
(G) TAXES AND LIENS. The Company will pay and promptly discharge, when
due, all lawful claims, including taxes, assessments, governmental charges and
claims for labor, materials and supplies incurred in the ordinary course of
business, except in those instances where the validity or amount thereof is
being contested in good faith and by appropriate legal or administrative
proceedings, and an adequate reserve therefor has been established on its books.
(H) INSURANCE. The Company will maintain (i) all of its assets which
are of an insurable character fully insured against loss or damage by fire,
flood, theft, explosion, sprinklers and all other hazards and risks ordinarily
insured against under all risk policies in use in the jurisdiction where such
assets are located, (ii) insurance against claims for general comprehensive
liability relating to bodily injury, death or property damage in amounts as
shall be satisfactory to the Investors in their reasonable judgment and are
consistent with the type and amounts of insurance customarily carried by similar
companies, (iii) insurance under the workers' compensation laws of the states in
which the Company conducts business and (iv) life insurance, in the minimum
amount of at least $1,000,000 each, on the lives of William J. Pratt and David
A. Norbury for the benefit of the Company. The Company shall provide the
Investors with copies of all such policies upon request, which policies shall be
issued by financially sound and reputable insurers acceptable to the Investors
in their reasonable discretion.
(I) FINANCIAL STATEMENTS. The Company will deliver to the Investors:
(i) within 30 days after the end of each month, a balance
sheet of the Company as of the end of such month, statements of income
and retained earnings and statements of cash flows of the Company for
the current month just ended and for the period from the beginning of
the current fiscal year to the end of such month, all in reasonable
detail and satisfactory in form and scope to the Investor, and prepared
in accordance with generally accepted accounting principles,
consistently applied. With respect to each such financial statement,
the Company will deliver to the Investors (A) a comparison of actual
financial results to budgeted figures, for the month to which the
financial statements pertain for the fiscal year to date and (B) an
Officer's Certification from the chief executive officer or chief
financial officer of the Company stating in effect that, to the best of
his knowledge and belief, such financial statements are true and
correct and have been prepared in accordance with generally accepted
accounting principles, consistently applied, subject to changes
resulting from year-end adjustments;
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(ii) as soon as available and in any event within 90 days
after the end of each fiscal year, a balance sheet of the Company as of
the end of such fiscal year, and a statement ofincome and retained
earnings and a statement of cash flows of the Company for such year,
setting forth in each case in comparative form corresponding figures
from the preceding year, and a comparison of actual consolidated
financial results to budgeted figures for the fiscal year in question,
all in reasonable detail and satisfactory in form and scope to the
Investors and certified by and containing an unqualified report thereon
satisfactory to the Investors of Ernst & Young or another firm of
independent certified public accountants acceptable to the Investors,
which financial statements shall have been prepared in accordance with
generally accepted accounting principles, consistently applied;
(iii) within 30 days after the end of each month, a
management summary prepared by the Company's chief executive
officer (which management summary should not customarily exceed two
type-written pages in length) setting forth in narrative form all
significant operational and financial events and activities affecting
the Company during such month, and stating that the chief executive
officer has reviewed the obligations of the Company under this
Agreement and the related documents and, to his best knowledge and
belief, no breach by the Company of this Agreement has occurred, or
disclosing any breach of which he has obtained knowledge and setting
forth what action, if any, has been initiated or taken by the Company
towards the curing of such breach;
(iv) as soon as available and to the extent requested by the
Investors, copies of all statements, reports and other documents
relating to the financial condition of the Company and its business
operations as required to be furnished to any lender of the Company
pursuant to the terms of any loan documentation, as the same may be
amended, supple mented or modified from time to time;
(v) promptly upon transmission thereof, and in any event no
later than 10 days after the date of such transmission, copies of all
financial statements, reports and returns as the Company shall send to
its stockholders and any governmental department, bureau, commission or
agency having regulatory authority over the Company and including, but
not limited to, all communications to and from applicable regulatory
authorities regarding notice of enforcement proceedings, complaints,
inspections and related matters;
(vi) promptly upon the effectiveness thereof, certified
copies of all amendments to the Articles of Incorporation and
Bylaws of the Company;
(vii) with reasonable promptness, such additional financial
or other data as the Investors may reasonably request; and
(viii) following the occurrence of a Public Offering and
notwithstanding the introductory clause of this Section 7, promptly
upon being filed, a copy of each 10-K, 10-Q and 8-K filed by the
Company.
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(J) OTHER INFORMATION; EXAMINATION. The Company will furnish to the
Investors from time to time and with reasonable promptness (i) detailed
information with respect to proposed material events relating to the operations
of the Company (including, without limitation, matters relating to any public
offering of securities, financing arrangements, material litigation, either
filed against or on behalf of the Company, and contracts for substantial amounts
of the Company's products and contracts for any related services), and (ii)
copies of all material documents filed with any court with respect to any
material litigation in which the Company is a party. The Company will further
permit representatives of the Investors to visit and inspect the premises of the
Company and to examine its insurance certificates and records, books of account
and other records at such reasonable times and as often as the Investors may
reasonably request, but only under circumstances as would not unreasonably
interfere with the conduct of the Company's business. The Company will also
permit representatives of the Investors to visit with the Company's accountants,
and this Agreement shall constitute the Company's authorization to said
accountants to discuss with such representatives the Company's affairs, finances
and accounts. The foregoing notwithstanding, nothing in this subsection 7(j)
shall entitle an Investor that is a customer or supplier of the Company to
receive or be provided access to competitively sensitive information.
(K) MEETINGS.
(i) The Company will have regular meetings of its Board of
Directors at least every calendar quarter (and more frequently if felt
to be necessary by the Required Investors) andof its shareholders at
least once a year, as provided for in the Company's Bylaws, and minutes
of such meetings shall be prepared and maintained as a part of the
permanent records of the Company. The Company will provide the
Investors with written notice of all proposed agendas (which shall not,
however, limit the matters which may be acted upon in the event a
majority of the directors or shareholders, as appropriate, present at
the meeting vote to discuss or act upon any other matter) for all
meetings of the shareholders and Board ofDirectors of the Company at
least two weeks in advance (except in the case of special meetings of
the Board of Directors, in which case such notice shall be as prompt as
practicable consistent with applicable state law).
(ii) Each of the Investors owning not less than 80,000 shares
of Preferred Stock and not otherwise directly represented on the Board
of Directors shall be entitled to have a representative present at each
regular and special meeting of the Board of Directors in a nonvoting
observer capacity; provided, however, that such representative shall
agree to hold intrust and act in a fiduciary capacity with respect to
all information provided at such meetings and provided further that the
Company may exclude such representatives at any meeting of which
attendance by such representative could adversely affect the
attorney-client privilege between the Company and its counsel; and
provided, further, that the representative of an Investor that is a
customer or supplier of the Company (A) shall not be entitled to attend
meetings of the Board of Directors at which the principal agenda items
are competitively sensitive information with respect to the Investor or
its affiliate and (B) may be excluded from any portion of a meeting of
the Board of Directors during which competitively sensitive information
with respect to the Investor or its affiliate is to be discussed.
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(L) EXECUTIVE PERSONNEL. Set forth on Schedule 7(l) attached hereto and
incorporated herein by reference is a list of the officers and other Key
Employees of the Company. The Company will use its best efforts to retain the
same executive personnel and management as it has as of the date hereof;
provided, however, that nothing herein shall give any officer or Key Employee of
the Company any rights greater than he would otherwise have under any existing
agreement with the Company. With respect to future Key Employees, the Company
will enter into appropriate inventions and confidentiality agreements on terms
and conditions reasonably satisfactory to the Board of Directors.
(M) BOOKS OF ACCOUNT. The Company will maintain books of account in
accordance with generally accepted accounting principles, consistently applied.
(N) CORPORATE EXISTENCE. The Company will do all things necessary to
preserve and to keep in full force and effect its corporate existence, rights
and franchises granted by law or otherwise.
(O) COMPLY WITH LAWS. The Company will comply in all material respects
with all laws of the United States and each state and subdivision thereof which
may be applicable to it, and with all rules and regulations promulgated by
agencies, commissions and other instrumentalities of the United States and any
state or subdivision thereof having rule-making or regulatory authority over the
Company.
(P) MAINTAIN PROPERTY. The Company will take all reasonable steps to
maintain its property in good order and repair.
(Q) NOTICE OF DEFAULT. The Company will, within five days of its
discovery of any default under this Agreement, or any default under any other
agreement executed in connection herewith, or under any other loan or material
lease pursuant to which the Company is obligated to any third party, furnish the
Investor with a copy of any notification of default (in the case such
notification is received with respect to obligations owing to third parties) and
an Officer's Certification providing a written explanation of the circumstances
involved.
(R) AMEND BYLAWS. The Company will amend its Bylaws to the extent
necessary to avoid or eliminate a conflict with the terms of this Agreement.
(S) DIRECTOR LIABILITY. The Company will, as from time to time made
necessary by a change in applicable law, amend its Bylaws or Articles of
Incorporation to the extent necessary to limit the liability of directors and to
provide for the indemnification of directors, in both instances, to the maximum
amount allowed by law.
(T) SBA REPURCHASE OBLIGATION. If the Company uses the proceeds
received from the sale of the Class C Preferred Stock to an SBIC Purchaser in
violation of the rules and regulations promulgated by the Small Business
Administration (the "SBA") it shall give each Investor that is a small business
investment company (as determined by the SBA, an "SBIC Purchaser") the right in
its sole and absolute discretion to demand, upon 30 days' notice, that the
Company repurchase,
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at the price paid hereunder by such SBIC Purchaser to the Company, the Class C
Preferred Stock purchased by such SBIC Purchaser hereunder. All amounts due
hereunder shall be paid to such SBIC Purchaser by certified check, cashier's
check or wire transfer in immediately available funds. Notwithstanding the
foregoing, to the extent that SBA regulations permit the Company to cure any
default under this Section 7(t), the Company may cure such default prior to the
expiration of the 30-day notice period above, and in such case the rights of
such SBIC Purchaser under this Section 7(t) shall cease with respect to such
default. Any such cure shall in no way be deemed to limit such SBIC Purchaser's
right under this Section 7(t) with respect to any subsequent default. Nothing in
this Section 7(t) shall be construed to restrict or otherwise limit any SBIC
Purchaser's right to seek all other remedies available to it as provided
hereunder, or at law or in equity. The provisions of this Section 7(t) shall
expire with respect to any SBIC Purchaser upon evidence satisfactory to such
SBIC Purchaser that the Company has utilized the proceeds received pursuant to
this Agreement in a manner that is consistent with their use reported to the SBA
on SBA Form 1031.
8. NEGATIVE COVENANTS OF THE COMPANY.
The Company covenants and agrees that, prior to the occurrence of a
Public Offering, for so long as (i) any of the Investors owns any Preferred
Stock or Common Stock or (ii) any part of the principal or interest on the
Redemption Notes remains unpaid, the Company will not, without obtaining the
prior written permission and consent of the Required Investors, do any of the
following:
(A) DIVIDENDS AND REDEMPTION OF STOCK. Notwithstanding the provisions
of Section 9(1), authorize, declare or pay any dividend, whether in cash,
properties or securities, or make any distribution (other than redemptions of
securities approved by the Required Investors) upon any class of its capital
stock, except for the redemption of Preferred Stock in accordance with
theArticles of Incorporation without the written consent of the Purchaser until
the Foundry to be used to manufacture Licensed Products as described in the
License Agreement is an Operational Foundry (as therein defined) or the License
Agreement terminates, whichever first occurs.
(B) LOANS TO, INVESTMENTS IN, AND LIABILITIES OF OTHERS. Make or permit
to remain outstanding any loan or advance to, or pledge or encumber its assets
for the benefit of, or assume or guarantee the payment or performance of any
liability or obligations of, or own, purchase or acquire any stock or securities
of, or guarantee, endorse or otherwise be or become contingently or absolutely
liable in connection with the obligations, stock or dividends of, any other
Person except for: (a) the endorsement of negotiable instruments for deposit or
collection in the normal course of business; (b) the investment in direct
obligations of the United States of America or generally accepted short-term
money market instruments which by independent credit ratings by Standard & Poors
or Moody's are considered nonspeculative, or in bank certificates of deposit;
(c) the extension of credit in the ordinary course of business in connection
with the sale of its products and services; (d)the investment in, or purchase of
shares of open-end investment companies investing in high-grade money market
instruments; (e) the making of advances to employees and consultants for
expenses incurred in the ordinary course of business; (f) the making of deposits
in the ordinary course of business with vendors, suppliers of services, and
other entities; or (g) as provided for in
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the budget delivered in accordance with subsection 4(c) hereof or proposed and
approved in accordance with subsection 7(f) hereof.
(C) DISPOSAL OF ASSETS. Sell, exchange, convey, assign, transfer, lease
or otherwise dispose of all or any portion of its assets other than dispositions
which (i) result in proceeds to the Company of $50,000 or less, (ii) are for
adequate value and (iii) are in the normal course of the Company's business
operations.
(D) SUBSIDIARY CORPORATION. Create or acquire in any manner a
Subsidiary corporation, or acquire any equity interest in any other Person.
(E) CHARACTER OF BUSINESS. Change the general character of the business
of the Company as conducted or contemplated at the date hereof, or engage in any
type of business not reasonably related to the business of the Company as
presently conducted.
(F) PAYMENT FOR SERVICES OR PROPERTY NOT DELIVERED. Enter into or be a
party to any contract for the purchase of materials, supplies or other property
or for the provision of services if such contract requires that payment for such
materials, supplies or other property or services shall be made regardless of
whether or not delivery is ever made of such materials, supplies or other
property or whether or not performance of such services is ever accomplished.
(G) SALE AND LEASEBACK. Enter into any arrangement, directly or
indirectly, whereby the Company shall sell or transfer any real or personal
property, whether now or hereafter acquired, used or useful in the business of
the Company and thereafter rent or lease such property, or other property, which
the Company shall intend to use for substantially the same purpose as the
property sold or transferred.
(H) CAPITAL EXPENDITURES AND LEASEHOLD OBLIGATIONS. Except as provided
in the License Agreement, make or enter into (a) any capital expenditures of the
Company or expenses for research and development mask sets and productions mask
sets which exceed the amount provided for in the budget delivered in accordance
with subsection 4(c) hereof or prepared and approved in accordance with
subsection 7(f) hereof, (b) any leasehold obligations of the Company with
respect to which the total of such rentals and other payments owing over the
life of such leases is in excess of the amount provided for in the budget
delivered in connection with subsection 4(c) hereof or prepared and approved in
accordance with subsection 7(f) hereof or (c) any contract that would reasonably
be expected to result in expenditures by the Company in excess of $50,000 in any
fiscal year.
(I) DISCOUNT OR SALE OF NOTES AND ACCOUNTS RECEIVABLE. Discount or
sell, with recourse, or sell for less than the face amount thereof, any of the
notes or accounts receivable of the Company.
(J) CONFLICT OF INTEREST TRANSACTIONS WITH RESTRICTED PERSONS. Enter
into any trans action with a Restricted Person of the Company, except on terms
that would be usual and customary in a similar transaction between Persons who
are not Affiliates, or enter into a Conflict of Interest
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Transaction with such Restricted Person. For purposes of this Agreement, a
Restricted Person shall consist of an employee, a shareholder, director or
officer of the Company, or a relative of any such individual, or a customer or
supplier of the Company, and a Conflict of Interest Transaction shall include,
but not be limited to, the sale of merchandise or the provision of services by
the Company for less than fair market value, or the purchase of merchandise or
supplies in transactions involving rebates to or from a Restricted Person, or
the payment of fees or salaries in excess of the legitimate and documentable
fair market value of the services rendered for such fees or salaries.
(K) NO AMENDMENTS TO BYLAWS OR NONCOMPETITION AGREEMENTS. Make any
amendments to the Company's Bylaws or, without the approval of the Board of
Directors, amend any of the Noncompetition Agreements.
(L) SETTING OR CHANGING COMPENSATION. Without the approval of the
Compensation Committee of the Board of Directors, set or change the compensation
(including salary, bonuses, stock options and benefits) of the chief executive
officer or any officer who reports directly to the chief executive officer.
(M) INDEBTEDNESS. Except for the indebtedness to be incurred under the
Convertible Note or as otherwise disclosed in the Financial Statements delivered
pursuant to subsection 4(c) hereof or described on Schedule 5(j) hereto or
provided for in budgets proposed and approved in accordance with subsection 7(f)
hereof, incur, create, assume or permit to exist any liability for borrowed
money, or any other liability evidenced by notes, bonds, debentures or similar
obligations.
(N) "OFF BALANCE SHEET FINANCING." Create any financial obligations
which are not reported as liabilities or obligations to pay to their full extent
on the audited balance sheet of the financial statements of the Company, whether
such obligations be leases, lease-purchases, non-recourse financing or any other
means or methods commonly referred to as "off balance sheet financing."
(O) ASSIGNMENT OF RIGHTS. Assign any rights or obligations under this
Agreement or any of the other agreements contemplated in this transaction.
(P) EMPLOYEE BENEFIT PLANS. Without the approval of the Board of
Directors, adopt or amend any employee benefit plans, other than stock option
plans.
(Q) STOCK OPTION PLANS. Adopt any stock option plan or enter into any
stock option agreement or amend any existing stock option plan or related
agreement if such plan or agreement, as adopted, entered into or amended, would
(i) provide the employee with a vesting or exercise schedule more favorable than
the schedule currently in effect under the agreements entered into between the
Company and certain of its employees pursuant to the Company's 1992 Stock Option
Plan or (ii) contain repurchase provisions less favorable to the Company than
the repurchase provisions currently in effect under the agreements entered into
between the Company and certain of its employees pursuant to the Company's 1992
Stock Option Plan.
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9. GENERAL.
As further and special provisions set forth under this Agreement, the
parties hereto further warrant, covenant, contract and agree each with the other
as follows:
(A) ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto
and other documents referred to herein constitute the entire understanding among
the parties as to the subject matter specifically referred to herein or therein.
The affirmative and negative covenants contained in Sections 7 and 8 of this
Agreement supersede the affirmative and negative covenants contained in Sections
7 and 8 of the Stock Purchase Agreement dated November 22, 1995 (the "Prior
Agreement") by and among the Company and the Investors named therein, which
Agreement otherwise remains in full force and effect (unless and to the extent
that the Prior Agreement conflicts with the terms of this Agreement with respect
to the sale of the Purchaser Securities, in which case this Agreement shall
control).
(B) SURVIVAL OF AGREEMENTS AND REPRESENTATIONS AND WARRANTIES. All
agreements and all representations and warranties contained herein or made in
writing by the Company in connection herewith, to the extent applicable, shall
survive the execution and delivery of this Agreement and other documents
referred to herein and shall continue so long as (i) any of the Investors owns
any Preferred Stock or Common Stock or (ii) any part of the principal or
interest on the Redemption Notes remains unpaid; provided that the Company shall
not be bound by any agreement, representation or warranty applicable solely to
the Purchaser after such time as the Purchaser or its successor no longer holds
any Purchaser Securities or shares of Common Stock or Preferred Stock issued
upon conversion or exercise thereof.
(C) NO WAIVER. No delay by or on behalf of the Purchaser in exercising
any rights conferred hereunder, and no course of dealing between the Purchaser
and the Company, shall operate as a waiver of any right granted hereunder,
unless expressly waived in writing by the party whose waiver is alleged.
(D) BINDING EFFECT. All covenants, representations, warranties and
other stipulations in this Agreement and other documents referred to herein,
given by or on behalf of any of the parties hereto, shall bind and inure to the
benefit of the respective successors, heirs, personal representatives and
assigns of the parties hereto.
(E) INITIAL HOLDER. The Company shall be entitled to treat and deal
with the Purchaser, and shall not be required to recognize any other Person as
the holder of the Purchaser Securities, the Common Stock or Preferred Stock
issued upon conversion or exercise thereof or the Purchaser's Redemption Notes,
except after production of the stock certificates or other documentation
representing such securities, duly endorsed for transfer, together with such
documentation as the Company may reasonably require concerning compliance with
Federal or state securities laws, or after receipt by the Company of written
notice from the Person theretofore entitled to be treated as the holder advising
the Company of the transfer of such stock certificates or other documentation
representing such securities or any portion thereof to such other Person and
stating the latter's address, together with such documentation as the Company
may reasonably require concerning compliance with Federal or state securities
laws.
24
<PAGE> 29
(F) CUMULATIVE POWERS. No remedy herein conferred upon the Purchaser is
intended to be exclusive of any other remedy, and each such remedy shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter existing at law, or in equity or by statute or otherwise.
(G) LOSS OF SECURITIES; REISSUANCE IN LESSER DENOMINATIONS. Upon:
(i) receipt of evidence satisfactory to the Company of loss,
theft, mutilation or destruction of a stock certificate, the
Convertible Note, the Deficit Warrant, the Warrant, or a Redemption
Note; and
(ii) in the case of any such loss, theft, or destruction, upon
delivery of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon
surrender and cancellation of such stock certificate, Convertible Note,
Deficit Warrant, Warrant, or such Redemption Note,
the Company will make and deliver a new certificate, Convertible Note, Deficit
Warrant, Warrant, or Redemption Note of like tenor, in lieu of such lost,
stolen, mutilated or destroyed certificate, note or warrant. In addition, upon
request of any holder of a stock certificate, note or warrant or other
securities of the Company now or hereafter issued by the Company to the
Purchaser, and upon surrender of such certificate, note or warrant or other
securities to the Company and compliance with any restrictive legends, the
Company will reissue, in lesser denominations to parties designated by such
holder, new certificates, notes or warrants or other securities in the
equivalent amounts of such other securities surrendered.
(H) COMMUNICATIONS. All communications and notices provided for
hereunder shall be sent by registered or certified mail, via a courier service,
or by telephonic notice, telecopy, telegram or Telex (except for communications
pursuant to subsection 7(i) hereof, which may be delivered by regular,
first-class mail) to the Investors and the Company at their respective addresses
set forth on Schedule 9(h) hereto, or to such other address with respect to any
Person as such Person shall notify the Company and the other Investors hereto in
writing. Any notice required to be given hereunder by one Person to another
shall be deemed to have been given when deposited in certified or registered
form in the United States mail, properly addressed to such other Person and with
proper first-class postage and postage for certification or registration affixed
thereto (or, in the case of notice by courier service, telephonic notice,
telecopy, telegram or Telex, where the receipt of such message is verified by
return). Except as otherwise provided for herein, all requests for disclosure or
other provision of information to be made or otherwise given by the Company
shall be completed no later than 10 days following the giving of a written
request therefor in the manner described in this subsection.
(I) GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of North Carolina.
(J) HEADINGS. The descriptive section headings herein have been
inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
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<PAGE> 30
(K) MULTIPLE ORIGINALS. This Agreement may be executed simultaneously
in multiple counterparts, each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
(L) AMENDMENT OR WAIVER. Except as otherwise provided in this Section
9(l), this Agreement may be amended only by the written agreement of the Company
and the Purchaser. Notwithstanding the foregoing, Sections 7 and 8 hereof may be
amended only by the written agreement of (i) the Company and (ii) those
Investors holding an aggregate ownership interest of sixty percent (60%) of the
Preferred Stock held by all Investors. For the purposes of the previous
sentence, the ownership interest of an Investor with respect to Preferred Stock
shall be (i) the number of shares of Common Stock held by the Investors which
were obtained by conversion of shares of Preferred Stock, (ii) the number of
shares of Common Stock issuable to the Investor pursuant to the conversion of
shares of such class of Preferred Stock held by the Investor, and (iii)
following the redemption of the Investor's Preferred Stock, the number of shares
of Common Stock that would have been issuable to the Investor if the Investor
had converted its Preferred Stock immediately prior to redemption; provided,
however, that the ownership interest of an Investor determined pursuant to this
clause (iii) shall be deemed to be reduced proportionately in accordance with
the repayment of the Redemption Note held by the Investor. If at any time an
Investor, alone or together with one or more of its Affiliates or any other
person for whom such Investor serves as the Related Investor, owns 20% or more
of the Company's then outstanding equity securities (calculated on a fully
diluted basis), then the reference above to "sixty percent (60%) of the
securities of the Preferred Stock held by all Investors" shall thereafter be
deemed a reference to "more than fifty percent (50%) of the Preferred Stock held
by all Investors." The Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, if the Company shall
obtain the written consent of the Required Investors to such action or omission
to act. Neither this subsection 9(l) nor the definition of "Required Investors"
set forth in Section 1 hereof may be amended without the prior written consent
of all Investors. Any such consent to any such action or omission to act may be
granted prior to or after such action or omission to act. Each holder of the
Preferred Stock, the Common Stock and the Redemption Notes, at the time or times
thereafter outstanding, shall be bound by any consent authorized by this
section, whether or not the stock certificates, notes, warrants, or the
Redemption Notes shall have been marked to indicate such consent. Any provision
contained herein to the contrary notwithstanding, neither Section 7 nor 8 of
this Agreement or this Section 9(l) may be waived, modified or amended without
the written consent of the holders of sixty percent (60%) of a class of
Preferred Stock (seventy-five percent (75%) in the case of the Class C Preferred
Stock) if such waiver, modification or amendment would have an adverse effect on
the rights and privileges of such class of Preferred Stock that is materially
and adversely different from the effect of such amendment on the holders of
other classes of Preferred Stock. Further, no amendment of Sections 7(a),
7(c)(i) and 7(e) shall be effected without the separate consent of the
Purchaser.
(M) THIRD PARTY BENEFICIARIES. In consideration of the receipt from the
Required Investors of their consent to the transactions contemplated by this
Agreement, the parties hereto agree that Sections 7, 8, 9(a), 9(b), 9(d), 9(h),
9(l), 9(m) and 9(n) hereof are specifically intended to benefit the Investors
and are hereby deemed to so benefit such Investors and further that this Section
9(m) shall not be amended without the prior written consent of all Investors.
26
<PAGE> 31
(N) OBLIGATIONS OF COMPANY TO CERTAIN INVESTORS. The Company shall be
deemed to have fulfilled its obligation to each Investor if (i) it provides to
the Related Investor of such Investor the information and notices required to be
provided in subsections 7(f), 7(i), 7(j), 7(k) and 7(q) or pursuant to the
Registration Rights Agreement or the Shareholders' Agreement and (ii) it allows
the Related Investor of such Investor Affiliate to make the inquiries, visits
and inspections allowed by subsection 7(j). For the purposes hereof, (i) ATG
shall be the Related Investor for the following Investors: Robert G. Paul,
Philip W. Colburn, Robert A. Youdelman and Erik H. van der Kaay and (ii) ATV
shall be the Related Investor for the following Investors: Royce Diener, Robert
Easton, Peter Flanigan, Steward S. Flaschen Revocable Investment Trust, Flaschen
Family Trust, Robert F. Sproull, Richard J. Testa and Jasper Welch. Nothing
contained in this subsection 9(n) shall relieve the Company of any obligation
imposed by law to provide any of the Investors with notices or other
information.
(O) OBLIGATIONS OF PURCHASER TO PAY ITS EXPENSES. The Purchaser shall
pay all costs and expenses which it incurs in connection with the Purchaser
Agreements, including, without limitation, the fees of any investment bankers,
attorneys or other third parties retained by the Purchaser.
27
<PAGE> 32
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers, their
respective seals to be hereunto affixed, all by authority of their respective
Board of Directors, all as of the day and year first above written.
COMPANY:
RF MICRO DEVICES, INC.
By: /s/ David A. Norbury
-------------------------------------
David A. Norbury, Chief Executive
Officer and President
ATTEST:
/s/ Powell T. Seymour
- ----------------------------------
Secretary
- -----------------
[CORPORATE SEAL]
PURCHASER:
TRW INC.
By: /s/ T.W. Hannemann
-------------------------------------
Name: Timothy W. Hannemann
-----------------------------------
Its: Executive Vice President
------------------------------------
ATTEST:
/s/ William E. Gallas
- ----------------------------------
Assistant Secretary
- -----------------
[CORPORATE SEAL]
28
<PAGE> 33
FIRST AMENDMENT
TO
SECURITIES PURCHASE AGREEMENT
THIS FIRST AMENDMENT (this "Amendment") is made as of the 4th day of
November 1996, to the Securities Purchase Agreement, dated June 6, 1996, between
RF MICRO DEVICES, INC., (the "Company") and TRW, INC. (the "Securities Purchase
Agreement").
The Securities Purchase Agreement is amended as follows:
1. Section 8(q) is hereby amended by adding the following
phrase immediately prior to the period at the end of this section: ";
provided, however that the Compensation Committee of the Board of
Directors may grant nonqualified stock options pursuant to the
Company's 1992 Stock Option Plan (the "Plan") to non-employee officers,
directors, consultants, advisors and other such individuals performing
services for or on behalf of the Company on such terms as it shall
approve consistent with the provisions of the Plan."
2. Except as set forth herein, the Securities Purchase
Agreement shall remain in full force and effect.
<PAGE> 1
EXHIBIT 3.2
NEITHER THIS SUBORDINATED CONVERTIBLE PROMISSORY NOTE NOR THE SECURITIES
ISSUABLE UPON CONVERSION HEREOF HAS BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND NEITHER
THIS NOTE NOR SUCH SECURITIES MAY BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND LAWS UNLESS RF
MICRO DEVICES, INC. RECEIVES AN OPINION OF COUNSEL, WHICH MAY BE IN- HOUSE
COUNSEL OF HOLDER, REASONABLY ACCEPTABLE TO IT THAT SUCH REGISTRATION IS NOT
REQUIRED.
SUBORDINATED CONVERTIBLE PROMISSORY NOTE
$10,000,000.00 Greensboro, North Carolina June 6, 1996
FOR VALUE RECEIVED, the undersigned, RF MICRO DEVICES, INC., a
North Carolina corporation ("Maker"), promises to pay to the order of TRW INC.
("Payee"; Payee and any subsequent holder[s] hereof individually and
collectively referred to as the "Holder"), the sum of up to TEN MILLION and
NO/100 DOLLARS ($10,000,000.00), or so much thereof as shall have been advanced
from time to time and remain unpaid, together with interest thereon, all as
hereinafter provided.
1. Principal Advances; Interest and Principal Payments.
Provided no Event of Default (as hereinafter defined) shall have occurred and be
continuing, Maker shall be entitled, at any time and from time to time prior to
December 6, 1997, to request advances of principal under this Note exclusively
(unless Holder otherwise agrees in writing) for use in funding the planning and
construction and the operational, working capital and related requirements of
the Foundry to be used to manufacture Licensed Products described in the License
and Technical Assistance Agreement dated of even date herewith (the "License
Agreement") between Payee and Maker (the "Permitted Uses"). Each request for an
advance of principal hereunder shall (i) be in writing and addressed to Holder
at Holder's principal corporate office as shown in paragraph 7 below, or at such
other place as Holder may designate to Maker in writing, (ii) be delivered to
Holder in accordance with the notice provisions of paragraph 7 not less than two
business days prior to the date of the requested advance, and (iii) specify
(with appropriate wire transfer instructions) the amount of the advance and the
account of Maker to which such advance should be deposited. Every request for
advance shall contain or be accompanied by the following:
(a) A letter, signed by the President or Chief Financial
Officer of Maker describing in reasonable detail the intended use of
the proceeds of such advance (which use must be a Permitted Use);
(b) An officer's certificate signed by the President and Chief
Financial Officer of Maker certifying that there has been no default of
this Note or any event which, with notice or lapse of time, or both,
would constitute such a default; and
(c) Such additional information, certificates and other
documents as may be reasonably required by Holder for making such
advance.
<PAGE> 2
Not later than 2:00 p.m., Greensboro, North Carolina time, on the date specified
for the advance in Maker's written notice, the Holder shall transfer or cause to
be transferred the amount of the requested advance for deposit, in immediately
available funds, to Maker's account as specified in Maker's written notice.
Maker agrees that Payee shall be authorized to complete Schedule A attached
hereto and incorporated herein by reference to evidence advances made under this
Note.
The unpaid principal amount of this Note shall bear simple
interest from the date of advance until paid at the rate of six percent (6%) per
annum.
Subject to the prior conversion of this Note in accordance
with paragraph 3, all principal and accrued interest on this Note is payable in
full in a lump sum on June 6, 2003 (the "Maturity Date").
Subject to the prior conversion of this Note in accordance
with paragraph 3, or if an Event of Default (as defined herein) occurs and is
continuing (in which case the amounts due will be accelerated), all principal
and accrued interest shall be made in lawful money of the United States of
America and shall be made to Holder at Holder's principal corporate office as
shown in paragraph 7 or at such other place as Holder may designate to Maker in
writing.
Regardless of any other provision of this Note or in any
documents otherwise relating hereto, no Holder of this Note shall ever be
entitled to receive, collect or apply as interest on the principal of this Note
any amount in excess of the maximum rate of interest allowable under applicable
law, and if any Holder of this Note ever receives, collects or applies as
interest hereon any such excess, such amount that would be excessive interest
shall be deemed a partial prepayment of principal and shall be treated as such,
and if the principal is paid in full, any remaining excess shall forthwith be
paid to Maker. In determining whether the interest paid or payable on the
principal outstanding under this Note exceeds the maximum rate of interest
allowable under applicable law, Maker and Payee shall, to the maximum extent
permitted under applicable law, (a) characterize any nonprincipal payment as an
expense, fee or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof and (c) spread the total amount of interest
throughout the entire contemplated term hereof; provided that if the
indebtedness evidenced hereby is paid and performed in full prior to the end of
the full contemplated term thereof, and if the interest received for the actual
period of existence thereof exceeds the maximum rate of interest allowable under
applicable law, Payee shall either apply or refund to Maker the amount of such
excess as herein provided, and in such event, Payee shall not be subject to any
penalties provided by any laws for contracting for, charging or receiving
interest in excess of the maximum rate of interest allowable under applicable
law.
2. Prepayments. This Note may be prepaid prior to the Payment
Date, at the option of Maker, as a whole at any time, or in part from time to
time (in multiples of $10,000), without premium or penalty. Maker shall give
notice of its intent to prepay this Note by giving written notice thereof to the
Holder not less than five nor more than 20 days prior to the date fixed for such
prepayment in such notice and shall specify the amount to be prepaid and the
date fixed for such prepayment. Upon the giving of notice of any prepayment,
Maker will prepay (unless Holder has exercised the conversion rights granted in
paragraph 3 below) on the date therein fixed for prepayment the amount to be
prepaid as specified in the notice. Any prepayment received by Holder shall be
applied first to interest accrued to the date of prepayment and then to
principal. Upon any partial prepayment or conversion (as provided in paragraph 3
below) of this Note, this Note shall, at the option of the Holder thereof, be
either (i) surrendered to Maker in exchange for a new Note
2
<PAGE> 3
in a principal amount equal to the principal amount remaining unpaid on the Note
surrendered (and for purposes of the foregoing provisions of this paragraph to
be deemed to be the same Note and not a novation of the indebtedness represented
thereby), or (ii) made available to Maker at the principal office of the Holder
of such Note for notation thereon of the portion of the principal so prepaid,
except that, so long as the Payee shall hold this Note, Maker agrees that the
Payee may make notation of any portion of the principal so paid on the back of
this Note.
3. Conversion of Note.
(a) General. The Holder shall have the right at such Holder's
option, at any time and from time to time up to and including December
31, 1998, to convert, from time to time, subject to the terms and
provisions of this paragraph 3, all or any portion of the then
outstanding principal of this Note into RFMD Shares (as defined below)
at the price of $9.00 per share; or, in case an adjustment of such
price has taken place pursuant to the provisions of paragraph 3(c),
then at the price as last adjusted (referred to herein as the
"Conversion Price") upon surrender of this Note, the principal of which
(or any portion thereof) is so to be converted, to Maker at any time
during usual business hours together with written notice (hereinafter
referred to as "Conversion Notice"), that Holder elects to convert this
Note into such RFMD Shares in accordance with the provisions of this
paragraph 3, and specifying the name or names in which the RFMD Shares
issuable upon conversion shall be registered, together with the
addresses of the persons so named, and, if so required by Maker,
accompanied by a written instrument or instruments of transfer in form
satisfactory to Maker duly executed by the registered Holder or its
attorney duly authorized in writing. Notwithstanding the foregoing,
Holder agrees that prior to delivery of the Conversion Notice it shall
comply with the provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"). Maker shall be
prohibited from making any prepayments hereunder until five days
following the earlier of the date any waiting period imposed by the HSR
Act terminates or lapses or Holder withdraws its Conversion Notice as
provided below. If action is taken by the Federal Trade Commission or
the United States Department of Justice to enjoin Holder's exercise of
the conversion privilege provided in this paragraph 3, Maker agrees to
reasonably cooperate with Holder, at Holder's request and expense, to
contest such enjoinment. Holder may, at any time prior to the final
settlement in its favor of any action to prevent the exercise of its
conversion rights, withdraw the Conversion Notice. Subject to the
foregoing, Holder shall convert this Note in full immediately prior to
the closing of a Public Offering (as defined below) in which the per
share price to the public is at least $12.
The term "RFMD Shares" shall mean, (i) if the proposed
conversion date is prior to the closing of a Public Offering (as
hereinafter defined), shares of a class or series of Maker's
convertible preferred stock to be created (in accordance with the
provisions of Article 2 of the Maker's Articles of Incorporation) with
an original issue price of $9.00 per share (the "New Preferred
Shares"), which New Preferred Shares shall have preferences,
limitations and relative rights, including dividend, liquidation,
conversion, voting, redemption and other rights, preferences and
limitations which are substantially identical to, and ranking on a
parity with, the preferences, limitations and relative rights,
including dividend, liquidation, conversion, voting, redemption and
other rights, preferences and limitations of (i) the class of the
Maker's Preferred Stock the shares of which were issued immediately
prior to the first to occur of (x) any conversion of all or any portion
of the principal amount of this Note or (y) the exercise in whole or in
part of Maker's Warrant No. 3, provided that
3
<PAGE> 4
such shares were issued in a bona fide transaction or series of related
transactions, the aggregate gross proceeds from which payable to the
Maker were at least $5,000,000 or (ii) if such proceeds were less than
$5,000,000, then shares of Maker's Class C Convertible Preferred Stock,
except that in either event the dividend, liquidation and redemption
amounts of the New Preferred Stock may be different insofar as such
differences are based solely on the relative differences in original
issue prices of such stock and the New Preferred Stock or (ii) after a
Public Offering, shares of Maker's Common Stock, no par value ("Common
Stock"). "Public Offering" means an underwritten public offering
pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale to the public of
Common Stock resulting in gross proceeds to Maker (before deduction of
underwriters' commissions and expenses) of not less than $15,000,000
and at a price per share to the public which implies a pre-financing
fully diluted valuation of Maker of at least $75,000,000.
(b) Procedures. As promptly as practicable after the
surrender, as herein provided, of this Note for conversion, in whole or
in part, and the receipt of the Conversion Notice relating thereto,
Maker shall deliver to Holder certificates representing the number of
fully paid and nonassessable RFMD Shares into which this Note may be
converted in accordance with the provisions of this paragraph 3 and, if
such conversion was partial, deliver to Holder a new Note as provided
in paragraph 2 above. Subject to the following provisions of this
paragraph 3(b), such conversion shall be deemed to have been made at
the close of business on the date that this Note shall have been
surrendered for conversion together with the Conversion Notice, so that
the rights of the Holder of this Note as a Noteholder shall cease at
such time and the person or persons entitled to receive the RFMD Shares
upon conversion of this Note shall be treated for all purposes as
having become the record holder or holders of such RFMD Shares at such
time and such conversion shall be at the Conversion Price in effect at
such time and all accrued but unpaid interest on the principal amount
so converted shall be forgiven. Notwithstanding the foregoing, no such
surrender on any date when the stock transfer books of the Company
shall be closed shall be effective to constitute the person or persons
entitled to receive the RFMD Shares upon such conversion as the record
holder or holders of such RFMD Shares on such date, but such surrender
shall be effective to constitute the person or persons entitled to
receive such RFMD Shares as the record holder or holders thereof for
all purposes at the close of business on the next succeeding day on
which such stock transfer books are open and such conversion shall be
at the Conversion Price in effect at the close of business on such next
succeeding day. If the last day for the exercise of the conversion
right shall not be a business day, then such conversion right may be
exercised on the next succeeding business day.
(c) Adjustments. The provisions of this paragraph 3(c) shall,
except as provided in paragraph 3(c)(i) below, apply only in the event
the RFMD Shares to be issued upon conversion of this Note are shares of
Common Stock.
(i) If Maker shall at any time (a) make a subdivision
of shares of Common Stock outstanding or (b) pay a dividend or
make a distribution in shares of Common Stock, the Conversion
Price in effect immediately prior to such action shall be
proportionately decreased, and in case Maker shall at any time
reduce the number of shares of Common Stock outstanding, by
combination or otherwise, the Conversion Price in effect
immediately prior to such combination shall be proportionately
increased. If the RFMD Shares
4
<PAGE> 5
are New Preferred Shares and Maker takes any action described
in the foregoing sentence, the Conversion Price in effect
immediately prior to each of such events will be adjusted
proportionately to reflect such event; provided, however, that
such proportionate adjustment may instead be made pursuant to
the terms of the New Preferred Shares. Any adjustment made
pursuant to this paragraph 3(c)(i) shall, in the case of a
subdivision or combination, become effective as of the
effective date thereof, and shall, in the case of a dividend
or distribution, become effective as of the close of business
on the record date for the determination of shareholders
entitled thereto.
(ii) In the event Maker at any time or from time to
time shall make or issue, or fix a record date for the
determination of holders of shares of Common Stock entitled to
receive, a dividend or other distribution payable in
securities of Maker other than shares of Common Stock, then
and in each such event provision shall be made so that Holder
shall receive upon conversion hereof in addition to the number
of shares of Common Stock receivable hereupon, the amount of
securities of Maker that it would have received had this Note
been converted into shares of Common Stock on the date of such
event and had thereafter, during the period from the date of
such event to and including the conversion date, retained such
securities receivable by it as aforesaid during such period,
giving application to all other adjustments called for during
such period under this paragraph 3(c) with respect to the
rights of Holder.
(iii) If the shares of Common Stock issuable upon the
conversion of this Note shall be changed into the same or a
different number of shares of any class or classes of stock,
whether by capital reorganization, reclassification or
otherwise (other than a subdivision or combination of shares
or stock dividend provided for in paragraph 3(c)(i) above, or
a reorganization, merger, consolidation or sale of assets
provided for in paragraph 3(c)(iv) below), then and in each
such event Holder shall have the right thereafter to convert
this Note into the kind and amounts of shares of stock and
other securities and property receivable upon such
reorganization, reclassification or other change, by holders
of the number of shares of Common Stock into which this Note
might have been converted immediately prior to such
reorganization, reclassification or change, all subject to
further adjustment as provided herein.
(iv) If at any time or from time to time there shall
be a capital reorganization of the shares of Common Stock
(other than a subdivision, combination, reclassification or
exchange of shares provided for elsewhere in this paragraph
3(c)) or a merger or consolidation of Maker with or into
another corporation, or the sale of all or substantially all
Maker's properties and assets to any other person, then, as a
part of such reorganization, merger, consolidation or sale,
provision shall be made so that Holder shall thereafter be
entitled to receive upon conversion of this Note, the number
of shares of stock or other securities or property of Maker,
or of the successor corporation resulting from such merger or
consolidation or sale, to which a
5
<PAGE> 6
holder of that number of shares of Common Stock deliverable
upon conversion of this Note would have been entitled on such
capital reorganization, merger, consolidation or sale. In any
such case, appropriate adjustment shall be made in the
application of the provisions of this paragraph 3(c) with
respect to the rights of Holder after the reorganization,
merger, consolidation or sale to the end that the provisions
of this paragraph 3(c) (including adjustment of the Conversion
Price then in effect and the number of shares issuable upon
conversion of this Note) shall be applicable after that event
as nearly equivalent as may be practicable.
(d) Computation. In each case of an adjustment or readjustment
of the Conversion Price or the number of RFMD Shares or other
securities issuable upon conversion of this Note, Maker shall, at its
expense, cause its independent certified public accountants to compute
such adjustment or readjustment in accordance herewith and to prepare a
certificate showing such adjustment or readjustment, and shall mail
such certificate, by first class mail, postage prepaid, to the Holder
of this Note as provided in paragraph 7 below within 30 days after such
adjustment occurs. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based.
(e) Issuance of Stock. The Company agrees that at all times it
will have a sufficient number of authorized but unissued shares to
permit conversion of this Note and will reserve 1,111,111 shares of its
Common Stock for such purposes. The Company covenants that all RFMD
Shares which shall be issued upon exercise of Holder's rights under
this paragraph 3 shall be duly and validly issued, fully-paid and
non-assessable.
(f) Certificates. The issuance of certificates for RFMD Shares
upon the conversion of this Note shall be made without charge to the
converting Holder for any tax in respect of the issuance of such
certificates, and such certificates shall be issued in the respective
names of, or in such names as may be directed by, Holder; provided,
however, that Maker shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and
delivery of any such certificate in a name other than that of the
Holder and Maker shall not be required to issue or deliver such
certificates unless or until the person or persons requesting the
issuance thereof shall have paid to Maker the amount of such tax or
shall have established to the satisfaction of Maker that such tax has
been paid.
(g) Termination. Notwithstanding anything in this Note to the
contrary, at such time as the total number of RFMD Shares into which
portions of the outstanding principal amount hereof have then been
converted, plus the number of RFMD Shares purchased upon exercise of
Maker's Warrant No. 3, equals 1,111,111 (subject to adjustment as
provided in paragraph 3(c)), the Holder shall no longer have the right
to convert any remaining balance of this Note into RFMD Shares.
4. Subordination Provisions.
(a) Applicable Provisions. Maker covenants and agrees, and
Payee and each subsequent Holder of this Note by acceptance hereof
likewise covenants and agrees, that, anything in this Note to the
contrary notwithstanding, the payment of all indebtedness
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<PAGE> 7
evidenced by this Note is subordinated to certain indebtedness of Maker
in accordance with the terms and conditions of and to the extent and in
the manner set forth in paragraphs 4(b) through (g).
(b) Subordination in General. Notwithstanding anything in this
Note to the contrary, the payment of all indebtedness evidenced by this
Note is subordinated to all Senior Indebtedness (as hereinafter
defined) of Maker, whether such Senior Indebtedness is outstanding on
the date hereof or is hereafter created, and all extensions, renewals
or refundings of such Senior Indebtedness, unless, by the terms of the
instrument creating or evidencing such Senior Indebtedness, it is
specifically provided that such Senior Indebtedness is not superior in
right of payment to the indebtedness evidenced by this Note. For
purposes of this Note, the term "Senior Indebtedness" shall mean (i)
indebtedness of Maker for money heretofore, now or hereafter borrowed
by Maker from Silicon Valley Bank and any of its affiliates or
divisions, its successors and assigns ("SVB") or any other commercial
lender in an amount up to $25 million in the aggregate, (ii)
indebtedness of Maker for money heretofore, now or hereafter borrowed
by Maker ("Foundry Debt") from SVB or any other lender in excess of the
amount set forth in (i) used solely for the planning and construction
and the operational, working capital and related requirements of the
Foundry to be used to manufacture Licensed Products described in the
License Agreement, (iii) any modifications, renewals, extensions or
refundings of indebtedness of the kind described in clauses (i) and
(ii) preceding in an amount up to $25 million in the aggregate, plus
any amount of Foundry Debt, and (iv) such other indebtedness of Maker
as may be consented to in writing by the Holder of this Note.
(c) Subordination Upon Distribution of Assets. Upon any
distribution of the assets of Maker in any dissolution, winding up,
liquidation or reorganization of Maker (whether in bankruptcy,
insolvency or receivership proceedings, or upon an assignment for the
benefit of creditors, or any other marshaling of the assets and
liabilities of Maker or otherwise), the holders of all Senior
Indebtedness shall first be entitled to receive payment in full, in
accordance with the terms of such Senior Indebtedness, of the principal
thereof (and premium, if any) and the interest and all other amounts
due thereon, or with respect thereto (including without limitation all
interest accruing after the commencement by Maker of any bankruptcy,
insolvency or similar proceedings) before any Holder of this Note is
entitled to receive any payment upon the principal (and premium, if
any) or interest on indebtedness evidenced by this Note; and, upon any
such dissolution, winding up, liquidation or reorganization, any
payment or distribution of assets of Maker of any kind or character,
whether in cash, property or securities (other than shares of stock of
Maker as reorganized or adjusted or readjusted or securities of Maker
or any other entity provided for by its plan of reorganization or
readjustment, the payment of which is subordinate to the payment of all
Senior Indebtedness that may at the time be outstanding and which are
provided for by a plan or reorganization or readjustment that does not
alter the rights of the holders of Senior Indebtedness at the time
outstanding and under which such other entity, if any, assumes all
Senior Indebtedness at the time outstanding), to which the Holder of
this Note would be entitled except for the provisions of this paragraph
4(c) shall be made by the liquidating trustee or agent or other persons
making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the holders
of Senior Indebtedness or their representative or representatives or to
the trustee or trustees under any indenture under which such
instruments evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate amounts remaining unpaid on
account
7
<PAGE> 8
of the principal of (and premium, if any) and interest and other
amounts due on the Senior Indebtedness held or represented by each, to
the extent necessary to pay in full all Senior Indebtedness remaining
unpaid, after giving effect to any concurrent payment or distribution
to the holders of such Senior Indebtedness.
Notwithstanding the foregoing, if, upon any such dissolution,
winding up, liquidation or reorganization, any payment or distribution
of assets of Maker of any kind or character, whether in cash, property
or securities (other than shares of stock of Maker as reorganized or
readjusted or securities of Maker or any other entity provided for by
its plan of reorganization or readjustment, the payment of which is
subordinate to the payment of all Senior Indebtedness that may at the
time be outstanding and which are provided for by a plan of
reorganization or readjustment that does not alter the rights of the
holders of Senior Indebtedness at the time outstanding and under which
such other entity, if any, assumes all Senior Indebtedness at the time
outstanding), shall be received by a Holder of this Note before all
Senior Indebtedness is paid in full, such payment or distribution shall
be paid over to the holders of such Senior Indebtedness or their
representative or representatives or to the trustee under any indenture
under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably as aforesaid, for application to the
payment of all Senior Indebtedness remaining unpaid until all of such
Senior Indebtedness shall have been paid in full, after giving effect
to the concurrent payment or distribution (or provision therefor) to
the holders of any of such Senior Indebtedness. In addition, if Holder
receives a payment or distribution as provided above at a time when it
has actual knowledge that it is obligated to pay over such amount, it
shall upon receipt use its best efforts to segregate the proceeds
thereof during the time they are in the possession of Holder.
(d) Maturity of Other Indebtedness. Upon the maturity of any
Senior Indebtedness by lapse of time, acceleration or otherwise, all
principal of, and interest on, all such matured Senior Indebtedness
shall first be paid in full before any payment on account of principal
of or interest on this Note is made.
(e) Default on Senior Indebtedness. Upon a default in the
payment of principal or interest with respect to any Senior
Indebtedness (including a default in the payment of principal and
interest upon stated maturity), or upon the happening of any event of
default with respect to any Senior Indebtedness, as defined in the
instrument under which the same is outstanding, permitting the holder
or holders thereof to accelerate the maturity thereof, then, during the
continuance of any such default and for a period not to exceed one
hundred twenty (120) days from the date of such default, no amount
shall be paid by Maker, and the Holder of this Note shall not be
entitled to receive, any amount in respect of the principal of, or
interest on, this Note unless and until (i) such default shall have
been remedied or waived, or (ii) expiration of the period of one
hundred twenty (120) days from the date of such default, whichever
shall first occur.
Nothing contained in this paragraph 4 of this Note shall
affect the obligation of Maker to make, or prevent Maker from making,
payment (or any prepayments permitted hereunder) of principal of, or
interest on, this Note, except under the conditions described in the
provisions of paragraphs 4(c) or (d) or this paragraph 4(e).
Notwithstanding any other provision of this Note, no payment of any
kind (including, without limitation, prepayments) shall be made under
this Note if the making of such payment would cause any event of
default to occur under the Senior Indebtedness.
8
<PAGE> 9
(f) Subrogation. Subject to the payment in full of all Senior
Indebtedness, the Holder of this Note shall be subrogated to the rights
of the holders of all Senior Indebtedness to receive payments or
distributions of assets of Maker applicable to the Senior Indebtedness
until this Note shall be paid in full and none of the payments or
distributions to holders of the Senior Indebtedness to which the Holder
or this Note would be entitled except for the provisions of the
foregoing paragraphs 4(c) through (d) of this Note shall, as between
Maker, its creditors, and the Holders of this Note, be deemed to be a
payment by Maker to, or on account of, Senior Indebtedness of Maker; it
being understood that the subordination provisions of this Note are and
are intended solely for the purpose of defining the relative rights of
the Holder of this Note, on the one hand, and the holders of the Senior
Indebtedness on the other hand, and nothing contained in this Note is
intended to or shall impair, as between Maker, its creditors, and the
Holders of this Note, the obligation of Maker, which is unconditional
and absolute, to pay to the Holder of this Note the principal of, and
interest on, this Note as and when the same shall become due and
payable in accordance with its terms, or to affect the relative rights
of the Holder of this Note and creditors of Maker other than holders of
Senior Indebtedness, nor shall anything herein or therein prevent the
Holder of this Note from exercising all remedies otherwise permitted by
applicable law upon default hereunder, subject to the rights, if any,
under the subordination provisions of this Note, of the holders of
Senior Indebtedness in respect of cash, property or securities of Maker
received on the exercise of any such remedy.
(g) Reliance by Holders of Senior Indebtedness. Each Holder of
this Note agrees that each holder of Senior Indebtedness, whether
outstanding at the date of this Note or incurred hereafter, shall have
purchased or accepted or will purchase or accept such Senior
Indebtedness in reliance upon the subordination provisions contained in
this Note. In the event of any legal action by the holder of any Senior
Indebtedness to enforce its rights hereunder, such holder shall be
entitled to recover, in addition to such other relief as may be
granted, all reasonable costs and expenses, including reasonable
attorneys' fees, incurred in such action.
(h) Specific Provisions in Favor of SVB. Without limiting the
generality of the foregoing provisions, the Holder of this Note agrees
to the following provisions in favor of SVB:
(i) The Holder of this Note shall promptly deliver to
SVB in the form received (except for endorsements or
assignment by the holder of this Note where required by SVB)
for application to its Senior Indebtedness any payment,
distribution, security or proceeds received by the Holder of
this Note with respect to its subordinated debt other than in
accordance with the subordination provisions contained herein.
In addition, if Holder receives a payment or distribution as
provided above at a time when it has actual knowledge that it
is obligated to pay over such amount, it shall upon receipt
use its best efforts to segregate the proceeds thereof during
the time they are in the possession of Holder.
(ii) If, at any time within two years after payment
in full of its Senior Indebtedness, any payments of the Senior
Indebtedness must be disgorged by SVB for any reason
(including, without limitation, the bankruptcy of Maker), the
subordination provisions herein provided and the
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<PAGE> 10
relative rights and priorities set forth herein shall be
reinstated as to all such disgorged payments as though such
payments had not been made and the Holder of this Note shall
immediately pay over to SVB all payments received with respect
to this Note to the extent that such payments would have been
prohibited hereunder.
(iii) At any time and from time to time, without
notice to the Holder of this Note, SVB may take such actions
(other than increasing the maximum principal amount) with
respect to its Senior Indebtedness as SVB, in its sole
discretion, may deem appropriate, including, without
limitation, terminating advances to Maker, extending the time
of payment, increasing applicable interest rates, renewing,
compromising or otherwise amending the terms of any documents
affecting the Senior Indebtedness and any collateral securing
the Senior Indebtedness, and enforcing or failing to enforce
any rights against Maker or any other person. No such action
or inaction or delay shall impair or otherwise affect SVB's
rights hereunder. The Holder of this Note waives, but only to
the extent of SVB's claims with respect to Senior
Indebtedness, the benefits, if any, of any statutory or common
law rule that may permit a subordinating creditor to assert
any defenses of a surety or guarantor, and the Holder of this
Note agrees that it shall not assert any such defenses.
5. Covenants. The Maker covenants and agrees that at all times
until this Note shall be repaid in full, it shall
(a) comply in all material respects with all applicable laws;
(b) use the proceeds hereof only for the planning and construction
and the operational, working capital and related requirements
of the Foundry to be used to manufacture Licensed Products
described in the License Agreement;
(c) maintain a sufficient number of authorized RFMD Shares to
allow for the full conversion of this Note;
(d) pay and promptly discharge, when due, all taxes, assessments,
governmental charges and claims for labor, materials and
supplies incurred in the ordinary course of business, except
in those instances where the validity or amount thereof is
being contested in good faith and by appropriate legal or
administrative proceedings, and an adequate reserve therefor
has been established on its books;
(e) maintain books of account in accordance with generally
accepted accounting principles, consistently applied, provide
Holder upon reasonable notice the opportunity to inspect
Maker's financial records and deliver to Holder within 15 days
after receipt by Maker all audited financial statements of
Maker;
(f) preserve and keep in full force and effect its corporate
existence and take all reasonable steps to maintain its
property in good order and repair;
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<PAGE> 11
(g) not incur any indebtedness (i.e. liability for money borrowed
and specifically excluding capital lease obligations) in
excess of an aggregate amount of $25 million except for
Foundry Debt; and
(h) not authorize, declare or pay any cash dividends until such
time as the Foundry described in (b) above is an Operational
Foundry (as defined in the License Agreement).
6. Events of Default. The occurrence or existence of any one
of the following events or conditions shall constitute an "Event of Default":
(a) Maker shall fail to pay the principal of, or interest on,
this Note when the same becomes due and payable in accordance with the
terms hereof;
(b) Maker shall fail to perform any covenant or agreement made
herein (other than payment as provided in (a) above) and such failure
shall continue for a period of thirty (30) days after receipt from
Holder of a written notice requesting Holder to cure such failure; or
(c) Maker makes a general assignment for the benefit of its
creditors or applies to any tribunal for the appointment of a trustee
or receiver of a substantial part of the assets of Maker, or commences
any proceedings relating to Maker under any bankruptcy, reorganization
arrangement, insolvency, readjustment of debts, dissolution or other
liquidation law of any jurisdiction; or any such application is filed,
or any such proceedings are commenced against Maker and Maker indicates
its consent to such proceedings, or an order or decree is entered by a
court of competent jurisdiction appointing such trustee or receiver, or
adjudicating Maker bankrupt or insolvent, or approving the petition in
any such proceedings, and such order or decree remains unstayed and in
effect for sixty (60) days; or
(d) The acceleration of any indebtedness aggregating
$1,000,000 because of a default that has not been cured within 30 days.
Maker covenants and agrees that it will notify the Payee if it
becomes aware of the occurrence of any Event of Default.
7. Remedies. If an Event of Default occurs and is continuing,
the Holder of this Note may, by notice in writing to Maker, declare the entire
unpaid principal of the Note to be due and payable immediately, and upon any
such declaration the principal and unpaid interest of the Note shall become and
be immediately due and payable, and the Holder of this Note may thereupon
proceed to enforce the payment of this Note or to enforce any other legal or
equitable right of such Holder. In the event this Note is placed in the hands of
an attorney for collection or for enforcement, or in the event that Holder
incurs any costs incident to the collection of any indebtedness evidenced
hereby, Maker agrees to pay all reasonable attorneys' fees actually incurred,
all court and other costs and the reasonable costs of any other collection
efforts. Forbearance to exercise the remedies set forth herein with respect to
any failure or breach of Maker shall not constitute a waiver by Payee of any of
such remedies. Maker further waives, to the fullest extent permitted by law, the
right to plead any and all statutes of limitation as a defense to any
acceleration of this Note.
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<PAGE> 12
8. Notices; Miscellaneous. All notices, requests, consents and
other communications required or permitted under this Note shall be in writing
and shall be deemed to have been delivered on the date mailed, postage prepaid,
by certified mail, return receipt requested, or on the date personally
delivered, or on the day following the date delivered to an overnight courier
such as Federal Express, Airborne, Emery or similar reputable national courier
with guaranteed overnight delivery, or on the date of facsimile transmission:
(i) If to Payee, to:
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
Attention: Secretary
With copies to:
TRW Inc.
1900 Richmond Road
Cleveland, Ohio 44124
Attention: Treasurer
and
TRW Inc.
TRW Space & Electronics Group
One Space Park
Redondo Beach, CA 90278
Attention: V.P., Finance
Facsimile Number: (310) 812-7838
(ii) If to Maker, to:
RF Micro Devices, Inc.
7431-D W. Friendly Avenue
Greensboro, North Carolina 27410
Attention: President
Facsimile Number: (910) 299-9809
(iii) If to any other holder other than Payee, to
such address (or facsimile number as the case may be) as may
have been designated by notice given Maker by such holder.
Maker, Payee or any other holder hereof may designate a
different address or facsimile number by notice given in accordance with the
foregoing.
From time to time, without affecting the obligations of Maker
or its legal representatives, successors or assigns to pay the outstanding
principal balance or interest of this Note and observe the covenants of Maker
contained herein and in the documents and instruments related hereto, without
giving notice to or obtaining the consent of Maker, or its legal
representatives,
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<PAGE> 13
successor or assigns, and without liability on the part of Holder, Holder may,
at the option of Holder (but subject to at least 5 days prior written notice to
SVB), extend the time for payment of said outstanding principal balance or any
part thereof, reduce the payments thereon, release anyone liable on any of said
outstanding principal balance, accept a renewal of this Note, modify the terms
and time of payment of said outstanding principal balance or join in any
extension or subordination agreement, and agree in writing with Maker to modify
the rate of interest or period of amortization of this Note or change the amount
of the payments hereunder. No one or more of such actions shall constitute a
novation or otherwise affect or impair the indebtedness evidenced hereby. No
amendment may be made to paragraph 4 of this Note without the prior written
consent of SVB. The subordination provisions hereinabove contained shall bind
any successors or assignees of the Holder of this Note and shall benefit any
successors or assigns of any holder of Senior Indebtedness, and, if Maker
refinances all or any portion of Senior Indebtedness with a new lender, such new
lender shall be deemed a successor of the holder of such Senior Indebtedness for
all purposes hereof.
A director, officer, employee or stockholder, as such, of
Maker shall not have any liability for any obligations of Maker under the Note
or for any claim based on, in respect of or by reason of such obligations or
their creation. Each Holder by accepting this Note waives and releases all such
liability, other than for fraud or willful misconduct in connection with the
issuance of this Note or the procuring of funds pursuant hereto.
This Note and the rights and obligations of the parties
hereunder shall be governed by, and construed and interpreted in accordance
with, the laws of the State of North Carolina (without regard to principles of
conflicts of laws) and applicable Federal law.
RF MICRO DEVICES, INC.
By: /s/ David A. Norbury
-------------------------------------------
David A. Norbury
President and Chief Executive Officer
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<PAGE> 1
EXHIBIT 3.3
RESTRICTED STOCK AGREEMENT
THIS RESTRICTED STOCK AGREEMENT (the "Agreement"), dated as of
June 6, 1996, is made by and between RF MICRO DEVICES, INC., a North Carolina
corporation (the "Company"), and TRW INC., an Ohio corporation ("TRW").
RECITALS:
WHEREAS, pursuant to that certain Securities Purchase
Agreement of even date herewith (the "Purchase Agreement"), and in
consideration of the execution, delivery and performance by TRW of that certain
License and Technical Assistance Agreement between TRW and the Company of even
date herewith (the "License Agreement"), concurrent with the execution of this
Agreement the Company is issuing to TRW 2,683,930 shares (the "TRW Shares") of
its Common Stock, no par value (the "Common Stock"); and
WHEREAS, the parties agree as a condition of the issuance
thereof that the TRW Shares shall be subject to certain restrictions as more
fully set out herein; and
WHEREAS, capitalized terms not otherwise defined herein shall
have the meaning given them in the License Agreement;
NOW, THEREFORE, the parties agree as follows:
1. SHARE CERTIFICATES.
Concurrent with the execution of the Purchase Agreement, the
License Agreement and this Agreement, a certificate representing the TRW Shares
is being issued in the name of TRW, and the TRW Shares represented by such
certificate shall be considered to be issued and outstanding for all purposes.
Such certificate (or any replacement therefor) shall also bear the following
(or a similar) legend:
"THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS (INCLUDING
REDEMPTION) CONTAINED IN THE RESTRICTED STOCK AGREEMENT BETWEEN THE
ISSUER AND TRW INC. DATED AS OF JUNE 6, 1996, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE ISSUER'S PRINCIPAL EXECUTIVE OFFICE.
FURTHERMORE, SUCH RESTRICTED STOCK AGREEMENT CONTAINS AN IRREVOCABLE
PROXY COUPLED WITH AN INTEREST WHICH PROVIDES FOR THE VOTING OF SUCH
SHARES IN A CERTAIN MANNER PRIOR TO THE EXPIRATION OF SUCH AGREEMENT."
<PAGE> 2
2. DIVIDENDS AND VOTING RIGHTS.
(a) TRW shall be entitled to receive on the same basis as
all other holders of Common Stock any cash dividends declared and paid by the
Company on the Common Stock. Any securities of the Company distributed as a
dividend on or in exchange or replacement of the TRW Shares (collectively, the
"New Securities"), shall bear the legend described in Section 1 above and the
provisions of this Agreement shall apply mutatis mutandis to the New
Securities.
(b) During the term of this Agreement, the parties agree
that this Agreement shall serve as TRW's proxy to David A. Norbury (or his
successor in the office of President of the Company, in either case, "Proxy
Holder") who, by his execution hereof, agrees to vote the TRW Shares in any
vote of the holders of the Company's Common Stock for any proposal approved by
a vote (as provided in the Company's Bylaws) of the Company's Board of
Directors. Any attempt to revoke this proxy shall result in the immediate
right of the Company to redeem any or all of the TRW Shares for an aggregate
purchase price of $1.00. The Proxy Holder shall have full power of
substitution provided any such substitute shall be bound by the provisions of
this Agreement and shall vote the TRW Shares in the manner herein specified.
THE FOREGOING PROXY APPOINTMENT IS IRREVOCABLE AND SHALL BE DEEMED COUPLED WITH
AN INTEREST.
3. TRANSFERABILITY.
During the term of this Agreement, no TRW Share, nor any
right, title or interest therein, may be sold, transferred, pledged,
encumbered, assigned or otherwise disposed of (a "Transfer") without the prior
written consent of the Company, which consent may be given or withheld in the
Company's sole discretion. Any purported Transfer in violation of this Section
3 shall be null and void, shall not be recognized in the stock transfer records
of the Company and shall result in the immediate right of the Company to redeem
any or all of the TRW Shares attempted to be so Transferred for an aggregate
purchase price of $1.00. Notwithstanding the foregoing, the provisions of this
Section 3 shall not apply to any Transfer (i) in connection with a merger
transaction to which the Company is party and in which the Company is not the
surviving entity or (ii) to an entity in which TRW owns at least 50% of the
outstanding voting securities provided TRW or the transferee shall comply with
Section 6(g) of the Purchase Agreement.
4. FORFEITURE OF TRW SHARES.
(a) If by March 1, 1997 (the "Funding Date"), the
Financing has not been secured or committed, or the Company has not entered
into a definitive sublicense agreement with a third party for the manufacture
of Licensed Products, then the Company shall have the immediate right to redeem
any or all of the TRW Shares for an aggregate purchase price of $1.00.
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<PAGE> 3
(b) If the Foundry is not an Operational Foundry on or
before December 31, 1998 (or such other date as to which the parties mutually
agree pursuant to Section 8.2.2 of the License Agreement) (the "Target Date"),
the Company shall have the immediate right to redeem as much as one-half of the
TRW Shares for an aggregate purchase price of $1.00.
(c) Upon the exercise by the Company of the redemption
rights provided in Sections 2 or 3 above or this Section 4, TRW agrees to
execute any stock power or other documentation necessary to transfer the TRW
Shares being redeemed to the Company and the Company agrees promptly to issue a
new certificate representing the balance, if any, of the TRW Shares not so
redeemed. Until surrendered, each outstanding certificate representing any TRW
Share to be redeemed shall represent only the right to receive the cash
redemption consideration provided herein and no interest will be paid or
accrued thereon upon the surrender of the certificate or certificates
representing such TRW Shares. With respect to any certificate for TRW Shares
that has been lost or destroyed, TRW shall provide an indemnity reasonably
satisfactory to the Company. After the date fixed for redemption of any TRW
Shares, no transfer thereof shall be made on the stock transfer books of the
Company and such shares shall not be considered outstanding for any purpose.
5. COMPLIANCE WITH LAW.
Upon the request of either party hereto based on the advice of
its counsel, the parties agree to cooperate in good faith with one another to
determine whether compliance with the provisions of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), is required
prior to the date any TRW Share ceases to be subject to redemption in
accordance with Section 4 above. If action is taken by the Federal Trade
Commission or the United States Department of Justice to enjoin TRW's retention
of any TRW Share, the Company agrees to reasonably cooperate with TRW, at TRW's
request and expense, to contest such enjoinment.
6. MISCELLANEOUS.
(a) This Agreement, together with the Purchase Agreement
and the other documents attached or referred to therein (including the License
Agreement), constitute the entire agreement between the parties with respect to
the subject matter hereof.
(b) This Agreement may not be modified or amended except
by an instrument in writing signed by the Company and TRW. The consent of the
Proxy Holder shall not be required to amend this Agreement unless this Section
6(b) is being amended or additional duties are required of such Proxy Holder
pursuant to such amendment, in which case the consent of the Proxy Holder shall
be required for such an amendment.
(c) This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE> 4
(d) This Agreement shall terminate on March 31, 1997 if
by the Funding Date, the Financing has not been secured or committed, or the
Company has not entered into a definitive sublicense agreement with a third
party for the manufacture of Licensed Products or if not then terminated, 30
days after the Target Date.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the State of North Carolina, without regard to its
provisions regarding conflicts of law.
[The remainder of this page is intentionally left blank.]
4
<PAGE> 5
IN WITNESS WHEREOF, this Restricted Stock Agreement has been executed
in behalf of the Company and TRW as the date set forth above.
RF MICRO DEVICES, INC.
By: /s/ David A. Norbury
------------------------------------
David A. Norbury, President
TRW INC.
By: /s/ T.W. Hannemann
------------------------------------
Timothy W. Hannemann
Executive Vice President
PROXY HOLDER:
/s/ David A. Norbury (SEAL)
----------------------------------
David A. Norbury
5
<PAGE> 1
EXHIBIT 3.4
NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAS BEEN
REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF ANY STATE AND NEITHER
THIS WARRANT NOR SUCH SECURITIES MAY BE
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND LAWS UNLESS
RF MICRO DEVICES, INC. RECEIVES AN OPINION OF COUNSEL, WHICH MAY BE HOLDER'S
IN-HOUSE COUNSEL, REASONABLY ACCEPTABLE TO
IT THAT SUCH REGISTRATION IS NOT REQUIRED.
WARRANT NO. 4
RF MICRO DEVICES, INC.
A North Carolina Corporation
(Void after 5:00 p.m.,
Washington D.C. Time, at the Expiration Date (as hereinafter defined))
THIS CERTIFIES THAT, for value received, TRW Inc. (the "Holder") is
entitled at any time before 5:00 p.m. Washington D.C. time on the Expiration
Date (as hereinafter defined) (such time on the Expiration Date being referred
to herein as the "Expiration Time") to purchase up to 1,000,000 (one million)
shares (the "Shares") of the Common Stock, no par value, of RF MICRO DEVICES,
INC. (the "Company"), a North Carolina corporation, at the price of $10.00 per
Share, subject to adjustment as provided in paragraph 5 of this Warrant (that
price, as it may be adjusted from time to time, being referred to as the
"Warrant Price").
1. This Warrant may only be exercised if the Technology
Transfer Date (as hereinafter defined) has occurred and prior to the first to
occur of: (i) the second anniversary of the Technology Transfer Date; or (ii)
90 days after the Company has provided notice to the Holder that the current
market price of the Company's Common Stock (as determined pursuant to this
paragraph) is, and has been for at least 20 (twenty) consecutive trading days
(as defined below), at least $12.00 per share (subject to adjustment to reflect
stock splits, subdivisions, combinations, or dividends paid in common stock of
the Company) (the first to occur of subparagraph (i) or (ii) of this paragraph
1 being the "Expiration Date"); provided, however, that if the Holder has
complied with the filing provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") at least thirty days prior
to the Expiration Date, but the waiting period imposed by the HSR Act has not
terminated or lapsed, then the Expiration Date will be extended until ten days
after such termination or lapse; and further provided, that if the Technology
Transfer Date (defined below) does not occur by December 31, 1998 (or such
other date as to which the parties mutually agree pursuant to Section 8.2.2 of
the License), this Warrant will be void and of no further force or effect.
As used herein, the term "Technology Transfer Date" will mean the
date when a "Foundry" is considered an "Operational Foundry" under the terms of
that certain License and Technical Assistance Agreement of even date herewith
between the Company and the Holder (the "License Agreement"), and the terms
"Foundry and "Operational Foundry" will have the meanings given them in the
License Agreement. A "trading day" will mean any day upon which the New York
Stock Exchange is open for trading.
The current market price per share of Common Stock on any day will be
deemed to be the closing price of the Common Stock on the day before the day in
question. The closing price of the Common Stock on a day will be the last
reported sale price regular way or, in case no reported sale takes place on
that day, the average of the reported bid and asked prices regular way, in
either case on the principal trading market on which the Common Stock is listed
or authorized for trading, or if not listed or authorized for trading on any
trading market in which actual transactions are reported, the average of the
highest reported bid and lowest reported asked prices as furnished by the
National Association of Securities Dealers Inc.'s Automated Quotation System
Level I, or the nearest comparable system.
<PAGE> 2
2. To exercise this Warrant, this Warrant must be surrendered
prior to the Expiration Time at the office of the Company at 7341-D West
Friendly Avenue, Greensboro, North Carolina 27410 (or such other address as
the Company may specify in writing to the Holder of this Warrant at least ten
days before this Warrant is exercised) with the attached Notice of Exercise
duly completed and executed, accompanied by evidence of a wire transfer of
immediately available funds to the Company's money market account #________
with Silicon Valley Bank, Santa Clara, California, ABA Routing #________ (or
such other account as the Company may specify in writing to the Holder of this
Warrant at least ten days before this Warrant is exercised) in full payment of
the purchase price of the Shares with respect to which this Warrant is
exercised. This Warrant may be exercised in whole or in part as to any whole
number of Shares. If this Warrant is exercised in part, upon surrender of this
Warrant for exercise, the Company will issue to the Holder a new Warrant to
purchase the remaining number of Shares which may be purchased upon exercise of
this Warrant (before taking account of adjustments by reason of paragraphs 5, 6
and 7). The new Warrant will bear the same date as this Warrant and will be
identical to this Warrant in all respects, except as to the number of Shares as
to which it may be exercised.
3. The Shares as to which this Warrant is exercised will be
deemed to be issued when this Warrant is exercised. Holder agrees that, prior
to the exercise of this Warrant, it will comply with the provisions of the HSR
Act as in effect from time to time. If action is taken by the Federal Trade
Commission or the United States Department of Justice to enjoin Holder's
exercise of the Warrant, the Company agrees to reasonably cooperate with Holder
to contest such enjoinment at the expense of this Holder. A certificate
representing those Shares will be issued to the Holder of this Warrant promptly
after it is exercised. The certificate may bear a legend to the effect that
the Shares it represents have not been registered under the Securities Act of
1933, as amended (the "Act"), or any applicable state securities laws, and may
only be transferred in a transaction registered under that Act or such laws or
exempt from the registration requirements of that Act or such laws. In
addition, any other legend required by any other agreement between the Company
and Holder may be included on the certificate or certificates for such Shares.
4. This Warrant will expire, and the right to purchase the Shares
by exercise of this Warrant will terminate, at the Expiration Time (as it may
be extended pursuant to paragraph 1: provided, however, that if Holder has
complied with the filing provisions of the HSR Act at least thirty days prior
to the Expiration Time, but the waiting period imposed by the HSR Act has not
terminated or lapsed, then the Expiration Time will be extended until ten days
after such termination or lapse. After that time this Warrant will be void.
5. The Warrant Price will be subject to adjustment from time to
time as follows: If the Company (i) pays a dividend on its Common Stock in
Common Stock, (ii) splits or subdivides its outstanding shares of Common Stock,
or (iii) combines its outstanding shares of Common Stock into a smaller number
of shares, the Warrant Price in effect immediately prior to each of those
events will be adjusted proportionately so that the adjusted Warrant Price will
bear the same relation to the Warrant Price in effect immediately prior to the
event as the total number of shares of Common Stock outstanding immediately
prior to the event will bear to the total number of shares of Common Stock
outstanding immediately after the event. An adjustment made pursuant to this
paragraph will become effective immediately after the corresponding record date
in the case of a dividend and immediately after the effective date in the case
of a subdivision or combination.
No adjustment of the Warrant Price will be made if the amount of such
adjustment would be less than 2% of the Warrant Price, but any such adjustment
that would otherwise be required to be made and has not previously been made
will be carried forward and be made at the time of and together with the next
subsequent adjustment which, together with all adjustments so carried forward,
amount in the aggregate to 2% or more of the Warrant Price. As used in this
paragraph, "Common Stock" includes any class of the Company's capital stock,
now or hereafter authorized, having the right to participate in the
distribution of either earnings or assets of the Company without limitation as
to amount or percentage. At no time will the Warrant Price be less than $.01
per share.
6. Upon each adjustment of the Warrant Price pursuant to
paragraph 5, the number of shares of Common Stock purchasable upon exercise of
this Warrant will be adjusted so that the number of shares of Common Stock
which would be issued if this Warrant were exercised in full (at such adjusted
Warrant Price) would be the number of shares obtained by multiplying the number
of shares of Common Stock purchasable by exercise of this
<PAGE> 3
Warrant in full immediately prior to the adjustment by the Warrant Price in
effect prior to the adjustment and dividing the product so obtained by the new
Warrant Price, but upon any exercise of this Warrant, the number of Shares to
be issued will be the nearest number of whole Shares.
7. In case of a distribution to all holders of the Company's
Common Stock of shares of its capital stock (other than Common Stock) or
evidences of its indebtedness or assets, or a capital reorganization of the
Company, a reclassification of the Common Stock, a consolidation of the Company
with or merger of the Company into another corporation or entity (other than a
consolidation or merger in which the Company is the continuing entity) or a
sale of the properties and assets of the Company as, or substantially as, an
entirety and distribution of the proceeds of sale, after such distribution,
capital reorganization, reclassification, consolidation, merger or sale, on
exercise of this Warrant the Holder will receive the number of shares of stock
or other securities or property which the Holder would have received if this
Warrant had been exercised immediately before the first such corporate event
and the Holder had retained what it would have received as a result of each
such corporate event. The split or subdivision or combination of shares of
Common Stock at any time outstanding into a greater or lesser number of shares
of Common Stock will not be deemed to be a reclassification of the Common Stock
of the Company for the purposes of this paragraph. The Company will not effect
any consolidation or merger unless prior to or simultaneously with its
consummation the successor entity (if other than the Company) resulting from
the consolidation agrees in writing to deliver to the Holder of this Warrant on
exercise of this Warrant the shares of stock or other securities or property to
which the Holder becomes entitled because of that exercise.
8. Whenever the Warrant Price is adjusted as provided in this
Agreement, the Company will compute the adjusted Warrant Price and the number
of Shares or other assets the Holder would receive on exercise of this Warrant
in full and will provide a notice to the Holder within thirty (30) days of the
date of such adjustment stating that the Warrant Price has been adjusted and
setting forth the adjusted Warrant Price and what the Holder would receive upon
exercise of this Warrant in full. The Company will also provide a notice to the
Holder describing any event that would trigger an adjustment in the Warrant
Price in the absence of the last paragraph of paragraph 5. Such notice will be
given within thirty (30) days of the effective date of such event.
9. The Company will at all times keep a sufficient number of
authorized but unissued shares of its Common Stock to permit exercise in full
of this Warrant. The Company represents and warrants that all the shares of
Common Stock which are delivered on exercise of this Warrant (and payment of
the Warrant Price therefor) will, upon delivery, be duly issued, fully paid and
non-assessable.
10. The Holder will not, by reason of holding this Warrant, have
any right to vote, to receive dividends or other distributions, or any other
rights of a shareholder, with regard to the Shares.
11. The Holder may not assign this Warrant or any of the Holder's
rights under it, except (i) to a corporation controlling, controlled by or
under common control with the Holder or by (ii) merger or other operation of
law, and any transfer or attempted transfer of this Warrant will be of no
force or effect.
12. Any notices or other communications to the holder of this
Warrant will be addressed to TRW Inc., Space & Electronics Group, One Space
Park, Redondo Beach, California 90278, Attention: Vice President, Finance,
Electronic Systems & Technology Division, with a copy to TRW Inc., 1900
Richmond Road, Cleveland, Ohio 44124, Attention: Secretary, or to such other
address as the Holder may specify in writing to the Company.
13. This Warrant will be governed by, and construed under, the
laws of the State of North Carolina.
14. This Warrant may not be modified without the written consent
of the Company.
Dated: June 6, 1996 RF MICRO DEVICES, INC.
By: /s/ David A. Norbury
--------------------------
President and CEO
<PAGE> 1
EXHIBIT 3.5
LICENSE AND TECHNICAL ASSISTANCE
AGREEMENT
BY AND BETWEEN
ELECTRONICS SYSTEMS & TECHNOLOGY DIVISION
TRW SPACE & ELECTRONICS GROUP
ONE SPACE PARK
REDONDO BEACH, CALIFORNIA 90278
AND
RF MICRO DEVICES, INC.
7341-D WEST FRIENDLY AVENUE
GREENSBORO, NORTH CAROLINA
<PAGE> 2
LICENSE AND TECHNICAL ASSISTANCE AGREEMENT
THIS AGREEMENT, made and entered into as the 6th day of June, 1996 by
and between the Electronics Systems & Technology Division of TRW Inc., an Ohio
corporation, having offices at One Space Park, Redondo Beach, California 90278
(hereinafter "Licensor") and RF Micro Devices, Inc., a North Carolina
corporation, having offices at 7341-D West Friendly Avenue, Greensboro, North
Carolina 27410 (hereinafter "Licensee").
WHEREAS, Licensor has developed, designed and manufactured certain
kinds of gallium arsenide heterojunction bipolar transistors, and has utilized
molecular beam epitaxy processes in the production of such transistors, and
possesses patents rights and technical information and know-how relating
thereto; and
WHEREAS, Licensee intends to design, manufacture and sell GaAs
heterojunction bipolar transistors and products incorporating such GaAs
heterojunction bipolar transistors and, to that end, desires to obtain from
Licensor certain rights to Licensor's patent rights relating thereto and to
receive technical assistance from Licensor to assist in enabling Licensee to
manufacture such heterojunction bipolar transistors.
THEREFORE, in consideration of the mutual promises herein contained
and the mutual benefits to be derived therefrom, Licensor and Licensee agree as
follows:
ARTICLE 1
DEFINITIONS
The following words and phrases shall have the meanings set forth
below unless the context requires a different meaning:
1.1 AGREEMENT: This Agreement and the following Schedules hereto:
Schedule 1.6 Existing RFMD Products
Schedule 1.7 Existing TRW GaAs HBT Patent Rights
Schedule 1.8 Existing TRW MBE Patent Rights
Schedule 1.13 HBT Technical Information
Schedule 1.18 MBE Technical Information
Schedule 2.8.2 Licensor Contractual Obligations
Schedule 3.1 Technical Assistance
1.2 ASSET SALE: the sale of all or substantially all the assets of
Licensee.
1.3 COMMERCIAL: Involving the transfer or sale of products where
the transaction does not require qualification of the product to relevant
specifications in of mil-m-38510, mil-std-883, mil-i-38534, mil-i-38535 or
similar specifications and subsequent versions issued by any agency of the
United States government.
1.4 COMMERCIAL WIRELESS COMMUNICATION APPLICATIONS: The sale or
transfer to Commercial customers of products that provide, facilitate,
support or are otherwise directly related to one or more aspects of Wireless
Communication .
1.5 EFFECTIVE DATE: June 6, 1996.
1.6 EXISTING RFMD PRODUCTS: The products listed on Schedule 1.6.
1.7 EXISTING TRW GAAS HBT PATENT RIGHTS: Licensor's patents and
patent applications, listed in
<PAGE> 3
Schedule 1.7, and any patent and patent applications filed by Licensor after
the Effective Date to protect inventions relating to GaAs HBTs conceived or
first actually reduced to practice prior to the Effective Date, and any United
States and foreign patents which issue from any continuations,
continuations-in-part, divisionals or substitutions thereof, and all
extensions, reexaminations, renewals and reissues therefrom, and all rights to
bring an action against any person to recover damages or profits resulting from
infringement of the foregoing.
1.8 EXISTING TRW MBE PATENT RIGHTS: Licensor's patents and patent
applications, listed in Schedule 1.8, and any patent and patent applications
filed by Licensor after the Effective Date to protect inventions relating to
TRW's MBE processes conceived or first actually reduced to practice prior to
the Effective Date, and any United States and foreign patents which issue from
any continuations, continuations-in-part, divisionals or substitutions thereof,
and all extensions, reexaminations, renewals and reissues therefrom, and all
rights to bring an action against any person to recover damages or profits
resulting from infringement of the foregoing.
1.9 FOUNDRY: A business concern which provides wafer processing
services including: design rules; design support; photomask layout and
fabrication; wafer processing (including in-process testing); wafer dicing and
inspection; and wafer delivery.
1.10 FUTURE TRW GAAS HBT PATENT RIGHTS: Licensor's United States
and foreign patents and patent applications filed by Licensor to protect
inventions relating to GaAs HBTs conceived subsequent to the Effective Date,
and any United States and foreign patents which issue from any continuations,
continuations-in-part, divisionals or substitutions thereof, and all
extensions, reexaminations, renewals and reissues therefrom, and all rights to
bring an action against any person to recover damages or profits resulting from
infringement of the foregoing.
1.11 FUTURE TRW MBE PATENT RIGHTS: Licensor's United States and
foreign patents and patent applications filed by Licensor to protect inventions
relating to MBE processes conceived subsequent to the Effective Date, and any
United States and foreign patents which issue from any continuations,
continuations-in-part, divisionals or substitutions thereof, and all
extensions, reexaminations, renewals and reissues therefrom, and all rights to
bring an action against any person to recover damages or profits resulting from
infringement of the foregoing.
1.12 GAAS HBT: A heterojunction bipolar transistor having a base,
emitter and collector formed on a substrate of gallium arsenide, and the
manufacturing process utilized for forming such transistors on the gallium
arsenide substrate.
1.13 HBT TECHNICAL INFORMATION: All documentation, know-how,
software or other information of Licensor relating to Licensor's GaAs HBT,
whether or not it is considered proprietary or a trade secret by Licensor,
including, without limitation, data and information contained in reports,
documents, computer programs, drawings and graphs, schematics, manuals, files
and notes in any medium or representation, electronic or otherwise, including
but not limited to those items specified in Schedule 1.13.
1.14 IPO: an underwritten initial public offering of Licensee's
common stock to be registered under the Securities Act of 1933, as amended.
1.15 LICENSED FIELD: The design, development, manufacture,
testing, sale, marketing, , service, and repair of Licensed Products, including
the sale of spare parts for or spare complete Licensed Products by Licensee,
for Commercial Wireless Communication Applications where the Licensed Products
operate on signals having a frequency of less than ten (10) gigahertz.
1.16 LICENSED PRODUCTS: Any GaAs HBT products where the emitter of
the GaAs HBT has a width of between One (1) and Three (3) microns inclusive.
1.17 MBE: An epitaxial process for manufacturing the starting
wafers for GaAs HBTs utilizing molecular beam technology.
2
<PAGE> 4
1.18 MBE TECHNICAL INFORMATION: All documentation, know-how,
software or other information of Licensor relating to Licensor's MBE
processes for use in connection with the production of GaAs HBTs, whether or
not it is considered proprietary or a trade secret by Licensor, including,
without limitation, data and information contained in reports, documents,
computer programs, drawings and graphs, schematics, manuals, files and notes in
any medium or representation, electronic or otherwise, including but not
limited to those items specified in Schedule 1.18.
1.19 MERGER: the participation of a party as a constituent
corporation in a merger in which it is not the surviving corporation if its
stockholders immediately prior to the effective time of the merger own less
than fifty percent (50%) of the outstanding voting securities of the surviving
corporation immediately after the effective time of the merger.
1.20 OPERATIONAL FOUNDRY: A Foundry shall be considered
operational for purposes of this Agreement when (a) all of the conditions set
forth in Sections 1.20.1 through 1.20.4 are met; or, (b) when the parties
mutually agree that the Foundry is operational.
1.20.1 EQUIPMENT AND PROCESS DOCUMENTATION - all equipment
is installed and in operation and manufacturing flow documents (Licensor
MF1-type documents) on all major process steps are in place
1.20.2 LINE YIELD (NUMBER OF WAFERS COMPLETED MEETING
PROCESS CONTROL MONITOR [PCM] YIELDS) - exceeds 50% at a throughput rate of
50 wafer starts per week
1.20.3 OVERALL YIELD (THROUGH PACKAGED CHIP TEST) ON
2 STANDARD EVALUATION CIRCUITS (SEC) [to be selected from existing Licensee
chip products now manufactured by Licensor in its GaAs foundry] - exceeds 60%
of the prior overall yield for that sec product currently in production by
Licensor; this yield must be achieved from at least 4 wafer lots, with a
minimum 2 week interval between the start of the 1st and 4th wafer lot.
1.20.4 PACKAGED CHIP RELIABILITY YIELDS - equivalent to
current reliability levels achieved through testing by Licensee using
Licensee's standard packaged chip reliability testing procedures.
1.21 PATENT RIGHTS: Existing TRW GaAs HBT Patent Rights, Future
TRW GaAs HBT Patent Rights, Existing TRW MBE Patent Rights, and Future TRW MBE
Patent Rights.
1.22 RESTRICTED STOCK: Those 2,683,930 shares of Licensee's
common stock, no par value, issued to Licensor pursuant to the Restricted Stock
Agreement of even date herewith.
1.23 STOCK SALE: the sale by a party or its stockholders in a
single transaction or series of substantially contemporaneous related
transactions of more than fifty percent (50%) of the party's outstanding voting
securities entitled to vote in the election of directors.
1.24 TECHNICAL INFORMATION: HBT Technical Information and MBE
Technical Information.
1.25 TRANSFER: any mortgage, pledge, transfer, sale, assignment or
other disposition, whether voluntary, by operation of law or otherwise, of a
party's rights hereunder, including any delegation or subcontracting of duties
and specifically including (i) a Stock Sale; and (ii) a Merger.
1.26 WIRELESS COMMUNICATION: The transmission of voice, data or
other information via the transmission or reception of electromagnetic energy
propagating through the air with a frequency of less than 10 gigahertz.
3
<PAGE> 5
ARTICLE 2
LICENSE
2.1 HBT LICENSE: Licensor hereby grants to Licensee, subject to
the terms and conditions of this Agreement, a fully paid up, royalty free
worldwide right and license under Existing TRW GaAs HBT Patent Rights, Future
TRW GaAs HBT Patent Rights and to HBT Technical Information to design, develop,
manufacture, have manufactured, use, test, sell, market, service, and repair
Licensed Products and Existing RFMD Products in the Licensed Field.
2.1.1 Subject to the provisions of Sections 2.8 and 5.2
herein, the license granted in this Section 2.1 shall be exclusive as to all
persons including Licensor for Licensed Products and Existing RFMD Products in
the Licensed Field.
2.1.2 The license granted in this Section 2.1 may , at
Licensor's sole option and sole discretion, be converted to a non-exclusive
license under the circumstances set forth in Section 5.2 of this Agreement.
2.1.3 The license granted in this Section 2.1 shall be
perpetual, subject to the provisions of Article 8 relating to termination or
expiration of this Agreement.
2.1.4 The license granted in this Section 2.1 is effective
as of the Effective Date.
2.1.5 Licensee shall have the right to assign in whole or
in part or to grant sublicenses under the licenses to utilize Existing TRW GaAs
HBT Patent Rights, Future TRW HBT Patent Rights and HBT Technical Information
granted in this Section 2.1 to responsible parties, but only in accordance with
the provisions of Article 13 herein.
2.1.6 The license granted in this Section 2.1 to utilize
HBT Technical Information in the Licensed Field is a continuing license that
extends automatically without any further action on the part of Licensor or
Licensee to (i) any modification, update, change or other improvement to the
HBT Technical Information that is made by Licensor after the Effective Date and
is delivered to Licensee in accordance with Section 3.5; and (ii) any
discovery, development or other invention made by Licensor after the Effective
Date that constitutes new HBT Technical Information and is required to be
delivered to Licensee in accordance with Section 3.5.
2.2 MBE LICENSE: Licensor hereby agrees to grant to Licensee,
subject to the terms and conditions of this Agreement, a fully paid up, royalty
free, worldwide right and license under Existing TRW MBE Patent Rights, Future
TRW MBE Patent Rights and to MBE Technical Information to design, develop,
manufacture, have manufactured but only in accordance with Section 2.2.6 and
Article 13, use, test, sell, market, service, and repair Licensed Products and
Existing RFMD Products in the Licensed Field.
2.2.1 Subject to the provisions of Sections 2.8 and 5.2
herein, the license granted in this Section 2.2 shall be exclusive as to all
persons including Licensor for Licensed Products and Existing RFMD Products in
the Licensed Field.
2.2.2 The license granted in this Section 2.2 may, at
Licensor's sole option and sole discretion, be converted to a non-exclusive
license under the circumstances set forth in Section 5.2 of this Agreement.
2.2.3 The license granted in this Section 2.2 shall be
perpetual, subject to the provisions of Article 8 relating to termination or
expiration of this Agreement.
2.2.4 The license granted in this Section 2.2 shall be
effective as of the date that Licensee has an Operational Foundry for the
manufacture of Licensed Products.
4
<PAGE> 6
2.2.5 Licensee shall have the right to assign, in whole or
in part, or grant sublicenses under the Existing TRW MBE Patent Rights, Future
TRW MBE Patent Rights and MBE Technical Information granted in this Section 2.2
only in accordance with Article 13. .
2.2.6 Licensee shall have the right to have Licensed
Products and Existing RFMD Products manufactured on its behalf by a third party
under the license granted in this Section 2.2 only upon the prior written
approval of an authorized representative of Licensor, which approval may be
given, withheld or conditioned at the sole discretion of Licensor.
2.2.7 The license granted in this Section 2.2 to utilize
MBE Technical Information in the Licensed Field is a continuing license that
extends automatically without any further action on the part of Licensor or
Licensee to (i) any modification, update, change or other improvement to the
MBE Technical Information that is made by Licensor after the Effective Date and
is delivered to Licensee in accordance with Section 3.5; and (ii) any
discovery, development or other invention made by Licensor after the Effective
Date that constitutes new MBE Technical Information and is required to be
delivered to Licensee in accordance with Section 3.5.
2.3 EXISTING RFMD PRODUCTS HBT LICENSE: Licensor hereby grants to
Licensee, subject to the terms and conditions of this Agreement, a fully paid
up, royalty free worldwide right and license under Existing TRW GaAs HBT Patent
Rights and to HBT Technical Information to design, develop, manufacture, have
manufactured, use, test, sell, market, service, and repair the following
Existing RFMD Products outside the Licensed Field:
RF 2310 HBT Gain Block, RFMD design
RF 2311 HBT Gain Block, RFMD design
RF 2312 HBT Gain Block, RFMD design - CATV broadband amp
RF 2313 HBT Gain Block
RF 2314 HBT Gain Block
RF 2315 HBT Gain Block
RF 2316 HBT TV Distr Amp (Balanced)
RF 2317 HBT TV Distr Amp (Unbalanced)(G=15dB).
2.3.1 The license granted in this Section 2.3 shall be
non-exclusive.
2.3.2 The license granted in this Section 2.3 shall be
perpetual, subject to the provisions of Article 8 relating to termination or
expiration of this Agreement.
2.3.3 The license granted in this Section 2.3 is effective
as of the Effective Date.
2.3.4 Licensee shall have the right to assign in whole or
in part or to grant sublicenses under the licenses to utilize Existing TRW GaAs
HBT Patent Rights and HBT Technical Information granted in this Section 2.3 but
only in accordance with the provisions of Article 13.
2.3.5 The license granted in this Section 2.3 to use HBT
Technical Information is a continuing license that extends automatically
without any further action on the part of Licensor or Licensee to (i) any
modification, update, change or other improvement to the HBT Technical
Information that is made by Licensor after the Effective Date and is delivered
to Licensee in accordance with Section 3.5; and (ii) any discovery, development
or other invention made by Licensor after the Effective Date that constitutes
new HBT Technical Information and is delivered to Licensee in accordance with
Section 3.5.
2.4 EXISTING RFMD PRODUCTS MBE LICENSE: Licensor hereby agrees to
grant to Licensee, subject to the terms and conditions of this Agreement, a
fully paid up, royalty free worldwide right and license under Existing TRW MBE
Patent Rights and to MBE Technical Information to design, develop, manufacture,
use, test, sell, market, service, and repair the following Existing RFMD
Products outside the Licensed Field:
5
<PAGE> 7
RF 2310 HBT Gain Block, RFMD design
RF 2311 HBT Gain Block, RFMD design
RF 2312 HBT Gain Block, RFMD design - CATV broadband amp
RF 2313 HBT Gain Block
RF 2314 HBT Gain Block
RF 2315 HBT Gain Block
RF 2316 HBT TV Distr Amp (Balanced)
RF 2317 HBT TV Distr Amp (Unbalanced)(G=15dB).
2.4.1 The license granted in this Section 2.4 shall be
non-exclusive.
2.4.2 The license granted in this Section 2.4 shall be
perpetual, subject to the provisions of Article 8 relating to termination or
expiration of this Agreement.
2.4.3 The license granted in this Section 2.4 shall be
effective as of the date that the parties hereto mutually agree that Licensee
has an Operational Foundry for the manufacture of Licensed Products.
2.4.4 Licensee shall have the right to assign, in whole or
in part, or to grant sublicenses under the Existing TRW MBE Patent Rights and
MBE Technical Information for Existing RFMD Products granted in this Section
2.4 only in accordance with Article 13.
2.4.5 The license granted in this Section 2.4 to utilize
MBE Technical Information is a continuing license that extends automatically
without any further action on the part of Licensor or Licensee to (i) any
modification, update, change or other improvement to the MBE Technical
Information that is made by Licensor after the Effective Date and is delivered
to Licensee in accordance with Section 3.5; and (ii) any discovery, development
or other invention made by Licensor after the Effective Date that constitutes
new MBE Technical Information and is delivered to Licensee in accordance with
Section 3.5.
2.5 FUTURE TECHNOLOGIES: Except for the Future TRW GaAs HBT
Patent Rights, Future TRW MBE Patent Rights, or as specified in Sections 2.1.6,
2.2.7, 2.3.6 and 2.4.6, rights and licenses to future TRW technologies
applicable to the Licensed Field and/or Licensed Products are not granted to
Licensee by this Agreement. Commencing on the Effective Date and continuing
until ten (10) years from the date that the parties hereto mutually agree that
Licensee has an Operational Foundry for the manufacture of Licensed Products,
rights and licenses to other TRW future technologies applicable to the Licensed
Field and/or Licensed Products not granted to Licensee by this Agreement shall
be offered to Licensee by Licensor on the following terms and conditions:
2.5.1 Licensor shall deliver a notice to Licensee stating
its bona fide intention to grant rights and/or licensees to a third party for
technologies applicable to the Licensed Field and/or Licensed Products, and
identify the specific technology it desires to license (the "Offered
Technology") and the terms and conditions by which it proposes to license the
Offered Technology.
2.5.2 Within forty-five (45) days after the date of such
notice, Licensee shall inform Licensor whether or not it is willing to license
the Offered Technology upon the same terms and conditions which Licensor
proposes to license the Offered Technology to the third party. If Licensor has
not received Licensee's decision by the end of the forty-five (45) day period,
it will be deemed that Licensee has decided not to license the Offered
Technology.
2.5.3 If Licensee does not elect to license the Offered
Technology in accordance with Section 2.5.2, Licensor may license the Offered
Technology to any third party upon terms which in their entirety are no more
favorable to the prospective third party than those specified to Licensee,
provided that the license is consummated within ninety (90) days of the date of
the notice to Licensee. Licensor may, at its discretion, alter the final terms
of the license to the third party from those notified to Licensee such that,
though individual terms may be more
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<PAGE> 8
favorable to the third party, the overall license terms and conditions are in
their entirety no more favorable to the third party than those notified. If
the final terms and conditions are, in their entirety, considered to be more
favorable to the third party than those notified to Licensee, then Licensor
must offer those terms to Licensee in accordance with Section 2.5.2, and
Licensee shall have forty-five (45) days to elect to license the Offered
Technology.
2.5.4 All obligations to grant licenses to future TRW
technologies under this Section 2.5 shall terminate ten (10) years from the
date that the parties hereto mutually agree that Licensee has an Operational
Foundry for the manufacture of Licensed Products.
2.6 EXCLUSION: Except as otherwise provided in this Agreement,
the license and rights granted hereunder shall not be interpreted as granting
or implying the grant of rights in any other invention or technical information
of either party. Licensor specifically reserves to itself the right to utilize
Existing TRW GaAs HBT Patent Rights, Future TRW GaAs HBT Patent Rights, Future
TRW MBE Patent Rights, Existing TRW MBE Patent Rights, HBT Technical
Information, and MBE Technical Information for any and all purposes other than
as set forth in this Article 2.
2.7 MARKINGS: To the extent practical, Licensee shall provide on
any Licensed Product or component parts thereof, or on any Existing RFMD
Product manufactured, used or sold utilizing any of the rights or licenses
granted under this Agreement, or on the packaging or data sheets related
thereto so long as the marking is in accordance with applicable marking
provisions of United States or foreign patent laws, a legible notice that such
Licensed Product or component part or Existing RFMD Product is manufactured
under a license granted by Licensor. Licensee shall submit to Licensor prior
to marking any Licensed Product or component part thereof or Existing RFMD
Product the full copy of such proposed marking for written approval by
Licensor, which approval will not be unreasonably withheld and will be deemed
given unless Licensor responds to the contrary within ten (10) business days of
such submission. No rights are granted hereunder by either party to the other
regarding their respective trade names or trademarks.
2.8 LICENSOR RESERVATIONS: Licensor reserves unto itself the
rights to utilize Existing TRW GaAs HBT Patent Rights, Future TRW GaAs HBT
Patent Rights, Existing TRW MBE Patent Rights, Future TRW MBE Patent Rights,
HBT Technical Information, and MBE Technical Information to manufacture, have
manufactured, use, test, sell, service, and repair Licensed Products in the
Licensed Field, but only in accordance with the following:
2.8.1 Licensor may provide Foundry services for any
customers but limited solely to the provision of the following services:
Design Rule Manual
Element Library (GDSII tape)
Model & Design Rule Technical Consultation
Design Rule Check & Circuit Layout Verification
Maskset Procurement and Storage
Three (3) inch MBE profile wafers
HBT or HEMT wafer processing with full backside metallization
Status Reports
Delivery of a minimum of 3 wafers per lot that pass PCM
specifications; and
2.8.2 Licensor is permitted production of Licensed Products
for use in the Licensed Field in order to fulfill any and all contractual
obligations Licensor has as of the Effective Date. A listing of such
contractual obligations is set forth in Schedule 2.8.2.
2.9 MAINTENANCE OF PATENTS: Licensor shall retain the right to
manage and control the prosecution and
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<PAGE> 9
maintenance of patent applications and patents included in the Patent Rights,
and shall have sole financial responsibility for patent acquisition or
maintenance of the Patent Rights to the extent it elects, in its sole
discretion, to pursue the same. From time to time at the reasonable request of
Licensee, Licensor shall furnish Licensee with a written report setting forth
in reasonable detail the identity and status of each patent and patent
application included in the Patent Rights. In the event Licensor determines
that it no longer deems it necessary or desirable to prosecute a patent
application or maintain a patent included in the Patent Rights in any country,
Licensor shall notify Licensee not less than thirty (30) days prior to the
abandonment of the patent application or the final due date for the payment of
the maintenance fee. In such event, Licensee may obtain an assignment of the
patent application or patent by notifying Licensor and providing it with
appropriate assignment documents in a form ready to be executed by it, and
thereafter Licensee shall own the same and shall have the right to (and the
sole financial responsibility for) management and control of the prosecution
and maintenance of such patent applications and patents. Any assignment of any
patent or patent application pursuant to this Section 2.9 shall include a
royalty-free, fully paid up non-exclusive license to Licensor under such patent
or application to design, develop, manufacture, have manufactured, use, test,
sell, market, service, and repair any products outside of Licensed Field.
2.10 ENFORCEMENT OF PATENT RIGHTS:
2.10.1 If either party hereto learns at any time of any
infringement or threatened infringement by any other person of any enforceable
Patent Rights owned by or licensed to the other party after the Effective Date,
that party shall give notice of that infringement or threatened infringement to
the other party. The parties shall then consult together as to the best course
of action to pursue in response to such potential infringement, but neither
party shall be obligated to institute legal action at its own expense. A good
faith failure by one party to provide such notice to the other party shall not
be deemed a breach of this Agreement and shall not give rise to a right of
action by other party.
2.10.2 In the event that the parties do not reach an
agreement as contemplated by Section 2.10.1 hereof as to the best course of
action to pursue with respect to a potential infringement (i) Licensor shall
have the right, but not the obligation, to institute legal action, through
counsel of its own choosing and at its sole expense, to restrain any
infringement or threatened infringement, or to recover damages therefor, of its
enforceable Patent Rights, and (ii) Licensee shall have the right, but not the
obligation, to institute legal action, through counsel of its own choosing and
at its sole expense, to restrain any infringement or threatened infringement,
or to recover damages therefor, of its enforceable Patent Rights in the
Licensed Field. The party that bears the expenses of pursuing legal action
against a third party infringer shall be entitled to any damages, lost profits
or other monies recovered by judgment, decree, settlement, arbitration or
otherwise, resulting from such legal action.
2.10.3 In the event that one party elects to institute legal
action against a third party infringer, the other party shall fully cooperate
in the prosecution of such action including joining as a party in suit when
necessary to acquire standing to institute legal action pursuant to this
Section 2.10; provided, however, that such other party shall be reimbursed for
all reasonable out-of-pocket expenses incurred in providing such cooperation
including its reasonable legal fees and expenses. The electing party shall
reimburse the other party for all such expenses within thirty (30) days after
its receipt of an invoice from the other party that describes such expenses in
reasonable detail, with supporting documentation as appropriate.
ARTICLE 3
TECHNICAL ASSISTANCE AND EQUIPMENT
3.1 TECHNICAL ASSISTANCE AND TRAINING: Licensor shall use
reasonable efforts to provide Licensee with such technical assistance, training
and instruction as may be necessary to enable Licensee or its permitted
sublicensee to design, construct, start-up, test and operate an Operational
Foundry, and to utilize the MBE process in such Operational Foundry, in
accordance with the implementation plan set forth in Schedule 3.1.
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<PAGE> 10
3.1.1 Licensor shall assist Licensee in the design and
upfit of a Foundry (if Licensee elects to operate its own Foundry), including
the provision of such information within its possession as may reasonably be of
use to Licensee (as determined solely by Licensor) with respect to site
selection, building specifications, plant layout, equipment specifications and
sourcing, manufacturing process flows, chemical and physical parameters and
conditions, raw material and intermediate material requirements, waste
generation and treatment, consumable items and materialsand all other
engineering, scientific or technical assistance appropriate for the design and
construction of a Foundry.
3.1.2 Licensor shall assist Licensee in the start-up phase
of the Foundry, including technical assistance, instruction and training of
Licensee personnel to operate, adjust, modify, control and optimize the
manufacturing process to be undertaken at the foundry to the point where it can
become an Operational Foundry.
3.1.3 The instruction and technical assistance to be
rendered by Licensor shall be at Licensee's Foundry location unless otherwise
agreed by the parties. All travel and living expenses incurred by Licensor
personnel in traveling to and from Licensee's Foundry and while on site shall
be borne by Licensor.
3.1.4 Notwithstanding the provisions set forth above in
this Section 3.1, Licensor shall be under no obligation to provide technical
assistance to Licensee once the expense limit set forth in Schedule 3.1 has
been reached. In no event will Licensor be obligated to spend more money than
is set forth in Schedule 3.1.
3.1.5 If Licensee requests Licensor to perform, prior to
December 31, 1998, additional technical assistance beyond that specified in
Schedule 3.1, then Licensor shall provide such additional technical assistance
at Licensor's then existing labor rates, including burden and reasonable
margin. If such additional technical assistance is requested, then Licensee
shall also reimburse Licensor for all expenses incurred by Licensor and its
employees in connection with the performance of such services (including but
not limited to travel, lodging and meal expenses). Licensee shall be
responsible for all expenses incurred by Licensee's representatives in
connection with the performance of all technical assistance (including but not
limited to travel, lodging and meal expenses). Additional Technical Assistance
beyond that specified in Schedule 3.1 to be performed after December 31, 1998
will be subject to the mutual agreement of the parties.
3.2 TECHNICAL INFORMATION: Licensor shall not be obligated to
reduce to a tangible medium of expression any Technical Information; provided,
that nothing in this Section shall be construed to diminish the scope of
Licensee's licenses or the obligation of Licensor to deliver Technical
Information to Licensee.
3.3 DELIVERY OF TECHNICAL INFORMATION: Licensor shall deliver to
Licensee HBT Technical Information and MBE Technical Information related to
Licensed Products in the same form as is used in Licensor's own business. Both
source code and object code for software included in the HBT Technical
Information or the MBE Technical Information shall be delivered to Licensee.
Licensor shall deliver HBT Technical Information as soon as practical and in
any event within thirty (30) days of the Effective Date. Licensor shall
deliver MBE Technical Information as soon as practical and in any event within
thirty (30) days of the date of Licensee's written request for such MBE
Technical Information, which request may be made no earlier than the date upon
which the MBE License becomes effective as set forth in Section 2.2.4.
Licensor shall deliver to Licensee one legible copy of each issued patent and
all patent applications included in the Patent Rights as soon as practical
after the Effective Date. Licensor shall also promptly furnish Licensee a copy
of all patent applications filed and patents issued after the Effective Date
that are included in the Patent Rights.
3.4 USE AND NONDISCLOSURE: Licensee shall not use or permit the
use of Technical Information for any purpose not authorized by this Agreement.
Licensee shall hold in confidence, and shall not disclose or communicate or
permit to be disclosed or communicated to any third person, any Technical
Information which is furnished to Licensee hereunder except in accordance with
Sections 3.6 and 3.7. Licensee shall take or cause to be taken all necessary
precautions to the same extent that it would with its own technical
information, but in no event less than a reasonable standard of care, to
prevent the disclosure or communication of Technical Information to third
persons.
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<PAGE> 11
3.5 UPDATES OF TECHNICAL INFORMATION: Except as specified in this
Section 3.5, Licensor shall be under no obligation to deliver to Licensee any
modifications or additions to Technical Information.
3.5.1 Licensor shall provide to Licensee updated HBT
Technical Information related to improvements to or new discoveries of HBT
Technical Information, but only as such updated HBT Technical Information
relates to GaAs HBTs having an emitter width between Two (2) and Three (3)
microns inclusive and only until three (3) years from the date that Licensee
has an Operational Foundry or this Agreement is terminated in accordance with
Article 8, whichever occurs first.
3.5.2 Licensor shall provide to Licensee updated HBT
Technical Information related to improvements to or new discoveries of HBT
Technical Information, but only as such updated HBT Technical Information
relates to GaAs HBTs having an emitter width of One (1) micron and only for a
period of eight (8) years after the date Licensee has an Operational Foundry or
this Agreement is terminated in accordance with Article 8, whichever occurs
first.
3.5.3 Licensor shall provide to Licensee updated MBE
Technical Information related to improvements to or new discoveries of MBE
Technical Information as it relates to the processing of GaAs HBTs having an
emitter width between One (1) and Three (3) microns, only if the licenses
granted in Sections 2.2 and 2.4 have become effective, and only for a period of
eight (8) years after the date that the licenses granted in Sections 2.2 and
2.4 become effective or this Agreement is terminated in accordance with Article
8, whichever occurs first.
3.5.4 The updated Technical Information specified in this
Section 3.5 shall be delivered to Licensee in the same form as is used in
Licensor's own business (including both source code and object code in the case
of software), and will be delivered as soon as practical after the same becomes
available.
3.5.5 Licensor's obligations to provide updated Technical
Information according to this Section 3.5 is subject to the limitation of
expense set forth in Schedule 3.1. After such limitation of expense is met,
Licensor's provision of updated Technical Information shall be at Licensee's
expense.
3.6 HBT EXCEPTIONS: Licensee may disclose HBT Technical
Information to its employees, sublicensees, consultants, and subcontractors to
the extent that each such disclosure is reasonably necessary for purposes of
designing, developing, constructing, manufacturing, marketing, selling,
installing, repairing and/or servicing Licensed Products or procuring goods and
services required in connection therewith; provided that (i) Licensee clearly
marks any document or other material containing any HBT Technical Information
so disclosed to indicate that such documents or materials contain confidential
and proprietary information of Licensor; (ii) Licensee requires each person to
whom such documents or materials are disclosed to sign a written agreement
limiting use thereof to the purpose stated in such agreement, prohibiting the
reproduction thereof and the disclosure thereof to any such person and
requiring the prompt return thereof when no longer needed or such agreement is
terminated; and (iii) providing that any reproduction, note or summary of such
documents or materials immediately upon the making thereof shall become the
property of Licensor and shall be delivered to Licensor with the return of
Technical Information or otherwise destroyed.
3.7 MBE EXCEPTIONS: Licensee may disclose MBE Technical
Information only to its employees and any permitted sublicensee or assignee
under Article 13 to the extent that each such disclosure is reasonably
necessary for purposes of designing, developing, constructing, manufacturing,
marketing, selling, installing, repairing and/or servicing Licensed Products or
procuring goods and services required in connection therewith; provided that
(i) Licensee clearly marks any document or other material containing any MBE
Technical Information so disclosed to indicate that such documents or materials
contain confidential and proprietary information of Licensor; (ii) Licensee
requires each employee to whom such documents or materials are disclosed to
sign a written agreement limiting use thereof to the purpose stated in such
agreement, prohibiting the reproduction thereof and the disclosure thereof to
any other person; and (iii) providing that any reproduction, note or summary of
such documents or materials immediately upon the making thereof shall become
the property of Licensor and shall be delivered to Licensor with
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the return of Technical Information.
3.8 RESTRICTIONS: The rights granted Licensee herein cover only
Licensed Products for use as licensed hereunder, and Licensee agrees that it
shall not, during the terms of this Agreement, manufacture, sell, lease or
otherwise dispose of any Licensed Products or parts thereof embodying any of
the Patent Rights except insofar as the application thereof is expressly
provided for under this Agreement.
ARTICLE 4
CONSIDERATION
In consideration of all rights, licenses, technical assistance and
Technical Information and benefits conferred to Licensee hereunder, Licensee
has issued to Licensor Two Million Six Hundred Eighty-Three Thousand, Nine
Hundred and Thirty (2,683,930) shares of Restricted Stock.
ARTICLE 5
MANUFACTURE OF LICENSED PRODUCTS
5.1 SUPPLY OF LICENSED PRODUCTS: Once Licensee has provided an
Operational Foundry, Licensee agrees to use commercially reasonable efforts to
place itself in, and to maintain, a position to manufacture, test, sell,
service, repair, and maintain Licensed Products for application in the Licensed
Field in the manner necessary to supply effectively the demand therefor.
5.2 PERFORMANCE GOALS: If the following gross revenue goals are
not reached by Licensee by the date specified, Licensor may, at its sole option
and upon thirty (30) days prior written notice, convert any or all of the
licenses granted in Article 2 to non-exclusive licenses. For purposes of this
Article, the date upon which Licensee has an Operational Foundry shall be
called the "Target Date."
<TABLE>
<CAPTION>
DATE GROSS REVENUES WITHIN
---- ---------------------
PRECEDING 12 MONTH PERIOD
-------------------------
<S> <C>
Target Date Plus One Year $30,000,000
Target Date Plus Two Years $65,000,000
Target Date Plus Three Years $125,000,000
</TABLE>
Licensee's gross revenues shall be calculated in accordance with generally
accepted accounting principles.
ARTICLE 6
IMPROVEMENTS
Licensee agrees that any modifications or improvements in the Licensed
Products, Patent Rights or the Technical Information made by Licensee,
including any inventions, shall be promptly made known to Licensor in the form
of drawings, written descriptions, or other data, and Licensor shall have a
royalty free, non-exclusive right to use such modifications or improvements,
including any inventions outside the Licensed Field or in accordance with
Section 2.8. Licensee further agrees to inform Licensor from time to time in
writing of any of Licensee's patents and patent applications relating to such
modifications, improvements or inventions. If, in countries selected by
Licensor, Licensee decides it shall not file applications for, or maintain
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<PAGE> 13
patents upon, Licensee's modifications, improvements or inventions, then
Licensor shall have the right to do so at its expense and such applications and
patents shall be and become its property, provided Licensee shall continue to
have the right to make use thereof on an exclusive basis in the Licensed Field.
Licensee shall use its best efforts to have executed such application papers
and assignments as Licensor may request in connection with such patents. The
provisions of this Article 6 shall survive termination or expiration of this
Agreement insofar as the rights of the parties to use such improvements,
modifications, inventions and patents are concerned.
ARTICLE 7
REPRESENTATIONS, WARRANTIES AND INDEMNIFICATION
7.1 REPRESENTATIONS AND WARRANTIES OF LICENSOR: Except as
provided for or otherwise described in this Agreement, Licensor represents and
warrants to Licensee as follows:
7.1.1 As of the Effective Date, Licensor is the owner of
all Patent Rights and Technical Information licensed in this Agreement in
existence as of the Effective Date.
7.1.2 As of the Effective Date, Licensor has all requisite
power and authority to enter into and execute this Agreement, to grant the
licenses provided herein and to perform its obligations hereunder.
7.1.3 This Agreement constitutes a legal, valid and binding
obligation of Licensor, enforceable against Licensor in accordance with its
terms.
7.1.4 Licensor has not entered into any agreement with
third parties that would conflict with the terms and conditions herein.
Neither the execution and delivery of this Agreement nor the performance by
Licensor of any of its obligations hereunder will conflict with or result in a
breach of the terms, conditions or provisions of, or constitute a default
under, the Articles of Incorporation or By-Laws of Licensor, as amended.
7.1.5 No royalties or fees have been paid by Licensor to
other persons by reason of its ownership of the Patent Rights or Technical
Information.
7.1.6 As of the Effective Date there is no pending or, to
the actual knowledge of Licensor, threatened claim, litigation or rendered
decision, judgment or holding against Licensor concerning: (i) any claims of
ownership by Licensor to any of the Patent Rights or Technical Information;
(ii) the validity, registrability or enforceability of any intellectual
property rights of Licensor associated with any of the Patent Rights or
Technical Information; (iii) the license of any Patent Rights or Technical
Information to Licensee; or (iv) that the Commercial manufacture, use or sale
of any Licensed Product violates the intellectual property rights of any other
person.
7.1.7 The documentation relating to the Technical Information
to be transferred and disclosed by Licensor to Licensee pursuant to this
Agreement will constitute actual Technical Information used by Licensee prior
to the Effective Date.
7.2 LICENSOR'S RIGHTS: Licensor does not make any representation
or warranty as to the validity of the Patent Rights or that the manufacture,
use or sale of Licensed Products shall not infringe the intellectual property
rights of third parties.
7.3 REPRESENTATIONS AND WARRANTIES OF LICENSEE: Except as
provided for or otherwise described in this Agreement, Licensee represents and
warrants to Licensor as follows:
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7.3.1 Licensee has all requisite power and authority to
enter into and execute this Agreement and to perform its obligations hereunder.
7.3.2 This Agreement constitutes a legal, valid and binding
obligation of Licensee, enforceable against Licensee in accordance with its
terms.
7.3.3 Licensee has not entered into any agreements with
third parties that would conflict with the terms and conditions herein.
Neither the execution and delivery of this Agreement nor the performance by
Licensee of its obligations hereunder will conflict with or result in a breach
of the terms, conditions or provisions of, or constitute a default, under the
Articles of Incorporation or By-Laws of Licensee, as amended.
7.4 VISITS: With respect to all visits of personnel of one party to
the facilities of the other party, the visiting party shall defend and
indemnify the other party from all liability, claim or loss for injury to or
death of any visiting party's employees or agents which such persons are
present at the plant of the other party, and also for damage to the visiting
party's property or to the property of any employee or agent of the visiting
party which may occur during the presence of any such person at the plant of
the other party, regardless of how much damage occurs.
7.5 LIMITATION OF LIABILITY: Licensor does not assume any
responsibility, nor does Licensor give any warranties to Licensee, of any
nature whatsoever, with respect to the ability of Licensee to construct
successfully Licensed Products using the Technical Information or Patent
Rights. LICENSOR'S WARRANTY OBLIGATIONS AND LICENSEE'S REMEDIES THEREUNDER ARE
SOLELY AND EXCLUSIVELY AS STATED HEREIN.
7.6 EXCLUSION: THE WARRANTIES PROVIDED IN THIS ARTICLE 7 ARE IN
LIEU OF ALL OTHER WARRANTIES, WHETHER STATUTORY, EXPRESS OR IMPLIED, AT LAW OR
IN EQUITY, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, ALL OF WHICH ARE EXPRESSLY EXCLUDED.
LICENSOR'S WARRANTY OBLIGATIONS AND LICENSEE'S REMEDIES ARE SOLELY AND
EXCLUSIVELY AS STATED IN THIS ARTICLE 7. IN NO CASE SHALL LICENSOR OR LICENSEE
BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES,
WHETHER ARISING IN CONTRACT, WARRANTY, TORT, INCLUDING NEGLIGENCE, STRICT
LIABILITY, OR OTHER LEGAL OR EQUITABLE THEORY. LICENSOR DOES NOT MAKE ANY
WARRANTY AS TO THE VALIDITY OR ENFORCEABILITY OF THE PATENT RIGHTS.
ARTICLE 8
TERM AND TERMINATION
8.1 TERM: This Agreement shall commence on the Effective Date,
and shall remain in effect until this Agreement is terminated in accordance
with Sections 8.2 or 11.2.
8.2 TERMINATION:
8.2.1 Licensee agrees to use its reasonable best efforts to
obtain written commitments from one or more banks, institutional investors or
financing sources for debt, lease or equity funds in an aggregate amount which,
when added to the cash on hand held by Licensee, will be sufficient to enable
Licensee to purchase and reconfigure and upfit, or design, construct, install
and start-up, a Foundry to be used to manufacture Licensed Products (the
"Financing"). In lieu of securing the Financing and subject to Article 13
hereof, Licensee may elect to sublicense a third party in order to enable such
third party to manufacture Licensed Products for Licensee. If Licensee is
unable to secure the Financing or enter into a definitive sublicense agreement
with a third party for the manufacture of Licensed Products, by March 1, 1997,
then this
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<PAGE> 15
Agreement, and the licenses and rights granted herein, shall terminate and be
of no force or effect unless both parties agree to extend such date. If the
Agreement is terminated in accordance with this Section 8.2.1, then:
8.2.1.1 Licensee shall return to Licensor all
Technical Information which has been delivered to Licensee in accordance with
Article 3; and
8.2.1.2 The licenses granted to Licensee in
accordance with Article 2 shall be automatically terminated as of such date and
shall be of no force or effect.
8.2.2 In the event that Licensee has been unable to construct
or sublicense an Operational Foundry by December 31, 1998 despite all
reasonable efforts of the parties, then this Agreement, and the licenses and
rights granted herein, shall terminate unless both parties agree to extend such
date. If the Agreement is terminated in accordance with this Section 8.2.2,
then:
8.2.2.1 Licensee shall return to Licensor all
Technical Information which has been delivered to Licensee in accordance with
Article 3; and
8.2.2.2 The licenses granted to Licensee in
accordance with Article 2 shall be automatically terminated as of such date and
shall be of no force and effect.
ARTICLE 9
EXCUSABLE DELAY
9.1 NOTICE: If either Licensor or Licensee is unable to perform
any of their respective obligations as herein provided then the party whose
performance is prevented or delayed shall give the other party notice thereof
as soon as reasonably possible under the circumstances and information
regarding the cause or reason therefor.
9.2 EXCUSABLE DELAY: If either Licensor or Licensee is unable to
perform any of their respective obligations as herein provided due to any
circumstances beyond its reasonable control, but not due to its negligence
(including but not limited to strikes, war, an act of God, a public enemy,
interference by any civil or military authority, inability to secure
governmental approval, materials or services or similar cause) and gives notice
to the other as provided in Section 9.1, then the time of performance of any
such obligation shall be extended for a period equal to the number of days
during which performance thereof was delayed due to such circumstances, and
during such period such party shall not be deemed in default of this Agreement.
ARTICLE 10
NOTICES AND LEGAL ADDRESSES
Except as otherwise expressly provided, all notices under this
Agreement shall be made by fax, confirmed by letter, to the fax numbers and
addresses below:
Licensee: RF Micro Devices, Inc.
7341-D West Friendly Avenue
Greensboro, North Carolina 27410
Telecopy: 910-855-3101
Attention: President
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Licensor: TRW Inc.
Electronics Systems & Technology Division
One Space Park
Redondo Beach, California 90278
Telecopy: 310.
Attention: Vice President and General Manager
ARTICLE 11
DEFAULT
11.1 DEFAULT: The occurrence of one or more of the following shall
constitute a default hereunder:
11.1.1 In the event a party fails to pay any sum due and
payable hereunder within ten (10) days after same has become due and payable
and such failure continues for fifteen (15) days after written notice from the
payee;
11.1.2 In the event Licensor is unable to fulfill its
obligations under this Agreement as a result of: (a) liens, claims, charges or
encumbrances in existence as of the Effective Date or arising as a result of
Licensor's execution or performance of this Agreement; (b) Licensor's failure
to obtain all consents, approvals or authorizations of other persons necessary
as of the Effective Date in order to grant the licenses provided for herein;
(c) Licensor's failure to make all filings, notifications and registrations
with all governmental authorities, if any, necessary as of the Effective Date
in order to grant the licenses provided for herein; or (d) any federal, state
or local judgment, writ, decree, order, statute, rule or regulation applicable
as of the Effective Date to Licensor, the Patent Rights or Technical
Information, and such inability continues for a period of thirty (30) days
after written notice from Licensee specifying such failure, provided that if
the failure be such that it cannot with due diligence be cured within such
thirty (30) day period, then Licensor shall have such longer period, not to
exceed thirty (30) additional days, as shall be reasonably necessary to cure
such failure so long as Licensor is acting in good faith and with due
diligence;
11.1.3 In the event a party fails to perform any other
material covenant or obligation required to be performed by such party
hereunder and such failure continues for a period of thirty (30) days after
written notice from the nondefaulting party specifying such failure, provided
that if the failure be such that it cannot be cured solely by the payment of
money and cannot with due diligence be cured within such thirty (30) day
period, then the notified party shall have such longer period, not to exceed
thirty (30) additional days, as shall be reasonably necessary to cure such
failure so long as such party is acting in good faith and with due diligence;
11.1.4 In the event a party (i) shall commence a voluntary
case or other proceeding seeking dissolution, liquidation or other relief with
respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
receiver, trustee, liquidator, custodian or other similar official, or (ii)
shall consent to any such relief or to the appointment of, or taking possession
by, such official in any voluntary case or other proceeding commenced against
it; or
11.1.5 In the event any involuntary case or other proceeding
shall be commenced against a party seeking dissolution, liquidation or other
relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
receiver, trustee, liquidator, custodian or other similar official of it or any
substantial part of its property, if such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty (60) days.
11.2 REMEDY: If any party is in default as specified in Section
11.1, the party not in default may
15
<PAGE> 17
terminate this Agreement by giving the other party thirty (30) days prior
written notice of termination and pursue any other remedy hereunder or
otherwise available to it at law or in equity.
11.3 COMPENSATION: Each party hereby expressly agrees and
acknowledges that termination of this Agreement by either party for default
shall not entitle the other party to any termination compensation or to any
payment in respect of any goodwill established during the term of this
Agreement or render the party liable for damages on account of any loss of
prospective profits or on account of any expenditure, investment or obligation
incurred or made by the parties, or otherwise.
11.4 PERFORMANCE AFTER DEFAULT TERMINATION: If this Agreement is
terminated for default, whether due to the default of Licensor or otherwise,
Licensee shall discontinue the use of the Patent Rights, and Technical
Information and shall return to Licensor all Technical Information furnished to
or otherwise made available to Licensee hereunder.
ARTICLE 12
SURVIVAL OF OBLIGATIONS
Other provisions hereof notwithstanding, the obligations of Licensor
and Licensee under Articles 6 and 7 and Sections 3.4 and 3.8 shall survive the
termination and expiration of this Agreement.
ARTICLE 13
SUBLICENSES, ASSIGNMENTS AND TRANSFERS
13.1 Neither party may sublicense or Transfer any of its rights or
obligations under this Agreement in whole or in part or delegate any of its
obligations or duties hereunder to any person except upon compliance with this
Article 13.
13.2 Prior to the date Licensee constructs or sublicenses an
Operational Foundry, Licensor may Transfer its rights hereunder only with the
prior written consent of Licensee, which consent will not be unreasonably
withheld. From and after the date Licensee certifies that it has an
Operational Foundry, Licensor may Transfer its rights hereunder to any person
upon prior written notice to Licensee.
13.3 Licensee may sublicense its license rights under Section 2.2 to
any person with the prior written consent of Licensor, which consent may be
given, withheld or conditioned at the sole discretion of Licensor.
13.4 Licensee may Transfer its license rights under Section 2.2 only
as follows:
13.4.1 If the proposed Transfer would occur prior to an IPO,
Licensee may Transfer such rights only with the prior written consent of
Licensor, which consent may be given, withheld or conditioned at the sole
discretion of Licensor;
13.4.2 If the proposed Transfer is after the closing of an
IPO and not in conjunction with a Stock Sale, Merger or Asset Sale, Licensee
may Transfer such rights only with the prior written consent of Licensor, which
consent may be given, withheld or conditioned at the sole discretion of
Licensor;
13.4.3 If the proposed Transfer is after the closing of an
IPO and in conjunction with a Stock Sale, Merger or Asset Sale, Licensee may
Transfer such rights by delivering to Licensor a written undertaking executed
by the transferee under which such transferee acknowledges that the rights it
is acquiring from Licensee are limited to the Licensed Field in accordance with
this Agreement.
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<PAGE> 18
13.5 Prior to the closing of an IPO, Licensee may sublicense or
Transfer its license rights under Section 2.1, and may Transfer all its other
rights under this Agreement except its license rights under Section 2.2, to any
person with the prior written consent of Licensor, which consent shall not be
unreasonably withheld.
13.6 After the closing of an IPO, Licensee may sublicense or Transfer
its license rights under Section 2.1, and may Transfer all its rights under
this Agreement except its license rights under Section 2.2, to any person by
delivering to Licensor a written undertaking executed by the transferee under
which such transferee acknowledges that the rights it is acquiring from
Licensee are limited to the Licensed Field in accordance with this Agreement.
13.7 Any purported sublicense or Transfer in contravention of this
Agreement shall be null and void and of no force or effect.
ARTICLE 14
MISCELLANEOUS
14.1 HEADINGS: The headings and titles to the Articles and
Sections of this Agreement are inserted for convenience only and shall not be
deemed a part hereof or affect the construction or interpretation of any
provision hereof.
14.2 REMEDIES: Unless otherwise expressly provided herein, the
rights and remedies hereunder are in addition to, and not in limitation of,
other rights and remedies under the Agreement, and exercise of one right or
remedy shall not be deemed a waiver of any other right or remedy.
14.3 MODIFICATION - WAIVER: No cancellation, modification,
amendment, deletion, addition or other change in this Agreement or any
provision hereof, or waiver of any right or remedy herein provided, shall be
effective for any purpose unless specifically set forth in a writing signed by
the party to be bound thereby and specifically referencing this Agreement. No
waiver of any right or remedy in respect of any occurrence or event on one
occasion shall be deemed a waiver of such right or remedy in respect of such
occurrence or event on any other occasion.
14.4 ENTIRE AGREEMENT: This Agreement supersedes all other
agreements, oral or written, heretofore made with respect to the subject hereof
and the transactions contemplated hereby and, with the Schedules hereto and, in
conjunction with the Securities Purchase Agreement, Restricted Stock Agreement,
Subordinated Convertible Promissory Note, Warrant, Deficit Warrant, and Supply
Agreements of even date herewith, contains the entire agreement of the parties.
14.5 CONTROLLING LAW: All questions concerning the validity and
operation of this Agreement and the performance of the obligations imposed upon
the parties hereunder shall be governed by and construed in accordance with the
laws of the State of California, United States of America applicable to
contracts entered into and wholly to be performed in the State of California.
14.6 SUCCESSORS AND ASSIGNS: The provisions of this Agreement
shall be binding upon and inure to the benefit of Licensor and Licensee and
their respective successors and assigns, but this provision shall not be deemed
to expand or otherwise affect the limitations on assignment and sublicensing
set forth in Article 13 .
14.7 COUNTERPARTS: This Agreement has been executed in several
counterparts, each of which shall be deemed to be an original copy hereof.
14.8 SCHEDULES: The Schedules hereto shall form an integral part
of this Agreement and shall
17
<PAGE> 19
have the same effectiveness as the Agreement itself. In the event of any
conflict between the terms of the Agreement and any Schedule, the Agreement
shall be controlling.
14.9 GOVERNMENT REGULATIONS: This Agreement is subject to all the
laws and regulations, and other administrative acts, now or hereinafter in
effect, of the United States Government and its departments and agencies.
Technical Information, any Licensed Product, component, or spare part, are not
authorized to be directly or indirectly sold, leased, released, assigned,
transferred, conveyed, or in any manner disposed of in or to any country where
such sale, lease, assignment, transferal, conveyance or use, is regulated by
the United States Government without first obtaining any necessary approvals of
the United States Government.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first set forth above.
TRW Inc.
Electronics Systems & Technology Division
By: /s/ David B. Vandervoet
----------------------------------
David B. Vandervoet
Vice President & Division General Manager
RF Micro Devices, Inc.
By: /s/ David A. Norbury
----------------------------------
President and CEO
18
<PAGE> 1
EXHIBIT 3.6
SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT, (the
"Agreement") dated as of June 6, 1996, is made by and among RF MICRO DEVICES,
INC., a North Carolina corporation (the "Company"), and those certain investors
set forth on Schedule 1 attached hereto and incorporated herein by reference
(collectively, the "Investors"). This Agreement amends, restates and
supersedes that certain Amended and Restated Registration Rights Agreement
dated November 22, 1995.
WHEREAS, certain of the Investors own, in the aggregate, 975,000
shares of the Company's Class A-1 Convertible Preferred Stock (the "Class A-1
Preferred Stock"), 1,034,091 shares of the Company's Class A-2 Convertible
Preferred Stock (the "Class A-2 Preferred Stock"), 3,300,000 shares of the
Company's Class B Convertible Preferred Stock (the "Class B Preferred Stock")
and 1,818,783 shares of the Company's Class C Convertible Preferred Stock (the
"Class C Preferred Stock"); and
WHEREAS, the Company has issued to Allen Telecom Group, Inc. its Stock
Purchase Warrant No. 1 dated August 7, 1995 and its Stock Purchase Warrant No.
2 dated November 10, 1995 (the "Allen Warrants"), each of which entitles Allen
Telecom Group, Inc. to purchase shares of the Company's common stock, no par
value per share ("Common Stock"); and
WHEREAS, pursuant to the terms of that certain Securities Purchase
Agreement of even date herewith by and between the Company and TRW Inc. (the
"Purchaser" and also an "Investor") (the "Securities Purchase Agreement"), the
Company has sold to the Purchaser the aggregate amount of 826,446 shares of the
Company's Class C Preferred Stock; a subordinated convertible promissory note
in the principal amount of $10,000,000, pursuant to which the Company may
borrow up to $10,000,000 from the Purchaser and the outstanding principal of
which may be converted by the Purchaser into 1,111,111 shares of Common Stock
or a class of the Company's preferred stock (the "New Preferred Stock") (to be
determined and adjusted as provided therein) (the "Convertible Note"); a
warrant entitling the Purchaser to purchase up to 1,111,111 shares of Common
Stock or New Preferred Stock (to be determined and adjusted as provided
therein) (the "Deficit Warrant"); a warrant entitling the Purchaser to purchase
up to 1,000,000 shares of Common Stock (subject to adjustment as provided
therein) (the "Warrant"); and the aggregate amount of 2,683,930 shares of
Common Stock (the "Restricted Common Stock"), which shares are subject to the
provisions of that certain Restricted Stock Agreement of even date herewith
between the Company and the Purchaser (the "Restricted Stock Agreement");
WHEREAS, the Class A-1 Preferred Stock, the Class A-2 Preferred Stock,
the Class B Preferred Stock, the Class C Preferred Stock and the New Preferred
Stock are collectively referred to as the "Preferred Stock" and such Preferred
Stock is convertible into Common Stock, all as
<PAGE> 2
provided (or to be provided, in the case of the New Preferred Stock) in the
Company's Articles of Incorporation; and
WHEREAS, in order to induce the Investors to purchase from the Company
the Preferred Stock and to induce the Purchaser to purchase the Class C
Preferred Stock, the Convertible Note, the Deficit Warrant, the Warrant and the
Restricted Common Stock (collectively, the "Purchaser Securities"), the Company
desires to grant registration rights to the Investors for shares of its Common
Stock which the Investors will have the right to acquire pursuant to conversion
of the Preferred Stock, the Purchaser Securities or the Allen Warrants;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1. Definitions.
As used herein the following defined terms shall have the
following respective meanings:
(a) The term "Holders" means any holder or holders of
shares of Registrable Securities.
(b) The terms "register", "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act (as defined below) and the
declaration or ordering of the effectiveness of such registration statement.
(c) The term "Registrable Securities" means all shares of
Common Stock issued or issuable upon (i) the conversion of Preferred Stock,
(ii) the exercise of the Allen Warrants, (iii) the exercise or conversion of
any Purchaser Securities other than the Restricted Common Stock and (iv) those
shares of Restricted Common Stock which are no longer subject to forfeiture as
provided in the Restricted Stock Agreement.
(d) The term "Securities Act" means the Securities Act of
1933, as amended.
2. Requested Registration.
(a) If at any time after one year from the date hereof,
the Company shall receive from the Holders of at least sixty percent (60%) of
the Registrable Securities a written request that the Company effect a
registration under the Securities Act with respect to not less than twenty
percent (20%) of the Registrable Securities and having an expected aggregate
offering price to the public of not less than $15,000,000, the Company will, as
expeditiously as possible, notify in writing all the Holders of such request
and use its diligent best efforts to effect all such registrations (including,
without limitation, the execution of an undertaking to file post-effective
amendments and appropriate qualifications and approvals under the laws and
regulations applicable to the Company of any applicable governmental agencies
and authorities, including the applicable blue sky or other
2
<PAGE> 3
state securities laws) as may be so requested and as would permit or facilitate
the sale and distribution of all or such portion of the Registrable Securities
as are specified in such request, together with any Registrable Securities held
by the other Holders who may desire to participate in such registrations;
provided, however, that before filing any such registration statement or any
amendments or supplements thereto, the Company will (x) furnish to the Holders
of Registrable Securities which are to be included in such registration, copies
of all such documents proposed to be filed, which documents will be subject to
the review of such Holders and their counsel, and (y) give the Holders of
Registrable Securities to be included in such registration statement and their
representatives the opportunity to conduct a reasonable investigation of the
records and business of the Company and to participate in the preparation of
any such registration statement or any amendments or supplements thereto;
provided, further, that the Company shall not be obligated to take any action
to effect such registration pursuant to this subparagraph 2(a), (i) after (A)
the Company has effected three such registrations pursuant to this subparagraph
2(a) at the request of the Holders and (B) each of such registrations have been
declared or ordered effective; (ii) during the ninety (90) day period
commencing with the closing date of the Company's initial public offering, or
(iii) if it delivers notice to the Holders of the Registerable Securities
within thirty (30) days of any registration request of its intent to file a
registration statement for such initial public offering within ninety (90)
days. With respect to any registration requested pursuant to this subparagraph
2(a), the Company may include in such registration any other shares of its
capital stock, subject to the restrictions set forth in subparagraph 2(c).
(b) Subject to subparagraph 2(a) above and the other
terms and conditions contained herein, the Company shall file a registration
statement covering the Registrable Securities so requested to be registered as
soon as practical, but in any event within ninety (90) days after (i) receipt
of the request or requests of the Holders or (ii) the date in which the Holders
of Registrable Securities to be included in such registration agree, pursuant
to subparagraph 2(c), on the terms and conditions of an underwriting, if
applicable, as evidenced by its letter of intent describing such terms and
conditions, whichever is later; provided, however, that if the Company shall
furnish to the Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed at the date filing would be required hereunder and it is
therefore essential to defer the filing of such registration statement, the
Company shall have an additional period of not more than sixty (60) days within
which to file such registration statement (which additional period may be
extended to ninety (90) days if such deferral will materially reduce the
expenses of such registration due to the elimination of the need for any
special audits to be performed in connection with such registration).
(c) If the Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to subparagraph
2(a). In such event, if so requested in writing by the Company, the Holders
shall negotiate in good faith with a nationally recognized underwriter or
underwriters or major regional underwriter or underwriters acceptable to the
Holders, selected by the Company with regard to the underwriting of such
requested registration; provided, however, that if the Holders have not agreed
with such underwriter(s), in their discretion, as to the terms and conditions
of such
3
<PAGE> 4
underwriting within thirty (30) days following commencement of such
negotiations, the Holders may select an underwriter of their choice. The right
of the Holders to registration pursuant to this Paragraph 2 shall be
conditioned upon the Holder's participation in such underwriting to the extent
provided herein. The Company shall (together with all Holders proposing to
distribute their Registrable Securities through such underwriting) enter into
an underwriting agreement in customary form with the underwriter or
underwriters selected pursuant to this Paragraph 2. Notwithstanding any other
provision of this Paragraph 2, if the underwriter advises the Company in
writing with a copy to the Holders that marketing factors require a limitation
of the number of shares to be underwritten, the Company shall so advise all
Holders, and the Company will include in such registration up to the maximum
allowed by such underwriter (x) first, as many shares as possible of
Registrable Securities requested to be included by the applicable Holders,
which shall be allocated among all Holders thereof in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities requested by
such Holders to be registered and (y) second, shares to be sold by the Company
or other holders of the Company's capital stock. If any Holder of Registrable
Securities disapproves of the terms of the underwriting, he or it may elect to
withdraw therefrom by written notice to the Company, the underwriter and the
other Holders. In the event of any such withdrawal, the Company will include
in any such registration in lieu thereof any additional shares of Registrable
Securities which were requested to be included by a Holder and which were
excluded pursuant to the above-described underwriter limitation up to the
maximum set by such underwriter.
(d) The Company will use its best efforts to do any and
all other acts which may be necessary or advisable to enable each selling
Holder to dispose of the Registrable Securities being sold including, without
limitation, (i) furnishing to each such Holder (x) the number of copies of the
registration statement and of the exhibits and the prospectus contained therein
reasonably requested by each such Holder, and (y) signed counterparts,
addressed to each such Holder, of an opinion of the Company's counsel and a
"cold comfort" letter of the Company's independent certified public accountants
with respect to the matters customarily covered in such documents delivered to
underwriters in underwritten public offerings, (ii) registering or qualifying
the Registrable Securities under the blue sky laws of any state in which the
Registrable Securities are to be sold or obtaining exemptions therefrom;
provided, however, that no blue sky filing shall be required in any state if to
do so would require the Company to qualify to do business or to file a general
consent to service of process in such state and (iii) listing the Registrable
Securities to be sold on a national securities exchange or equivalent.
3. Company Registration.
(a) In addition to the registration rights set forth in
Paragraph 2, if at any time or from time to time, the Company shall determine
to register any of its securities, either for its own account or the account of
a security holder or holders, in a registration statement covering the sale of
Common Stock to the general public pursuant to an underwritten public offering
(except with respect to any registration filed on Form S-8, Form S-4 or any
successor forms thereto), the Company will: (x) give to each Holder written
notice thereof at least ninety (90) days before the initial filing of such
registration (which shall include a list of the jurisdictions in which the
Company intends to attempt to qualify such securities under the applicable blue
sky or other state securities
4
<PAGE> 5
laws), or forty-five (45) days before filing if such registration is a
subsequent registration; provided, however, in the case of a registration
statement on Form S-3, the Company shall give each Holder written notice of the
proposed filing thereof promptly after a decision to make such filings has been
made and in no event less than ten (10) business days prior to filing; and (y)
use its best efforts to include in such registration (and any related
qualification under blue sky laws) and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests, made
within thirty (30) days after receipt of such written notice from the Company,
by any Holder or Holders, except as set forth in subparagraph 3(b) below.
(b) The right of any Holder to registration pursuant to
this Paragraph 3 shall be conditioned upon such Holder's participation in the
underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the Company, and
may, at their option, require that any or all the representations and
warranties by, and the covenants and other agreements on the part of, the
Company to and for the benefit of such underwriter shall also be made to and
for the benefit of such Holders. Such Holders shall not be required to make
any representations or warranties to or agreements with the Company or the
underwriter other than those relating to such Holders and such Holders'
intended methods of distribution. Notwithstanding any other provision of this
Paragraph 3, if the underwriter determines that marketing factors require a
limitation of the number of Registrable Securities to be underwritten, the
underwriter may limit the number of Registrable Securities to be included in
the registration and underwriting; provided, however, that with respect to any
such registration of securities for the account of the Company, the underwriter
may not limit the amount of Registrable Securities included in such
registration and underwriting if other holders of the Company's securities are
permitted to include their securities in such registration and underwriting.
The Company shall so advise all Holders, and the number of shares of
Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities
requested by such Holders to be registered. If any Holder disapproves of the
terms of any such underwriting, he may elect to withdraw therefrom by written
notice to the Company and the underwriter. In the event of any such
withdrawal, the Company will include, on a proportionate basis (determined in
accordance with the preceding sentence), in any such registration in lieu
thereof any additional Registrable Securities which were requested to be
included by a Holder and which were excluded pursuant to the above-described
underwriter limitation up to the maximum set by such underwriter.
(c) Purchaser's rights, if any, to purchase shares of the
Company's securities in an offering described in this Section 3 shall rank pari
passu with the rights of the other Holders of the Registrable Securities and
shall be determined on the same basis.
5
<PAGE> 6
4. Registration on Form S-3.
At such time as the Company shall have qualified for the use
of Form S-3 (or any similar form or forms promulgated under the Securities
Act), the Holders of the Registrable Securities shall have the right to request
an unlimited number of registrations (but no more than one such registration
every six months) on Form S-3 (which request or requests shall be in writing,
shall specify the Registrable Securities intended to be sold or disposed of by
the Holder thereof, shall state the intended method of disposition of such
Registrable Securities by the Holder requesting such registration and shall
relate to Registrable Securities having a proposed aggregate gross offering
price (before deduction of underwriting discounts and expenses of sale) of at
least $500,000) and the Company shall be obligated to use its best efforts to
effect such registration or registrations on Form S-3.
5. Expenses of Registration.
All expenses incurred in connection with any registration or
qualification pursuant to this Agreement, including, without limitation, all
registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for the Company and counsel for the Holders, and
expenses and fees of any special audits incidental to or required by such
registration, shall be borne by the Company; provided, however, that (x) the
Company shall not be required to pay for expenses of any registration begun
pursuant to Paragraph 2, the request for which has been subsequently withdrawn
by the Holders and which the Company or any other stockholders do not wish to
continue, in which case, such expenses shall be borne by the Holders requesting
such withdrawal; provided, however, that the Company shall be required to pay
for such expenses if such registration was begun pursuant to Paragraph 2(a) and
the Holders deem such registration to satisfy the Company's obligation with
respect to registering such offering; and (y) the Company in any event shall
not be required to pay fees of legal counsel of the Holders (except for the
fees of one legal counsel of the Holders) or underwriters' discounts or
commissions relating to Registrable Securities (such underwriters' fees,
discounts, commissions or other fees or expenses to be borne by the Holders, on
a pro rata basis, based on the number of Registrable Securities sold by each of
them), except where a partner or employee of a Holder is a director of the
Company and incurs expenses on behalf of the Company with respect to any
registration or qualification in his or her capacity as a director of the
Company. In the event that expenses are to be paid by the Holders, such
expenses shall not include (x) costs of preparing any financial statements or
other information normally prepared by or for the Company in the ordinary
course or (y) general overhead expenses of the Company, including, without
limitation, salaries.
6. Registration Procedures.
In the case of each registration effected by the Company
pursuant to this Agreement, the Company will keep each Holder participating
therein advised in writing as to the initiation of such registration (and any
state qualifications) and as to the completion thereof. The Company will: (x)
keep such registration or qualification pursuant to Paragraphs 2, 3 or 4
effective for a period of ninety (90) days or until all the Holders have
completed the distribution described in the registration
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<PAGE> 7
statement relating thereto, whichever last occurs, and (y) furnish such number
of prospectuses and other documents incident thereto as a Holder from time to
time may reasonably request.
7. Indemnification.
(a) The Company will indemnify each Holder of Registrable
Securities, each of the Holder's officers, directors, partners and employees,
and each person controlling such Holder, with respect to such registration or
qualification effected pursuant to this Agreement and in which Registrable
Securities are included, against all claims, losses, damages, and liabilities
(or actions in respect thereto) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any prospectus,
registration statement or other document incident to any such registration or
qualification, or based on any omission (or alleged omission) to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of any rule
or regulation promulgated pursuant to any Federal, state or common law rule or
regulation including, without limitation, the Securities Act, applicable to the
Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance and will
reimburse each such Holder, each of such Holder's officers, directors, partners
and employees, and each person controlling such Holder, for any legal and any
other expenses incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, including reasonable attorneys' fees;
provided, however, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is based
on any untrue statement or omission based upon and in conformity with written
information furnished to the Company by such Holder, in a signed document
stating that such information is specifically for use therein. Such indemnity
shall be effective notwithstanding any investigation made by or on behalf of
any Holder, or any such officer, director, partner, employee or controlling
person, and shall survive any transfer by the same of any of the Registrable
Securities.
(b) Each Holder will, if Registrable Securities held by
or issuable to such Holder are included in the securities as to which such
registration or qualification is being effected, severally and not jointly,
indemnify the Company, each of its directors, officers and employees, against
all claims, losses, damages and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any such registration statement, prospectus or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse the Company, such Holders, such
directors, officers, partners, employees, persons or underwriters for any legal
or any other expenses incurred in connection with investigating or defending
any such claim, loss, damage, liability or action, including reasonable
attorneys' fees, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus or other document
in reliance upon and in conformity with written information furnished to the
Company by such Holder in a signed document stating that such information is
specifically for use therein. Notwithstanding the foregoing, the liability of
any such Holder shall not exceed an amount equal to the proceeds realized by
each such Holder of Registrable Securities sold as
7
<PAGE> 8
contemplated herein. Such indemnity shall be effective notwithstanding any
investigation made by or on behalf of the Company, any such director, officer,
partner, employee, or controlling person and shall survive the transfer of such
securities by such seller.
(c) Each party entitled to indemnification under this
Paragraph 7 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought. Unless in the reasonable judgment of the Indemnified Party a
conflict of interest may exist between the Indemnifying Party and the
Indemnified Party, the Indemnifying Party shall be permitted to assume the
defense of any such claim or any litigation resulting therefrom; provided,
however, that in any event counsel for the Indemnifying Party or Indemnified
Party who shall conduct the defense of such claim or litigation as provided
above shall be approved by the other Party (whose approval shall not be
unreasonably withheld), and such other Party may participate in such defense at
such Party's expense; provided, further, that the failure of any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying
Party of its obligations under this Paragraph 7.
(d) The Indemnified Party shall make no settlement of any
claim or litigation which would give rise to liability on the part of the
Indemnifying Party under an indemnity contained in this Paragraph 7 without the
written consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed, and no Indemnifying Party shall make any
settlement of any such claim or litigation without the consent of the
Indemnified Party. If a firm offer is made to settle a claim or litigation
defended by the Indemnified Party and the Indemnified Party notifies the
Indemnifying Party in writing that the Indemnified Party desires to accept and
agree to such offer, but the Indemnifying Party elects not to accept or agree
to such offer within ten (10) days after receipt of written notice from the
Indemnified Party of the terms of such offer, then, in such event, the
Indemnified Party shall continue to contest or defend such claim or litigation
and, if such claim or litigation is within the scope of the Indemnifying
Party's indemnity contained in this Paragraph 7, the Indemnified Party shall be
indemnified pursuant to the terms hereof. If a firm offer is made to settle a
claim or litigation defended by the Indemnifying Party and the Indemnifying
Party notifies the Indemnified Party in writing that the Indemnifying Party
desires to accept and agree to such offer, but the Indemnified Party elects not
to accept or agree to such offer within 10 days after receipt of written notice
from the Indemnifying Party of the terms of such offer, then, in such event,
the Indemnified Party may continue to contest or defend such claim or
litigation and, in such event, the total maximum liability of the Indemnifying
Party to indemnify or otherwise reimburse the Indemnified Party in accordance
with this Agreement with respect to such claim or litigation shall be limited
to and shall not exceed the amount of such settlement offer, plus reasonable
out-of-pocket costs and expenses (including reasonable fees and disbursements
of counsel) to the date of notice that the Indemnifying Party desired to accept
such settlement offer.
(e) The indemnification payments required pursuant to
this Paragraph 7 for expenses of the investigation or defense of a claim or
lawsuit shall be made from time to time during the course of the investigation
or defense, as the case may be, upon submission of reasonably sufficient
documentation that any such expenses have been incurred.
8
<PAGE> 9
8. Information by Holder.
The Holder or Holders of Registrable Securities included in
any registration shall furnish to the Company such written information
regarding such Holder or Holders and the distribution proposed by such Holder
or Holders as the Company may reasonably request in writing and as shall be
required in connection with any registration or qualification referred to in
this Agreement. The Company agrees to include in any such registration
statement all information concerning the Holders and their distribution which
the Holders shall reasonably request.
9. Securities Act Registration Statements.
The Company shall not file any registration statement under
the Securities Act covering any securities unless it shall first have given the
Holders written notice thereof. The Company further covenants that the Holders
shall have the right, at any time when they may be deemed to be a controlling
person of the Company, to participate in the preparation of such registration
statement and to request the insertion therein of material furnished to the
Company in writing which in the Holders' judgment should be included. In
connection with any registration statement referred to in this subsection, the
Company will indemnify, to the extent permitted by law, the Holders, their
officers, directors, partners and employees and each person, if any, who
controls the Holders within the meaning of Section 15 of the Securities Act,
against all losses, claims, damages, liabilities and expenses caused by any
untrue statement or alleged untrue statement of a material fact contained in
any registration statement or prospectus or any preliminary prospectus or any
amendment thereof or supplement thereto or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by any untrue
statement or alleged untrue statement or omission or alleged omission contained
in written information furnished to the Company by the Holders expressly for
use in such registration statement. If, in connection with any such
registration statement, the Holders shall furnish written information to the
Company expressly for use in the registration statement, the Holders, severally
and not jointly, will indemnify, to the extent permitted by law, the Company,
its directors, each of its officers who sign such registration statement and
each person if any, who controls the Company within the meaning of the
Securities Act against all losses, claims, damages, liabilities and expenses
caused by any untrue statement or alleged untrue statement of a material fact
or any omission or alleged omission of a material fact required to be stated in
the registration statement or prospectus or any preliminary prospectus or any
amendment thereof or supplement thereto or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
alleged untrue statement or such omission or alleged omission is contained in
information so furnished in writing by the Holders for use therein.
9
<PAGE> 10
10. Filing of Reports Under The Exchange Act.
The Company shall give prompt notice to the Holders of (a) the
filing of any registration statement (an "Exchange Act Registration Statement")
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), relating to any class of equity securities of the Company, and (b) the
effectiveness of such Exchange Act Registration Statement and the number of
shares of such class of equity securities outstanding as reported in such
Exchange Act Registration Statement, in order to enable the Holders to comply
with any reporting requirements under the Exchange Act or the Securities Act.
The Company shall, at any time after the Company shall register any shares of
Common Stock under the Securities Act and upon the written request of the
Holders, file an Exchange Act Registration Statement relating to any class of
equity securities of the Company then held by the Holders or issuable upon
conversion or exercise of any class of debt or equity securities or warrants or
options of the Company then held by the Holders, whether or not the class of
equity securities with respect to which such request is made shall be held by
at least the number of persons which would require the filing of a registration
statement under Section 12(g) of the Exchange Act.
11. Rule 144 Reporting.
With a view to making available to the Holders benefits of
certain rules and regulations of the Securities and Exchange Commission (the
"SEC") which may permit the sale of the Registrable Securities to the public
without registration, the Company agrees that if it becomes subject to the
reporting requirements of either Section 13 of Section 15(d) of the Exchange
Act, it will:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, or any successor provision
thereto, at all times;
(b) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act;
(c) so long as a Holder owns any Registrable Securities
(or other securities of the Company), to furnish to such Holder forthwith upon
its request a written statement by the Company as to the Company's compliance
with the reporting requirements of Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing such Holder to sell any such securities without registration;
and take any further action reasonably requested by a Holder to enable such
Holder to sell its Registrable Securities without registration under Rule 144,
under any successor provision, or any similar rule or regulation promulgated by
the SEC from time to time.
10
<PAGE> 11
12. Transfer of Registration Rights.
The rights to cause the Company to register Registrable
Securities that are granted by the Company under Paragraphs 2, 3 and 4 may be
assigned by a Holder to (i) any partner or retired partner of any Holder which
is also a partnership, (ii) any family member or trust for the benefit of any
Holder who is also an individual, or (iii) any transferee who acquires at least
10,000 shares of Registrable Securities provided that the Company is given
written notice by the Holder at the time of or within a reasonable time after
said transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being assigned. Subject to the foregoing provision, this Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
respective successors and assigns; provided, however, that the registration
rights granted in this Agreement shall not be transferred to persons who
received Registrable Securities pursuant to a registration statement under the
Securities Act or pursuant to a transaction under Rule 144 or any successor
provision thereto.
13. Consent; Changes.
For purposes of this Agreement, unless otherwise specifically
provided for hereby, all approvals and consents of the Holders required or
permitted under this Agreement shall be deemed granted by the affirmative vote
of the Holders of sixty percent (60%) of the Registrable Securities which have
not already been registered. The terms and provisions of this Agreement may
not be waived, modified or amended, except that they may be waived, modified or
amended with the written consent of (a) the Company and (b) the Holders of
sixty percent (60%) of the Registrable Securities which have not already been
registered; provided, however, that this Paragraph 13 may not be waived,
modified or amended without the written consent of (a) the Company and (b) all
of the Holders; provided, further, however, that this Agreement may not be
waived, modified or amended without the written consent of (X) the holders of
seventy-five percent (75%) of the Class C Convertible Preferred Stock and (Y)
the Company, if such waiver, modification or amendment would have an adverse
effect on the rights and privileges of the Class C Convertible Preferred Stock
that is materially and adversely different from the effect of such waiver,
modification or amendment on the holders of other classes of Preferred Stock.
14. Granting of Registration Rights.
The Company shall not, without the prior written consent of
holders of sixty percent (60%) of the Registrable Securities with respect to
the Holders of the Preferred Stock which have not already been registered,
grant any rights to any persons to register any shares of capital stock or
other securities of the Company if such rights could reasonably be expected to
conflict with, or be on parity with, the rights of the Holders provided
hereunder.
11
<PAGE> 12
15. "Lock-Up" Agreement.
If required by the Company and an underwriter of Common Stock
or other securities of the Company, each Holder shall agree not to sell or
otherwise transfer or dispose of any Registrable Securities held by such Holder
for a specified period of time (not to exceed one hundred twenty (120) days)
following the effective date of a primary offering by the Company; provided
that all officers and directors of the Company and all other Holders of 1% of
the shares, enter into similar agreements. Such agreement shall be in writing
in a form satisfactory to the Company and such underwriter. The Company may
impose stop-transfer instructions with respect to the Registrable Securities or
other securities subject to the foregoing restriction until the end of the
stand-off period.
16. Standstill Agreement by TRW.
From the date hereof through and including the date which is
the fifth anniversary of the closing of the initial Public Offering (as defined
below) by the Company, the Purchaser hereby agrees that it shall not, and shall
cause its Affiliates (as defined below) not to, directly or indirectly, (a)
acquire, offer to acquire (including without limitation, any offer conditioned
on a waiver or other elimination of this Paragraph 16), or agree to acquire,
directly or indirectly, by purchase or otherwise, any voting securities or
direct or indirect rights or options to acquire any voting securities of the
Company or any subsidiary thereof in excess of the Percentage Limit, or any
assets of the Company or any subsidiary or division thereof; (b) make any
public announcement with respect to, or submit any proposal for, or offer of
(with or without conditions), any extraordinary transaction involving the
Company or its securities or assets; (c) make, or in any way participate,
directly or indirectly, in any "solicitation" of "proxies" to vote (as such
terms are used in the proxy rules of the Securities and Exchange Commission),
or seek to advise or influence any person or entity with respect to the voting
of any voting securities of the Company; (d) form, join or in any way
participate in a "group" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934 with respect to any voting securities of the
Company; or (e) solicit or encourage any person to propose a business
combination or similar transaction with, or a change in control of, the
Company. Notwithstanding the foregoing, actions permitted by that certain
Second Amended and Restated Shareholders' Agreement among the Company and its
shareholders are excepted from the prohibitions of this Paragraph 16.
Furthermore, if any party makes a bona fide offer to purchase all of the
outstanding shares of the Company, the Company shall notify the Purchaser in
writing that for a period of thirty (30) days after the date of such notice
(the "Special Option Period"), the Purchaser shall be entitled to make a
counterproposal for all outstanding shares of the Company on the same or better
terms and conditions as provided in such offer and the Purchaser may deliver
written notice to the Company at any time during the Special Option Period
setting forth the terms and conditions of such counterproposal (the "Purchaser
Offer"). The Company shall promptly upon receipt forward the Purchaser Offer
to all of its shareholders who, in their sole discretion, may elect to accept
or reject such Purchaser Offer. As used herein, the term "Public Offering"
shall have the same meaning as provided in the Company's Articles of
Incorporation; "Affiliate" shall have the same meaning as provided in Rule 405
promulgated under the Securities Act; and "Percentage Limit" means the lesser
of forty percent (40%) or the actual maximum percentage of the Company's equity
securities owned by Purchaser (assuming conversion by Purchaser of all of its
convertible
12
<PAGE> 13
securities and the exercise of any warrants or options held by Purchaser),
calculated on a fully diluted basis. Purchaser acknowledges that the Company
would not have an adequate remedy at law for money damages in the event of a
breach by Purchaser or its Affiliates of this Paragraph 16 and agrees that the
Company shall be entitled to specific enforcement of the terms of this
Paragraph 16 in addition to any other remedy to which it may be entitled at law
or in equity.
17. Governing Law.
This Agreement shall be governed by and construed in
accordance with the internal laws of the State of North Carolina without
reference to the principles of conflicts of law thereof.
18. Notice.
All notices and other communications required or permitted to
be given in respect of this Agreement shall be deemed to have been given or
made if delivered personally or if mailed by registered or certified mail,
return receipt requested, to the parties at the addresses listed on Schedule 1
hereto, or, in each case, at such other address or addresses as any party shall
hereafter specify by written notice to the others. All such notices and
communications, if mailed, shall be deemed to have been given on the third
business day after the mailing thereof.
19. Termination.
This Agreement shall terminate with respect to any Holder 90
days after the effective date of a Registration Statement registering all of
such Holder's Shares under Section 12 of the Securities Act; provided, however,
that the indemnification provisions in Paragraph 7 shall survive the
termination of this Agreement and Paragraph 16 shall survive the termination of
this Agreement.
20. Counterparts.
This Agreement may be executed in counterparts, each of which
shall be deemed an original and which together shall constitute a single
agreement.
21. Headings.
The headings of the Paragraphs of this Agreement are inserted
for convenience only and shall not be deemed to constitute a part hereof.
22. Severability.
If any provision or any portion of any provision of this
Agreement shall be held to be void or unenforceable, the remaining portions of
this Agreement shall continue in full force and effect.
13
<PAGE> 14
23. Superseding Effect.
This Agreement supersedes and replaces that certain Amended
and Restated Registration Rights Agreement dated November 22, 1995 by and among
the Company and certain of the Investors.
[Signatures appear on the following pages.]
14
<PAGE> 15
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed by their authorized officers as of the day and year first
above written.
COMPANY:
RF MICRO DEVICES, INC.
By: /s/ David A. Norbury
------------------------------------
David A. Norbury, Chief Executive
Officer and President
ATTEST:
/s/ Powell T. Seymour
- --------------------------------
Secretary
- -----------------
[CORPORATE SEAL]
INVESTORS:
TRW Inc.
By:
------------------------------------
Name:
----------------------------------
Its:
-----------------------------------
KITTY HAWK CAPITAL LIMITED PARTNERSHIP II
By: KITTY HAWK PARTNERS LIMITED
PARTNERSHIP, General Partner
By: /s/ Walter H. Wilkinson, Jr.,
------------------------------
Walter H. Wilkinson, Jr.,
General Partner
<PAGE> 16
ADVANCED TECHNOLOGY VENTURES III, L.P.
By: ATV ASSOCIATES III, L.P.,
General Partner
By: /s/ Albert E. Paladino,
------------------------------
Albert E. Paladino,
General Partner
ALLEN TELECOM GROUP, INC.
By: /s/ E. H. Vander Kaay
---------------------------------------
Name: Erik H. Vander Kay
-------------------------------------
Its: President
--------------------------------------
BRANTLEY VENTURE PARTNERS, II, L.P.
By: /s/ Ray Rund
---------------------------------------
Raymond J. Rund,
General Partner
THE NORTH CAROLINA ENTERPRISE FUND, L.P.
By: THE NORTH CAROLINA ENTERPRISE
CORPORATION, General Partner
By: /s/ Joseph A. Velk
------------------------------
Joseph A. Velk,
Vice President
CAROLINAS CAPITAL LIMITED PARTNERSHIP
By: CAROLINAS CAPITAL INVESTMENT
CORPORATION, General Partner
<PAGE> 17
By: /s/ Edward S. Goode
------------------------------
Edward S. Goode,
President
NORWEST EQUITY PARTNERS IV, a Minnesota
Limited Partnership
By: ITASCA PARTNERS, General Partner
By: /s/ Ernest Parizeau
------------------------------
Ernest Parizeau,
General Partner
NORWEST EQUITY PARTNERS V, a Minnesota
Limited Partnership
By: ITASCA PARTNERS, General Partner
By: /s/ Ernest Parizeau
------------------------------
Ernest Parizeau,
General Partner
/s/ Robert G. Paul (SEAL)
-------------------------------------
Robert G. Paul
/s/ Philip W. Colburn (SEAL)
-------------------------------------
Philip W. Colburn
/s/ Robert A. Youdelman (SEAL)
-------------------------------------
Robert A. Youdelman
<PAGE> 18
/s/ Erik H. van der Kaay (SEAL)
------------------------------------
Erik H. van der Kaay
/s/ Royce Diener (SEAL)
------------------------------------
Royce Diener
/s/ Robert J. Easton (SEAL)
------------------------------------
Robert J. Easton
/s/ Peter Flanigan (SEAL)
------------------------------------
Peter Flanigan
STEWARD S. FLASCHEN REVOCABLE
INVESTMENT TRUST
By: /s/ Steward S. Flaschen
---------------------------------
Print Name: Steward S. Flaschen
-------------------------
Title: Trustee
------------------------------
FLASCHEN FAMILY TRUST
By: /s/ Steward S. Flaschen
---------------------------------
Print Name: Steward S. Flaschen
-------------------------
Title: Trustee
------------------------------
/s/ Robert F. Sproull (SEAL)
----------------------------------
Robert F. Sproull
<PAGE> 19
/s/ Richard J. Testa (SEAL)
-----------------------------------
Richard J. Testa
/s/ Jasper Welch, Jr. (SEAL)
-----------------------------------
Jasper Welch, Jr.
SSANG YONG CEMENT (SINGAPORE) LIMITED
By: /s/ Tan Cheng Gay
--------------------------------
Print Name: Tan Cheng Gay
------------------------
Title: Managing Director
-----------------------------
ALLIANCE TECHNOLOGY VENTURES, L.P.
By: /s/ Stephen Fleming
--------------------------------
Stephen Fleming
SVE STAR VENTURES ENTERPRISES NO. II GbR
A GERMAN CIVIL LAW PARTNERSHIP (with limitation of
liability)
By: /s/
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SVE STAR VENTURES ENTERPRISES NO. III GbR
A GERMAN CIVIL LAW PARTNERSHIP (with limitation of
liability)
By: /s/
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
SVE STAR VENTURES ENTERPRISES NO. IIIa GbR
<PAGE> 20
A GERMAN CIVIL LAW PARTNERSHIP (with limitation of
liability)
By: /s/
---------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
NATIONSBANC CAPITAL CORPORATION
By: /s/ Robert H. Korman, II
-------------------------------------
Robert H. Korman, II,
Senior Vice President
QUALCOMM INCORPORATED
By: /s/ Richard Sulpizio
-------------------------------------
Name: Richard Sulpizio
-----------------------------------
Title: Senior Vice President
----------------------------------
and Chief Operating
Officer
<PAGE> 21
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS FIRST AMENDMENT is made as of the 14th day of February, 1997 to
the Second Amended and Restated Registration Rights Agreement, dated as of June
6, 1996, by and among RF MICRO DEVICES, INC., a North Carolina corporation, and
certain shareholders of the Company (the "Registration Rights Agreement").
The Registration Rights Agreement is amended as follows:
1. Paragraph 1(c) is hereby amended by adding a new clause (iii)
to read as follows:
(iii) the exercise of stock purchase warrants issued
by the Company to FINOVA Technology Finance, Inc.
("FINOVA") for the purchase of up to an aggregate of
82,645 shares of Common Stock, subject to adjustment
as provided therein, in connection with the Master
Equipment Lease Agreement entered into between the
Company and FINOVA in February 1997,
and renumbering current clauses (iii) and (iv) as (iv) and
(v), respectively.
2. Paragraph 15 is hereby amended by deleting the phrase "one
hundred twenty (120) days" and replacing such phrase with "one
hundred eighty (180) days."
3. Except as set forth herein, the Registration Rights Agreement
shall remain in full force and effect.
