<PAGE>
As filed with the Securities and Exchange Commission on October 15, 1999.
File No. 333-87885
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
PRE-EFFECTIVE
AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------
TELAXIS COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 3679 04-2751645
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification No.)
incorporation or
organization)
20 Industrial Drive East
South Deerfield, MA 01373-0109
(413) 665-8551
(Address, including ZIP code, and telephone number, including area code, of
registrant's principal executive offices)
John L. Youngblood
President and Chief Executive Officer
TELAXIS COMMUNICATIONS CORPORATION
20 Industrial Drive East
South Deerfield, MA 01373-0109
(413) 665-8551
(Name, address, including ZIP code, and telephone number, including area code,
of agent for service)
Copies to:
DAVID L. LOUGEE, ESQ. WILLIAM R. KOLB, ESQ.
JEFFREY L. DONALDSON, ESQ. JOHN D. HANCOCK, ESQ.
Mirick, O'Connell, DeMallie & Lougee, Foley, Hoag & Eliot llp
llp One Post Office Square
100 Front Street Boston, MA 02109
Worcester, Massachusetts 01608-1477 (617) 832-1000
(508) 791-8500
-----------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
-----------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
-----------
CALCULATION OF REGISTRATION FEE
<TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<CAPTION>
Proposed
maximum Amount of
Title of each class of aggregate registration
securities to be registered offering price fee
- --------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $.01 par value...................... $72,450,000 $20,141.10(1)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
(1) A fee of $20,141.10 was paid with the initial filing of this Registration
Statement with the Commission on September 27, 1999.
-----------
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Part I of the Registration Statement has been intentionally omitted because
this Amendment No. 1 does not effect any changes to the Prospectus. The sole
purpose of this Amendment No. 1 is to file Exhibits 3.1, 10.8, 10.9, 10.10,
10.11 and 10.18 and to refile Exhibits 3.2, 10.12, 10.13, 10.15 and 10.17.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses (other than the underwriting
compensation expected to be incurred) in connection with the offering described
in this Registration Statement. All of the amounts (except the SEC Registration
Fee, the NASD Filing Fee and The Nasdaq Stock Market's National Market Listing
Fee) are estimates.
<TABLE>
<S> <C>
SEC Registration Fee................................................... $20,141
NASD Filing Fee........................................................ 7,745
The Nasdaq Stock Market's National Market Listing Fee.................. 95,000
Blue Sky Fees and Expenses............................................. 7,500
Printing and Engraving Costs........................................... *
Legal Fees and Expenses................................................ *
Accounting Fees and Expenses........................................... *
Transfer Agent and Registrar Fees and Expenses......................... *
Miscellaneous.......................................................... *
-------
Total................................................................ $ *
=======
</TABLE>
Item 14. Indemnification of Directors and Officers.
Section 67 of Chapter 156B of the Massachusetts General Laws, or the
Massachusetts Business Corporation Law (the "MBCL"), provides that the
indemnification of directors, officers, employees and other agents of a
corporation, and persons who serve at its request as directors, officers,
employees or other agents of another organization, or who serve at its request
in any capacity with respect to any employee benefit plan, may be provided by
it to whatever extent shall be specified in or authorized by (i) the articles
of organization or (ii) a by-law adopted by the stockholders or (iii) a vote
adopted by the holders of a majority of the shares of stock entitled to vote on
the election of directors. Except as the articles of organization or by-laws
otherwise require, indemnification of any such persons who are not directors of
the corporation may be provided by it to the extent authorized by the
directors. Such indemnification may include payment by the corporation of
expenses incurred in defending a civil or criminal action or proceeding in
advance of the final disposition of such action or proceeding, upon receipt of
an undertaking by the person indemnified to repay such payment if he shall be
adjudicated not to be entitled to indemnification, which undertaking may be
accepted without reference to the financial ability of such person to make
repayment. Any such indemnification may be provided although the person to be
indemnified is no longer an officer, director, employee or agent of the
corporation or of such other organization or no longer serves with respect to
any such employee benefit plan. Section 67 further provides that no
indemnification shall be provided for any person with respect to any matter as
to which he shall have been adjudicated in any proceeding not to have acted in
good faith in the reasonable belief that his action was in the best interest of
the corporation or, to the extent that such matter relates to service with
respect to any employee benefit plan, in the best interests of the participants
or beneficiaries of such employee benefit plan.
The Company's by-laws provide that the Company shall indemnify each person
who is, or shall have been, a director, officer, employee or agent of the
Company, or who is serving or shall have served, at the request of the Company,
as a director or officer of another organization or in any capacity with
respect to any employee benefit plan of the Company, against all liabilities
and expenses (including judgments, fines, penalties, amounts paid or to be paid
in settlement and reasonable attorney's fees) imposed upon or incurred by any
such person in connection with or arising out of claims made, or any action,
suit or proceeding threatened or brought against him or in which he may be
involved by reason of any action taken omitted by him as a director, officer,
employee or agent, or as a result of any service with respect to any such
employee benefit plan.
II-1
<PAGE>
Section 13(b)(1 1/2) of Chapter 156B of the MBCL permits a corporation to
include in its articles of organization a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director, provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 61 or
62 of the MBCL (relating to unlawful payment of dividends, unlawful stock
purchase and redemption and loans to insiders) or (iv) for any transaction from
which the director derived an improper personal benefit. Article VI of the
Company's Articles of Organization provides that the Company's directors shall
not be liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, expect in the circumstances set forth
in the MBCL.
Section 67 of the MBCL also affords a Massachusetts corporation the power to
obtain insurance on behalf of its directors and officers against liabilities
incurred by them in those capacities. The Company currently maintains a
directors and officers liability insurance policy.
The Underwriting Agreement filed as Exhibit 1.1 provides that the
Underwriters named therein will indemnify and hold harmless the Company and
each director, officer or controlling person of the Company from and against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"), and the Underwriting Agreement provides that
such Underwriters will contribute to certain liabilities of such persons under
the Securities Act.
Item 15. Recent Sales of Unregistered Securities.
The Company has issued or sold the following unregistered securities within
the past three years:
. an aggregate of 6,666,667 shares of Class E preferred stock at $2.25 per
share in September 1999 to 47 accredited investors;
. a warrant to purchase 44,445 shares of Class E preferred stock at $2.25
per share in August 1999 to a commercial lender;
. warrants to purchase an aggregate of 200,000 shares of common stock at
$.50 per share in July 1999 to 12 accredited investors;
. a warrant to purchase 40,000 shares of common stock at $.50 per share in
June 1999 to one accredited investor;
. a warrant to acquire 44,445 shares of Class E preferred stock at $2.25
per share in May 1999 to a lease financing company;
. warrants to purchase an aggregate of 200,000 shares of common stock at
$.50 per share in April 1999 to 14 accredited investors;
. an aggregate of 3,274,841 shares of Class E preferred stock at $2.25 per
share in October, November and December 1998 to 32 accredited investors;
. an aggregate of 7,200,000 shares of Class D preferred stock at $1.80 per
share in November and December 1997 to 38 accredited investors;
. warrants to acquire an aggregate of 1,800,000 shares of common stock at
$.50 per share in September 1996 and July 1997 to 23 accredited
investors;
. an aggregate of 22,500 shares at $.50 per share in September 1999 to
one accredited investor upon the exercise of warrants held by that
individual that were issued in September 1996 and July 1997.
. stock options to purchase an aggregate of 2,540,135 shares of common
stock at an exercise price of $.50 between October 1, 1996 and September
2, 1999 to a total of 189 consultants, employees and directors under the
Company's 1997 stock plan;
. stock options to purchase an aggregate of 554,225 shares of common stock
at an exercise price of $1.25 between July 14, 1999 and September 2,
1999 to a total of 11 consultants, employees and directors under the
Company's 1997 stock plan;
II-2
<PAGE>
. stock options to purchase an aggregate of 374,386 shares of common stock
at an exercise price of $2.25 between August 24, 1999 and September 13,
1999 to a total of 177 consultants, employees and directors under the
Company's 1997 stock plan;
. 225,000 shares of restricted common stock at $1.25 per share under our
1997 Stock Plan to one employee in September 1999; and
. an aggregate of 427,778 shares at prices ranging from $0.50 to $1.25 to
our employees, directors and consultants upon the exercise of options
held by those individuals and issued under one or more of our stock
plans.
Each of the sales described above were completed without registration under
the Securities Act in reliance upon one or more of the following exemptions:
. Section 4(2) of the Securities Act or Rule 506 of Regulation D
promulgated under the Securities Act for transactions not involving a
public offering; or
. Rule 701 promulgated under the Securities Act with respect to certain of
the options and shares of common stock issued to the Company's
employees, directors and consultants.
None of the sales of the securities issued by the Company have involved the
use of an underwriter, and no commissions were paid in connection with the sale
of any of the securities issued by the Company.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Restated Articles of Organization of the Company.**
3.2 Amended and Restated By-laws of the Company.**+
4.1 Form of certificate evidencing ownership of Common Stock of the
Company.*
5.1 Opinion of Mirick, O'Connell, DeMallie & Lougee, LLP.*
10.1 1986 Stock Plan of the Company.
10.2 1987 Stock Plan of the Company.
10.3 1988 Stock Plan of the Company.
10.4 1996 Stock Plan of the Company.
10.5 1997 Stock Plan of the Company.
10.6 1999 Stock Plan of the Company.
10.7 Employment Agreement by and between the Company and John L. Youngblood
dated January 25, 1994.
10.8 Reseller Agreement by and between the Company and Newbridge Networks
Corporation dated August 7, 1998.**++
10.9 Professional Services Agreement by and between the Company and
Newbridge Networks Corporation dated August 7, 1998.**++
10.10 Revised Purchase Order by and between the Company and Motorola dated
September 20, 1999.**++
10.11 Supply Agreement by and between the Company and California Amplifier,
Inc. dated October 14, 1999.**++
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.12 Lease by and between the Company and Edward J. O'Leary-Raymond M.
Vincunas Partnership dated January 16, 1990.**+
10.13 Lease by and between the Company and Lloyd C. Green and Mildred E.
Green dated June 30, 1998.**+
10.14 Revolving Line of Credit Agreement by and between the Company and
Boston Federal Savings Bank dated August 20, 1999.
10.15 Fourth Amended and Restated Registration Rights Agreement dated
September 17, 1999.**+
10.16 Registration Rights Agreement by and between the Company and Boston
Federal Savings Bank dated August 20, 1999.
10.17 Registration Rights Agreement by and between the Company and Phoenix
Leasing Incorporated dated May 19, 1999.**+
10.18 Purchase Agreement by and between the Company and Massachusetts
Technology Development Corporation dated June 1988.**
10.19 First Amendment to the Purchase Agreement by and between the Company
and Massachusetts Technology Development Corporation dated December
28, 1988.*
10.20 Second Amendment to the Purchase Agreement by and between the Company
and Massachusetts Technology Development Corporation dated June 17,
1999.*
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Mirick, O'Connell, DeMaillie & Lougee, LLP (incorporated in
the Opinion as filed as Exhibit 5.1 above).*
24.1 Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>
- ---------------------
* To be filed by amendment.
** Filed with this Amendment No. 1. All non-marked Exhibits listed above were
filed with the Commission on September 27, 1999.
+ Supercedes exhibit previously filed.
++ Confidential treatment requested as to certain portions of this Exhibit.
(b) Financial Statement Schedules
Schedule II - Valuation and Qualifying Accounts
All other financial statement schedules have been omitted because they are
not required, not applicable, or the information to be included in the
financial statement schedules is included in the Financial Statements or the
notes thereto.
II-4
<PAGE>
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 14, or otherwise, the
registrant has been advised that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance on Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it is declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the underwriting agreement certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Boston, Commonwealth of Massachusetts, on October 15, 1999.
Telaxis Communications Corporation
By: /s/ John L. Youngblood
----------------------------------
John L. Youngblood
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ John L. Youngblood President, Chief Executive October 15, 1999
______________________________________ Officer and Director
John L. Youngblood
/s/ Dennis C. Stempel Vice President, Chief October 15, 1999
______________________________________ Financial Officer,
Dennis C. Stempel Treasurer, and Principal
Accounting Officer
/s/ Albert E. Paladino* Director October 15, 1999
______________________________________
Albert E. Paladino
/s/ Allan M. Doyle, Jr.* Director October 15, 1999
______________________________________
Allan M. Doyle, Jr.
/s/ Robert C. Fleming* Director October 15, 1999
______________________________________
Robert C. Fleming
/s/ James W. Fordyce* Director October 15, 1999
______________________________________
James W. Fordyce
/s/ David A. Norbury* Director October 15, 1999
______________________________________
David A. Norbury
/s/ Matthew S. Robison* Director October 15, 1999
______________________________________
Matthew S. Robison
</TABLE>
* By Dennis C. Stempel, attorney-in-fact pursuant to a Power of Attorney
previously filed.
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.*
3.1 Restated Articles of Organization of the Company.**
3.2 Amended and Restated By-laws of the Company.**+
4.1 Form of certificate evidencing ownership of Common Stock of the
Company.*
5.1 Opinion of Mirick, O'Connell, DeMallie & Lougee, LLP.*
10.1 1986 Stock Plan of the Company.
10.2 1987 Stock Plan of the Company.
10.3 1988 Stock Plan of the Company.
10.4 1996 Stock Plan of the Company.
10.5 1997 Stock Plan of the Company.
10.6 1999 Stock Plan of the Company.
10.7 Employment Agreement by and between the Company and John L. Youngblood
dated January 25, 1994.
10.8 Reseller Agreement by and between the Company and Newbridge Networks
Corporation dated August 7, 1998.**++
10.9 Professional Services Agreement by and between the Company and
Newbridge Networks Corporation dated August 7, 1998.**++
10.10 Revised Purchase Order by and between the Company and Motorola dated
September 20, 1999.**++
10.11 Supply Agreement by and between the Company and California Amplifier,
Inc. dated October 14, 1999.**++
10.12 Lease by and between the Company and Edward J. O'Leary-Raymond M.
Vincunas Partnership dated January 16, 1990.**+
10.13 Lease by and between the Company and Lloyd C. Green and Mildred E.
Green dated June 30, 1998.**+
10.14 Revolving Line of Credit Agreement by and between the Company and
Boston Federal Savings Bank dated August 20, 1999.
10.15 Fourth Amended and Restated Registration Rights Agreement dated
September 17, 1999.**+
10.16 Registration Rights Agreement by and between the Company and Boston
Federal Savings Bank dated August 20, 1999.
10.17 Registration Rights Agreement by and between the Company and Phoenix
Leasing Incorporated dated May 19, 1999.**+
10.18 Purchase Agreement by and between the Company and Massachusetts
Technology Development Corporation dated June 1988.**
10.19 First Amendment to the Purchase Agreement by and between the Company
and Massachusetts Technology Development Corporation dated December
28, 1988.*
10.20 Second Amendment to the Purchase Agreement by and between the Company
and Massachusetts Technology Development Corporation dated June 17,
1999.*
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Mirick, O'Connell, DeMaillie & Lougee, LLP (incorporated in
the Opinion as filed as Exhibit 5.1 above).*
24.1 Power of Attorney.
27.1 Financial Data Schedule.
</TABLE>
- ---------------------
* To be filed by amendment.
** Filed with this Amendment No. 1. All non-marked Exhibits listed above were
filed with the Commission on September 27, 1999.
+ Supercedes exhibit previously filed.
++ Confidential treatment requested as to certain portions of this Exhibit.
<PAGE>
Exhibit 3.1
FEDERAL IDENTIFICATION
NO. 04-2751645
------------------
The Commonwealth of Massachusetts
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
We, John L. Youngblood , *President
-------------------------------------------------------------
and David L. Renauld ,*Clerk
-------------------------------------------------------------
of Millitech Corporation ,
--------------------------------------------------------------------------
(Exact name of corporation)
located at South Deerfield Research Park, P.O. Box 109, South Deerfield, MA
----------------------------------------------------------------
01373,
-----
(Street address of corporation Massachusetts)
do hereby certify that the following Restatement of the Articles of Organization
was duly adopted at a meeting held on October 13 , 1999 by a vote of
----------------- ------
the directors/or:
833,922 shares of Common Stock of 1,623,972 shares outstanding,
- -------
2,708,134 shares of Class A Preferred Stock of 3,045,696 shares outstanding,
- --------- ------------------------- ------------
(type, class & series, if any)
743,756 shares of Class B Preferred Stock of 789,677 shares outstanding, and
- ------- ------------------------- ----------
(type, class & series, if any)
6,864,898 shares of Class D Preferred Stock of 7,200,000 shares outstanding,
- --------- ------------------------ -----------
(type, class & series, if any)
9,557,110 shares of Class E Preferred Stock of 9,941,508 shares outstanding,
- ---------
** being at least two-thirds of each type, class or series outstanding and
entitled to vote thereon and of each type, class or series of stock whose rights
are adversely affected thereby:
ARTICLE I
The name of the corporation is:
Telaxis Communications Corporation
ARTICLE II
The purpose of the corporation is to engage in the following business
activities:
See Attached.
*Delete the inapplicable words. **Delete the inapplicable clause.
Note: If the space provided under any article or item on this form is
insufficient, additions shall be set forth on separate 8 1/2 x 11 sheets of
paper with a left margin of at least 1 inch. Additions to more than one article
may be made on a single sheet so long as each article requiring each addition is
clearly indicated.
<PAGE>
ARTICLE III
State the total number of shares and par value, if any, of each class of stock
which the corporation is authorized to issue:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
WITHOUT PAR VALUE WITH PAR VALUE
- -----------------------------------------------------------------------------------------
TYPE NUMBER OF SHARES TYPE NUMBER OF SHARES PAR VALUE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common: Common: 100,000,000 $.01
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Class A 3,090,323 $.01
Preferred: Preferred: Class B 789,677 $.01
- -----------------------------------------------------------------------------------------
Class C 0 $.01
Class D 7,200,000 $.01
- -----------------------------------------------------------------------------------------
Class E 11,000,000 $.01
Undesignated 4,500,000 $.01
- -----------------------------------------------------------------------------------------
</TABLE>
ARTICLE IV
If more than one class of stock is authorized, state a distinguishing
designation for each class. Prior to the issuance of any shares of a class, if
shares of another class are outstanding, the corporation must provide a
description of the preferences, voting powers, qualifications, and special or
relative rights or privileges of that class and of each other class of which
shares are outstanding and of each series then established within any class.
See Attached.
ARTICLE V
The restrictions, if any, imposed by the Articles of Organization upon the
transfer of shares of stock of any class are:
None.
ARTICLE VI
**Other lawful provisions, if any, for the conduct and regulation of the
business and affairs of the corporation, for its voluntary dissolution, or for
limiting, defining, or regulating the powers of the corporation, or of its
directors or stockholders, or of any class of stockholders:
See Attached.
**if there are no provisions state "None".
Note: The preceding six (6) articles are considered to be permanent and may ONLY
be changed by filing appropriate Articles of Amendment.
<PAGE>
ARTICLE VII
The effective date of the restated Articles of Organization of the corporation
shall be the date approved and filed by the Secretary of the Commonwealth. If a
later effective date is desired, specify such date which shall not be more than
thirty days after the date of filing.
ARTICLE VIII
The information contained in Article VIII is not a permanent part of the
Articles of Organization.
a. The street address (post office boxes are not acceptable) of the principal
office of the corporation in Massachusetts is:
South Deerfield Research Park, South Deerfield, MA 01373
b. The name, residential address and post office address of each director and
officer of the corporation is as follows:
<TABLE>
<CAPTION>
NAME RESIDENTIAL ADDRESS POST OFFICE ADDRESS
<S> <C> <C>
President: John L. Youngblood 29366 Duberry Ridge 29366 Duberry Ridge
Boerne, TX 78015 Boerne, TX 78015
Treasurer: Dennis C. Stempel 18 Independence Road 18 Independence Road
Feeding Hills, MA 01030 Feeding Hills, MA 01030
Clerk: David L. Renauld 40 Barnes Road 40 Barnes Road
No. Brookfield, MA 01535 No. Brookfield, MA 01535
Directors: Albert E. Paladino 12 Wachusett Road 12 Wachusett Road
Chestnut Hill, MA 02167 Chestnut Hill, MA 02167
Allan M. Doyle, Jr. 17 Soo-Nipi Park Road 17 Soo-Nipi Park Road
New London, NH 03257 New London, NH 03257
Robert C. Fleming 7 Cider Hill Lane 7 Cider Hill Lane
Sherborn, MA 01770 Sherborn, MA 01770
Matthew S. Robison 3204 Caves Road 3204 Caves Road
Owings Mills, MD 21117 Owings Mills, MD 21117
James W. Fordyce 370 Lake Avenue 370 Lake Avenue
Greenwich, CT 06830 Greenwich, CT 06830
David A. Norbury 6705 Polo Farms Drive 6705 Polo Farms Drive
Summerfield, NC 27358 Summerfield, NC 27358
John L. Youngblood 29366 Duberry Ridge 29366 Duberry Ridge
Boerne, TX 78015 Boerne, TX 78015
</TABLE>
c. The fiscal year (i.e., tax year) of the corporation shall end on the last day
of the month of: December
d. The name and business address of the resident agent, if any, of the
corporation is: N/A
**We further certify that the foregoing Restated Articles of Organization affect
no amendments to the Articles of Organization of the corporation as heretofore
amended, except amendments to the following articles. Briefly describe
amendments below:
See Attached.
SIGNED UNDER THE PENALTIES OF PERJURY, this 13th/ day of October, 1999,
------- ------- --
/s/ John L. Youngblood , *President
- -------------------------------------------------------------------
John L. Youngblood
/s/ David L. Renauld , *Clerk
- -------------------------------------------------------------------
David L. Renauld
*Delete the inapplicable words. **If there are no amendments, state `None'.
<PAGE>
THE COMMONWEALTH OF MASSACHUSETTS
RESTATED ARTICLES OF ORGANIZATION
(General Laws, Chapter 156B, Section 74)
================================================
I hereby approve the within Restated Articles of Organization and, the filing
fee in the amount of $64,400 having been paid, said articles are deemed to
have been filed with me this 14th day of October, 1999.
Effective Date: 10-14-99
WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth
TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:
David L. Renauld, Esquire
- --------------------------------------------
Mirick, O'Connell, DeMallie & Lougee, LLP
100 Front Street
- --------------------------------------------
Worcester, MA 01608-1477
- --------------------------------------------
Telephone: (508) 791-8500
----------------------------------
<PAGE>
ARTICLE II
----------
Purposes
--------
To develop, manufacture, market, sell and service devices, components,
subsystems and systems operating in the millimeter and submillimeter wavelength
regions of the electromagnetic spectrum.
To carry on any manufacturing, mercantile, selling, management, service or
other business, operation or activity which may be lawfully carried on by a
corporation organized under the Business Corporation Law of the Commonwealth of
Massachusetts, whether or not related to those referred to in the foregoing
paragraph.
<PAGE>
ARTICLE IV
----------
Capital Stock
-------------
The total number of shares of all classes of stock which the corporation
shall have authority to issue is One Hundred Twenty-Six Million Five Hundred
Eighty Thousand (126,580,000) shares, consisting of One Hundred Million
(100,000,000) shares of Common Stock, par value $.01 per share (the "Common
Stock"), and Twenty-Six Million Five Hundred Eighty Thousand (26,580,000) shares
of Preferred Stock, par value $.01 per share (the "Preferred Stock").
COMMON STOCK
------------
Section 1. Voting Rights. Subject to the relative rights and preferences
--------- -------------
of any shares of preferred stock authorized and issued hereunder, the holders of
shares of Common Stock shall be entitled to one vote for each share so held with
respect to all matters voted on by the shareholders of the corporation.
Section 2. Liquidation Rights. Subject to the prior and superior right of
--------- ------------------
any shares of preferred stock authorized and issued hereunder, upon any
voluntary or involuntary liquidation, dissolution or winding up of the affairs
of the corporation, the holders of Common Stock shall be entitled to receive
that portion of the remaining funds to be distributed. Such funds shall be paid
to the holders of Common Stock on the basis of the number of shares of Common
Stock held by each of them.
Section 3. Dividends. Subject to the relative rights and preferences of
--------- ---------
any shares of preferred stock authorized and issued hereunder, dividends may be
paid on the Common Stock as and when declared by the Board of Directors.
Section 4. Residual Rights. All rights accruing to the outstanding shares
--------- ---------------
of the corporation not expressly provided for to the contrary herein shall be
vested in the Common Stock.
PREFERRED STOCK
---------------
Section 1. Classes and Series of Preferred Stock. The Preferred Stock may
--------- -------------------------------------
from time to time be divided into and issued in classes and series within a
class. The different classes and series of Preferred Stock shall be established
and designated, and the variations in the relative rights and preferences as
between the different classes and series shall be fixed and determined, by the
Board of Directors as hereinafter provided. In all other respects all shares of
Preferred Stock shall be identical.
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<PAGE>
Section 2. Designation of Class by Board of Directors. The Board of
--------- ------------------------------------------
Directors is hereby expressly authorized, subject to the provisions of these
Restated Articles of Organization, to establish classes of Preferred Stock, with
or without series, in accordance with applicable law and to fix and determine by
vote providing for the issue of such class:
(a) the number of shares constituting that class and series within that
class and the distinctive designation of that class and/or any series
and whether additional shares of that class and/or series may be
issued;
(b) whether any dividends shall be paid on shares of that class and/or
series, and, if so, the dividend rate on the shares of that class
and/or series; whether dividends shall be cumulative and, if so, from
which date or dates, and the relative rights of priority, if any, of
payment of dividends on shares of that class and/or series;
(c) whether shares of that class and/or series shall have voting rights in
addition to the voting rights provided by law and, if so, the terms of
such voting rights;
(d) whether shares of that class and/or series shall be convertible into
shares of Common Stock or another security and, if so, the terms and
conditions of such conversion, including provisions for adjustment of
the conversion rate in such events as the Board of Directors shall
determine;
(e) whether or not the shares of that class and/or series shall be
redeemable and, if so, the terms and conditions of such redemption,
including the date or dates upon or after which they shall be
redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates; and whether that class and/or series shall have a
sinking fund for the redemption or purchase of shares of that class
and/or series and, if so, the terms and amount of such sinking fund;
(f) whether, in the event of purchase or redemption of the shares of that
class and/or series, any shares of that class and/or series shall be
restored to the status of authorized but unissued shares or shall have
another specified status;
(g) the rights of the shares of that class and/or series in the event of
the sale, conveyance, exchange or transfer of all or substantially all
of the property and assets of the corporation, or the merger or
consolidation of the corporation into or with any other corporation,
or the merger of any other corporation into it, or the voluntary or
involuntary liquidation, dissolution or winding up of the corporation,
and the relative rights of priority, if any, of shares of that class
and/or series to payment in any such event;
3
<PAGE>
(h) whether the shares of that class and/or series shall carry any
preemptive right in or preemptive right to subscribe for any
additional shares of that class or series or any shares of any other
class of stock which may at any time be authorized or issued, or any
bonds, debentures or other securities convertible into shares of stock
of any class of the corporation, or options or warrants carrying
rights to purchase such shares or securities;
(i) whether the shares of that class and/or series shall carry any
registration rights and the terms and conditions of such registration;
and
(j) any other designation, preferences, voting powers, qualifications, and
special or relative rights or privileges of the shares of that class
and/or series.
The Board of Directors may from time to time increase the number of shares
of any class or series of Preferred Stock already created by providing that any
unissued shares of Preferred Stock shall constitute part of such class or
series, and/or may decrease (but not below the number of shares thereof then
outstanding) the number of shares of any class or series of Preferred Stock
already created by providing that any unissued shares previously assigned to
such class or series shall no longer constitute part thereof.
Section 3. Residual Rights. All rights accruing to the outstanding shares
--------- ---------------
of capital stock of the corporation not expressly provided for to the contrary
in the Restated Articles of Organization with respect to the existing class or
series of Preferred Stock or in any subsequent designations with respect to any
other class or series of Preferred Stock shall be vested in the Common Stock.
CLASS A PREFERRED STOCK
-----------------------
Section 1. Designation. Three Million Ninety Thousand Three Hundred
--------- -----------
Twenty-Three (3,090,323) shares of Preferred Stock are hereby designated as
"Class A Preferred Stock" (the "Class A Preferred").
Section 2. Liquidation Rights. In the event of any voluntary or
--------- ------------------
involuntary liquidation, dissolution or winding up of the affairs of the
corporation, the holders of each share of Class A Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the corporation to the holders of the Class C Preferred and the
holders of the Common Stock of the corporation by reason of their ownership
thereof, an amount equal to three dollars and twenty-five cents ($3.25) per
share plus an amount equal to all declared but unpaid dividends to and including
the date full payment shall be tendered to the holder of the Class A Preferred
with respect to such liquidation, dissolution or winding up.
All of the preferential amounts to be paid to the holders of the Class A
Preferred under this Section 2 shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the distribution of
any assets of the corporation to, the holders of
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<PAGE>
the Class C Preferred or the holders of the Common Stock in connection with such
liquidation, dissolution or winding up. After the payment or the setting apart
of payment to the holders of the Class A Preferred of the preferential amounts
so payable to them, the holders of the Class C Preferred and the holders of the
Common Stock shall be entitled to receive all remaining assets of the
corporation.
If the assets or surplus funds to be distributed to the holders of the
Class A Preferred are insufficient to permit the payment to such holders of
their full preferential amount, the assets and surplus funds legally available
for distribution shall be distributed ratably among the holders of the Class A
Preferred in proportion to the full preferential amount each such holder is
otherwise entitled to receive.
A consolidation or merger of the corporation or a sale of all or
substantially all of the assets of the corporation shall be regarded as a
liquidation, dissolution or winding up of the affairs of the corporation within
the meaning of this Section 2; provided, however, that each holder of Class A
-------- -------
Preferred shall have the right to elect the benefits of the provisions of
Section 3(d) (vii) hereof in lieu of receiving payment in liquidation,
dissolution or winding up of the corporation pursuant to this Section 2.
Section 3. Conversion. The holders of the Class A Preferred shall have
--------- ----------
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Class A Preferred shall be
----------------
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for the Class A Preferred, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing three dollars and
twenty-five cents ($3.25) by the Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion without the payment
of any additional consideration by the holder thereof (the "Conversion Price")
shall initially be three dollars and twenty-five cents ($3.25) per share of
Common Stock. Such initial Conversion Price shall be subject to adjustment, in
order to adjust the number of shares of Common Stock into which the Class A
Preferred is convertible, as hereinafter provided.
(b) Automatic Conversion. Each share of Class A Preferred shall
--------------------
automatically be converted into shares of Common Stock at the then effective
Conversion Price upon the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock for the
account of the corporation to the public at a public offering price of at least
$4.50 per share (with such amount to be appropriately adjusted in the event of
any stock dividend, stock distribution or subdivision as provided in
subparagraph (d)(vi) hereof) and having an aggregate offering price to the
public resulting in gross proceeds to the corporation of not less than
$15,000,000 (in the event of which offering, the person(s) entitled to receive
the Common Stock issuable upon such conversion of the Class A Preferred shall
not be deemed to have converted that Class A Preferred until immediately prior
to the closing of such offering).
5
<PAGE>
Each person who holds of record Class A Preferred immediately prior to such
automatic conversion shall be entitled to all dividends which have accrued to
the time of the automatic conversion, but not paid on the Class A Preferred,
pursuant to Section 6 hereof. Such dividends shall be paid to all such holders
within 30 days of the automatic conversion.
(c) Mechanics of Conversion. No fractional shares of Common Stock
-----------------------
shall be issued upon conversion of the Class A Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Class A Preferred shall be
entitled to convert the same into full shares of Common Stock, he shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the corporation or of any transfer agent for the Class A Preferred, and shall
give written notice to the corporation at such office that he elects to convert
the same and shall state therein his name or the name or names of his nominees
in which he wishes the certificate or certificates for shares of Common Stock to
be issued. The corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Class A Preferred, or to his nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid, together with cash in lieu of any
fraction of a share. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Class A Preferred to be converted, and the person or persons entitled
to receive the shares of Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
on such date.
(d) Adjustments to Conversion Price for Diluting Issues.
(i) Special Definitions. For purposes of this Section 3(d), the
-------------------
following definitions shall apply:
(1) "Option" shall mean rights, options, or warrants to
------
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
(2) "Original Issue Date" shall mean the date on which a
share of Class A Preferred was first issued.
(3) "Convertible Securities" shall mean any evidences of
indebtedness, shares (other than Common Stock, Class A Preferred or Class B
Preferred) or other securities directly or indirectly convertible into or
exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all
shares of Common Stock issued (or, pursuant to Section 3(d)(iii) hereof, deemed
to be issued) by the corporation after the Original Issue Date, other than
shares of Common Stock issued or issuable:
(A) upon conversion of shares of Class A Preferred or
of Class B Preferred;
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<PAGE>
(B) to officers or employees of, or consultants to,
the corporation pursuant to the corporation's 1983 Incentive Stock Option Plan,
1984 Incentive Stock Option Plan, 1986 Incentive Stock Option Plan, 1987 Stock
Plan, 1988 Stock Plan, 1996 Stock Plan or pursuant to action by the Board of
Directors prior to March 28, 1984, and pursuant to a stock purchase or option
plan or other employee or director stock incentive or compensation program
(collectively, the "Plans") approved by a majority of the representatives of the
Class A Preferred on the Board of Directors;
(C) by way of dividend or other distribution of shares
of Common Stock excluded from the definition of Additional Shares of Common
Stock by the foregoing clauses (A) and (B) or this clause (C) or on shares of
Common Stock so excluded; or
(D) with the approval of a majority of the
representatives of the Class A Preferred and Class B Preferred on the Board of
Directors, which shares have been designated by said majority to be excepted
from the definition of "Additional Shares of Common Stock" contained herein.
(ii) No Adjustment of Conversion Price. No adjustment in the
---------------------------------
number of shares of Common Stock into which the Class A Preferred is convertible
shall be made, by adjustment in the Conversion Price of Class A Preferred in
respect of the issuance of Additional Shares of Common Stock or otherwise,
unless the consideration per share for an Additional Share of Common Stock
issued or deemed to be issued by the corporation is less than the Conversion
Price in effect on the date of, and immediately prior to, the issue of such
Additional Share.
(iii) Issue of Securities Deemed Issue of Additional Shares of
--------------------------------------------------------
Common Stock.
- ------------
(1) Options and Convertible Securities. In the event the
----------------------------------
corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such record date shall have been fixed, as of
the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section 3(d)(v) hereof), of such Additional
Shares of Common Stock would be less than the Conversion Price in effect on the
date of and immediately prior to such issue, or such record date, as the case
may be, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
7
<PAGE>
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the corporation, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be re-computed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be
re-computed as if:
(I) in the case of Convertible Securities or
Options for Common Stock, the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the corporation upon such conversion or exchange, and
(II) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the corporation
(determined pursuant to Section 3(d)(v) hereof) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised;
(D) no readjustment pursuant to clause (B) or (C)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price on the original adjustment
data, or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;
8
<PAGE>
(E) in the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment of
the Conversion Price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner provided in
clause (C) above; and
(F) if such record date shall have been fixed and such
Options or Convertible Securities are not issued on the date fixed therefor, the
adjustment previously made in the Conversion Price which became effective on
such record date shall be canceled as of the close of business on such record
date, and thereafter the Conversion Price shall be adjusted pursuant to this
subparagraph 3(d)(iii) as of the actual date of their issuance.
(2) Stock Dividends, Stock Distributions and Subdivisions.
-----------------------------------------------------
In the event the corporation at any time or from time to time after the Original
Issue Date shall declare or pay any dividend or make any other distribution on
the Common Stock payable in Common Stock, or effect a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in Common Stock), then and in any such event, Additional
Shares of Common Stock shall be deemed to have been issued:
(A) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend or
distribution, or
(B) in the case of any such subdivision, at the close
of business on the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date shall have been fixed and such dividend shall not have
been fully paid on the date fixed therefor, the adjustment previously made in
the Conversion Price which became effective on such record date shall be
canceled as of the close of business on such record date, and thereafter the
Conversion Price shall be adjusted pursuant to this subparagraph 3(d)(iii) as of
the time of actual payment of such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of Additional
----------------------------------------------------------
Shares of Common Stock. In the event the corporation shall issue Additional
- ----------------------
Shares of Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Section 3(d) (iii) hereof, but excluding Additional Shares of
Common Stock issued pursuant to Section 3(d)(iii)(2), which event is dealt with
in Section 3(d)(vi) hereof) without consideration or for a consideration per
share less than the Conversion Price in effect on the date of and immediately
prior to such issue, then and in such event, such Conversion Price shall be
reduced, concurrently with such issue in order to increase the number of shares
of Common Stock into which the Class A Preferred is convertible, to a price
(calculated to the nearest cent) determined by multiplying such Conversion Price
by a fraction (x) the numerator of which shall be (1) the number of shares of
Common Stock outstanding immediately prior to such issue (including shares of
Common Stock issuable upon conversion of any outstanding Class A Preferred,
Class B Preferred or Convertible Securities), plus (2) the number of shares of
Common Stock which the aggregate
9
<PAGE>
consideration received by the corporation for the total number of Additional
Shares of Common Stock so issued would purchase at such Conversion Price, and
(y) the denominator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issue (including shares of Common Stock
issuable upon conversion of any outstanding Class A Preferred, Class B Preferred
or Convertible Securities), plus (2) the number of such Additional Shares of
Common Stock so issued, provided that the Conversion Price shall not be so
reduced at such time if the amount of such reduction would be an amount less
than $0.05, but any such amount shall be carried forward and reduction with
respect thereto made at the time of and together with any subsequent reduction
which, together with such amount and any other amount or amounts so carried
forward, shall aggregate $0.05 or more.
(v) Determination of Consideration. For purposes of this
------------------------------
Section 3(d), the consideration received by the corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
-----------------
(A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the corporation excluding amounts paid or
payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The consideration
----------------------------------
per share received by the corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 3(d)(iii)(1) above, relating to
Options and Convertible Securities shall be determined by dividing
(x) the total amount, if any, received or receivable
by the corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration until such
subsequent adjustment occurs) payable to the corporation upon the exercise of
such Options or the conversion or exchange of such Convertible Securities, or in
the case of Options for Convertible Securities, the exercise of such Options for
Convertible Securities and the conversion or exchange of such Convertible
Securities, by
10
<PAGE>
(y) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number until such
subsequent adjustment occurs) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(vi) Adjustment for Dividends, Distributions, Subdivisions,
------------------------------------------------------
Combinations or Consolidation of Common Stock.
- ---------------------------------------------
(1) Stock Dividends, Distributions or Subdivisions. In the
----------------------------------------------
event the corporation shall issue Additional Shares of Common Stock pursuant to
Section 3(d)(iii)(2) hereof in a stock dividend, stock distribution or
subdivision, the Conversion Price in effect immediately prior to such stock
dividend, stock distribution or subdivision shall, concurrently with the
effectiveness of such stock dividend, stock distribution or subdivision, be
proportionately decreased.
(2) Combination or Consolidations. In the event the
-----------------------------
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(vii) Adjustment for Merger or Reorganization. In case of any
---------------------------------------
consolidation or merger of the corporation with or into another corporation or
the conveyance of all or substantially all of the assets of the corporation to
another corporation, each share of Class A Preferred shall thereafter be
convertible into the number of shares of stock or other securities or property
to which a holder of the number of shares of Common Stock of the corporation
deliverable upon conversion of such Class A Preferred would have been entitled
upon such consolidation, merger or conveyance; and, in any such case,
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of the holders of the Class A Preferred, to the end that
the provisions set forth herein (including provisions with respect to changes in
and other adjustments of the Conversion Price) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Class A Preferred.
Each holder of Class A Preferred upon the occurrence of a capital
reorganization, merger or consolidation of the corporation or the sale of all or
substantially all its assets and properties as such events are more fully set
forth in the first paragraph of this Section 3(d)(vii), shall have the option of
electing treatment of his shares of Class A Preferred under either this
Section 3(d)(vii) or Section 2 hereof, notice of which election shall be
submitted in writing to the corporation at its principal offices no later than
five (5) days before the effective date of such event.
(e) No Impairment. The corporation will not, by amendment of its
-------------
Restated Articles of Organization or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the
11
<PAGE>
observance or performance of any of the terms to be observed or performed
hereunder by the corporation but will at all times in good faith assist in the
carrying out of all the provisions of this Section 3 and in the taking of all
such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Class A Preferred against impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Class A Preferred a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The corporation shall, upon the written request at any time of any
holder of Class A Preferred, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at the time in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of Class A Preferred.
(g) Notice of Record Date. In the event of (i) any taking by the
---------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, or (ii) any capital reorganization of
the corporation, any reclassification or recapitalization of the capital stock
of the corporation, any merger or consolidation of the corporation, and any
transfer of all or substantially all of the assets of the corporation to any
other corporation, or any other entity or person, or any voluntary or
involuntary dissolution, liquidation or winding up of the corporation, the
corporation shall mail to each holder of Class A Preferred at least 20 days
prior to the record date specified therein, a notice specifying (A) the date on
which any such record is to be taken for the purpose of such dividend or
distribution and a description of such dividend or distribution, (B) the date on
which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective,
and (C) the time, if any, that is to be fixed, as to when the holders of record
of Common Stock (or other securities) shall be entitled to exchange their shares
of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up.
(h) Common Stock Reserved. The corporation shall reserve and keep
---------------------
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Class A Preferred.
Section 4. Redemption. (a) There shall be a five-year period (the
--------- ----------
"Redemption Period") for each share of the Class A Preferred commencing five
years after April 20, 1994 for any Class A Preferred issued on or prior to that
date and commencing five years after the date of issuance for any Class A
Preferred issued subsequent to April 20, 1994. On the commencement date of the
Redemption Period for each share of the Class A Preferred eligible for
redemption and on the first, second, third and fourth anniversaries thereof, the
corporation shall offer to each holder of shares of Class A Preferred eligible
for redemption to redeem a maximum of twenty percent
12
<PAGE>
(20%), forty percent (40%), sixty percent (60%), eighty percent (80%) and one
hundred percent (100%), respectively, of the total number of shares of Class A
Preferred held by such holder prior to the commencement of the Redemption Period
with respect to such Class A Preferred, at a price of three dollars and twenty-
five cents ($3.25) per share, plus an amount equal to all declared but unpaid
dividends payable in accordance with Section 6 hereof on each share of Class A
Preferred tendered for redemption; provided, that any shares of Class A
Preferred redeemed hereunder in any previous years shall reduce the maximum
amount of Class A Preferred which the corporation may be requested to redeem in
any then current year. The corporation shall offer to redeem shares of Class A
Preferred eligible for redemption by giving written notice thereof to each
holder of shares of Class A Preferred eligible for redemption, which notice
shall state the number of shares of Class A Preferred eligible to be redeemed by
such holder and shall specify a redemption date not less than forty-five (45)
days nor more than sixty (60) days after the date of such written notice. Any
holder of shares of Class A Preferred eligible to be redeemed may redeem such
shares by giving written notice thereof to the corporation, and to each other
holder of shares of Class A Preferred, no less than 15 days prior to the
redemption date specified in the corporation's written offer of redemption, and
by surrendering to the corporation on or before the redemption date the share
certificates for the number of shares of Class A Preferred to be redeemed. If
less than all of the shares represented by such certificates are redeemed, a new
certificate shall be issued for the unredeemed shares as promptly as possible.
Notwithstanding the foregoing, the holders of sixty-six and two-thirds percent
(66 2/3%) or more of the Class A Preferred shall have the right to postpone for
a specified period of time or waive such rights of redemption of all holders by
written notice to the corporation and to all such holders given at least fifteen
(15) days prior to the scheduled date of redemption.
(b) In the event of a sale of all or substantially all the assets of
the corporation, then the corporation shall offer to each holder of shares of
Class A Preferred to redeem not less than all the shares of Class A Preferred
held by such holder on the date the corporation fixes as the date to mail or
otherwise send out its offer of redemption, at a redemption price of three
dollars and twenty-five cents ($3.25) per shares plus an amount equal to all
declared but unpaid dividends payable in accordance with Section 6 hereof on
each such share of Class A Preferred tendered for redemption. The corporation
shall offer to redeem shares of Class A Preferred by giving written notice
thereof to each holder of shares of Class A Preferred, which notice shall be
sent not less than twenty (20) days before the scheduled date of consummation of
the transaction described above. Such notice of redemption shall state the
number of shares of Class A Preferred eligible to be redeemed by such holder and
shall specify a redemption date not less than twenty (20) days nor more than
sixty (60) days after the date of such written notice. Any holder of shares of
Class A Preferred may redeem such shares by giving written notice thereof to the
corporation not less than ten (10) days prior to the redemption date specified
in the corporation's written offer of redemption, and by surrendering to the
corporation on or before the redemption date the share certificates for the
number of shares of Class A Preferred to be redeemed.
13
<PAGE>
Section 5. Voting Rights.
--------- -------------
(a) The holders of shares of Class A Preferred shall be entitled to
notice of any shareholders' meeting and to vote upon any matter submitted to a
shareholder for a vote, as though the Common Stock, the Class A Preferred, the
Class B Preferred and the Class C Preferred constitute a single class of stock,
except with respect to those matters on which the Massachusetts Corporation Law
requires that a vote must be by a separate class or classes or by separate
series. For all votes other than votes by a separate class or series, holders of
Class A Preferred shall have that number of votes per share as is equal to the
number of shares of Common Stock into which each such share of Class A Preferred
held by such holder is then convertible, provided, however, that at any time, if
the number of shares of Common Stock into which the Class A Preferred is
convertible is increased as a result of an adjustment of the Conversion Price,
all as set forth in Section 3 above, the holders of Class A Preferred shall have
that number of votes equal to the number of shares of Common Stock into which
such Class A Preferred is convertible.
(b) The holders of Class A Preferred, the holders of Class B
Preferred, the holders of the Class C Preferred and the holders of Common Stock
shall be entitled to vote upon the election of directors on the following basis:
So long as at least 50,000 shares of Class A Preferred and Class B Preferred,
collectively, shall be outstanding, the holders of Class A Preferred and Class B
Preferred issued and outstanding, voting as a single class, are entitled to
elect three directors; and the holders of Class A Preferred, Class B Preferred,
Class C Preferred and Common Stock and any other capital stock having voting
rights are entitled to elect all other members of the Board of Directors.
Section 6. Dividend Rights.
--------- ---------------
(a) The holders of the then outstanding shares of Class A Preferred
shall be entitled to receive, when and as declared by the Board Directors, out
of funds legally available therefor, non-cumulative cash dividends at the annual
rate of $.26 per share payable at a rate of $.065 per share per calendar
quarter. The corporation's obligation to pay such dividends shall commence after
the first calendar quarter when the corporation's net after tax income,
calculated in accordance with generally accepted accounting principles, exceeds
five times such quarterly dividend on all then outstanding Class A Preferred,
Class B Preferred and Class C Preferred and on all then outstanding shares of
any other class of preferred stock of the corporation.
(b) Notwithstanding any provisions in Section 6(a) hereof, dividends
which have been declared on the Class A Preferred but not been paid prior to an
automatic conversion pursuant to Section 3(b) hereof shall be payable within 30
days of the Closing, as defined in Section 3(b), to each person who holds of
record Class A Preferred immediately prior to the automatic conversion.
Section 7. Covenants. So long as at least 50,000 shares of Class A
--------- ---------
Preferred shall be outstanding (as adjusted for all subdivisions and
combinations), the corporation shall not,
14
<PAGE>
without first obtaining the affirmative vote or written consent of not less than
sixty-six percent (66%) of such outstanding shares of Class A Preferred:
(a) amend or repeal any provision of, or add any provision to, the
corporation's Restated Articles of Organization or By-Laws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, the Class A Preferred generally except
with respect to any class or any series of preferred stock of the corporation
created by the Board of Directors pursuant to a Certificate of Designation in
accordance with the provisions of these Revised Articles of Organization so long
as shares of the class or series created do not have any preference or priority
as to dividends or assets superior to the Class A Preferred;
(b) reclassify any Common Stock into shares having any preference or
priority as to dividends or assets superior to or on a parity with any such
preference or priority of the Class A Preferred;
(c) pay or declare any dividend or distribution on any shares of
Common Stock or apply any of its assets to the redemption, retirement, purchase
or other acquisition directly or indirectly, through subsidiaries, if any, or
otherwise, of any shares of Common Stock except from officers, directors or
employees of or consultants to the corporation upon termination of employment
and except pursuant to the corporation's rights of first refusal; or
(d) create any other class or classes of stock or series of preferred
stock having any preference or priority as to dividends or assets superior to
any such preference or priority of the Class A Preferred; or
(e) authorize any merger or consolidation of the corporation with or
into any other corporation or entity (except into or with a wholly-owned
subsidiary corporation with the requisite shareholder approval), or authorize
the sale of substantially all of the assets of the corporation.
CLASS B PREFERRED STOCK
-----------------------
Section 1. Designation. Seven Hundred Eighty-Nine Thousand Six Hundred
--------- -----------
Seventy-Seven (789,677) shares of Preferred Stock are hereby designated as
"Class B Preferred Stock" (the "Class B Preferred").
Section 2. Liquidation Rights. In the event of any voluntary or
--------- ------------------
involuntary liquidation, dissolution or winding up of the affairs of the
corporation, the holders of each share of Class B Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the corporation to the holders of the Class A Preferred, the
holders of the Class C Preferred and the holders of the Common Stock of the
corporation by reason of their ownership thereof, an amount equal to three
dollars and twenty-five cents ($3.25) per share plus an amount equal to all
declared but unpaid dividends to and including the date full payment shall
15
<PAGE>
be tendered to the holder of the Class B Preferred with respect to such
liquidation, dissolution or winding up.
All of the preferential amounts to be paid to the holders of the Class B
Preferred under this Section 2 shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the distribution of
any assets of the corporation to, the holders of the Class A Preferred, the
holders of the Class C Preferred or the holders of the Common Stock in
connection with such liquidation, dissolution or winding up. After the payment
or the setting apart of payment to the holders of the Class B Preferred of the
preferential amounts so payable to them, the holders of the Class A Preferred,
the holders of the Class C Preferred and the holders of the Common Stock shall
be entitled to receive all remaining assets of the corporation.
If the assets or surplus funds to be distributed to the holders of the
Class B Preferred are insufficient to permit the payment to such holders of
their full preferential amount, the assets and surplus funds legally available
for distribution shall be distributed ratably among the holders of the Class B
Preferred in proportion to the full preferential amount each such holder is
otherwise entitled to receive.
A consolidation or merger of the corporation or a sale of all or
substantially all of the assets of the corporation shall be regarded as a
liquidation, dissolution or winding up of the affairs of the corporation within
the meaning of this Section 2; provided, however, that each holder of Class B
-------- -------
Preferred shall have the right to elect the benefits of the provisions of
Section 3(d)(vii) hereof in lieu of receiving payment in liquidation,
dissolution or winding up of the corporation pursuant to this Section 2.
Section 3. Conversion. The holders of the Class B Preferred shall have
--------- ----------
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Class B Preferred shall be
----------------
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for the Class B Preferred, into such number of fully paid and nonassessable
shares of Common Stock as is determined by dividing three dollars and twenty-
five cents ($3.25) by the Conversion Price, determined as hereinafter provided,
in effect at the time of conversion. The Conversion Price at which shares of
Common Stock shall be deliverable upon conversion without the payment of any
additional consideration by the holder thereof (the "Conversion Price") shall
initially be three dollars and twenty-five cents ($3.25) per share of Common
Stock. Such initial Conversion Price shall be subject to adjustment, in order
to adjust the number of shares of Common Stock into which the Class B Preferred
is convertible, as hereinafter provided.
(b) Automatic Conversion. Each share of Class B Preferred shall
--------------------
automatically be converted into shares of Common Stock at the then effective
Conversion Price upon the closing of a firm commitment underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, covering the offer and sale of Common Stock for the
account of the corporation to the public at a public offering price of at
16
<PAGE>
least $4.50 per share (with such amount to be appropriately adjusted in the
event of any stock dividend, stock distribution or subdivision as provided in
subparagraph (d)(vi) hereof) and having an aggregate offering price to the
public resulting in gross proceeds to the corporation of not less than
$15,000,000 (in the event of which offering, the person(s) entitled to receive
the Common Stock issuable upon such conversion of the Class B Preferred shall
not be deemed to have converted that Class B Preferred until immediately prior
to the closing of such offering). Each person who holds of record Class B
Preferred immediately prior to such automatic conversion shall be entitled to
all dividends which have accrued to the time of the automatic conversion, but
not paid on the Class B Preferred, pursuant to Section 6 hereof. Such dividends
shall be paid to all such holders within 30 days of the automatic conversion.
(c) Mechanics of Conversion. No fractional shares of Common Stock
-----------------------
shall be issued upon conversion of the Class B Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Class B Preferred shall be
entitled to convert the same into full shares of Common Stock, he shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the corporation or of any transfer agent for the Class B Preferred, and shall
give written notice to the corporation at such office that he elects to convert
the same and shall state therein his name or the name or names of his nominees
in which he wishes the certificate or certificates for shares of Common Stock to
be issued. The corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Class B Preferred, or to his nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid, together with cash in lieu of any
fraction of a share. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Class B Preferred to be converted, and the person or persons entitled
to receive the shares of Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
on such date.
(d) Adjustments to Conversion Price for Diluting Issues.
---------------------------------------------------
(i) Special Definitions. For purposes of this Section 3(d), the
-------------------
following definitions shall apply:
(1) "Option" shall mean rights, options, or warrants to
------
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities.
(2) "Original Issue Date" shall mean the date on which a
-------------------
share of Class B Preferred was first issued.
(3) "Convertible Securities" shall mean any evidences of
----------------------
indebtedness, shares (other than Common Stock, Class A Preferred or Class B
Preferred) or other securities directly or indirectly convertible into or
exchangeable for Common Stock.
17
<PAGE>
(4) "Additional Shares of Common Stock" shall mean all
---------------------------------
shares of Common Stock issued (or, pursuant to Section 3(d)(iii) hereof, deemed
to be issued) by the corporation after the Original Issue Date, other than
shares of Common Stock issued or issuable:
(A) upon conversion of shares of Class A Preferred or
of Class B Preferred;
(B) to officers or employees of, or consultants to,
the corporation pursuant to the corporation's 1983 Incentive Stock Option Plan,
1984 Incentive Stock Option Plan, 1986 Incentive Stock Option Plan, 1987 Stock
Plan, 1988 Stock Plan, 1996 Stock Plan or pursuant to action by the Board of
Directors prior to March 15, 1991, and pursuant to a stock purchase or option
plan or other employee or director stock incentive or compensation program
(collectively, the "Plans") approved by a majority of the representatives of the
Class A Preferred and Class B Preferred on the Board of Directors;
(C) by way of dividend or other distribution of shares
of Common Stock excluded from the definition of Additional Shares of Common
Stock by the foregoing clauses (A) and (B) or this clause (C) or on shares of
Common Stock so excluded; or
(D) with the approval of a majority of the
representatives of the Class A Preferred and Class B Preferred on the Board of
Directors, which shares have been designated by said majority to be excepted
from the definition of "Additional Shares of Common Stock" contained herein.
(ii) No Adjustment of Conversion Price. No adjustment in the
number of shares of Common Stock into which the Class B Preferred is convertible
shall be made, by adjustment in the Conversion Price of Class B Preferred in
respect of the issuance of Additional Shares of Common Stock or otherwise,
unless the consideration per share for an Additional Share of Common Stock
issued or deemed to be issued by the corporation is less than the Conversion
Price in effect on the date of, and immediately prior to, the issue of such
Additional Share.
(iii) Issue of Securities Deemed Issue of Additional Shares of
--------------------------------------------------------
Common Stock.
- ------------
(1) Options and Convertible Securities. In the event the
----------------------------------
corporation at any time or from time to time after the Original Issue Date shall
issue any Options or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such record date shall have been
18
<PAGE>
fixed, as of the close of business on such record date, provided that Additional
Shares of Common Stock shall not be deemed to have been issued unless the
consideration per share (determined pursuant to Section 3(d)(v) hereof), of such
Additional Shares of Common Stock would be less than the Conversion Price in
effect on the date of and immediately prior to such issue, or such record date,
as the case may be, and provided further that in any such case in which
Additional Shares of Common Stock are deemed to be issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) if such Options or Convertible Securities by their
terms provide, with the passage of time or otherwise, for any increase in the
consideration payable to the corporation, or decrease in the number of shares of
Common Stock issuable, upon the exercise, conversion or exchange thereof, the
Conversion Price computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be re-computed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be
re-computed as if:
(I) in the case of Convertible Securities or
Options for Common Stock, the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the corporation upon such conversion or exchange, and
(II) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the corporation
(determined pursuant to Section 3(d)(v) hereof) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised;
19
<PAGE>
(D) no readjustment pursuant to clause (B) or (C)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price on the original adjustment
data, or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;
(E) in the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment of
the Conversion Price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner provided in
clause (C) above; and
(F) if such record date shall have been fixed and such
Options or Convertible Securities are not issued on the date fixed therefor, the
adjustment previously made in the Conversion Price which became effective on
such record date shall be canceled as of the close of business on such record
date, and thereafter the Conversion Price shall be adjusted pursuant to this
subparagraph 3(d)(iii) as of the actual date of their issuance.
(2) Stock Dividends, Stock Distributions and Subdivisions.
-----------------------------------------------------
In the event the corporation at any time or from time to time after the Original
Issue Date shall declare or pay any dividend or make any other distribution on
the Common Stock payable in Common Stock, or effect a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in Common Stock), then and in any such event, Additional
Shares of Common Stock shall be deemed to have been issued:
(A) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend or
distribution, or
(B) in the case of any such subdivision, at the close
of business on the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date shall have been fixed and such dividend shall
not have been fully paid on the date fixed therefor, the adjustment previously
made in the Conversion Price which became effective on such record date shall be
canceled as of the close of business on such record date, and thereafter the
Conversion Price shall be adjusted pursuant to this subparagraph 3(d)(iii) as of
the time of actual payment of such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of Additional
----------------------------------------------------------
Shares of Common Stock. In the event the corporation shall issue Additional
- ----------------------
Shares of Common Stock (including Additional Shares of Common Stock deemed to be
issued pursuant to Section 3(d)(iii) hereof, but excluding Additional Shares of
Common Stock issued pursuant to Section 3(d)(iii)(2), which event is dealt with
in Section 3(d)(vi) hereof) without consideration or for a consideration per
share less than the Conversion Price in effect on the date of and immediately
prior to such issue, then and in such event, such Conversion Price shall be
reduced, concurrently
20
<PAGE>
with such issue in order to increase the number of shares of Common Stock into
which the Class B Preferred is convertible, to a price (calculated to the
nearest cent) determined by multiplying such Conversion Price by a fraction (x)
the numerator of which shall be (1) the number of shares of Common Stock
outstanding immediately prior to such issue (including shares of Common Stock
issuable upon conversion of any outstanding Class A Preferred, Class B Preferred
or Convertible Securities), plus (2) the number of shares of Common Stock which
the aggregate consideration received by the corporation for the total number of
Additional Shares of Common Stock so issued would purchase at such Conversion
Price, and (y) the denominator of which shall be (1) the number of shares of
Common Stock outstanding immediately prior to such issue (including shares of
Common Stock issuable upon conversion of any outstanding Class A Preferred,
Class B Preferred or Convertible Securities), plus (2) the number of such
Additional Shares of Common Stock so issued, provided that the Conversion Price
shall not be so reduced at such time if the amount of such reduction would be an
amount less than $0.05, but any such amount shall be carried forward and
reduction with respect thereto made at the time of and together with any
subsequent reduction which, together with such amount and any other amount or
amounts so carried forward, shall aggregate $0.05 or more.
(v) Determination of Consideration. For purposes of this Section
------------------------------
3(d), the consideration received by the corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
-----------------
(A) insofar as it consists of cash, be computed at the
aggregate amount of cash received by the corporation excluding amounts paid or
payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are
issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The consideration
----------------------------------
per share received by the corporation for Additional Shares of Common Stock
deemed to have been issued pursuant to Section 3(d)(iii)(1) above, relating to
Options and Convertible Securities shall be determined by dividing
(x) the total amount, if any, received or receivable
by the corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such
21
<PAGE>
consideration until such subsequent adjustment occurs) payable to the
corporation upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such number until such
subsequent adjustment occurs) issuable upon the exercise of such Options or the
conversion or exchange of such Convertible Securities.
(vi) Adjustment for Dividends, Distributions, Subdivisions,
-----------------------------------------------------
Combinations or Consolidation of Common Stock.
- ---------------------------------------------
(1) Stock Dividends, Distributions or Subdivisions. In the
----------------------------------------------
event the corporation shall issue Additional Shares of Common Stock pursuant to
Section 3(d)(iii)(2) hereof in a stock dividend, stock distribution or
subdivision, the Conversion Price in effect immediately prior to such stock
dividend, stock distribution or subdivision shall, concurrently with the
effectiveness of such stock dividend, stock distribution or subdivision, be
proportionately decreased.
(2) Combination or Consolidations. In the event the
-----------------------------
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(vii) Adjustment for Merger or Reorganization. In case of any
---------------------------------------
consolidation or merger of the corporation with or into another corporation or
the conveyance of all or substantially all of the assets of the corporation to
another corporation, each share of Class B Preferred shall thereafter be
convertible into the number of shares of stock or other securities or property
to which a holder of the number of shares of Common Stock of the corporation
deliverable upon conversion of such Class B Preferred would have been entitled
upon such consolidation, merger or conveyance; and, in any such case,
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of the holders of the Class B Preferred, to the end that
the provisions set forth herein (including provisions with respect to changes in
and other adjustments of the Conversion Price) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Class B Preferred.
Each holder of Class B Preferred upon the occurrence of a capital
reorganization, merger or consolidation of the corporation or the sale of all or
substantially all its assets and properties as such events are more fully set
forth in the first paragraph of this Section 3(d)(vii),
22
<PAGE>
or Section 2 hereof, notice of which election shall be submitted in writing to
the corporation at its principal offices no later than five (5) days before the
effective date of such event.
(e) No Impairment. The corporation will not, by amendment of its
-------------
Restated Articles of Organization or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Class B Preferred against impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Class B Preferred a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The corporation shall, upon the written request at any time of any holder
of Class B Preferred, furnish or cause to be furnished to such holder a like
certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at the time in effect, and (iii) the number of shares of Common
Stock and the amount, if any, of other property which at the time would be
received upon the conversion of Class B Preferred.
(g) Notice of Record Date. In the event of (i) any taking by the
---------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, or (ii) any capital reorganization of
the corporation, any reclassification or recapitalization of the capital stock
of the corporation, any merger or consolidation of the corporation, and any
transfer of all or substantially all of the assets of the corporation to any
other corporation, or any other entity or person, or any voluntary or
involuntary dissolution, liquidation or winding up of the corporation, the
corporation shall mail to each holder of Class B Preferred at least 20 days
prior to the record date specified therein, a notice specifying (A) the date on
which any such record is to be taken for the purpose of such dividend or
distribution and a description of such dividend or distribution, (B) the date on
which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective,
and (C) the time, if any, that is to be fixed, as to when the holders of record
of Common Stock (or other securities) shall be entitled to exchange their shares
of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up.
(h) Common Stock Reserved. The corporation shall reserve and keep
---------------------
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Class B Preferred.
23
<PAGE>
Section 4. Redemption. (a) There shall be a five-year period (the
--------- ----------
"Redemption Period") for each share of the Class B Preferred commencing five
years after the date of issuance for any Class B Preferred or on March 28, 1999,
whichever is later. On the commencement date of the Redemption Period for each
share of the Class B Preferred eligible for redemption and on the first, second,
third and fourth anniversaries thereof, the corporation shall offer to each
holder of shares of Class B Preferred eligible for redemption to redeem a
maximum of twenty percent (20%), forty percent (40%), sixty percent (60%),
eighty percent (80%) and one hundred percent (100%), respectively, of the total
number of shares of Class B Preferred held by such holder prior to the
commencement of the Redemption Period with respect to such Class B Preferred, at
a price of three dollars and twenty-five cents ($3.25) per share, plus an amount
equal to all declared but unpaid dividends payable in accordance with Section 6
hereof on each share of Class B Preferred tendered for redemption; provided,
that any shares of Class B Preferred redeemed hereunder in any previous years
shall reduce the maximum amount of Class B Preferred which the corporation may
be requested to redeem in any then current year. The corporation shall offer to
redeem shares of Class B Preferred eligible for redemption by giving written
notice thereof to each holder of shares of Class B Preferred eligible for
redemption, which notice shall state the number of shares of Class B Preferred
eligible to be redeemed by such holder and shall specify a redemption date not
less than forty-five (45) days nor more than sixty (60) days after the date of
such written notice. Any holder of shares of Class B Preferred eligible to be
redeemed may redeem such shares by giving written notice thereof to the
corporation, and to each other holder of shares of Class B Preferred, no less
than 15 days prior to the redemption date specified in the corporation's written
offer of redemption, and by surrendering to the corporation on or before the
redemption date the share certificates for the number of shares of Class B
Preferred to be redeemed. If less than all of the shares represented by such
certificates are redeemed, a new certificate shall be issued for the unredeemed
shares as promptly as possible. Notwithstanding the foregoing, the holders of
sixty-six and two-thirds percent (66 2/3%) or more of the Class B Preferred
shall have the right to postpone for a specified period of time or waive such
rights of redemption of all holders by written notice to the corporation and to
all such holders given at least fifteen (15) days prior to the scheduled date of
redemption.
(b) In the event of a sale of all or substantially all the assets of
the corporation, then the corporation shall offer to each holder of shares of
Class B Preferred to redeem not less than all the shares of Class B Preferred
held by such holder on the date the corporation fixes as the date to mail or
otherwise send out its offer of redemption, at a redemption price of three
dollars and twenty-five cents ($3.25) per share plus an amount equal to all
declared but unpaid dividends payable in accordance with Section 6 hereof on
each such share of Class B Preferred tendered for redemption. The corporation
shall offer to redeem shares of Class B Preferred by giving written notice
thereof to each holder of shares of Class B Preferred, which notice shall be
sent not less than twenty (20) days before the scheduled date of consummation of
the transaction described above. Such notice of redemption shall state the
number of shares of Class B Preferred eligible to be redeemed by such holder and
shall specify a redemption date not less than twenty (20) days nor more than
sixty (60) days after the date of such written notice. Any holder of shares of
Class B Preferred may redeem such shares by giving written notice thereof to the
corporation not less than ten (10) days prior to the redemption date specified
in the corporation's
24
<PAGE>
written offer of redemption, and by surrendering to the corporation on or before
the redemption date the share certificates for the number of shares of Class B
Preferred to be redeemed.
Section 5. Voting Rights.
--------- -------------
(a) The holders of shares of Class B Preferred shall be entitled to
notice of any shareholders' meeting and to vote upon any matter submitted to a
shareholder for a vote, as though the Common Stock, the Class A Preferred, the
Class B Preferred and the Class C Preferred constitute a single class of stock,
except with respect to those matters on which the Massachusetts Corporation Law
requires that a vote must be by a separate class or classes or by separate
series. For all votes other than votes by a separate class or series, holders of
Class B Preferred shall have that number of votes per share as is equal to the
number of shares of Common Stock into which each such share of Class B Preferred
held by such holder is then convertible, provided, however, that at any time, if
the number of shares of Common Stock into which the Class B Preferred is
convertible is increased as a result of an adjustment of the Conversion Price,
all as set forth in Section 3 above, the holders of Class B Preferred shall have
that number of votes equal to the number of shares of Common Stock into which
such Class B Preferred is convertible.
(b) The holders of Class A Preferred, the holders of Class B
Preferred, the holders of Class C Preferred and the holders of Common Stock
shall be entitled to vote upon the election of directors on the following basis:
So long as at least 50,000 shares of Class A Preferred and Class B Preferred,
collectively, shall be outstanding, the holders of Class A Preferred and Class B
Preferred issued and outstanding, voting as a single class, are entitled to
elect three directors; and the holders of Class A Preferred, Class B Preferred,
Class C Preferred and Common Stock and any other capital stock having voting
rights are entitled to elect all other members of the Board of Directors.
Section 6. Dividend Rights.
--------- ---------------
(a) The holders of the then outstanding shares of Class B Preferred
shall be entitled to receive, when and as declared by the Board Directors, out
of funds legally available therefor, non-cumulative cash dividends at the annual
rate of $.26 per share payable at a rate of $.065 per share per calendar
quarter. The corporation's obligation to pay such dividends shall commence after
the first calendar quarter when the corporation's net after tax income,
calculated in accordance with generally accepted accounting principles, exceeds
five times such quarterly dividend on all then outstanding Class A Preferred,
Class B Preferred and Class C Preferred and on all then outstanding shares of
any other class of preferred stock of the corporation.
(b) Notwithstanding any provisions in Section 6(a) hereof, dividends
which have been declared on the Class B Preferred but not been paid prior to an
automatic conversion pursuant to Section 3(b) hereof shall be payable within 30
days of the conversion, as defined in Section 3(b), to each person who holds of
record Class B Preferred immediately prior to the automatic conversion.
25
<PAGE>
Section 7. Covenants. So long as at least 50,000 shares of Class A
--------- ---------
Preferred and Class B Preferred, collectively, shall be outstanding (as adjusted
for all subdivisions and combinations), the corporation shall not, without first
obtaining the affirmative vote or written consent of not less than sixty-six
percent (66%) of such outstanding shares of Class A Preferred and Class B
Preferred, collectively:
(a) amend or repeal any provision of, or add any provision to, the
corporation's Restated Articles of Organization or By-Laws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, the Class A Preferred and/or Class B
Preferred generally except with respect to any class or any series of preferred
stock of the corporation created by the Board of Directors pursuant to a
Certificate of Designation in accordance with the provisions of these Revised
Articles of Organization so long as the shares of the class or series created do
not have any preference or priority as to dividends or assets superior to the
Class A Preferred and/or Class B Preferred;
(b) reclassify any Common Stock into shares having any preference or
priority as to dividends or assets superior to or on a parity with any such
preference or priority of the Class A Preferred and/or Class B Preferred;
(c) pay or declare any dividend or distribution on any shares of
Common Stock or apply any of its assets to the redemption, retirement, purchase
or other acquisition directly or indirectly, through subsidiaries, if any, or
otherwise, of any shares of Common Stock except from officers, directors or
employees of or consultants to the corporation upon termination of employment
and except pursuant to the corporation's rights of first refusal; or
(d) create any other class or classes of stock or series of preferred
stock having any preference or priority as to dividends or assets superior to
any such preference or priority of the Class A Preferred and/or Class B
Preferred; or
(e) authorize any merger or consolidation of the corporation with or
into any other corporation or entity (except into or with a wholly-owned
subsidiary corporation with the requisite shareholder approval), or authorize
the sale of substantially all of the assets of the corporation.
CLASS C PREFERRED STOCK
-----------------------
Section 1. Designation. No (0) shares of Preferred Stock are hereby
--------- -----------
designated as "Class C Preferred Stock" (the "Class C Preferred Stock").
Section 2. Liquidation Rights. In the event of any voluntary or
--------- ------------------
involuntary liquidation, dissolution or winding up of the affairs of the
corporation, the holders of each share of Class C Preferred shall be entitled to
receive, prior and in preference to any distribution of any of the assets or
surplus funds of the corporation to the holders of the Common Stock of the
corporation by reason of their ownership thereof, but after any distributions
upon any voluntary or involuntary liquidation, dissolution or winding up of the
affairs of the corporation to holders of
26
<PAGE>
the Class A Preferred and Class B Preferred as provided in these Restated
Articles of Organization, an amount equal to twelve dollars and fifty cents
($12.50) per share plus an amount equal to all declared but unpaid dividends to
and including the date full payment shall be tendered to the holder of the Class
C Preferred with respect to such liquidation, dissolution or winding up.
All of the preferential amounts to be paid to the holders of the Class C
Preferred under this Section 2 shall be paid or set apart for payment before the
payment or setting apart for payment of any amount for, or the distribution of
any assets of the corporation to, the holders of the Common Stock in connection
with such liquidation, dissolution or winding up. After the payment or the
setting apart of payment to the holders of the Class C Preferred of the
preferential amounts so payable to them, the holders of the Common Stock shall
be entitled to receive all remaining assets of the corporation.
If the assets or surplus funds to be distributed to the holders of the
Class C Preferred are insufficient to permit the payment to such holders of
their full preferential amount, the assets and surplus funds legally available
for distribution shall be distributed ratably among the holders of the Class C
Preferred in proportion to the full preferential amount each such holder is
otherwise entitled to receive.
A consolidation or merger of the corporation or a sale of all or
substantially all of the assets of the corporation shall be regarded as a
liquidation, dissolution or winding up of the affairs of the corporation within
the meaning of this Section 2.
Section 3. Conversion. The holders of the Class C Preferred shall have
--------- ----------
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Class C Preferred shall be
----------------
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for the Class C Preferred, into one (1) fully paid and nonassessable share of
Common Stock.
(b) Automatic Conversion. Each share of Class C Preferred shall
--------------------
automatically be converted into one share of Common Stock upon the closing of a
firm commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, covering
the offer and sale of Common Stock for the account of the corporation to the
public at a public offering price of at least $9.75 per share and having an
aggregate offering price to the public resulting in gross proceeds to the
corporation of not less than $15,000,000 (in the event of which offering, the
person(s) entitled to receive the Common Stock issuable upon such conversion of
the Class C Preferred shall not be deemed to have converted that Class C
Preferred until immediately prior to the closing of such offering). Each person
who holds of record Class C Preferred immediately prior to such automatic
conversion shall be entitled to all dividends which have accrued to the time of
the automatic
27
<PAGE>
conversion, but not paid on the Class C Preferred, pursuant to Section 6 hereof.
Such dividends shall be paid to all such holders within 30 days of the automatic
conversion.
(c) Mechanics of Conversion. Before any holder of Class C Preferred
-----------------------
shall be entitled to convert the same into shares of Common Stock, he shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the corporation or of any transfer agent for the Class C Preferred, and shall
give written notice to the corporation at such office that he elects to convert
the same and shall state therein his name or the name or names of his nominees
in which he wishes the certificate or certificates for shares of Common Stock to
be issued. The corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Class C Preferred, or to his nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid. Such conversion shall be deemed to
have been made immediately prior to the close of business on the date of such
surrender of the shares of Class C Preferred to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon conversion
shall be treated for all purposes as the record holder or holders of such shares
of Common Stock on such date.
(d) No Impairment. The corporation will not, by amendment of its
-------------
Restated Articles of Organization or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Class C Preferred against impairment.
(e) Notice of Record Date. In the event of (i) any taking by the
---------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, or (ii) any capital reorganization of
the corporation, any reclassification or recapitalization of the capital stock
of the corporation, any merger or consolidation of the corporation, and any
transfer of all or substantially all of the assets of the corporation to any
other corporation, or any other entity or person, or any voluntary or
involuntary dissolution, liquidation or winding up of the corporation, the
corporation shall mail to each holder of Class C Preferred at least 20 days
prior to the record date specified therein, a notice specifying (A) the date on
which any such record is to be taken for the purpose of such dividend or
distribution and a description of such dividend or distribution, (B) the date on
which any such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up is expected to become effective,
and (C) the time, if any, that is to be fixed, as to when the holders of record
of Common Stock (or other securities) shall be entitled to exchange their shares
of Common Stock (or other securities) for securities or other property
deliverable upon such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up.
28
<PAGE>
(f) Common Stock Reserved. The corporation shall reserve and keep
---------------------
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Class C Preferred.
Section 4. Redemption. The Class C Preferred shall be redeemable only
--------- ----------
upon the mutual agreement of the holders thereof and the corporation. The
corporation shall have no obligation to redeem any shares of the Class C
Preferred.
Section 5. Voting Rights.
--------- -------------
(a) The holders of shares of Class C Preferred shall be entitled to
notice of any shareholders' meeting and to vote upon any matter submitted to a
shareholder for a vote, as though the Common Stock, the Class A Preferred, the
Class B Preferred and the Class C Preferred constitute a single class of stock,
except with respect to those matters on which the Massachusetts Corporation Law
requires that a vote must be by a separate class or classes or by separate
series. For all votes, holders of Class C Preferred shall have one vote per
share.
(b) The holders of Class A Preferred, the holders of the Class B
Preferred, the holders of Class C Preferred and the holders of Common Stock
shall be entitled to vote upon the election of directors on the following basis:
So long as at least 50,000 shares of Class A Preferred and Class B Preferred,
collectively, shall be outstanding, the holders of Class A Preferred and Class B
Preferred issued and outstanding, voting as a single class, are entitled to
elect three directors; and the holders of Class A Preferred, Class B Preferred,
Class C Preferred and Common Stock and any other capital stock having voting
rights are entitled to elect all other members of the Board of Directors.
Section 6. Dividend Rights. The holders of the then outstanding shares of
--------- ---------------
Class C Preferred shall be entitled to receive, when and as declared by the
Board Directors, out of funds legally available therefor, non-cumulative cash
dividends at the annual rate of $1.00 per share payable at a rate of $.25 per
share per calendar quarter. The corporation's obligation to pay such dividends
shall commence after the first calendar quarter when the corporation's net after
tax income, calculated in accordance with generally accepted accounting
principles, exceeds five times such quarterly dividend on all then outstanding
Class A Preferred, Class B Preferred and Class C Preferred and on all then
outstanding shares of any other class of preferred stock of the corporation.
CLASS D PREFERRED STOCK
Section 1. Designation. Seven Million Two Hundred Thousand (7,200,000)
---------- -----------
shares of the corporation's authorized but unissued shares of Preferred Stock
are hereby designated as "Class D Preferred Stock". Such Class D Preferred
Stock (the "Class D Preferred") shall have the relative rights and preferences
set forth below.
29
<PAGE>
Section 2. Liquidation Rights.
---------- ------------------
(a) Payment to Holders of Class D Preferred Stock Upon Liquidation.
--------------------------------------------------------------
In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the affairs of the corporation, the holder of each share of Class
D Preferred shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the corporation to the
holders of the Class A Preferred, the Class C Preferred and the Common Stock of
the corporation by reason of their ownership thereof, an amount equal to (i)
$1.80 per share of Class D Preferred plus (ii) an amount equal to all declared
but unpaid dividends to and including the date full payment shall be tendered to
the holder of the Class D Preferred with respect to such liquidation,
dissolution or winding-up.
All of the preferential amounts to be paid to the holders of the Class D
Preferred under this Section 2(a) shall be paid or set apart for payment before
the payment or setting apart for payment of any amount for, or the distribution
of any assets of the corporation to, the holders of the Class A Preferred, Class
C Preferred and Common Stock in connection with such liquidation, dissolution or
winding-up. If the assets or surplus funds to be distributed to the holders of
the Class B Preferred and the Class D Preferred are insufficient to permit the
payment to such holders of their full preferential amount, the assets and
surplus funds legally available for distribution shall be distributed ratably
among the holders of Class D Preferred and Class B Preferred in proportion to
the full preferential amount each such holder is otherwise entitled to receive.
(b) Payment to Holders of Class D Preferred and Common Stock. After
--------------------------------------------------------
the payment or the setting apart of payment to the holders of the Class A
Preferred, the Class B Preferred, the Class C Preferred and the Class D
Preferred of the preferential amounts so payable to them, all remaining assets
of the corporation shall be distributed among the holders of the Class D
Preferred and the holders of the Common Stock ratably in proportion to the
number of shares of Class D Preferred and Common Stock (and, in the case of
Class D Preferred, the number of shares of Common Stock into which each such
share of Class D Preferred held by such holder could be converted on the record
date for the determination of rights of stockholders to distributions under this
Section 2) held by them.
(c) No Liquidation Preference After Conversion. Upon conversion of
------------------------------------------
shares of Class D Preferred into shares of Common Stock pursuant to Section 3
below, the holder of such Common Stock shall not be entitled to any preferential
payment or distribution in case of any liquidation, dissolution or winding-up of
corporation, but shall share ratably in any distribution of the assets of the
corporation to all holders of Common Stock.
(d) Distributions Other than Cash. Whenever the distribution provided
-----------------------------
for in this Section 2 shall be payable in property other than cash, the value of
such distribution shall be the fair market value of such property as determined
in good faith by the Board of Directors of the corporation.
30
<PAGE>
(e) Merger as Liquidation, etc. The merger or consolidation of the
--------------------------
corporation into or with another corporation (other than a wholly-owned
subsidiary of this corporation in a merger in which this corporation is the
surviving corporation and its Articles of Organization remain unchanged), or the
sale of all or substantially all of the assets of the corporation (other than to
a wholly-owned subsidiary of this corporation) shall be deemed to be a
liquidation, dissolution or winding-up of the corporation for purposes of this
Section 2 unless the holders of at least 51% of the then outstanding shares of
Class D Preferred (voting as a single class) elect to the contrary by giving
written notice thereof to the corporation at least three days before the
effective date of such event. If such notice is given, the provisions of
Section 3(f) shall apply. The amount deemed distributed to the holders of Class
D Preferred upon any such merger or consolidation shall be the cash or the value
of the property, rights or securities distributed to such holders by the
acquiring person, firm or other entity. The value of such property, rights or
other securities shall be determined in good faith by the Board of Directors of
the corporation.
(f) Notice and Opportunity to Exercise Conversion Rights.
----------------------------------------------------
Notwithstanding anything to the contrary that may be inferred from the
provisions of this Section 2, each holder of shares of Class D Preferred shall
be entitled to receive notice from the corporation pursuant to Section 3(i)
hereof of any proposed liquidation, dissolution or winding-up of the corporation
at least 20 days prior to the date on which any such liquidation, dissolution or
winding-up of the corporation is scheduled to occur and, at any time prior to
any such liquidation, dissolution or winding-up of the corporation, to convert
any or all of such holder's shares of Class D Preferred into shares of Common
Stock pursuant to Section 3 hereof.
Section 3. Conversion. The holders of the Class D Preferred shall have
---------- ----------
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Class D Preferred shall be
-----------------
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for the Class D Preferred, into such fully paid and nonassessable shares of
Common Stock, as is determined by dividing one dollar and eighty cents ($1.80)
by the Conversion Price, determined as hereinafter provided, in effect at the
time of conversion. The Conversion Price at which shares of Common Stock shall
be deliverable upon conversion without the payment of any additional
consideration by the holder thereof (the "Conversion Price") shall initially be
one dollar and eighty cents ($1.80) per share of Common Stock. Such initial
Conversion Price shall be subject to adjustment, in order to adjust the number
of shares of Common Stock into which the Class D Preferred is convertible, as
hereinafter provided.
(b) Automatic Conversion.
--------------------
(i) Upon Qualifying Public Offerings. Each share of Class D
--------------------------------
Preferred shall automatically be converted into shares of Common Stock at the
then effective Conversion Price upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the corporation to the public at a public
31
<PAGE>
offering price of at least $4.50 per share (with such amount to be appropriately
adjusted in the event of any stock dividend, stock distribution or subdivision
as provided in subparagraph (e) hereof and having an aggregate offering price to
the public resulting in gross proceeds to the corporation of not less than
$15,000,000 (in the event of which offering, the person(s) entitled to receive
the Common Stock issuable upon such conversion of the Class D Preferred shall
not be deemed to have converted that Class D Preferred until immediately prior
to the closing of such offering). Each person who holds of record Class D
Preferred immediately prior to such automatic conversion shall be entitled to
all dividends which have accrued to the time of the automatic conversion, but
have not been paid on the Class D Preferred, pursuant to Section 6 hereof. Such
dividends shall be paid to all such holders within 30 days of the automatic
conversion.
(ii) Upon Conversion of 90% of Class D Preferred. Each share
-------------------------------------------
of Class D Preferred then outstanding shall automatically be converted into
shares of Common Stock at the then effective Conversion Price, upon the
conversion of ninety percent (90%) or more of the authorized Class D Preferred.
Such conversion shall be deemed to have occurred on the date upon which the
aggregate number of shares of Class D Preferred which have been converted to
Common Stock equals or exceeds ninety percent (90%) of the authorized Class D
Preferred.
(c) Mechanics of Conversion. No fractional shares of Common Stock
-----------------------
shall be issued upon conversion of the Class D Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Class D Preferred shall be
entitled to convert the same into full shares of Common Stock, he shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the corporation or of any transfer agent for the Class D Preferred, and shall
give written notice to the corporation at such office that he elects to convert
the same and shall state therein his name or the name or names of his nominees
in which he wishes the certificate or certificates for shares of Common Stock to
be issued. The corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Class D Preferred, or to his nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid, together with cash in lieu of any
fraction of a share. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Class D Preferred to be converted, and the person or persons entitled
to receive the shares of Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
on such date.
(d) Adjustments to Conversion Price for Diluting Issues.
---------------------------------------------------
(i) Special Definitions. For purposes of this Section 3(d),
-------------------
the following definitions shall apply:
(1) "Option" shall mean rights, options, or warrants
------
to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
32
<PAGE>
(2) "Original Issue Date" shall mean the date on which
-------------------
the first share of Class D Preferred to be issued was issued.
(3) "Convertible Securities" shall mean any evidences
----------------------
of indebtedness, shares (other than Common Stock, Class A Preferred, Class B
Preferred, Class C Preferred or Class D Preferred) or other securities directly
or indirectly convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all
---------------------------------
shares of Common Stock issued (or, pursuant to Section 3(d)(iii) hereof, deemed
to be issued) by the corporation after the Original Issue Date, other than:
(A) shares of Common Stock issued or issuable
upon conversion of shares of Class A Preferred, Class B Preferred, Class C
Preferred or Class D Preferred;
(B) up to 3,381,533 shares of Common Stock issued
or issuable to officers or employees of, or consultants to, the corporation
pursuant to the corporation's 1983 Incentive Stock Option Plan, 1984 Incentive
Stock Option Plan, 1986 Incentive Stock Option Plan, 1987 Stock Plan, 1988 Stock
Plan, 1996 Stock Plan or 1997 Employee Incentive Stock Option Plan
(appropriately adjusted to take account of any stock split, stock dividend,
combination of shares or the like), and such number of shares of Common Stock as
are issued or issuable pursuant to additional stock options approved by the
Board of Directors including the representative of Class D Preferred on the
Board of Directors;
(C) shares of Common Stock issued by way of
dividend or other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing clauses (A) and
(B) or this clause (C) or on shares of Common Stock so excluded; or
(D) shares of Common Stock issued with the
approval of a majority of the representatives of the Class D Preferred on the
Board of Directors, which shares have been designated by said majority to be
excepted from the definition of "Additional Shares of Common Stock" contained
herein.
(ii) No Adjustment of Conversion Price. No adjustment in
---------------------------------
the number of shares of Common Stock into which the Class D Preferred is
convertible shall be made, by adjustment in the Conversion Price of Class D
Preferred in respect of the issuance of Additional Shares of Common Stock or
otherwise, unless the consideration per share for an Additional Share of Common
Stock issued or deemed to be issued by the corporation is less than the
Conversion Price in effect on the date of, and immediately prior to, the issue
of such Additional Share.
33
<PAGE>
(iii) Issue of Securities Deemed Issue of Additional Shares
-----------------------------------------------------
of Common Stock.
- ---------------
(1) Options and Convertible Securities. In the event
----------------------------------
the corporation at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such record date shall have been fixed, as of
the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section 3(d)(v) hereof), of such Additional
Shares of Common Stock would be less than the Conversion Price in effect on the
date of and immediately prior to such issue, or such record date, as the case
may be, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage or time or otherwise, for any increase in
the consideration payable to the corporation, or decrease in the number of
shares of Common Stock issuable, upon the exercise, conversion or exchange
thereof, the Conversion Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon such expiration, be
recomputed as if:
(I) in the case of Convertible Securities or
Options for Common Stock, the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or
34
<PAGE>
exchanged, plus the additional consideration, if any, actually received by the
corporation upon such conversion or exchange, and
(II) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the corporation
(determined pursuant to Section 3(d)(v) hereof) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised;
(D) no readjustment pursuant to clause (B) or (C)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price on the original adjustment
date, or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;
(E) in the case of any Options which expire by
their terms not more than 30 days after the date of issue thereof, no adjustment
of the Conversion Price shall be made until the expiration or exercise of all
such Options, whereupon such adjustment shall be made in the same manner
provided in clause (C) above; and
(F) if such record date shall have been fixed and
such Options or Convertible Securities are not issued on the date fixed
therefor, the adjustment previously made in the Conversion Price which became
effective on such record date shall be canceled as of the close of business on
such record date and thereafter the Conversion Price shall be adjusted pursuant
to this subparagraph 3(d)(iii) as of the actual date of their issuance.
(2) Stock Dividends, Stock Distributions and
----------------------------------------
Subdivisions. In the event the corporation at any time or from time to time
- ------------
after the Original Issue Date shall declare or pay any dividend or make any
other distribution on the Common Stock payable in Common Stock, or effect a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock), then and in any such
event, Additional Shares of Common Stock shall be deemed to have been issued:
(A) in the case of any such dividend or
distribution, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend or distribution, or
(B) in the case of any such subdivision, at the
close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
35
<PAGE>
If such record date shall have been fixed and such dividend shall not have
been fully paid on the date fixed therefor, the adjustment previously made in
the Conversion Price which became effective on such record date shall be
canceled as of the close of business on such record date, and thereafter the
Conversion Price shall be adjusted pursuant to this subparagraph 3(d)(iii) as of
the time of actual payment of such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of
-----------------------------------------------
Additional Shares of Common Stock. In the event the corporation shall issue
- ---------------------------------
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 3(d)(iii) hereof, but excluding
Additional Shares of Common Stock issued pursuant to Section 3(d)(iii)(2), which
event is dealt with in Section 3(e) hereof) without consideration or for a
consideration per share less than the Conversion Price in effect on the date of
and immediately prior to such issue, then and in such event, such Conversion
Price shall be reduced, concurrently with such issue in order to increase the
number of shares of Common Stock into which the Class D Preferred is
convertible, to a price (calculated to the nearest cent) determined by
multiplying such Conversion Price by a fraction (x) the numerator of which shall
be (1) the number of shares of Common Stock outstanding immediately prior to
such issue (including shares of Common Stock issuable upon conversion of any
outstanding Class A Preferred, Class B Preferred, Class C Preferred, Class D
Preferred or Convertible Securities) plus (2) the number of shares of Common
Stock which the aggregate consideration received by the corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
such Conversion Price, and (y) the denominator of which shall be (1) the number
of shares of Common Stock outstanding immediately prior to such issue (including
shares of Common Stock issuable upon conversion of any outstanding Class A
Preferred, Class B Preferred, Class C Preferred, Class D Preferred or
Convertible Securities), plus (2) the number of such Additional Shares of Common
Stock so issued, provided that the Conversion Price shall not be so reduced at
such time if the amount of such reduction would be an amount less than $0.05,
but any such amount shall be carried forward and reduction with respect thereto
made at the time of and together with any subsequent reduction which, together
with such amount and any other amount or amounts so carried forward, shall
aggregate $0.05 or more.
(v) Determination of Consideration. For purposes of this
------------------------------
Section 3(d), the consideration received by the corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
-----------------
(A) insofar as it consists of cash, be computed
at the aggregate amount of cash received by the corporation excluding amounts
paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
36
<PAGE>
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The
----------------------------------
consideration per share received by the corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 3(d)(iii)(1) above,
relating to Options and Convertible Securities shall be determined by dividing
(x) the total amount, if any, received or
receivable by the corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration until such subsequent adjustment occurs) payable to the
corporation upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number until
such subsequent adjustment occurs) issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities.
(e) Adjustment for Dividends, Distributions, Subdivisions,
------------------------------------------------------
Combinations or Consolidations of Common Stock.
- ----------------------------------------------
(i) Stock Dividends, Distributions or Subdivisions. In the
----------------------------------------------
event the corporation shall issue Additional Shares of Common Stock pursuant to
Section 3(d)(iii)(2) hereof in a stock dividend, stock distribution or
subdivision, the Conversion Price in effect immediately prior to such stock
dividend, stock distribution or subdivision shall, concurrently with the
effectiveness of such stock dividend, stock distribution or subdivision, be
proportionately decreased.
(ii) Combinations or Consolidations. In the event the
------------------------------
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(f) Adjustment for Merger or Reorganization. In case of any
---------------------------------------
consolidation or merger of the corporation with or into another corporation or
the conveyance of all or substantially all of the assets of the corporation to
another corporation, each share of Class D Preferred shall thereafter be
convertible into the number of shares of stock or other securities or property
to which a holder of the number of shares of Common Stock of the corporation
37
<PAGE>
deliverable upon conversion of such Class D Preferred would have been entitled
upon such consolidation, merger or conveyance; and, in any such case,
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of the holders of the Class D Preferred, to the end that
the provisions set forth herein (including provisions with respect to changes in
and other adjustments of the Conversion Price) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Class D Preferred.
Each holder of Class D Preferred upon the occurrence of a capital
reorganization, merger or consolidation of the corporation or the sale of all
or, substantially all its assets and properties as such events are more fully
set forth in the first paragraph of this Section 3(f), shall have the option of
electing treatment of his shares of Class D Preferred under either this Section
3(f) or Section 2 hereof, notice of which election shall be submitted in writing
to the corporation at its principal offices no later than five (5) days before
the effective date of such event.
(g) No Impairment. The corporation will not, by amendment of its
-------------
Restated Articles of Organization or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the corporation but
will at all times in good faith assist in the carrying out of the provisions of
this Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Class D Preferred against impairment.
(h) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Class D Preferred a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The corporation shall, upon the written request at any time of any
holder of Class D Preferred, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at the time in effect, and (iii) the number of shares of Common
Stock and the amount if any, of other property which at the time would be
received upon the conversion of Class D Preferred.
(i) Notice of Record Date. In the event of (i) any taking by the
---------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, or (ii) any capital reorganization of
the corporation, any reclassification or recapitalization of the capital stock
of the corporation, any merger or consolidation of the corporation, and any
transfer of all or substantially all of the assets of the corporation to any
other corporation, or any other entity or person, or any voluntary or
involuntary dissolution, liquidation or winding-up of the corporation, the
corporation shall mail to each holder of Class D Preferred at least 20 days
prior to the record date specified therein, a notice specifying (A) the date on
which any such record is to be taken for the purpose of such
38
<PAGE>
dividend or distribution and a description of such dividend or distribution, (B)
the date on which any such reorganization, reclassification, transfer,
consolidation, merger, dissolution, liquidation or winding-up is expected to
become effective, and (C) the time if any, that is to be fixed, as to when the
holders of record of Common Stock (or other securities) shall be entitled to
exchange their shares of Common Stock (or other securities) for securities or
other property deliverable upon such reorganization, reclassification, transfer,
consolidation, merger, dissolution liquidation or winding-up.
(j) Common Stock Reserved. The corporation shall reserve and keep
---------------------
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Class D Preferred.
Section 4. Redemption.
---------- ----------
(a) On November 21, 2002 (the "Commencement Date") and on the first
and second anniversaries thereof, the corporation shall offer to redeem from
each holder of shares of Class D Preferred a maximum of thirty-three and a third
percent (33 1/3%), sixty-six and two-thirds percent (66 2/3%) and one hundred
percent (100%), respectively, of the total number of shares of Class D Preferred
held by such shareholder prior to the Commencement Date, at a price for each
share tendered for redemption equal to the greater of (i) $1.80 plus an amount
equal to all declared but unpaid dividends payable in accordance with Section 6
hereof or (ii) the fair market value per share (the "Redemption Price");
provided, that any shares of Class D Preferred redeemed hereunder in any
previous years shall reduce the maximum amount of Class D Preferred which the
corporation may be requested to redeem in any then current year. Fair market
value shall mean the fair market value per share as determined in good faith by
the Board of Directors, provided that if holders of more than fifty percent of
the outstanding Class D Preferred disagree with such determination, the fair
market value shall be determined (i) by an independent investment banking firm
mutually selected by such holders and the Board of Directors, or (ii) failing
such agreement within thirty days, by two such firms, one selected by the Board
of Directors and one by such holders, or (iii) failing agreement by such two
firms within thirty days, by a third such firm mutually selected by such firms.
The fees of all such investment banking firms shall be borne in equal halves by
the corporation and such holders. The corporation shall provide access to all
such information as is reasonably necessary for such firms to determine fair
market value. The corporation shall offer to redeem shares of Class D Preferred
by giving written notice thereof to each holder of shares of Class D Preferred
eligible for redemption, which notice shall state the number of shares of Class
D Preferred eligible to be redeemed by such holder and shall specify a
redemption date not less than forty-five (45) days nor more than sixty (60) days
after the date of such written notice. Any holder of shares of Class D
Preferred eligible to be redeemed may redeem such shares by giving written
notice thereof to the corporation, and to each other holder of shares of Class D
Preferred, no less than 15 days prior to the redemption date specified in the
corporation's written offer of redemption, and by surrendering to the
corporation on or before the redemption date the share certificates for the
number of shares of Class D Preferred to be redeemed. If fewer than all of the
shares represented by such certificates are redeemed, one or more new
certificates shall be issued for the unredeemed shares as promptly as possible.
Notwithstanding the foregoing, the holders of more
39
<PAGE>
than fifty percent (50%) of all Class D Preferred in the aggregate shall have
the right to postpone for a specified period of time or waive such rights of
redemption of all holders by written notice to the corporation and to all such
holders given at least fifteen (15) days prior to the scheduled date of
redemption.
(b) In the event of a sale of all or substantially all the assets of
the corporation, then the corporation shall offer to redeem not fewer than all
the shares of Class D Preferred held by all holders of shares of Class D
Preferred on the date the corporation fixes as the date to mail or otherwise
send out its offer of redemption, at the Redemption Price. The corporation
shall offer to redeem shares of Class D Preferred by giving written notice
thereof to each holder of shares of such Class D Preferred, which notice shall
be sent not less than twenty (20) days before the scheduled date of consummation
of the transaction described above. Such notice of redemption shall state the
number of shares of Class D Preferred eligible to be redeemed by such holder and
shall specify a redemption date not less than twenty (20) days nor more than
sixty (60) days after the date of such written notice. Any holder of shares of
Class D Preferred may redeem such shares by giving written notice thereof to the
corporation not less than ten (10) days prior to the redemption date specified
in the corporation's written offer of redemption, and by surrendering to the
corporation on or before the redemption date the share certificates for the
number of shares of such Class D Preferred to be redeemed.
Section 5. Voting Rights.
---------- -------------
(a) The holders of shares of Class D Preferred shall be entitled to
notice of any shareholders' meeting and to vote upon any matter submitted to the
shareholders for a vote, as though the Common Stock, the Class A Preferred, the
Class B Preferred, the Class C Preferred and the Class D Preferred constituted a
single class of stock, except with respect to those matters on which the
Massachusetts Corporation Law requires that a vote must be by a separate class
or classes or by separate series. For all votes, holders of each class of Class
D Preferred Stock shall have that number of votes per share as is equal to the
number of shares of Common Stock into which each such share of Class D Preferred
held by such holder is convertible on the record date for the determination of
stockholders entitled to vote at the meeting or on the date of any written
consent.
(b) The holders of Class D Preferred, shall be entitled to vote upon
the election of directors on the following basis: So long as at least 50,000
shares of Class D Preferred shall be outstanding, the holders of Class D
Preferred issued and outstanding, voting as a single class, shall be entitled to
one director.
Section 6. Dividend Rights.
---------- ---------------
(a) The holders of the then outstanding shares of Class D Preferred
shall be entitled to receive, when and as declared by the Board Directors, out
of funds legally available therefor, non-cumulative cash dividends at the annual
rate of $.144 per share payable at a rate of $.036 per share per calendar
quarter. The corporation's obligation to pay such dividends shall commence
after the first calendar quarter when the corporation's net after tax income,
calculated
40
<PAGE>
in accordance with generally accepted accounting principles, exceeds five times
such quarterly dividend on all then outstanding Class D Preferred and on all
then outstanding shares of any other class of preferred stock of the
corporation.
(b) Notwithstanding any provisions in Section 6(a) hereof, dividends
which have been declared on any Class D Preferred but have not been paid prior
to an automatic conversion pursuant to Section 3(b) hereof shall be payable
within 30 days of the Closing, as defined in Section 3(b), to each person who
holds of record Class D Preferred immediately prior to the automatic conversion.
(c) When and as dividends are declared payable in cash, property or
shares of the corporation's capital stock on shares of Common Stock, the
corporation shall (except as otherwise provided in Section 3) declare at the
same time and pay to each holder of Class D Preferred a dividend equal to the
dividend which would have been payable to such holder if the shares of Class D
Preferred held by such holder had been converted into Common Stock on the record
date for the determination of holders of Common Stock entitled to receive such
dividend.
Section 7. Covenants. So long as at least 50,000 shares of Class D
---------- ---------
Preferred shall be outstanding, the corporation shall not, without first
obtaining the affirmative vote or written consent of not less than sixty-six
percent (66%) of the outstanding shares of Class D Preferred:
(a) amend or repeal any provision of, or add any provision to, the
corporation's Restated Articles of Organization or By-Laws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, Class D Preferred generally;
(b) reclassify any Common Stock into shares having any preference or
priority as to dividends or assets superior to or on a parity with any such
preference or priority of the Class D Preferred;
(c) pay or declare any dividend or distribution on any shares of
Common Stock or apply any of its assets to the redemption, retirement, purchase
or other acquisition directly or indirectly, through subsidiaries, if any, or
otherwise, of any shares of Common Stock except from officers, directors or
employees of or consultants to the corporation upon termination of employment
and except pursuant to the corporation's rights of first refusal;
(d) create any other class or classes of stock or series of capital
stock;
(e) authorize any merger or consolidation of the corporation with or
into any other corporation or entity (except into or with a wholly-owned
subsidiary corporation with the requisite shareholder approval), or authorize
the sale of substantially all of the assets of the corporation; or
(f) voluntarily liquidate, dissolve or wind up.
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<PAGE>
CLASS E PREFERRED STOCK
Section 1. Designation. Eleven Million (11,000,000) shares of the
--------- -----------
corporation's authorized but unissued shares of Preferred Stock are hereby
designated as "Class E Preferred Stock". Such Class E Preferred Stock (the
"Class E Preferred") shall have the relative rights and preferences set forth
below.
Section 2. Liquidation Rights.
--------- ------------------
(a) Payment to Holders of Class E Preferred Stock Upon Liquidation.
--------------------------------------------------------------
In the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the affairs of the corporation, the holder of each share of Class
E Preferred shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the corporation to the
holders of the Class A Preferred and the Common Stock of the corporation by
reason of their ownership thereof, an amount equal to (i) $2.25 per share of
Class E Preferred plus (ii) an amount equal to all declared but unpaid dividends
to and including the date full payment shall be tendered to the holder of the
Class E Preferred with respect to such liquidation, dissolution or winding-up.
All of the preferential amounts to be paid to the holders of the Class E
Preferred under this Section 2(a) shall be paid or set apart for payment before
the payment or setting apart for payment of any amount for, or the distribution
of any assets of the corporation to, the holders of the Class A Preferred and
Common Stock in connection with such liquidation, dissolution or winding-up. If
the assets or surplus funds to be distributed to the holders of the Class B
Preferred, the Class D Preferred and the Class E Preferred are insufficient to
permit the payment to such holders of their full preferential amount, the assets
and surplus funds legally available for distribution shall be distributed
ratably among the holders of Class E Preferred, Class D Preferred and Class B
Preferred in proportion to the full preferential amount each such holder is
otherwise entitled to receive.
(b) Payment to Holders of Class E Preferred, Class D Preferred and
--------------------------------------------------------------
Common Stock. After the payment or the setting apart of payment to the holders
- ------------
of the Class A Preferred, the Class B Preferred, the Class D Preferred and the
Class E Preferred of the preferential amounts so payable to them, all remaining
assets of the corporation shall be distributed among the holders of the Class E
Preferred, the Class D Preferred and the holders of the Common Stock ratably in
proportion to the number of shares of Class D Preferred, Class E Preferred and
Common Stock (and, in the case of Class D Preferred and the Class E Preferred,
the number of shares of Common Stock into which each such share of Class D
Preferred or Class E Preferred, as the case may be, held by such holder could be
converted on the record date for the determination of rights of stockholders to
distributions under this Section 2) held by them.
(c) No Liquidation Preference After Conversion. Upon conversion of
------------------------------------------
shares of Class E Preferred into shares of Common Stock pursuant to Section 3
below, the holder of such Common Stock shall not be entitled to any preferential
payment or distribution in case of any
42
<PAGE>
liquidation, dissolution or winding-up of corporation, but shall share ratably
in any distribution of the assets of the corporation to all holders of Common
Stock.
(d) Distributions Other than Cash. Whenever the distribution
-----------------------------
provided for in this Section 2 shall be payable in property other than cash, the
value of such distribution shall be the fair market value of such property as
determined in good faith by the Board of Directors of the corporation.
(e) Merger as Liquidation, etc. The merger or consolidation of the
--------------------------
corporation into or with another corporation (other than a wholly-owned
subsidiary of this corporation in a merger in which this corporation is the
surviving corporation and its Articles of Organization remain unchanged), or the
sale of all or substantially all of the assets of the corporation (other than to
a wholly-owned subsidiary of this corporation) shall be deemed to be a
liquidation, dissolution or winding-up of the corporation for purposes of this
Section 2 unless the holders of at least 51% of the then outstanding shares of
Class E Preferred (voting as a single class) elect to the contrary by giving
written notice thereof to the corporation at least three days before the
effective date of such event. If such notice is given, the provisions of
Section 3(f) shall apply. The amount deemed distributed to the holders of Class
E Preferred upon any such merger or consolidation shall be the cash or the value
of the property, rights or securities distributed to such holders by the
acquiring person, firm or other entity. The value of such property, rights or
other securities shall be determined in good faith by the Board of Directors of
the corporation.
(f) Notice and Opportunity to Exercise Conversion Rights.
----------------------------------------------------
Notwithstanding anything to the contrary that may be inferred from the
provisions of this Section 2, each holder of shares of Class E Preferred shall
be entitled to receive notice from the corporation pursuant to Section 3(i)
hereof of any proposed liquidation, dissolution or winding-up of the corporation
at least 20 days prior to the date on which any such liquidation, dissolution or
winding-up of the corporation is scheduled to occur and, at any time prior to
any such liquidation, dissolution or winding-up of the corporation, to convert
any or all of such holder's shares of Class E Preferred into shares of Common
Stock pursuant to Section 3 hereof.
Section 3. Conversion. The holders of the Class E Preferred shall have
--------- ----------
conversion rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Class E Preferred shall be
----------------
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for the Class E Preferred, into such fully paid and nonassessable shares of
Common Stock, as is determined by dividing two dollars and twenty-five cents
($2.25) by the Conversion Price, determined as hereinafter provided, in effect
at the time of conversion. The Conversion Price at which shares of Common Stock
shall be deliverable upon conversion without the payment of any additional
consideration by the holder thereof (the "Conversion Price") shall initially be
two dollars and twenty-five cents ($2.25) per share of Common Stock. Such
initial Conversion Price shall be subject to adjustment, in order to adjust the
number of shares of Common Stock into which the Class E Preferred is
convertible, as hereinafter provided.
43
<PAGE>
(b) Automatic Conversion.
--------------------
(i) Upon Qualifying Public Offerings. Each share of Class E
--------------------------------
Preferred shall automatically be converted into shares of Common Stock at the
then effective Conversion Price upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the corporation to the public at a public
offering price of at least $4.50 per share (with such amount to be appropriately
adjusted in the event of any stock dividend, stock distribution or subdivision
as provided in subparagraph (e) hereof) and having an aggregate offering price
to the public resulting in gross proceeds to the corporation of not less than
$15,000,000 (in the event of which offering, the person(s) entitled to receive
the Common Stock issuable upon such conversion of the Class E Preferred shall
not be deemed to have converted that Class E Preferred until immediately prior
to the closing of such offering). Each person who holds of record Class E
Preferred immediately prior to such automatic conversion shall be entitled to
all dividends which have accrued to the time of the automatic conversion, but
have not been paid on the Class E Preferred, pursuant to Section 6 hereof. Such
dividends shall be paid to all such holders within 30 days of the automatic
conversion.
(ii) Upon Conversion of 90% of Class E Preferred. Each share of
-------------------------------------------
Class E Preferred then outstanding shall automatically be converted into shares
of Common Stock at the then-effective Conversion Price, upon the conversion of
ninety percent (90%) or more of the authorized Class E Preferred. Such
conversion shall be deemed to have occurred on the date upon which the aggregate
number of shares of Class E Preferred which have been converted to Common Stock
equals or exceeds ninety percent (90%) of the authorized Class E Preferred.
(c) Mechanics of Conversion. No fractional shares of Common Stock
-----------------------
shall be issued upon conversion of the Class E Preferred. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Conversion Price. Before any holder of Class E Preferred shall be
entitled to convert the same into full shares of Common Stock, he shall
surrender the certificate or certificates therefor, duly endorsed, at the office
of the corporation or of any transfer agent for the Class E Preferred, and shall
give written notice to the corporation at such office that he elects to convert
the same and shall state therein his name or the name or names of his nominees
in which he wishes the certificate or certificates for shares of Common Stock to
be issued. The corporation shall, as soon as practicable thereafter, issue and
deliver at such office to such holder of Class E Preferred, or to his nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which he shall be entitled as aforesaid, together with cash in lieu of any
fraction of a share. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Class E Preferred to be converted, and the person or persons entitled
to receive the shares of Common Stock issuable upon conversion shall be treated
for all purposes as the record holder or holders of such shares of Common Stock
on such date.
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(d) Adjustments to Conversion Price for Diluting Issues.
---------------------------------------------------
(i) Special Definitions. For purposes of this Section 3(d),
-------------------
the following definitions shall apply:
(1) "Option" shall mean rights, options, or warrants
------
to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(2) "Original Issue Date" shall mean the date on which
-------------------
the first share of Class E Preferred to be issued was issued.
(3) "Convertible Securities" shall mean any evidences
----------------------
of indebtedness, shares (other than Common Stock, Class A Preferred, Class B
Preferred, Class D Preferred or Class E Preferred) or other securities directly
or indirectly convertible into or exchangeable for Common Stock.
(4) "Additional Shares of Common Stock" shall mean all
---------------------------------
shares of Common Stock issued (or, pursuant to Section 3(d)(iii) hereof, deemed
to be issued) by the corporation after the Original Issue Date, other than:
(A) shares of Common Stock issued or issuable
upon conversion of shares of Class A Preferred, Class B Preferred, Class D
Preferred or Class E Preferred;
(B) up to 3,355,507 shares of Common Stock issued
or issuable to officers or employees of, or consultants to, the corporation
pursuant to the corporation's 1983 Incentive Stock Option Plan, 1984 Incentive
Stock Option Plan, 1986 Incentive Stock Option Plan, 1987 Stock Plan, 1988 Stock
Plan, 1996 Stock Plan or 1997 Stock Plan (appropriately adjusted to take account
of any stock split, stock dividend, combination of shares or the like), and such
number of shares of Common Stock as are issued or issuable pursuant to
additional stock options approved by the Board of Directors including the
representative of Class D Preferred on the Board of Directors; or
(C) shares of Common Stock issued by way of
dividend or other distribution on shares of Common Stock excluded from the
definition of Additional Shares of Common Stock by the foregoing clauses (A) and
(B) or this clause (C) or on shares of Common Stock so excluded; or
(D) shares of Common Stock issued with the
approval of a majority of the representatives of the Class D Preferred on the
Board of Directors, which shares have been designated by said majority to be
excepted from the definition of "Additional Shares of Common Stock" contained
herein.
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(ii) No Adjustment of Conversion Price. No adjustment in
---------------------------------
the number of shares of Common Stock into which the Class E Preferred is
convertible shall be made, by adjustment in the Conversion Price of Class E
Preferred in respect of the issuance of Additional Shares of Common Stock or
otherwise, unless the consideration per share for an Additional Share of Common
Stock issued or deemed to be issued by the corporation is less than the
Conversion Price in effect on the date of, and immediately prior to, the issue
of such Additional Share.
(iii) Issue of Securities Deemed Issue of Additional Shares
-----------------------------------------------------
of Common Stock.
- ---------------
(1) Options and Convertible Securities. In the event
----------------------------------
the corporation at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such record date shall have been fixed, as of
the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section 3(d)(v) hereof), of such Additional
Shares of Common Stock would be less than the Conversion Price in effect on the
date of and immediately prior to such issue, or such record date, as the case
may be, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage or time or otherwise, for any increase in
the consideration payable to the corporation, or decrease in the number of'
shares of Common Stock issuable, upon the exercise, conversion or exchange
thereof, the Conversion Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) upon the expiration of any such Options or
any rights of conversion or exchange under such Convertible Securities which
shall not have been exercised, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon such expiration, be
re-computed as if:
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(I) in the case of Convertible Securities or
Options for Common Stock, the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the corporation upon such conversion or exchange, and
(II) in the case of Options for Convertible
Securities, only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the corporation
(determined pursuant to Section 3(d)(v) hereof) upon the issue of the
Convertible Securities with respect to which such Options were actually
exercised;
(D) no readjustment pursuant to clause (B) or (C)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price on the original adjustment
date, or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;
(E) in the case of any Options which expire by
their terms not more than 30 days after the date of issue thereof, no adjustment
of the Conversion Price shall be made until the expiration or exercise of all
such Options, whereupon such adjustment shall be made in the same manner
provided in clause (C) above; and
(F) if such record date shall have been fixed and
such Options or Convertible Securities are not issued on the date fixed
therefor, the adjustment previously made in the Conversion Price which became
effective on such record date shall be canceled as of the close of business on
such record date and thereafter the Conversion Price shall be adjusted pursuant
to this subparagraph 3(d)(iii) as of the actual date of their issuance.
(2) Stock Dividends, Stock Distributions and
----------------------------------------
Subdivisions. In the event the corporation at any time or from time to time
- ------------
after the Original Issue Date shall declare or pay any dividend or make any
other distribution on the Common Stock payable in Common Stock, or effect a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock), then and in any such
event, Additional Shares of Common Stock shall be deemed to have been issued:
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<PAGE>
(A) in the case of any such dividend or
distribution, immediately after the close of business on the record date for the
determination of holders of any class of securities entitled to receive such
dividend or distribution, or
(B) in the case of any such subdivision, at the
close of business on the date immediately prior to the date upon which such
corporate action becomes effective.
If such record date shall have been fixed and such dividend shall not have
been fully paid on the date fixed therefor, the adjustment previously made in
the Conversion Price which became effective on such record date shall be
canceled as of the close of business on such record date, and thereafter the
Conversion Price shall be adjusted pursuant to this subparagraph 3(d)(iii) as of
the time of actual payment of such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of
-----------------------------------------------
Additional Shares of Common Stock. In the event the corporation shall issue
- ---------------------------------
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 3(d) (iii) hereof, but excluding
Additional Shares of Common Stock issued pursuant to Section 3(d)(iii)(2), which
event is dealt with in Section (3)(e) hereof) without consideration or for a
consideration per share less than the Conversion Price in effect on the date of
and immediately prior to such issue, then and in such event, such Conversion
Price shall be reduced, concurrently with such issue in order to increase the
number of shares of Common Stock into which the Class E Preferred is
convertible, to a price (calculated to the nearest cent) determined by
multiplying such Conversion Price by a fraction (x) the numerator of which shall
be (1) the number of shares of Common Stock outstanding immediately prior to
such issue (including shares of Common Stock issuable upon conversion of any
outstanding Class A Preferred, Class B Preferred, Class D Preferred, Class E
Preferred or Convertible Securities) plus (2) the number of shares of Common
Stock which the aggregate consideration received by the corporation for the
total number of Additional Shares of Common Stock so issued would purchase at
such Conversion Price, and (y) the denominator of which shall be (1) the number
of shares of Common Stock outstanding immediately prior to such issue (including
shares of Common Stock issuable upon conversion of any outstanding Class A
Preferred, Class B Preferred, Class D Preferred, Class E Preferred or
Convertible Securities), plus (2) the number of such Additional Shares of Common
Stock so issued, provided that the Conversion Price shall not be so reduced at
such time if the amount of such reduction would be an amount less than $0.05,
but any such amount shall be carried forward and reduction with respect thereto
made at the time of and together with any subsequent reduction which, together
with such amount and any other amount or amounts so carried forward, shall
aggregate $0.05 or more.
(v) Determination of Consideration. For purposes of this
------------------------------
Section 3(d), the consideration received by the corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property. Such consideration shall:
-----------------
48
<PAGE>
(A) insofar as it consists of cash, be computed
at the aggregate amount of cash received by the corporation excluding amounts
paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other than
cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The
----------------------------------
consideration per share received by the corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 3(d)(iii)(1) above,
relating to Options and Convertible Securities shall be determined by dividing
(x) the total amount, if any, received or
receivable by the corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration until such subsequent adjustment occurs) payable to the
corporation upon the exercise of such Options or the conversion or exchange of
such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common Stock
(as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number until
such subsequent adjustment occurs) issuable upon the exercise of such Options or
the conversion or exchange of such Convertible Securities.
(e) Adjustment for Dividends, Distributions, Subdivisions,
------------------------------------------------------
Combinations or Consolidations of Common Stock.
- ----------------------------------------------
(i) Stock Dividends, Distributions or Subdivisions. In the
----------------------------------------------
event the corporation shall issue Additional Shares of Common Stock pursuant to
Section 3(d)(iii)(2) hereof in a stock dividend, stock distribution or
subdivision, the Conversion Price in effect immediately prior to such stock
dividend, stock distribution or subdivision shall, concurrently with the
effectiveness of such stock dividend, stock distribution or subdivision, be
proportionately decreased.
(ii) Combinations or Consolidations. In the event the
------------------------------
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to
49
<PAGE>
such combination or consolidation shall, concurrently with the effectiveness of
such combination or consolidation, be proportionately increased.
(f) Adjustment for Merger or Reorganization. In case of any
---------------------------------------
consolidation or merger of the corporation with or into another corporation or
the conveyance of all or substantially all of the assets of the corporation to
another corporation, each share of Class E Preferred shall thereafter be
convertible into the number of shares of stock or other securities or property
to which a holder of the number of shares of Common Stock of the corporation
deliverable upon conversion of such Class E Preferred would have been entitled
upon such consolidation, merger or conveyance; and, in any such case,
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of the holders of the Class E Preferred, to the end that
the provisions set forth herein (including provisions with respect to changes in
and other adjustments of the Conversion Price) shall thereafter be applicable,
as nearly as reasonably may be, in relation to any shares of stock or other
property thereafter deliverable upon the conversion of the Class E Preferred.
Each holder of Class E Preferred upon the occurrence of a capital
reorganization, merger or consolidation of the corporation or the sale of all
or, substantially all its assets and properties as such events are more fully
set forth in the first paragraph of this Section 3(f), shall have the option of
electing treatment of his shares of Class E Preferred under either this Section
3(f) or Section 2 hereof, notice of which election shall be submitted in writing
to the corporation at its principal offices no later than five (5) days before
the effective date of such event.
(g) No Impairment. The corporation will not, by amendment of its
-------------
Restated Articles of Organization or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the corporation but
will at all times in good faith assist in the carrying out of the provisions of
this Section 3 and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Class E Preferred against impairment.
(h) Certificate as to Adjustments. Upon the occurrence of each
-----------------------------
adjustment or readjustment of the Conversion Price pursuant to this Section 3,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Class E Preferred a certificate setting forth such adjustment or readjustment
and showing in detail the facts upon which such adjustment or readjustment is
based. The corporation shall, upon the written request at any time of any
holder of Class E Preferred, furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Price at the time in effect, and (iii) the number of shares of Common
Stock and the amount if any, of other property which at the time would be
received upon the conversion of Class E Preferred.
(i) Notice of Record Date. In the event of (i) any taking by the
---------------------
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof
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<PAGE>
who are entitled to receive any dividend (other than a cash dividend which is
the same as cash dividends paid in previous quarters) or other distribution, or
(ii) any capital reorganization of the corporation, any reclassification or
recapitalization of the capital stock of the corporation, any merger or
consolidation of the corporation, and any transfer of all or substantially all
of the assets of the corporation to any other corporation, or any other entity
or person, or any voluntary or involuntary dissolution, liquidation or winding-
up of the corporation, the corporation shall mail to each holder of Class E
Preferred at least 20 days prior to the record date specified therein, a notice
specifying (A) the date on which any such record is to be taken for the purpose
of such dividend or distribution and a description of such dividend or
distribution, (B) the date on which any such reorganization, reclassification,
transfer, consolidation, merger, dissolution, liquidation or winding-up is
expected to become effective, and (C) the time if any, that is to be fixed, as
to when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation or
winding-up.
(j) Common Stock Reserved. The corporation shall reserve and keep
---------------------
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall from time to time be sufficient to effect conversion of
the Class E Preferred.
Section 4. Redemption.
--------- ----------
(a) On October 21, 2003 (the "Commencement Date") and on the first
and second anniversaries thereof, the corporation shall offer to redeem from
each holder of shares of Class E Preferred a maximum of thirty-three and a third
percent (33 1/3%), sixty-six and two-thirds percent (66 2/3%) and one hundred
percent (100%), respectively, of the total number of shares of Class E Preferred
held by such shareholder prior to the Commencement Date, at a price for each
share tendered for redemption equal to the greater of (i) $2.25 plus an amount
equal to all declared but unpaid dividends payable in accordance with Section 6
hereof and (ii) the fair market value per share (the "Redemption Price");
provided, that any shares of Class E Preferred redeemed hereunder in any
previous years shall reduce the maximum amount of Class E Preferred which the
corporation may be requested to redeem in any then current year. Fair market
value shall mean the fair market value per share as determined in good faith by
the Board of Directors, provided that if holders of more than fifty percent
(50%) of the outstanding Class E Preferred disagree with such determination, the
fair market value shall be determined (i) by an independent investment banking
firm mutually selected by such holders and the Board of Directors, or (ii)
failing such agreement within thirty days, by two such firms, one selected by
the Board of Directors and one by such holders, or (iii) failing agreement by
such two firms within thirty days, by a third such firm mutually selected by
such firms. The fees of all such investment banking firms shall be borne in
equal halves by the corporation and such holders. The corporation shall provide
access to all such information as is reasonably necessary for such firms to
determine fair market value. The corporation shall offer to redeem shares of
Class E Preferred by giving written notice thereof to each holder of shares of
Class E Preferred eligible for redemption, which notice shall state the number
of shares of Class E Preferred eligible to be redeemed by such holder and shall
specify a redemption date not less than forty-five (45) days
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<PAGE>
nor more than sixty (60) days after the date of such written notice. Any holder
of shares of Class E Preferred eligible to be redeemed may redeem such shares by
giving written notice thereof to the corporation, and to each other holder of
shares of Class E Preferred, no less than 15 days prior to the redemption date
specified in the corporation's written offer of redemption, and by surrendering
to the corporation on or before the redemption date the share certificates for
the number of shares of Class E Preferred to be redeemed. If fewer than all of
the shares represented by such certificates are redeemed, one or more new
certificates shall be issued for the unredeemed shares as promptly as possible.
Notwithstanding the foregoing, the holders of more than fifty percent (50%) of
all Class E Preferred in the aggregate shall have the right to postpone for a
specified period of time or waive such rights of redemption of all holders by
written notice to the corporation and to all such holders given at least fifteen
(15) days prior to the scheduled date of redemption.
(b) In the event of a sale of all or substantially all the assets of
the corporation, the corporation shall offer to redeem not fewer than all the
shares of Class E Preferred held by all holders of shares of Class E Preferred
on the date the corporation fixes as the date to mail or otherwise send out its
offer of redemption, at the Redemption Price. The corporation shall offer to
redeem shares of Class E Preferred by giving written notice thereof to each
holder of shares of such Class E Preferred, which notice shall be sent not less
than twenty (20) days before the scheduled date of consummation of the
transaction described above. Such notice of redemption shall state the number
of shares of Class E Preferred eligible to be redeemed by such holder and shall
specify a redemption date not less than twenty (20) days nor more than sixty
(60) days after the date of such written notice. Any holder of shares of Class
E Preferred may redeem such shares by giving written notice thereof to the
corporation not less than ten (10) days prior to the redemption date specified
in the corporation's written offer of redemption, and by surrendering to the
corporation on or before the redemption date the share certificates for the
number of shares of such Class E Preferred to be redeemed.
Section 5. Voting Rights. The holders of shares of Class E Preferred
--------- -------------
shall be entitled to notice of any shareholders' meeting and to vote upon any
matter submitted to the shareholders for a vote, as though the Common Stock, the
Class A Preferred, the Class B Preferred, the Class D Preferred and the Class E
Preferred constituted a single class of stock, except with respect to those
matters on which the Massachusetts Corporation Law requires that a vote must be
by a separate class or classes or by separate series. For all votes, holders of
Class E Preferred Stock shall have that number of votes per share as is equal to
the number of shares of Common Stock into which each such share of Class E
Preferred held by such holder is convertible on the record date for the
determination of stockholders entitled to vote at the meeting or on the date of
any written consent.
Section 6. Dividend Rights.
--------- ---------------
(a) The holders of the then outstanding shares of Class E Preferred
shall be entitled to receive, when and as declared by the Board Directors, out
of funds legally available therefor, non-cumulative cash dividends at the annual
rate of $.18 per share payable at a rate of $.045 per share per calendar
quarter. The corporation's obligation to pay such dividends shall
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<PAGE>
commence after the first calendar quarter when the corporation's net after tax
income, calculated in accordance with generally accepted accounting principles,
exceeds five times such quarterly dividend on all then outstanding Class E
Preferred and on all then outstanding shares of all other classes of preferred
stock of the corporation.
(b) Notwithstanding any provisions in Section 6(a) hereof, dividends
which have been declared on any Class E Preferred but have not been paid prior
to an automatic conversion pursuant to Section 3(b) hereof shall be payable
within 30 days of the Closing, as defined in Section 3(b), to each person who
holds of record Class E Preferred immediately prior to the automatic conversion.
(c) When and as dividends are declared payable in cash, property or
shares of the corporation's capital stock on shares of Common Stock, the
corporation shall (except as otherwise provided in Section 3) declare at the
same time and pay to each holder of Class E Preferred a dividend equal to the
dividend which would have been payable to such holder if the shares of Class E
Preferred held by such holder had been converted into Common Stock on the record
date for the determination of holders of Common Stock entitled to receive such
dividend.
Section 7. Covenants. So long as at least 50,000 shares of Class E
--------- ---------
Preferred shall be outstanding, the corporation shall not, without first
obtaining the affirmative vote or written consent of not less than sixty-six
percent (66%) of the outstanding shares of Class E Preferred:
(a) amend or repeal any provision of, or add any provision to, the
corporation's Restated Articles of Organization or By-Laws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, Class E Preferred generally;
(b) reclassify any Common Stock into shares having any preference or
priority as to dividends or assets superior to or on a parity with any such
preference or priority of the Class E Preferred;
(c) pay or declare any dividend or distribution on any shares of
Common Stock or apply any of its assets to the redemption, retirement, purchase
or other acquisition directly or indirectly, through subsidiaries, if any, or
otherwise, of any shares of Common Stock except from officers, directors or
employees of or consultants to the corporation upon termination of employment
and except pursuant to the corporation's rights of first refusal;
(d) create any other class or classes of stock or series of capital
stock;
(e) authorize any merger or consolidation of the corporation with or
into any other corporation or entity (except into or with a wholly-owned
subsidiary corporation with the requisite shareholder approval), or authorize
the sale of substantially all of the assets of the corporation; or
(f) voluntarily liquidate, dissolve or wind up.
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ARTICLE VI
----------
OTHER LAWFUL PROVISIONS
-----------------------
(a) The corporation may carry on any business, operation or activity
referred to in Article 2 to the same extent as might an individual, whether as
principal, agent, contractor or otherwise, and either alone or in conjunction or
a joint venture or other arrangement with any corporation, association, trust,
firm or individual.
(b) The corporation may carry on any business, operation or activity
through a wholly or partly owned subsidiary.
(c) The corporation may be a partner in any business enterprise which
it would have the power to conduct by itself.
(d) the directors may make, amend or repeal the bylaws in whole or in
part, except with respect to any provision thereof which by law or the bylaws
requires action by the stockholders.
(e) Meetings of the stockholders may be held anywhere in the United
States.
(f) No stockholder shall have any right to examine any property or
any books, accounts or other writings of the corporation if there is reasonable
ground for belief that such examination will for any reason be adverse to the
interests of the corporation, and a vote of the directors refusing permission to
make such examination and setting forth that in the opinion of the directors
such examination would be adverse to the interests of the corporation shall be
prima facie evidence that such examination would be adverse to the interests of
the corporation. Every such examination shall be subject to such reasonable
regulations as the directors may establish in regard thereto.
(g) The directors may specify the manner in which the accounts to the
corporation shall be kept and may determine what constitutes net earnings,
profits and surplus, what amounts, if any, shall be declared as dividends.
Unless the board of directors otherwise specifies, the excess of the
consideration for any share of its capital stock with par value issued by it
over such par value shall be paid-in surplus. The board of directors may
allocate to capital stock less than all of the consideration for any share of
its capital stock without par value issued by it, in which case the balance of
such consideration shall be paid-in surplus. All surplus shall be available for
any corporate purpose, including the payment of dividends.
(h) The purchase or other acquisition or retention by the corporation
of shares of its own capital stock shall not be deemed a reduction of its
capital stock. Upon any reduction of capital or capital stock, no stockholder
shall have any right to demand any distribution from the
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<PAGE>
corporation, except as and to the extent that the stockholders shall have
provided at the time of authorizing such reduction.
(i) The directors shall have the power to fix from time to time their
compensation. No person shall be disqualified from holding any office by reason
of any interest. In the absence of fraud, any director, officer or stockholder
of this corporation individually, or any individual having any interest in any
concern which is a stockholder of this corporation, or any concern in which any
of such directors, officers, stockholders or individuals has any interest, may
be a party to, or may be pecuniary or otherwise interested in, any contract,
transaction or other act of this corporation, and
(1) such contract, transaction or act shall not be in any way
invalidated or otherwise affected by that fact;
(2) no such director, officer, stockholder or individual shall
be liable to account to this corporation for any profit or
benefit realized through any such contract, transaction or
act; and
(3) any such director of this corporation may be counted in
determining the existence of a quorum at any meeting of the
directors or of any committee thereof which shall authorize
any such contract, transaction or act, and may vote to
authorize the same;
provided, however, that any contract, transaction or act in which any director
or officer of this corporation is so interested individually or as a director,
officer, trustee or member of any concern which is not a subsidiary or affiliate
of this corporation, or in which any directors or officers are so interested as
holders, collectively, of a majority of shares of capital stock or other
beneficial interest at the time outstanding in any concern which is not a
subsidiary or affiliate of this corporation, shall be duly authorized or
ratified by a majority of the directors who are not so interested, to whom the
nature of such interest has been disclosed and who have made any findings
required by law;
the term "interest" including personal interest and interest as a
director, officer, stockholder, shareholder, trustee, member or
beneficiary of any concern;
the term "concern" meaning any corporation, association, trust,
partnership, firm, person or other entity other than this corporation;
and
the phrase "subsidiary or affiliate" meaning a concern in which a
majority of the directors, trustees, partners or controlling persons
is elected or appointed by the directors of this corporation, or is
constituted of the directors or officers of this corporation.
To the extent permitted by law, the authorizing or ratifying vote of the holders
of a majority of the shares of each class of the capital stock of this
corporation outstanding and entitled to vote for directors at any annual meeting
or a special meeting duly called for the purpose (whether
55
<PAGE>
such vote is passed before or after judgment rendered in a suit with respect to
such contract, transaction or act) shall validate any contract, transaction or
act of this corporation, or of the board of directors or any committee thereof,
with regard to all creditors and other claimants under this corporation;
provided, however, that
A. with respect to the authorization or ratification of contractors,
transactions or acts in which any of the directors, officers or
stockholders of this corporation have an interest, the nature of
such contracts, transactions or acts and the interest of any
director, officer or stockholder therein shall be summarized in
the notice of any such annual or special meeting, or in a
statement or letter accompanying such notice, and shall be fully
disclosed at any such meeting;
B. the stockholders so voting shall have made any findings required
by law;
C. stockholders so interested may vote at any such meeting except to
the extent otherwise provided by law; and
D. any failure of the stockholders to authorize or ratify such
contract, transaction or act shall not be deemed in any way to
invalidate the same or to deprive this corporation, its
directors, officers or employees of its or their right to proceed
with such contract, transaction or act.
No contract, transaction or act shall be avoided by reason of any provision of
this paragraph (i) which would be valid but for such provision or provisions.
(j) The corporation shall have all powers granted to corporations by
the laws of The Commonwealth of Massachusetts, provided that no such power shall
include any activity inconsistent with the Business Corporation Law or the
general laws of said Commonwealth.
(k) The corporation eliminates the personal liability of each member
of its board of directors to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that the foregoing
shall not eliminate the liability of a director (i) for any breach of such
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 61 or 62 of Chapter 156B of the
Massachusetts General Laws, or (iv) for any transaction from which such director
derived an improper personal benefit.
(l) The Directors of the corporation shall be classified with respect
to the time for which they shall severally hold office by dividing them into
three classes, each consisting of one-third, or as equal in number as possible,
of the whole number of the Board of Directors, and all Directors shall hold
office until their successors are chosen and qualified, or until their earlier
death, resignation, or removal. The Board of Directors has adopted a vote
designating, from among its members, Directors to serve as Directors of the
first class ("Class I Directors") who will hold office until the annual meeting
in 2000 and until their successors are duly elected and qualified, Directors of
the second class ("Class II Directors") who will hold office until the
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<PAGE>
annual meeting in 2001 and until their successors are duly elected and
qualified, and Directors of the third class ("Class III Directors") who will
hold office until the annual meeting in 2002 and until their successors are duly
elected and qualified. At each annual meeting beginning in 2000, the successors
to the class of Directors whose term expires at that meeting shall be elected to
hold office for a term continuing until the annual meeting held in the third
year following the year of their election and until their successors are duly
elected and qualified.
57
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DESCRIPTION OF AMENDMENTS
-------------------------
Article I was amended to change the name of the corporation from "Millitech
Corporation" to "Telaxis Communications Corporation."
Article III was amended to increase the authorized Common Stock of the
corporation from 36,000,000 shares to 100,000,000 shares.
Article IV was amended to
(a) incorporate the preferences, voting powers, qualifications, and
special or relative rights or privileges of the Class E Preferred
Stock of the corporation effected by the Certificate of Vote of
Directors Establishing a Series of a Class of Stock as filed with the
Massachusetts Secretary of State and effective October 26, 1998 (as
amended by the Certificate of Amendment as filed with the
Massachusetts Secretary of State and effective May 19, 1999 and by the
Certificate of Vote of Directors Establishing a Series of a Class of
Stock as filed with the Massachusetts Secretary of State and effective
August 18, 1999),
(b) reflect the changes in the authorized capital of the corporation
described above, and
(c) amend the automatic conversion provisions of Section 3(b) of the
description of the rights of each of Class A Preferred Stock, Class B
Preferred Stock and Class D Preferred Stock by reducing the minimum
public offering price upon an initial public offering of the Company's
stock required to trigger automatic conversion from $9.75 per share to
$4.50 per share (the same minimum public offering price contained in
the Class E Preferred Stock terms).
Article VI was amended to classify the Board of Directors of the corporation
into three classes, as nearly equal in number as possible, with the terms of
Class I directors expiring in 2000, the terms of Class II directors expiring in
2001, and the terms of Class III directors expiring in 2002.
<PAGE>
EXHIBIT 3.2
AMENDED AND RESTATED BY-LAWS
----------------------------
TELAXIS COMMUNICATIONS CORPORATION
ARTICLE I
STOCKHOLDERS
------------
1. Place of Meetings. All meetings of stockholders shall be held at such
-----------------
date, time and place, either within or outside of Massachusetts, as may be
designated by the Directors from time to time.
2. Annual Meetings. The annual meeting of stockholders shall be held on
---------------
the second Monday in May in each year (or if that be a legal holiday in the
place where the meeting is to be held, on the next succeeding full business day)
at 10:00 o'clock a.m., unless a different hour and date (which date shall be
within six months after the end of the fiscal year of the corporation) is fixed
by the Directors or the President and stated in the notice of the meeting. The
purposes for which the annual meeting is to be held, in addition to those
prescribed by law, by the Articles of Organization or by these By-laws, may be
specified by the Directors or the President. If no annual meeting is held in
accordance with the foregoing provisions, a special meeting may be held in lieu
thereof and any action taken at such meeting shall have the same effect as if
taken at the annual meeting.
3. Special Meetings. Special meetings of stockholders may be called by
----------------
the President or by the Directors. Upon written application of one or more
stockholders who hold at least thirty (30%) percent of the capital stock
entitled to vote at the meeting, special meetings shall be called by the Clerk,
or in the case of the death, absence, incapacity or refusal of the Clerk, by any
other officer. The call for the meeting shall state the place, date, hour and
purposes of the meeting. Business transacted at any special meeting of the
stockholders shall be limited to matters relating to the purpose or purposes
stated in the notice of meeting.
4. Notice of Meetings. A written notice of every meeting of
------------------
stockholders, stating the place, date and hour thereof and the purposes for
which the meeting is to be held, shall be given by the Clerk or other person
calling the meeting at least seven (7) days before the meeting to each
stockholder entitled to vote thereat and to each stockholder who, by law, by the
Articles of Organization or by these By-laws, is entitled to such notice, by
leaving such notice with him or at his residence or usual place of business, or
by mailing it postage prepaid and addressed to him at his address as it appears
upon the books of the corporation. Whenever any notice is required to be given
to a stockholder by law, by the Articles of Organization or by these By-laws, no
such notice need be given if a written waiver of notice, executed before or
after the meeting by the stockholder or his attorney thereunto duly authorized,
is filed with the records of the meeting.
<PAGE>
5. Quorum. Unless the Articles of Organization otherwise provide, a
------
majority in interest of all stock issued, outstanding and entitled to vote on
any matter shall constitute a quorum with respect to that matter; except that if
two or more classes of stock are outstanding and entitled to vote as separate
classes, then in the case of each such class a quorum shall consist of a
majority in interest of the stock of that class issued, outstanding and entitled
to vote.
6. Adjournments. Any meeting of stockholders may be adjourned to any
------------
other time and to any other place at which a meeting of stockholders may be held
under these By-laws by the vote of the holders of a majority of the stock
present or represented at the meeting, although less than a quorum, or by any
officer entitled to preside or to act as Clerk of such meeting, if no
stockholder is present or represented. It shall not be necessary to notify any
stockholder of any adjournment. Any business which could have been transacted
at any meeting of the stockholders as originally called may be transacted at any
adjournment thereof.
7. Voting and Proxies. Each stockholder shall have one vote for each
------------------
share of stock entitled to vote held by him of record according to the records
of the corporation, and a proportionate vote for a fractional share so held by
him, unless otherwise provided by the Articles of Organization. Stockholders
may vote either in person or by written proxy dated not more than six (6) months
before the meeting named therein; provided, that a proxy coupled with an
interest sufficient in law to support an irrevocable power, including, without
limitation, an interest in the shares or in the corporation generally, may be
made irrevocable if it so provides, need not specify the meeting to which it
relates, and shall be valid and enforceable until the interest terminates, or
for such shorter period as may be specified in the proxy. Proxies shall be
filed with the Clerk of the meeting or of any adjournment thereof before being
voted. Except as otherwise stated therein, proxies shall entitle the persons
named therein to vote at any adjournment of such meeting but shall not be valid
after final adjournment of such meeting. A proxy with respect to stock held in
the name of two or more persons shall be valid if executed by one of them
unless, at or prior to exercise of the proxy, the corporation receives a
specific written notice to the contrary from any one of them. A proxy purported
to be executed by or on behalf of a stockholder shall be deemed valid unless
challenged at or prior to its exercise.
8. Action at Meeting. When a quorum is present, the holders of a
-----------------
majority of the stock present or represented and voting on a matter (or if there
are two or more classes of stock entitled to vote as separate classes, then in
the case of each such class, the holders of a majority of the stock of that
class present or represented and voting on a matter), except where a larger vote
is required by law, by the Articles of Organization or by these By-laws, shall
decide any matter to be voted on by the stockholders. Any election by
stockholders shall be determined by a plurality of the votes cast by the
stockholders entitled to vote at the election. No ballot shall be required for
such election unless requested by a stockholder present or represented at the
meeting and entitled to vote in the election. The corporation shall not
directly or indirectly vote any shares of its stock other than shares held
directly or indirectly by it in a fiduciary capacity.
9. Inspectors of Election. The Board of Directors, in advance of any
----------------------
meeting of stockholders, may appoint one or more inspectors to act at the
meeting or any adjournment thereof. If inspectors are not so appointed, the
person presiding at the meeting may, and on the
2
<PAGE>
request of any stockholder entitled to vote thereat shall, appoint one or more
inspectors. If one or more inspectors are not so appointed, then the presiding
officer shall act as the inspector of the election. In case any person appointed
fails to appear or act, the vacancy may be filled by appointment made by the
Board in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, before entering upon the discharge of his duties, shall
take and sign an oath faithfully to execute the duties of inspector at such
meeting with strict impartiality and according to the best of his ability. No
director or officer of the corporation shall be eligible to act as an inspector
of an election of directors of the corporation.
The inspectors shall determine the number of shares outstanding and
the voting power of each, the shares represented at the meeting, the existence
of a quorum, the validity and effect of proxies, and shall receive votes,
ballots or consents, hear and determine all challenges and questions arising in
connection with the right to vote, count and tabulate all votes, ballots or
consents, determine the result, and do such acts as are proper to conduct the
election or vote with fairness to all stockholders. On request of the person
presiding at the meeting or any stockholder entitled to vote thereat, the
inspectors shall make a report in writing of any challenge, question or matter
determined by them and execute a certificate of any fact found by them.
10. Action Without Meeting. Any action to be taken by stockholders may be
----------------------
taken without a meeting if all stockholders entitled to vote on the matter
consent to the action by a writing filed with the records of the meetings of
stockholders. Such consent shall be treated for all purposes as a vote at a
meeting.
ARTICLE II
DIRECTORS
---------
1. Powers. The business of the corporation shall be managed by a Board
------
of Directors who may exercise all the powers of the corporation except as
otherwise provided by law, by the Articles of Organization or by these By-laws.
In the event of a vacancy in the Board of Directors, the remaining Directors,
except as otherwise provided by law, may exercise the powers of the full Board
until the vacancy is filled.
2. Election. A Board of Directors consisting of seven (7) persons shall
--------
be elected by the stockholders at the annual meeting or any special meeting in
lieu thereof.
3. Vacancies. If the office of any Director becomes vacant by reason of
---------
death, resignation, retirement, disqualification, removal from office, or
otherwise, including by enlargement of the Board of Directors, the Board of
Directors or remaining Directors if less than a quorum may, by majority vote,
choose a successor or successors, who shall hold office for the unexpired term
in respect of which such vacancy occurred and until his successor be chosen and
qualified, or until his earlier death, resignation or removal.
3
<PAGE>
4. Enlargement of the Board. The number of the Board of Directors may be
------------------------
increased at any meeting of the stockholders or by a vote of the Directors then
in office.
5. Tenure. The Directors shall be classified with respect to the time
------
for which they shall severally hold office by dividing them into three classes,
each consisting of one-third, or as equal in number as possible, of the whole
number of the Board of Directors, and all Directors shall hold office until
their successors are chosen and qualified, or until their earlier death,
resignation, or removal. At the first meeting held for election of the Board of
Directors following adoption of these By-laws, Directors of the first class
("Class I Directors") shall be elected for a term of one year; Directors of the
second class ("Class II Directors") shall be elected for a term of two years;
Directors of the third class ("Class III Directors") shall be elected for a term
of three years; and at each annual election thereafter, successors to the class
of Directors whose terms shall expire that year shall be elected to hold office
for a term of three years, so that the term of office of one class of Directors
shall expire in each year. Any Director may resign by delivering his written
resignation to the corporation at its principal office or to the President,
Clerk or Secretary, except that no Director shall resign by delivering such
resignation to himself. Such resignation shall be effective upon receipt unless
it is specified to be effective at some other time or upon the happening of some
other event.
6. Removal. A Director may be removed from office for cause by vote of a
-------
majority of the stock outstanding and entitled to vote in the election of
Directors, provided that the Directors of a class elected by a particular class
of stockholders may be removed only by the vote of the holders of a majority of
the shares of such class. A Director may be removed for cause only after
reasonable notice and opportunity to be heard before the body proposing to
remove him.
7. Meetings. Regular meetings of the Directors may be held without call
--------
or notice at such places, within or without Massachusetts, and at such times as
the Directors may from time to time determine, provided that any Director who is
absent when such determination is made shall be given notice of the
determination. A regular meeting of the Directors may be held without a call or
notice at the same place as the annual meeting of stockholders or the special
meeting held in lieu thereof, following such meeting of stockholders.
Special meetings of the Directors may be held at any time and place,
within or without Massachusetts, designated in a call by the President,
Treasurer or two or more Directors.
8. Notice of Special Meetings. Notice of all special meetings of the
--------------------------
Directors shall be given to each Director by the Secretary, or if there be no
Secretary by the Clerk or Assistant Clerk, or in case of the death, absence,
incapacity or refusal of such persons, by the officer or one of the Directors
calling the meeting. Notice shall be given to each Director in person or by
telephone or by telegram sent to his business or home address at least forty-
eight (48) hours in advance of the meeting, or by written notice mailed to his
business or home address at least seventy-two (72) hours in advance of the
meeting. Notice need not be given to any Director if a written waiver of notice,
executed by him before or after the meeting, is filed with the records of the
meeting, or to any Director who attends the meeting without protesting prior
thereto or at its
4
<PAGE>
commencement the lack of notice to him. A notice or waiver of notice of a
Directors' meeting need not specify the purposes of the meeting.
9. Quorum. At any meeting of the Directors, a majority of the Directors
------
then in office shall constitute a quorum. In the event that one or more
Directors shall be disqualified to vote at any meeting, then the required quorum
shall be reduced by one for each such Director so disqualified; provided,
however, that in no case shall less than one-third (1/3) of the total number of
Directors constitute a quorum. Less than a quorum may adjourn any meeting from
time to time without further notice.
10. Action at Meeting. At any meeting of the Directors at which a quorum
-----------------
is present, the vote of a majority of those present, unless a different vote is
specified by law, by the Articles of Organization or by these By-laws, shall be
sufficient to take any action.
11. Meeting by Conference. Members of the Board or any committee
---------------------
designated thereby may participate in a meeting of such Board or committee by
means of a conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other at the same
time and participation by such means shall constitute presence in person at a
meeting.
12. Action by Consent. Any action by the Directors may be taken without a
-----------------
meeting if a written consent thereto is signed by all the Directors and filed
with the records of the meetings of Directors. Such consent shall be treated
for all purposes as a vote at a meeting.
13. Committees. The Directors may, by vote of a majority of the Directors
----------
then in office, elect from their number an executive committee or other
committees and may by like vote delegate thereto some or all of their powers
except those which by law, the Articles of Organization or these By-laws, they
are prohibited from delegating. Each committee is to consist of two or more
Directors. The Board may designate one or more Directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee. In the absence or disqualification of a member of a committee,
the member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absent or disqualified member. Each such committee shall keep minutes
and make such reports as the Board of Directors may from time to time request.
Except as the Directors may otherwise determine, any such committee may make
rules for the conduct of its business but, unless otherwise provided by the
Directors or in such rules, its business shall be conducted as nearly as may be
in the same manner as is provided by these By-laws for the Directors.
5
<PAGE>
ARTICLE III
OFFICERS
--------
1. Enumeration. The officers of the corporation shall consist of a Chief
-----------
Executive Officer, a President, a Treasurer, a Clerk and such other officers,
including a Chairman of the Board, one or more Vice Presidents, Assistant
Treasurers, Assistant Clerks and Secretary as the Directors may determine.
2. Election. The Chief Executive Officer, President, Treasurer and Clerk
--------
shall be elected annually by the Directors at their first meeting following the
annual meeting of stockholders. Other officers may be appointed by the
Directors at such meeting or at any other meeting.
3. Qualification. The President shall be a Director. No officer need be
-------------
a stockholder. Any two or more offices may be held by the same person. The Clerk
shall be a resident of Massachusetts unless the corporation has a resident agent
appointed for the purpose of service of process. Any officer may be required by
the Directors to give bond for the faithful performance of his duties to the
corporation in such amount and with such sureties as the Directors may
determine.
4. Tenure. Except as otherwise provided by law, by the Articles of
------
Organization or by these By-laws, the President, Treasurer and Clerk shall hold
office until the first meeting of the Directors following the annual meeting of
stockholders or special meeting in lieu thereof and thereafter until their
successors are chosen and qualified; and all other officers shall hold office
until the first meeting of the Directors following the annual meeting of
stockholders or special meeting in lieu thereof unless a different term is
specified in the vote choosing or appointing them. Any officer may resign by
delivering his written resignation to the corporation at its principal office or
to the President, Clerk or Secretary, except that no officer shall resign by
delivering such resignation to himself, and such resignation shall be effective
upon receipt unless it is specified to be effective at some other time or upon
the happening of some other event.
5. Removal. The Directors may remove any officer with or without cause
-------
by a vote of a majority of the entire number of Directors then in office,
provided that an officer may be removed for cause only after reasonable notice
and opportunity to be heard by the Board of Directors prior to action thereon.
Except as the Board of Directors may otherwise determine, no officer who resigns
or is removed shall have any right to any compensation as an officer for any
period following his resignation or removal, or any right to damages on account
of such removal, unless such compensation is expressly provided for in a duly
authorized written agreement with the corporation.
6. Vacancies. The Board of Directors may fill any vacancy occurring in
---------
any office for any reason and may, in its discretion, leave unfilled for such
period as it may determine any offices other than those of President, Treasurer
and Clerk. Each such successor shall hold office
6
<PAGE>
for the unexpired term of his predecessor and until his successor is elected and
qualified, or until his earlier death, resignation or removal.
7. Chairman of the Board. If the Directors appoint a Chairman of the
---------------------
Board, he shall, when present, preside at all meetings of the Directors and
shall have such other powers and duties as are usually vested in the office of
Chairman of the Board or as may be vested in him by the Board of Directors.
8. Chief Executive Officer. The Chief Executive Officer shall, subject
-----------------------
to the direction of the Directors, have general supervision and control of the
corporation's business.
9. President. The President, unless designated as the Chief Executive
---------
Officer, shall be the Chief Operating Officer of the corporation and shall,
subject to the direction of the Directors and the Chief Executive Officer, have
general supervision and control of its business. Unless otherwise provided by
the Directors, the President shall preside, when present, at all meetings of
stockholders and of the Directors (except as provided in Section 7 of this
Article III).
10. Vice President. The Vice President or, if there shall be more than
--------------
one, the Vice Presidents in the order determined by the Directors shall, in the
absence or disability of the President, perform the duties and exercise the
powers of the President and shall perform such other duties, and shall have such
other powers, as the Directors may from time to time prescribe.
11. Treasurer and Assistant Treasurers. The Treasurer shall, subject to
----------------------------------
the direction of the Directors, have general charge of the financial affairs of
the corporation and shall cause to be kept accurate books of account. He shall
have custody of all funds, securities and valuable documents of the corporation,
except as the Directors may otherwise provide.
The Assistant Treasurer or, if there shall be more than one, the
Assistant Treasurers in the order determined by the Directors, shall, in the
absence or disability of the Treasurer, perform the duties and exercise the
powers of the Treasurer and shall perform such other duties and shall have such
other powers as the Directors may from time to time prescribe.
12. Clerk and Assistant Clerks. The Clerk shall keep a record of the
--------------------------
meetings of stockholders. Unless a transfer agent is appointed, the Clerk shall
keep or cause to be kept in Massachusetts at the principal office of the
corporation or at his office the stock and transfer records of the corporation
in which are contained the names of all stockholders and the record address and
the amount of stock held by each. If there is no Secretary or Assistant
Secretary, the Clerk shall keep a record of the meetings of the Directors.
The Assistant Clerk, or if there shall be more than one, the Assistant
Clerks in the order determined by the Directors shall, in the absence or
disability of the Clerk, perform the duties and exercise the powers of the Clerk
and shall perform such other duties, and shall have such other powers, as the
Directors may from time to time prescribe.
13. Secretary and Assistant Secretaries. If a Secretary is appointed, he
-----------------------------------
shall attend all meetings of the Directors and shall keep a record of the
meetings of the Directors. He shall,
7
<PAGE>
when required, notify the Directors of their meetings and shall have such other
powers, and shall perform such other duties, as the Directors may from time to
time prescribe.
The Assistant Secretary or, if there shall be more than one, the
Assistant Secretaries in the order determined by the Directors shall, in the
absence or disability of the Secretary, perform the duties and exercise the
powers of the Secretary and shall perform such other duties, and shall have such
other powers, as the Directors may from time to time prescribe.
14. Other Powers and Duties. Each officer shall, subject to these
-----------------------
By-laws, have in addition to the duties and powers specifically set forth in
these By-laws such duties and powers as are customarily incident to his office
and such duties and powers as the Directors may from time to time designate.
ARTICLE IV
CAPITAL STOCK
-------------
1. Certificates of Stock. Each stockholder shall be entitled to a
---------------------
certificate of the capital stock of the corporation in such form as may be
prescribed from time to time by the Directors. The certificate shall be signed
by the President or a Vice President, and by the Treasurer or an Assistant
Treasurer, but when a certificate is countersigned by a transfer agent or a
registrar, other than a Director, officer or employee of the corporation, such
signatures may be facsimiles. In case any officer who has signed or whose
facsimile signature has been placed on such certificate shall have ceased to be
such officer before such certificate is issued, it may be issued by the
corporation with the same effect as if he were such officer at the time of its
issue.
Every certificate for shares of stock which are subject to any
restriction on transfer pursuant to the Articles of Organization, the By-laws or
any agreement to which the corporation is a party, shall have conspicuously
noted on the face or back of the certificate either the full text of the
restriction or a statement of the existence of such restrictions and a statement
that the corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge. Every certificate issued
when the corporation is authorized to issue more than one class or series of
stock shall set forth on its face or back either the full text of the
preferences, voting powers, qualifications and special and relative rights of
the shares of each class and series authorized to be issued, or a statement of
the existence of such preferences, powers, qualifications and rights, and a
statement that the corporation will furnish a copy thereof to the holder of such
certificate upon written request and without charge.
2. Transfers. Subject to the restrictions, if any, stated or noted on
---------
the stock certificates, shares of stock may be transferred on the books of the
corporation by the surrender to the corporation or its transfer agent of the
certificate therefor, properly endorsed, or accompanied by a written assignment
and power of attorney properly executed, with necessary transfer stamps affixed
and with such proof of the authenticity of signature as the corporation or its
transfer agent may reasonably require. Except as may be otherwise required by
law, by the
8
<PAGE>
Articles of Organization or by these By-laws, the corporation shall be entitled
to treat the record holder of stock as shown on its books as the owner of such
stock for all purposes, including the payment of dividends and the right to vote
with respect thereto, regardless of any transfer, pledge or other disposition of
such stock, until the shares have been transferred on the books of the
corporation in accordance with the requirements of these By-laws. It shall be
the duty of each stockholder to notify the corporation of his post office
address and of his taxpayer identification number.
3. Record Date. The Directors may fix in advance a time not more than
-----------
sixty (60) days preceding the date of any meeting of stockholders, or the date
for the payment of any dividend, or the making of any distribution to
stockholders, or the last day on which the consent or dissent of stockholders
may be effectively expressed for any purpose, as the record date for determining
the stockholders having the right to notice of and to vote at such meeting, and
any adjournment thereof, or the right to receive such dividend or distribution,
or the right to give such consent or dissent. In such case only stockholders of
record on such record date shall have such right, notwithstanding any transfer
of stock on the books of the corporation after the record date. Without fixing
such record date, the Directors may for any of such purposes close the transfer
books for all or any part of such period. If no record date is fixed, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day before the day on
which notice is given, or, if notice is waived, at the close of business on the
day before the day on which the meeting is held. The record date for determining
stockholders for any other purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating to such purpose.
A determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
4. Replacement of Certificates. In case of the alleged loss or
---------------------------
destruction or the mutilation of a certificate of stock, a duplicate certificate
may be issued in place thereof upon such terms as the Directors may prescribe,
including the presentation of reasonable evidence of such loss, destruction or
mutilation, and the giving of such indemnity as the Directors may require, for
the protection of the corporation or any transfer agent or registrar.
5. Issue of Capital Stock. Unless otherwise voted by the stockholders,
----------------------
the whole or any part of any unissued balance of the authorized capital stock of
the corporation, or the whole or any part of the capital stock of the
corporation held in its treasury, may be issued or disposed of by vote of the
Directors in such manner, for such consideration, and on such terms as the
Directors may determine.
9
<PAGE>
ARTICLE V
MISCELLANEOUS PROVISIONS
------------------------
1. Fiscal Year. Except as from time to time otherwise determined by the
-----------
Directors, the fiscal year of the corporation shall end on December 31.
2. Seal. The seal of the corporation shall, subject to alteration by the
----
Directors, bear its name, the word "Massachusetts" and the year of its
incorporation.
3. Execution of Instruments. All deeds, leases, transfers, contracts,
------------------------
bonds, notes and other obligations authorized to be executed by an officer of
the corporation in its behalf shall be signed by the President or the Treasurer,
except as the Directors may generally or in particular cases otherwise
determine.
4. Voting of Securities. Except as the Directors may otherwise
--------------------
designate, the President or Treasurer may waive notice of and act as, or appoint
any person or persons to act as, proxy or attorney-in-fact for this corporation
(with or without power of substitution) at any meeting of stockholders or
shareholders of any corporation or organization, the securities of which may be
held by the corporation (including securities of the corporation held directly
or indirectly by it in a fiduciary capacity).
5. Corporate Records. The original or attested copies of the Articles of
-----------------
Organization, By-laws and records of all meetings of the incorporators and
stockholders, and the stock and transfer records which shall contain the names
of all stockholders and the record address and the amount of stock held by each
shall be kept in Massachusetts at the principal office of the corporation or at
an office of its transfer agent or of the Clerk. Said copies and records need
not all be kept in the same office. They shall be available at all reasonable
times to the inspection of any stockholder for any proper purpose, but not to
secure a list of stockholders for the purpose of selling said list or copies
thereof, or of using the same for a purpose other than in the interest of the
applicant, as a stockholder, relative to the affairs of the corporation.
6. Evidence of Authority. A certificate by the Clerk or Secretary or
---------------------
Assistant Clerk or Assistant Secretary, or a temporary Clerk or temporary
Secretary, as to any action taken by the stockholders, Directors, Executive
Committee or any officer or representative of the corporation shall, as to all
persons who rely thereon in good faith, be conclusive evidence of such action.
7. Articles of Organization. All references in these By-laws to the
------------------------
Articles of Organization shall be deemed to refer to the Articles of
Organization of the corporation as amended and in effect from time to time.
8. Transactions With Interested Parties. In the absence of fraud, no
------------------------------------
contract or other transaction between this corporation and any other corporation
or any firm, association, partnership or person shall be affected or invalidated
by the fact that any Director or officer of this corporation is pecuniarily or
otherwise interested in, or is a Director, member or officer of,
10
<PAGE>
such other corporation or of such firm, association or partnership, or is a
party to or is pecuniarily or otherwise interested in such contract or other
transaction, or is in any way connected with any person or persons, firm,
association, partnership or corporation pecuniarily or otherwise interested
therein; provided that the fact that he individually or as a Director, member or
officer of such corporation, firm, association or partnership is such a party or
is so interested shall be disclosed to or shall have been known by the Board of
Directors or a majority of such members thereof as shall be present at a meeting
of the Board of Directors at which action upon any such contract or transaction
shall be taken. Any Director may be counted in determining the existence of a
quorum and may vote at any meeting of the Board of Directors of this corporation
for the purpose of authorizing any such contract or transaction with like force
and effect as if he were not so interested, or were not a Director, member or
officer of such other corporation, firm, association or partnership; provided
that any vote with respect to such contract or transaction must be adopted by a
majority of the Directors then in office who have no interest in such contract
or transaction.
9. Indemnification. Each person at any time a Director, officer,
---------------
employee or agent of the corporation and any person who serves at its request as
a director, officer, employee or other agent of another organization, or who
serves at its request in any capacity with respect to any employee benefit plan,
including each former Director, officer, employee or agent who was before, on or
after the date of the adoption of this By-law shall, to the extent permitted by
law and without prejudice to any other rights he might have, be entitled to be
reimbursed by the corporation for, and indemnified by the corporation against,
all judgments, fines, penalties, costs and expenses reasonably incurred by him
in connection with or arising out of any claims made, or any action, suit or
proceeding threatened or brought against him or in which he may be involved as a
party or otherwise to which he may be or become subject by reason of any action
alleged to have been taken or omitted by him as a Director, officer, employee or
agent, or in any capacity with respect to any employee benefit plan, whether or
not he continues to be a Director, officer, employee, or agent, or to serve in
any capacity with respect to any employee benefit plan, at the time of incurring
such costs and expenses, including amounts paid or incurred by him in connection
with reasonable settlements (other than amounts paid to the corporation itself)
of any claim, action, suit or proceeding. Any rights to reimbursement and
indemnification granted under this section to any such Director, officer,
employee or agent shall extend to his heirs, executors, and administrators. No
such reimbursement or indemnification shall be provided for any person with
respect to any matter as to which he shall have been adjudicated in any
proceeding not to have acted in good faith in the reasonable belief that his
action was in the best interests of the corporation, or to the extent that such
matter relates to service with respect to an employee benefit plan, in the best
interests of the participants or beneficiaries of such employee benefit plan.
Reimbursement or indemnification hereunder may, in the discretion of the Board
of Directors, include payments by the corporation of costs and expenses incurred
in defending a civil or criminal action or proceeding in advance of the final
disposition of such action or proceeding upon receipt of an undertaking by the
person indemnified to repay such payment if he shall be adjudicated to be not
entitled to indemnification hereunder, which undertaking may be accepted without
reference to the financial ability of such person to make repayment. Nothing
herein contained is intended to, or shall, prevent a settlement by the
corporation prior to final adjudication of any claim, including claims for
reimbursement or indemnification under this By-
11
<PAGE>
law, against the corporation when such settlement appears to be in the interest
of the corporation. Each such person shall, by reason of his continuing such
service or accepting such election or employment, have the right to be
reimbursed and indemnified by the corporation, as above set forth with the same
force and effect as if the corporation, to induce him to continue so to serve or
to accept such election or employment, specifically agreed in writing to
reimburse and indemnify him in accordance with the foregoing provisions of this
section. No Director or officer of the corporation shall be liable to anyone for
making any determination as to the existence or absence of liability of the
corporation hereunder or for making or refusing to make any payment hereunder in
reliance upon advice of counsel.
10. Amendments. These By-laws may be amended or repealed and new by-laws
----------
adopted either (a) by the stockholders at any regular or special meeting of the
stockholders by the affirmative vote of the holders of at least seventy-five
percent (75%) in interest of the capital stock then outstanding and then
entitled to vote, provided that notice of the proposed amendment or repeal and
adoption stating the change or the substance thereof shall have been given in
the notice of such meeting or in the waiver of notice with respect to such
meeting, or (b) by vote of a majority of the Board of Directors then in office,
provided that (i) the Board of Directors may not amend or repeal any provision
of these By-laws which by law, by the Articles of Organization or by these
By-laws requires action by the stockholders, (ii) not later than the time of
giving notice of the meeting of stockholders next following the amendment or
repeal of these By-laws and adoption of new by-laws by the Board of Directors,
notice thereof stating the change or the substance of such change shall be given
to all stockholders entitled to vote on amending these By-laws, and (iii) any
amendment or repeal of these By-laws by the Board of Directors and any by-law
adopted by the Board of Directors may be amended or repealed by the
stockholders.
11. Severability. Any determination that any provision of these By-laws is
------------
for any reason inapplicable, illegal or ineffective shall not affect or
invalidate any other provision of these By-laws.
12. Pronouns. All pronouns used in these By-laws shall be deemed to refer
--------
to the masculine, feminine or neuter, singular or plural, as the identify of the
person or persons may require.
12
<PAGE>
EXHIBIT 10.8
RESELLER AGREEMENT
THIS RESELLER AGREEMENT made this 7th day of August, 1998
BETWEEN:
NEWBRIDGE NETWORKS CORPORATION, a Canadian corporation, having its main
office at 600 March Road, P.O. Box 13600, Kanata, Ontario, Canada K2K 2E6
("Newbridge")
AND:
MILLITECH CORPORATION, a Massachusetts corporation, having its main office
at 20 Industrial Drive East,, South Deerfield, Massachusetts, U.S.A. 01373
("Vendor")
WHEREAS Vendor is a manufacturer of Radio Frequency, Microwave and
Millimeterwave Electronic components and systems;
WHEREAS Newbridge wishes to distribute certain Vendor products as an integral
part of Newbridge's broadband wireless product line on a world-wide basis;
AND WHEREAS Vendor wishes to provide such Vendor products to Newbridge, in
accordance with the terms and conditions of this Agreement;
NOW THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged) the parties agree as follows:
1. DEFINITIONS
In this Agreement, unless the context otherwise requires:
(a) "Agreement" shall mean this agreement and all attached schedules and
exhibits, as may be amended in accordance with the provisions herein.
(b) "Authorized Areas" shall mean the entire world, which Newbridge divides
for its own purposes into the regions set forth in Schedule "B" hereto.
(c) "Documentation" shall mean all sales, marketing and technical
literature (excluding design drawings and documentation) prepared by Vendor or
on its behalf relating to the Vendor Products, and any updates, modifications
and enhancements made to them.
(d) "Effective Date" shall be the date first written above.
<PAGE>
(e) "End User" shall mean a person or entity that acquires a Vendor Product
for its own use rather than resale or distribution.
(f) "Transfer Price" shall mean the price specified in Schedule A.
(g) "Vendor Products" shall mean the products listed in Schedule "A"
hereto, including all upgrades and enhancements thereto accepted (as provided in
Section 8.1) by Newbridge.
2. APPOINTMENT
2.1 Appointment. Subject to the terms and conditions of this Agreement,
--- -----------
Vendor hereby appoints Newbridge as an independent, non-exclusive, authorized
reseller for the Vendor Products, in the Authorized Areas. Newbridge may
exercise any of its rights hereunder either directly or through its
subsidiaries, affiliates and/or distributors.
2.2 Newbridge Private Label.
--- -----------------------
(a) Notwithstanding anything herein contained to the contrary,
Newbridge may at its option and at its cost, "private label" the Vendor
Products, including marketing, licensing and distributing the Vendor Products:
(i) without Vendor trademarks, tradenames and/or service marks; and (ii) under
different trademarks, trademames and/or service marks, including without
limitation, Newbridge trademarks, tradenames and/or service marks (collectively
the "Marks").
(b) Newbridge shall be responsible for specification of the product
and packaging labels for such private-labeled Vendor Products (collectively the
"Labels"). Vendor shall be responsible for manufacturing of the Labels. Vendor
shall promptly return or destroy any excess or unused Labels.
(c) Other than the limited right to manufacture the Labels for the
benefit of Newbridge in section 2.3(b), Vendor shall have no right, title, or
interest in the Marks. Vendor shall make no other use of the Labels or Marks.
Any Vendor Products with the Labels will be for the sole use of Newbridge, and
shall not be provided to any other person or entity.
2.3 Confidentially.
--- --------------
(a) Each party acknowledges that, during the term of this Agreement,
it may be exposed to certain confidential and/or proprietary information and
materials regarding the other party's business, including but not limited to
information concerning a party's technology, customers and suppliers, which is
identified as confidential or proprietary at the time of disclosure
("Confidential Information").
2
<PAGE>
(b) However, Confidential Information shall not include any
information or material which: (i) is in (or comes into) the public domain,
provided it came into the public domain through no fault of the receiving party;
(ii) can be demonstrated to have been independently developed by the receiving
party without reference to the Confidential Information; (iii) is rightfully
received by the receiving party from a third party not under an obligation of
confidence to the disclosing party with respect thereto; or (iv) is required by
law or regulation to be disclosed, but then only to the extent of such required
disclosure and under confidentiality to the extent reasonably possible.
(c) Each party will: (i) use a reasonable standard of care to protect
Confidential Information, (ii) not use Confidential Information except as
permitted by the party disclosing such Confidential Information, (iii) not
disclose Confidential Information except to its employees or representatives to
whom disclosure is necessary to effect the purposes of this Agreement, and who
are similarly bound to hold the Confidential Information in confidence; and (iv)
not reproduce Confidential Information without the disclosing party's prior
written consent.
3. NEWBRIDGE'S OBLIGATIONS
3.1 Marketing. Newbridge shall use reasonable commercial efforts to market
--- --------- ---
the Vendor Products in the Authorized Areas.
3.2 Technical Support. Newbridge shall provide the support services for
--- ------------------
the Vendor Products to its End Users in the Authorized Areas, as provided in
Schedule D.
3.3 Trade-marks. As applicable, Newbridge shall use Vendor's trade-marks
--- -----------
and logos in accordance with Vendor's reasonable written guidelines, as provided
to Newbridge from time to time. End User services for the Vendor Products may be
marketed and sold under any applicable Newbridge service marks or trademarks
without restriction.
3.4 Account Manager. As applicable, Newbridge and Vendor shall assign
--- ---------------
individuals who will act as account co-ordination manager for Vendor and the
Vendor Products.
3.5 Forecast. Newbridge shall provide Vendor upon execution of this
--- --------
Agreement a good faith, non-binding forecast of its estimated requirements for
each of the Vendor Products (the "Forecast"), for an initial twelve (12) month
--------
period. Upon request of Vendor, Newbridge shall provide Vendor with an updated
Forecast for Vendor Products for the following twelve (12) months. Vendor
understands and agrees that such Forecasts shall not create any obligations on
the part of Newbridge.
3
<PAGE>
4. VENDOR'S OBLIGATIONS
4.1 Supply. Vendor agrees to sell to Newbridge the Vendor Products and
--- ------
spare parts ordered by Newbridge in accordance with the terms of this Agreement.
4.2 Documentation. Vendor shall provide Newbridge with a master copy and a
--- -------------
reasonable number of copies of all Documentation for each Vendor Product. Vendor
shall supply Documentation in both hard copy format and electronic format
suitable for dissemination by Newbridge via the Internet and/or CD ROM. Vendor
grants Newbridge a non-exclusive, royalty-free right and license to copy, use,
modify, translate and otherwise prepare derivative works of the Documentation
and distribute the Documentation and derivative works thereof to its End Users
in the Authorized Areas. All material changes to the Documentation shall be
approved by Vendor where such approval shall not be unreasonably withheld.
Should Vendor fail to respond, within two working days, to a written request for
approval, such approval shall be deemed accepted on the third working day after
the written request for approval. Notwithstanding any provision to the contrary
hereunder, in no event shall Vendor have any liability whatsoever from or in
connection with any such changes to the Documentation which are not approved by
Vendor.
4.3 Technical Support. Vendor shall provide the support services to
--- -----------------
Newbridge, and Newbridge shall provide support services to its distributors and
End Users, as provided in Schedule D.
4.3.1 Remote Diagnostic Tools. In order for Newbridge to perform on-
----- -----------------------
line trouble shooting of the Vendor Product hardware and software, Vendor shall
supply Newbridge with any remote diagnostic tools and routines that may be
developed for the Vendor Products at no charge.
4.4 Technical Information Service. Vendor shall provide to Newbridge a
--- -----------------------------
range of post sales technical information at regular intervals to ensure that
Newbridge has all current and relevant information regarding the Vendor
Products. These shall include, but not be limited to, (as applicable) the latest
software and hardware release notes, product release descriptions, technical
tips and bulletins, problem report bug list, white papers, reports, product
change notices, technical alerts, urgent problem notification and any other
applicable Documentation. Vendor shall supply information in hard copy format
and in electronic format suitable for dissemination by Newbridge via the
Internet and/or CD ROM.
4.5 Software Maintenance. If the Vendor Products are, or contain,
--- --------------------
software, the following shall apply: Vendor shall provide to Newbridge at no
cost all defect correction code (dot releases, patches, and software problem
workarounds) for the Vendor Product software, and all associated Documentation
and technical information. Vendor grants to Newbridge a royalty-free right and
license to distribute such software and Documentation to Newbridge End Users
4
<PAGE>
who have current valid service agreements with Newbridge. Such software will be
provided to End Users, at Newbridge's option, under either Newbridge's or
Vendor's End User license terms. Vendor shall supply software maintenance
release code in electronic format suitable for dissemination by Newbridge via
the Internet and CD ROM.
4.6 Training. Vendor shall, at no cost, provide the following training
--- --------
services to Newbridge:
(a) Initial Training. Vendor shall provide up to three (3) training
----------------
sessions for up to 15 Newbridge personnel on Vendor Products at Vendor's
premises. Each party shall bear their own costs associated with such training.
If Vendor does not have a suitable facility, training will be provided at
Newbridge's facility and Vendors shall bear all its expenses, including
salaries, travel and out-of-pocket expense associated with the training. Should
Newbridge request that the training be held on its premises, Newbridge shall
bear Vendors travel and out-of-pocket expenses associated with such training.
The courses will train Newbridge personnel on the functionality of the Vendor
Products as well as problem resolution procedures for the Vendor Products with
the objective of developing a customized, multi-day, multi-product training and
support program.
(b) Subsequent Training. As new functionality is added to the Vendor
-------------------
Products or new products are added to Schedule A, the Parties shall establish
mutually acceptable levels of training to be provided at Vendor's facility. Each
Party shall bear its travel and out of pocket expenses associated with the
subsequent training. If Vendor does not have a suitable training facility,
training will be provided at Newbridge's facility at Vendors expense.
(c) Training Materials. Vendor grants to Newbridge a non-exclusive,
------------------
royalty-free right and license to copy, modify, use, and distribute training
materials provided by Vendor.
(d) Additional Training. Any further training requested by Newbridge,
-------------------
over and above the obligations stated herein, shall be made available to
Newbridge at Vendor's standard rates for like or similar training.
4.7 Quality Metrics. Vendor shall provide to Newbridge copies of its
--- ---------------
quality assurance manuals and procedures applicable to the Vendor Products.
Vendor shall further grant Newbridge the right to witness Vendor's use of these
procedures.
4.8 Approvals. Vendor is responsible for obtaining all applicable
--- ---------
approvals required to permit Newbridge to resell the Vendor Products in the
Authorized Areas including, but not limited to, UL, CSA and FCC approvals.
Vendor shall bear all costs associated with such approvals. Where permitted by
law, Vendor shall assist Newbridge in registering second approvals in
Newbridge's name. Any costs associated with second approvals shall be borne by
Newbridge. Notwithstanding the foregoing, in the event that Newbridge requires
approvals other than those sought in Vendor's normal course of business, the
parties shall reasonably share the costs incurred by the approval process, based
on good faith negotiations.
5
<PAGE>
4.9 Development of Custom Vendor Products. Upon request from Newbridge,
--- -------------------------------------
Vendor will work with Newbridge on the modification, development and/or
production of Vendor Products for specific market requirements of Newbridge.
Such Vendor Products will be modified, developed and/or produced pursuant to the
terms of a separate development agreement, to be negotiated in good faith by the
parties.
5. PRICE TERMS
5.1 Purchase Price. Except as provided below, Newbridge shall pay the
--- --------------
Transfer Price for the Vendor Products.
5.2 Price Increase. The Transfer Prices will remain unchanged for the
--- --------------
first year of this Agreement. Thereafter, Vendor may change the Transfer Price
for the Vendor Products not more than once a year, and by no more than the
greater of: (a) five percent (5%) per annum or (b) the annual increase for the
preceding year in the U.S. Bureau of Labour Statistics Data index PCU3663#133
("Radio and Television Broadcast and Communications Equipment, Point to Point
Transmitters, Receivers, and power amplifiers (except satellite and amateur))".
If Vendor desires a greater change in the Transfer Price per annum, it may do so
only with the consent of Newbridge, which consent shall not be unreasonably
withheld. Vendor shall give Newbridge no less than ninety (90) days advance
written notice of any price changes. Price increases will not apply to any
orders already placed with Vendor, or to any Vendor Products to be ordered by
Newbridge following a quotation provided to an End User before the effective
date of the increase, provided such order is made within six (6) months of the
effective date of the increase. This time period may be extended, on a case-by-
case basis, upon mutual consent of the parties.
5.3 Delivery Costs. All Vendor Products are FCA (Incoterms, 1990) Vendor's
--- --------------
shipping point, provided, however, that Vendor shall not be obligated to obtain
any export license not permitted by applicable law or which it has been unable
to obtain after reasonable efforts. Vendor shall use the carrier specified by
Newbridge (if any), and shall charge all delivery costs against the Newbridge
account number authorized by Newbridge on a case-by-case basis.
5.4 Taxes. The prices for the Vendor Products do not include shipping,
--- -----
insurance, sales taxes or duties. Newbridge will pay (or reimburse Vendor) all
such shipping, insurance, taxes or duties designated, levied or based upon this
Agreement, except those based on Vendor's income. Newbridge may deduct from
payments to Vendor (if a nonresident of Canada) any amounts required to be
withheld by Canadian law. For greater certainty, as of the Effective Date,
amounts to be withheld are currently described in Section 212 and Regulation 105
of the Income Tax Act, Canada, as amended, all of which are subject to change.
6
<PAGE>
6. ORDERING PROCEDURE, DELIVERY AND PAYMENT TERMS
6.1 Purchase Orders. Newbridge shall order the Vendor Products by issuance
--- ---------------
of a written purchase order ("Purchase Order"). Each Purchase Order shall
include the desired quantity of Vendor Products, a requested ship date (the
"Ship Date"), the method of shipment and the location to which the Vendor
Products should be shipped. Vendor will use all reasonable efforts to meet the
requested ship date in Newbridge's Purchase Order.
6.2 Acceptance. Vendor shall promptly process Purchase Orders issued by
--- ----------
Newbridge and shall accept all Purchase Orders made in accordance with this
Agreement whose Ship Date is not less than eight (8) weeks from the date of the
Purchase Order, unless there are material amounts owed to Vendor by Newbridge
which are overdue. Purchase Orders will be deemed to be accepted, unless written
notice of rejection of a Purchase Order (or part thereof) is made within five
(5) business days of Vendor's receipt of the Purchase Order. Where Vendor
rejects any Purchase Order (or part thereof), it shall provide Newbridge the
reasons for rejection.
6.3 Re-Scheduling. Newbridge may re-schedule an order or any part thereof
--- -------------
to a cumulative (for all re-schedules pertaining to that order) maximum of
forty-five (45) days from the original Ship Date. If Newbridge desires to
reschedule an order or any part thereof, Newbridge shall pay the fee shown below
as compensation for Vendor's additional costs involved (which both parties agree
constitutes a reasonable estimate of such costs):
<TABLE>
<CAPTION>
Reschedule Request Received This Number of Fee (as a Percentage of Transfer Price of
Days Prior to Original Ship Date Rescheduled Vendor Products)
- -----------------------------------------------------------------------------------------------
<S> <C>
Over 90 [***]
- -----------------------------------------------------------------------------------------------
Over 60 but less than or equal to 90 [***]
- -----------------------------------------------------------------------------------------------
Over 30 but less than or equal to 60 [***]
- -----------------------------------------------------------------------------------------------
Less than or equal to 30 [***]
- -----------------------------------------------------------------------------------------------
</TABLE>
6.4 Cancellation. Newbridge may cancel a Purchase Order for Vendor Products
--- ------------
(or part thereof) up to [***] prior to the original Ship Date (i.e.
the Ship Date before any re-scheduling occurred). If such cancellation occurs as
a result of the cancellation by Newbridge's End User of the corresponding order,
Newbridge shall pay [***] in accordance with generally accepted accounting
principles (provided however, that in no event shall such amounts in aggregate
exceed the fees specified in the table below). If such cancellation occurs for
any other reason, Newbridge shall pay Vendor the fee shown below as compensation
for Vendor's additional costs involved (which both parties agree constitutes a
reasonable estimate of such costs):
[***] Confidential Treatment Requested.
7
<PAGE>
<TABLE>
<CAPTION>
Cancellation Request Received This Number of Fee (as a Percentage of Transfer Price of
Days Prior to Original Ship Date Vendor Products Sought to be Canceled)
- -----------------------------------------------------------------------------------------------
<S> <C>
Over 90 [***]
- -----------------------------------------------------------------------------------------------
Over 60 but less than or equal to 90 [***]
- -----------------------------------------------------------------------------------------------
Over 30 but less than or equal to 60 [***]
- -----------------------------------------------------------------------------------------------
</TABLE>
However, if such cancellation is for Vendor Products specifically designed for
and used by Newbridge alone ("Custom Vendor Products"), Newbridge shall pay
Vendor [***]. However, in no event shall such fees and expenses exceed [***] of
the Transfer Price of the order being canceled. Upon request, Vendor shall
provide Newbridge with copies of documentation in support of [***] that are
reasonably acceptable to Newbridge.
6.5 Invoicing and Payment. Vendor shall issue an invoice on shipment of
--- ---------------------
the Vendor Product(s). Newbridge shall pay all amounts due to Vendor by wire
transfer within forty five (45) days of receipt of an invoice from Vendor. In
the event of a dispute on an invoice, all undisputed amounts shall be paid in
accordance with the foregoing. Upon resolution of any disputed amounts, such
agreed-upon amounts shall be paid within thirty (30) days of the resolution.
6.6 Stock Adjustment and Update for non-Custom Vendor Products. Except for
--- ----------------------------------------------------------
Custom Vendor Products (which are dealt with in section 6.7 below), Newbridge
shall have the right to make stock adjustments and/or updates, subject to a
payment by Newbridge of a restocking charge equal to [***] of the price
originally paid by Newbridge for Vendor Products being returned. Returned Vendor
Products must be unused. Vendor will, at Newbridge's option, either (i) credit
Newbridge's account, or (ii) provide Newbridge with a revision level change for
Vendor Products returned.
6.7 Stock Adjustment and Update for Custom Vendor Products. Upon Vendor's
--- ------------------------------------------------------
prior written consent (which shall not be unreasonably withheld or delayed),
Newbridge may make stock adjustments and/or updates for Customer Vendor
Products, subject to a -payment by Newbridge of a restocking charge equal to
[***] of the price originally paid by Newbridge for Custom Vendor
Products being returned. Returned Custom Vendor Products must be unused. Updates
to Custom Vendor Products will be done by Vendor on a time and materials basis,
plus [***].
6.8 Product Returns. In addition to other rights and remedies available to
--- ---------------
Newbridge, Newbridge shall have the right to return to Vendor for a fall refund
within twelve (12) months of shipment to an End User, any Vendor Product which
fails to comply in all material respects to the quality, form, fit or function
as described in such Vendor Product's Documentation as ordered by Newbridge.
[***] Confidential Treatment Requested.
8
<PAGE>
7. TITLE AND SHIPPING
7.1 Title. Title. without encumbrance, and with risk of loss or damage, to
--- -----
the Vendor Products shall pass to Newbridge upon delivery to the carrier
designated by Newbridge. Newbridge shall provide Vendor with the details of its
shipping arrangements such that Vendor may prepare each shipment and make timely
delivery to the carrier.
7.2 Shipping Terms. For Purchase Orders placed pursuant to this Agreement,
--- --------------
Vendor shall ship to Newbridge (unless there are amounts of over [***] owed to
Vendor by Newbridge which are overdue) freight collect except that Vendor shall
pay any additional freight costs necessary to meet the original ship date
provided to Newbridge if the shipment would otherwise arrive late by the use of
normal shipping priority because of Vendor's fault or delay. The appropriate
shipping location will be based on Newbridge's specified delivery location and
the availability of Vendor Products.
7.3 Shipping Packaging. All product shipped to Newbridge shall be bulk
--- ------------------
packaged in a master carton of appropriate design and size to provide security
from physical damage.
8. PRODUCT CHANGES
8.1 Product Changes. Vendor must provide ninety (90) days' prior written
--- ---------------
notification to Newbridge if it intends to make any changes to any of the Vendor
Products which affect the Vendor Product's form, fit, function or the approvals
required for such Vendor Product(s). For any other changes to the Vendor
Products, Vendor must provide prior written notification to Newbridge. In
addition, in no event may changes adversely affect the Vendor Products, their
performance, features, functionality or required approvals without prior written
consent of Newbridge.
8.2 Software Release Support. If the Vendor Products are, or contain,
--- ------------------------
software, the following shall apply: Vendor shall support the current and the
two prior major releases of software for the Vendor Products in accordance with
Schedule D. However, Newbridge may, at no charge, require Vendor to continue to
produce and support older versions of the Vendor Products for specific Newbridge
customers, for a reasonable period of time.
8.3 Manufacturing. In no event shall Vendor change its manufacturing and
--- -------------
testing facility, and/or any outsourcing of same, for the Vendor Products
without prior written consent of Newbridge, where such consent not to be
reasonably withheld or delayed.
[***] Confidential Treatment Requested.
9
<PAGE>
The Vendor may only discontinue the manufacture of a Vendor Product if:
(i) the total purchases of such Vendor Product by Newbridge to
Vendor over the last three (3) quarters does not exceed [***]; and
(ii) Vendor shall provide at least six (6) months written notice
to Newbridge; and
(iii) Vendor shall give Newbridge, at a price to be mutually
negotiated in good faith, the opportunity to purchase a last time buy of the
millimeter-wave circuits on carriers for incorporation into such discontinued
Vendor Products and a license to use Vendor's intellectual property and other
confidential information necessary to manufacture and test such discontinued
Vendor Products (except for millimeter-wave circuits on carriers) and to
incorporate millimeter-wave circuits on carriers into Vendor Products.
In furtherance of the foregoing and subsequent to Vendor's notification to
Newbridge of the discontinuance of manufacturing of any Vendor Products, Vendor
and Newbridge shall negotiate in good faith, if requested by Newbridge, a
mutually acceptable escrow agreement with a mutually acceptable escrow agent
pursuant to which Vendor shall deliver to such escrow agent a copy of Vendor's
intellectual property and other confidential information necessary to
manufacture and test such discontinued Vendor Products (except for millimeter-
wave circuits on carriers) and to incorporate millimeter-wave circuits on
carriers into Vendor Products and such escrow agent shall be authorized and
directed to release such materials to Newbridge upon Newbridge's purchase of the
last time buy of millimeter-wave circuits on carriers and license referred to
above. The confidentiality provisions of Section 2.3 shall apply to the
Confidential Information to be provided under this Section 8.3.
8.4 Repairs: Spares. Vendor shall provide at its then-standard prices,
--- ---------------
spare parts for and the capability for repairing, the Vendor Products for a
period of not less than five (5) years from the date of the last shipment of
Vendor Products to Newbridge. If, within the five (5) year period Vendor fails
to maintain such capability, Vendor shall provide functionally equivalent
products at a cost not to exceed the cost of the spare parts that would have
been required to repair the Vendor Products. Vendor's prices will be no greater
than Vendor's lowest price to any other customer in comparable circumstances.
Vendor may subcontract its obligations under this section 8.4 (at no cost to
Newbridge) with the prior, written consent of Newbridge, which shall not be
unreasonably withheld. In lieu of the foregoing obligations (whether or not
Newbridge exercises the following opportunity), Vendor may offer Newbridge, at a
price to be mutually negotiated in good faith, the opportunity to purchase a
last time buy of spares of millimeter-wave circuits on carriers for
incorporation into such Vendor Products and a five (5) year license to use
Vendor's intellectual property and other confidential information necessary to
manufacture and test Vendor Products (except for millimeter-wave circuits on
carriers) and to incorporate millimeter-wave circuits on carriers into Vendor
Products.
[***] Confidential Treatment Requested.
10
<PAGE>
In furtherance of the foregoing and subsequent to the date of the last shipment
of Vendor Products to Newbridge, Vendor and Newbridge shall negotiate in good
faith, if requested by Newbridge, a mutually acceptable escrow agreement with a
mutually acceptable escrow agent pursuant to which Vendor shall deliver to such
escrow agent a copy of Vendor's intellectual property and other confidential
information necessary to manufacture and test Vendor Products (except for
millimeter-wave circuits on carriers) and to incorporate millimeter-wave
circuits on carriers into Vendor Products and such escrow agent shall be
authorized and directed to release such materials to Newbridge upon Newbridge's
purchase of the spares and license referred to above. The confidentiality
provisions of Section 2.3 shall apply to the Confidential Information to be
provided under this Section 8.4.
8.5 Continuing Technical Support. Vendor shall continue to provide
--- ----------------------------
technical support services to Newbridge for Vendor Products which have been
manufacturer discontinued, for a period of not less than [***] from the date of
the last shipment of Vendor Products to Newbridge. Vendor may subcontract its
obligations under this section 8.4 (at no cost to Newbridge) with the prior,
written consent of Newbridge, which shall not be unreasonably withheld.
9. REPRESENTATIONS AND WARRANTIES
9.1 Vendor represents and warrants that:
--- -----------------------------------
(a) it has the power and authority, and all rights, licenses and
permits required, to execute this Agreement and to satisfy and perform its
obligations and responsibilities set forth herein;
(b) it will comply with all laws, regulations, reasonable practices
and standards applicable to the obligations assumed by Vendor under this
Agreement;
(c) the Vendor Products conform to all applicable regulatory and/or
type approvals, as provided in Schedule E attached hereto which may be amended
form time-to-time with consent of the Parties.
(d) Vendor will upon notice from Newbridge use reasonable efforts to
enforce any third party warranty (express or implied) on behalf of Newbridge.
Upon reasonable request, Vendor will permit Newbridge to participate in such
enforcement.
(e) except as expressly disclosed in the Documentation, no Vendor
Product which includes software contains "product keys", "expiry codes" or other
codes or devices that may prevent Newbridge or its End Users from using the
software at any time, except as disclosed in writing to Newbridge;
[***] Confidential Treatment Requested.
11
<PAGE>
(f) it will have title to the Vendor Products immediately prior to the
passing of title to Newbridge; and
(g) the Vendor Products, and their use or distribution do not infringe
any copyright, patent, trade secret, or other proprietary or contractual right
or obligation. This warranty does not extend to: (i) the use of any Vendor
Product in manner for which is was not designed; (ii) the unauthorized
modification of the Vendor Products by Newbridge; or (iii) the use of any Vendor
Product in combination with any other equipment, products or other materials,
unless such equipment, products or other materials are provided by Vendor, or
referred to or recommended as appropriate for use in combination with such
Vendor Product in any written material which has been: (1) made generally
available by Vendor (subject to any limitations or restrictions contained in
such materials), and/or (2) provided to Newbridge by Vendor.
9.2 Newbridge represents and warrants that:
(a) it has the power and authority, and all rights, licenses and
permits required, to execute this Agreement and to satisfy and perform its
obligations and responsibilities set forth herein; and
(b) it will comply with all laws applicable to the obligations assumed
by Newbridge under this Agreement;
9.3 Year 2000 Compliance Warranty. Vendor represents and warrants that all
--- -----------------------------
Vendor Products are designed to be used prior to, during and after the calendar
year 2000 A.D. and will operate without any error arising from or relating to
date data which represents or references: a leap year; different centuries; more
than one century; or dates from January 1, 2000 onwards.
9.4 Vendor Warranty Obligations. If requested to do so by Newbridge,
--- ---------------------------
Vendor will promptly provide Newbridge with test results (using Newbridge's test
specification (document GFS-032)) which clearly show that the Vendor Products
comply with this Year 2000 compliance warranty in all respects. Vendor shall,
without charge to Newbridge, promptly repair or replace any Vendor Products
which are not compliant with the terms of this warranty, in addition to other
remedies available to Newbridge.
10. PRODUCT WARRANTY AND REPAIR PROCEDURE
10.1 Product Warranty. Vendor further warrants to Newbridge that the
--- -----------------
Vendor Products (excluding software which can be loaded into such hardware by a
Customer) will be free from defects in material and workmanship and will
function in accordance with the Documentation for a period of the lesser of:
[***] from date of delivery to Newbridge's End Users or [***] from date of
delivery to Newbridge. Vendor further warrants that the Vendor Product software
will function in accordance with the
[***] Confidential Treatment Requested.
12
<PAGE>
published specifications for a period [***] after delivery to a Newbridge End
User of the Vendor Products. The above warranties shall be collectively referred
to as the "Warranty Period". During the Warranty Period, Vendor will, at no
cost, make all necessary repairs and replacements to maintain the Vendor
Products in the condition warranted. Unilateral extension of the Warranty
Periods by Newbridge shall not be binding upon Vendor.
10.2 Repair or Replacement Option. If Vendor is not able to rectify
---- ----------------------------
(repair or replace) a defect in a Vendor Product within the time periods
specified in Schedule C it shall, at Newbridge's option, accept return of the
defective Vendor Products, and refund to Newbridge all amounts paid in respect
thereof.
10.3 Support Warranty. Vendor also warrants that the support services
---- ----------------
shall be provided by appropriately trained personnel, in a competent and
professional manner. Vendor will exercise a professional standard of care in
performing its obligations under the Agreements and monitoring its contractors
in the performance of the obligations delegated to them.
10.4 Repair Procedure. Newbridge agrees to comply with Vendor's standard
---- ----------------
repair procedure, as set out in Schedule C attached hereto.
11. DISCLAIMER OF OTHER WARRANTIES
EXCEPT FOR THE WARRANTIES CONTAINED IN THIS AGREEMENT, VENDOR DISCLAIMS ALL
OTHER WARRANTIES ON THE VENDOR PRODUCTS, EXPRESS OR IMPLIED, INCLUDING BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE.
12. INFRINGEMENT
12.1 Defense and Indemnity. Vendor will defend Newbridge and End Users
---- ---------------------
against any claim, legal proceeding or demand alleging a Vendor Product, its
distribution or use, infringes any copyright, patent, trade secret, or any other
contractual or proprietary right (a "Claim"); provided Vendor is promptly
notified of the Claim and is given authority to defend and settle it. Vendor
will indemnify and hold Newbridge and End Users harmless from and against all
costs, expenses, legal fees, damages, settlement amounts and other liabilities
arising out of or in respect of a Claim. Notwithstanding the foregoing, Vendor
shall have no obligation to indemnify or hold Newbridge harmless under this
Section 12.1 to the extent that any Claim arises from: (i) the use of any Vendor
Products in manner for which it was not designed; or (ii) the unauthorized
modification of the Vendor Products by Newbridge; or (iii) the use of any Vendor
Product in combination with any other equipment products or other materials,
unless such equipment, products or other materials are provided by Vendor, or
referred to or recommended as appropriate for use in combination with such
Vendor Product in any written
[***] Confidential Treatment Requested.
13
<PAGE>
material which has been: (1) made generally available by Vendor (subject to any
limitations or restrictions contained in such materials), and/or (2) provided to
Newbridge by Vendor.
12.2 Remedies. In the event Newbridge, its distributors or End Users are
---- --------
enjoined from their use of any of the Vendor Products due to a Claim that is
subject to an obligation to indemnify by Vendor under Section 12.1 above, Vendor
will (at no charge) promptly either:
(a) procure for Newbridge and its distributors End Users the right to
continue distributing and using the Vendor Product;
(b) render the Vendor Product non-infringing without materially
diminishing the Vendor Product's performance, functionality or features;
(c) replace the Vendor Product with equivalent non-infringing goods;
or
(d) if Vendor determines in its reasonable opinion that the provisions
of Sections 12.2(a) through 12.2(c) are not reasonably possible, having made
reasonable efforts, Vendor will remove the Vendor Products and refund the
Transfer Price paid for such Vendor Products.
12.3 Not Applicable. Section 13 ("Limitation of Liability") shall not
---- --------------
apply in any respect to this Section 12.
13. LIMITATION OF LIABILITY
13.1 Limitation. EXCEPT FOR SECTION 12 ABOVE, NEITHER PARTY, THEIR
---- ----------
EMPLOYEES, AGENTS, OFFICERS OR DIRECTORS SHALL BE LIABLE IN ANY WAY WHATSOEVER,
FOR ANY INDIRECT, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT
LIMITED TO, LOST PROFITS OR BUSINESS REVENUE, LOST BUSINESS, FAILURE TO REALIZE
EXPECTED SAVINGS, OR OTHER COMMERCIAL OR ECONOMIC LOSS OF -ANY KIND WHATSOEVER,
WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE OR EITHER PARTY, THEIR EMPLOYEES,
AGENTS, OFFICERS OR DIRECTORS HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
DAMAGES. EXCEPT FOR SECTIONS 2.3 AND 12 ABOVE AND FOR ANY CLAIMS RELATING TO
WILLFUL INFRINGEMENT OF A PARTY'S INTELLECTUAL PROPERTY PROVIDED BY ONE OF THE
PARTIES HEREUNDER, THE TOTAL CUMULATIVE LIABILITY OF VENDOR AND NEWBRIDGE, (AS
WELL AS THEIR EMPLOYEES, AGENTS, OFFICERS AND DIRECTORS) FOR ALL CLAIMS FOR
COSTS, LOSSES OR DAMAGES ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL NOT
EXCEED THE TOTAL AMOUNTS PAID TO VENDOR BY NEWBRIDGE UNDER TIES AGREEMENT.
14
<PAGE>
13.2 Trust. The foregoing provisions limiting the liability of Newbridge's
---- -----
and Vendor's employees, agents, officers and directors shall be deemed to be
trust provisions for the benefit of such employees, officers, directors and
agents and shall be enforceable by such as trust beneficiaries.
14. TERM; RENEWAL
Unless otherwise terminated in accordance with the provisions herein, this
Agreement shall remain in effect for a period of three (3) years from the
Effective Date (the "Initial Term"). Upon expiration of the Initial Term and
each Renewal Term thereafter, this Agreement will be automatically renewed for
an additional one (1) year term ("Renewal Term") unless terminated by either
party upon sixty (60) days' notice prior to the expiration of the Initial Term
or any Renewal Term.
15. TERMINATION
15.1 Either party may terminate this Agreement if:
---- --------------------------------------------
(a) the other party breaches any material term of this Agreement, and
fails to remedy such breach within thirty (30) days of receiving notice to do so
by the non-defaulting party;
(b) any proceeding in bankruptcy, receivership, liquidation or
insolvency is commenced against the other party or its property, and the same is
not dismissed within thirty (30) days; or
(c) the other party makes any assignment for the benefit of its
creditors, becomes insolvent, commits any act of bankruptcy, ceases to do
business as a going concern, or seeks any arrangement or compromise with its
creditors under any statute or otherwise.
16. EFFECT OF TERMINATION OR EXPIRY
In the event that this Agreement is terminated or expires:
(a) Vendor shall process all Purchase Orders received from Newbridge
prior to the effective date of termination or expiry, and shall accept all such
Purchase Orders made in accordance with this Agreement, unless termination is
due to non- payment of amounts owed hereunder. Newbridge shall, subject to the
terms of this Agreement, accept delivery of Vendor Products ordered through
Purchase Orders submitted by Newbridge;
15
<PAGE>
(b) Newbridge and its distributors shall be entitled to continue to
distribute any Vendor Products contained in their inventory on the effective
date of termination, or Vendor Products subsequently received from Vendor.
However, notwithstanding the foregoing, if Vendor has terminated this Agreement
because of a breach by Newbridge, Vendor may, at its option, require Newbridge
to return any Vendor Products contained in its inventory on the effective date
of termination, for a full refund of all amounts paid by Newbridge for such
Vendor Products;
(c) Neither party shall, by reason of the termination or expiry of
this Agreement, be liable to the other for compensation, reimbursement or
damages on account of the loss of prospective profits on anticipated sales, or
on account of expenditures, investments, leases or commitments entered into or
made in connection with the business or goodwill of the other;
(d) Notwithstanding any other provision of this Agreement, no
termination or expiry of this Agreement shall:
(1) affect the rights of End Users to continue to use any Vendor
Products;
(2) affect the rights of End Users to continue to receive
technical support services from Newbridge as may be contracted for prior to the
effective date of termination of the Agreement, or
(3) affect the rights of Newbridge to receive technical support
services from Vendor as described herein, for the duration of the then-current
term of any Customer contracts as in effect on the date of termination (as
specified in writing by Newbridge to the Vendor within ten (10) business days of
termination).
17. FORCE MAJEURE
Neither party shall be deemed to be in default of any provision of this
Agreement for any failure in performance resulting from acts or events beyond
its reasonable control, including acts of God. Each party will use its best
efforts to anticipate such failures and to devise means to eliminate or minimize
them. But if a failure continues for more than sixty (60) days, either party
may terminate the Agreement immediately upon notice.
16
<PAGE>
18. MISCELLANEOUS
18.1 Assignment. Except for Section 15.2, either party may assign or
---- ----------
transfer (by operation of law or otherwise) this Agreement only by written
notice to the other party. In no event may Vendor assign or transfer (by
operation of law or otherwise) Section 15.2. In the event that a party wishes to
assign or transfer this Agreement (the "Assignor/Transferor") in accordance with
this Section 18. 1:
(i) The Assignor/Transferor must give the other party (the "Other
Party") at least thirty (30) days prior notice;
(ii) the assignee/transferee must accept the foregoing
assignment/transfer and agree that, from and after the date of such
assignment/transfer, it shall be bound by and perform all of the provisions of
this Agreement to the same extent as if the assignee/transferee had been an
original party to this Agreement instead of the Assignor/Transferor; and
(iii) in addition to its other rights under this Agreement, the
Other Party may, in its discretion, terminate the Agreement for convenience upon
ninety (90) days written notice; provided, however, that Vendor shall not have
the option to terminate this Agreement if Newbridge assigns or transfers this
Agreement to any person or entity of which Newbridge (directly or indirectly)
owns at least twenty five percent (25%) of the issued and outstanding shares.
18.2 Governing Law. This Agreement shall be governed by the laws of the
---- -------------
State of Virginia (except for its conflict of laws provisions), and the parties
hereby irrevocably submit to the non-exclusive jurisdiction of the courts
located in the State of Virginia. The parties expressly exclude from this
Agreement all the provisions of the Vienna Convention, 1980 (The United Nations
Convention on Contracts for the International Sale of Goods). The remedies
specified in the Agreement will not be considered the sole remedies of the
parties.
18.3 Severability. The provisions of this Agreement shah be deemed
---- ------------
severable. If any provision of this Agreement shall be held unenforceable by any
court of competent jurisdiction, it shall be severed from this Agreement and the
remaining provisions shall remain in full force and effect.
18.4 Amendments. This Agreement shall not be amended or modified except in
---- ----------
writing signed by the parties hereto. No course of dealing or usage of trade by
or between the parties shall be deemed to effect any such amendment or
modification.
17
<PAGE>
18.5 Headings. All headings and captions contained herein are for
---- --------
convenience and ease of reference only and are not to be considered in the
construction or interpretation of any provision of this Agreement.
18.6 Sections. Numbered or lettered paragraphs, subparagraphs and
---- --------
schedules contained in this Agreement refer to sections, subsections and
schedules of this Agreement.
18.7 Survival. Sections 2.3, 3.3, 4.3 (but not 4.3.1), 5, 6.3, 6.4, 6.5,
---- --------
6.8, 8.4, 8.5, 9, 10, 11, 12, 13, 16, 17, and 18 shall survive termination or
expiry of this Agreement.
18.8 Notices. Any notice required shall be sent by certified or registered
---- -------
mail, return receipt requested, addressed as follows:
To Vendor: Millitech Corporation
20 Industrial Drive East
South Deerfield, MA 01373
Attention: John L. Youngblood, President and CEO
Tel. No. (413) 665-8551
Fax No. (413) 665-0089
To Newbridge: Newbridge Networks Corporation
P.O. Box 13600
600 March Road
Kanata, Ontario K2K 2E6
CANADA
Attention: President
Tel. No. (613) 591-3600
Fax No. (613) 591-3680
with a copy to the Legal Department, at the above address,
Fax No. (613) 599-3672.
18.9 Waivers. Any consent by any party to, or waiver of, a breach by the
---- -------
other, whether express or implied, shall not constitute a consent to, or a
waiver of any other, different or subsequent breach.
18.10 Relationship. Neither Newbridge nor Vendor shall represent that its
----- ------------
relationship with respect to the other party is other than as an independent
contractor. Nothing in this Agreement shall create in either party any right or
authority to incur any obligations on behalf of, or to bind in any respect, the
other party and nothing in this Agreement shall be construed to create any
agency, joint venture or partnership.
18.11 Public Announcements. Neither party may use the name of the other
----- --------------------
party, disclose any of the terms of this Agreement, or disclose the existence of
this Agreement, (including without limitation by way of an announcement or press
release) without the prior, written consent of the other party.
18
<PAGE>
18.12 Attorney's Fees. If litigation or other judicial or administrative
----- ---------------
action is commenced between the parties concerning any dispute arising out of or
relating to this Agreement, the prevailing party in any contested ancillary
proceeding relating to the action (e.g. motions to transfer, to compel
discovery, etc.) and the prevailing party in the action itself will be entitled,
in addition to any other award that may be made, to recover all court costs or
other official costs and all reasonable expenses associated with the ancillary
proceeding or action, including without limitation reasonable attorney's fees
and expenses.
18.13 Entire Agreement; Governing Terms. This Agreement constitutes the
----- ---------------------------------
entire agreement between the parties hereto with respect to the subject matter
hereof, and cancels and supersedes any prior understanding and agreements
between the parties relating thereto. There are no representations, warranties,
terms, conditions, undertakings or collateral agreements, express, implied,
statutory or otherwise between the parties, except as expressly set forth in
this Agreement. All additional or different terms or conditions contained in
either party's purchase orders, acknowledgments, invoices or other business
forms shall be void and of no effect.
18.14 U.S. Dollars. All dollar amounts in this Agreement are in U.S.
----- ------------
Dollars.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement.
NEWBRIDGE NETWORKS CORPORATION MILLITECH CORPORATION
Conrad Lewis John L. Youngblood
- ------------------------------ ------------------------------
(Print) (Print)
/s/ Conrad Lewis /s/ John L. Youngblood
- ------------------------------ ------------------------------
(Signature) (Signature)
Executive Vice President President
- ------------------------------ ------------------------------
(Title) (Title)
19
<PAGE>
SCHEDULE A
VENDOR PRODUCTS
<TABLE>
<CAPTION>
NEWBRIDGE VENDOR TRANSFER
PART PART PRODUCT ANNUAL PRICE
NUMBER NUMBER/3/ DESCRIPTION QUANTITY/4/ (US$)
- ----------------- ------------------ ------------------ ------------------ -----------------
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
90312378901 OTO [***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
9031238101 ORU [***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
9031238401 OTRU1 [***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
TBD OTRU2 [***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
[***] [***]
- -------------------------------------------------------------------------------------------------
</TABLE>
Note: 1 US Block A, US Block B, Canada
2 Korea
3 Vendor Part Numbers are only for Canada. Part Numbers for US and Korea
have not been defined.
4 On a quarterly basis (or with such other frequency as the parties may
agree), the parties will meet to discuss and agree upon the Annual
Quantity to assign for each Vendor Product, based on the forecasts
provided by Newbridge. On our about thirty (30) days after each
anniversary of the Effective Date of this Agreement, the parties will
meet to negotiate, in good faith and on a mutually satisfactory basis,
the possible adjustment (as mutually agreed to) of the prices paid by
Newbridge for the Vendor Products in the preceding year. Such adjustment
(if any) would be based upon: (i) the total amount of each Vendor Product
purchased by Newbridge, its subsidiaries, affiliates and business
partners (whether or not such purchases were made under this Agreement,
or another agreement) during the preceding year, and (ii) the aggregate
[***] Confidential Treatment Requested.
20
<PAGE>
price paid by Newbridge for such Vendor Products, so that the adjusted
prices would reasonably reflect the amounts purchased by Newbridge.
21
<PAGE>
SCHEDULE B
AUTHORIZED AREAS
The Authorized Areas are the following regions of the world, as defined by
Newbridge:
. NORTH AND SOUTH AMERICA (NSA)
. EUROPE, MIDDLE EAST AND AFRICA (EMA)
. ASIA PACIFIC REGION, INCLUDING THE FORMER SOVIET UNION (APR)
as such may be amended by Newbridge from time to time.
22
<PAGE>
SCHEDULE C
REPAIR AND RETURN PROCEDURE
1. REPAIR PROCEDURE AND RETURN AUTHORIZATION
1.1 Vendor has a centralized repair facility for servicing of all Vendor
Products. All requests for return of Vendor Products shall be made to Vendor.
Vendor representatives will obtain all necessary information for processing the
return and shall issue Newbridge a return authorization number within one (1)
working days of receipt of Newbridge's request. No Vendor Product shall be
returned by Newbridge without prior verbal, electronic or written authorization.
1.2 Unless Vendor is authorized by its third-party suppliers to repair
third-party equipment itself, Vendor will escalate all requests for service of
the third-party equipment to the applicable third-party supplier and repairs of
the third-party equipment will be completed by that third-party supplier.
1.3 Defective Vendor Products will be returned by Newbridge with the return
authorization number written clearly on the outside of the package, and shipped
prepaid to:
Millitech Corporation
20 Industrial Drive East
South Deerfield, MA 01373
Attention: Service Department
Phone: (413) 665-8551
2. WARRANTY REPAIRS
2.1 At its discretion, Vendor will either repair or replace defective
Vendor Products covered under warranty within ten (10) working days of its
receipt. The warranty period for repaired or replaced Vendor Products shall be
the remainder of the original warranty or [***], whichever is greater.
2.2 Vendor Products found to be without defect after testing by Vendor, may
be subject to Vendor's then-current handling charges.
[***] Confidential Treatment Requested.
23
<PAGE>
3. OUT-OF-WARRANTY REPAIRS
3.1 Vendor will either repair or replace, at Newbridge's cost, defective
Vendor Products not covered under warranty, within ten (10) working days of its
receipt. Repair charges are available from Vendor's repair facility upon
request. The warranty on serviced Vendor Products is [***] measured from
date of service. Out-of-warranty repair charges are based upon the prices in
effect at the time of return.
4. REPORTS
Vendor shall provide a written report for any root cause analysis and its final
determination regarding specific unit returns or in-warranty repair. The
reporting shall
include:
a) RMA number
b) description of problem
c) root cause of problem
d) corrective actions
e) target dates for implementing corrective action
5. ADVANCE REPLACEMENT SERVICE
Vendor agrees to hold a full set of spares for the Vendor Products at the
Vendor's facility in South Deerfield, MA in order to provide 24 hour advance
replacement services to Newbridge: [***]
[***] Confidential Treatment Requested.
24
<PAGE>
SCHEDULE D
SUPPORT SERVICES
1. SUPPORT LEVELS AND INTERFACE DEFINITIONS
These provisions are to be used by Newbridge and Vendor personnel for the
support level that must be provided for any problem or issue before it can be
escalated to the next defined level.
The activities identified are the minimum required, and may be supplemented by
further actions during the course of the problem investigation in order to
expedite a resolution. First and Second-Level Support will be provided by
Newbridge for Newbridge End Users who have purchased the products from Newbridge
or its business partners. Third-Level Support will be provided by Vendor to
Newbridge and directly to Newbridge End Users as deemed necessary by Newbridge.
1.1 First-Level NTAC (Front Office) Support. Newbridge will provide front
---- ---------------------------------------
office TAC support and basic help desk functions to the End User. Typically this
will include initial call handling, call logging, assignment of call priority
(Emergency, High, Medium and Low) and queue placement . This will be performed
by either the Newbridge Technical Assistance Centre (NTAC) or the Newbridge
Distributor/Service Agent. The NTAC is the focal point for all operational
support activities and is the contact point between the Customer and Newbridge.
NTAC is staffed and operational seven days a week, twenty-four hours a day,
365 days per year for first-level front office support.
1.2 First-Level NTAC (Back Office) Support. Newbridge will provide initial
---- --------------------------------------
product problem diagnostic services for identifying problems and generic
application faults, analysis, and where possible, problem resolution.
1.3 Second-Level Support. Newbridge will provide detailed product problem
---- --------------------
analysis, as well as any problem duplication in the NTAC laboratory. Second-
Level Support will provide more detailed problem diagnostic services for
identifying complex problems and application faults that cannot be resolved by
First-Level Back Office Support. Second-Level Support will be responsible for
the application of any maintenance releases or End User-specific fixes that
Vendor Support will provide. Second-Level Support will also provide interface
and escalation to Vendor Third-Level Support as required.
1.4 Third-Level Support. Vendor will provide Newbridge with 24 hours by
---- -------------------
365 days per year access to a senior consultant, based in Vendor's facility, for
product design problem analysis, and to formally escalate the problem as
described in section 2.0 of this Schedule. Typical duties include, providing
reasonable levels of technical assistance to the First-and Second-Level Support
organizations and timely delivery of defect correction code and associated
documentation.
25
<PAGE>
1.5 On-Site Support. Vendor will also provide Newbridge with on-site
---- ---------------
support if a problem is determined by mutual consent of Vendor and Newbridge to
be a valid design problem and travel is necessary. Vendor will provide for
travel and per them for Vendor personnel at no charge to Newbridge. However,
Newbridge may also require Vendor to perform such on-site support for which
Newbridge will pay in accordance with the current published Vendor Time,
Materials and Expense rates.
1.6 Installation. Newbridge will arrange for installation services at the
---- ------------
End User site. Newbridge may require Vendor to perform such installation, for
which Newbridge will pay in accordance with the Vendor's current published Time,
Materials and Expense rates.
1.7 Vendor Contacts for Services. The parties will notify each other of
---- ----------------------------
their points of contact, for any of the Vendor support services. As well, the
parties will complete and keep up to date Newbridge's "OEM Product Matrix". The
Vendor centre in South Deerfield, Massachusetts currently serves as the focal
point for all Vendor service activities. The Vendor centre will be staffed and
operational as described in section 2.0 of this Schedule.
2. PROBLEM ESCALATION
2.1 Escalation Process.
--- ------------------
(a) Following identification by Newbridge of a problem that cannot be
resolved by the regional First and Second Line support as described above,
Newbridge will record details of the problem (including diagnostic information)
and forward this information to Vendor.
(b) Newbridge will be given a problem report number and will be provided
with regular status and progress updates of Newbridge-escalated problems
2.2 Problem Priority Definitions. Four classifications of requests for
---- ----------------------------
information or assistance are defined. In order to classify a request, Newbridge
technical support personnel will confirm with Vendor the impact of the problem
to determine an appropriate classification. Where parties disagree on the
classification of a particular problem, the Vendor and Newbridge primary
technical contacts will undertake to discuss the problem with a view to reaching
a mutually acceptable classification.
2.2.1 Emergency Priority. Problems that have been verified through
------ ------------------
formal maintenance channels as problems affecting service, which cause major
functionality to be inoperative and therefore affect the normal business
operations during the normal working day. There is no acceptable work around. To
ensure the fastest possible response, problems classified as Emergency will be
reported via telephone.
26
<PAGE>
2.2.2 High Priority: Problems that have been verified through the
----- -------------
formal maintenance charmers as problems affecting service which cause major
functionality to be inoperative and therefore affect the normal business
operations during the normal working day. There is an acceptable work around.
2.2.3 Medium Priority: Problems that have been verified through the
----- ---------------
formal maintenance channels as causing particular features or functionality to
be inoperative, but do not affect the normal business operations during the
normal working day. There is no acceptable work around.
2.2.4 Low Priority: Problems that have been verified through the
----- ------------
formal maintenance channels as causing particular features or functionality to
be inoperative, but do not affect the normal business operations during the
normal business operations during the working day. There is an acceptable work
around.
2.3 Time-scale Objectives. In order for Newbridge to offer support
--- ---------------------
services to its distributors and End Users, Vendor will use best endeavors to
meet the following response, progress and restore time objectives. If these
time-scales cannot be met, Vendor will immediately notify Newbridge and Vendor
and Newbridge Primary technical contacts will undertake to discuss the problem
with a view to reaching- a mutually acceptable solution.
2.3.1 Response Time. The time from when Newbridge makes a request for
----- -------------
a problem to be escalated and Vendor responds to the request. The response times
are classified as:
<TABLE>
<S> <C>
. Emergency - One hour, 24 hours a day, 7 days a week
. High - Two hours, during normal business hours
. Medium - One business day
. Low - Two business days
</TABLE>
2.3.2 Progress Time. Newbridge may contact Vendor at any interval for
----- -------------
any problem to solicit update information. The time between Vendor making the
initial response to Newbridge and providing unsolicited updates, by telephone or
fax to the request for information or assistance are as follows:
<TABLE>
<S> <C>
. Emergency - One call every business day
. High - One call every two business days
. Medium - One call every working week
. Low - One call every working month
</TABLE>
27
<PAGE>
2.3.3 Restore Time. The time between Vendor receiving and accepting
----- ------------
the problem from Newbridge and the delivery of an acceptable work-around (or
fix) for the problem:
<TABLE>
<S> <C>
. Emergency - Vendor will use all best efforts and resources at its
disposal to ensure that an End User's network is
restored to operation status, as soon as possible, but
not to exceed twenty four (24) hours from receiving the
problem from Newbridge. Vendor will also use all best
efforts and resources at its disposal to deliver an
acceptable work-around (or fix) for the problem as soon
as possible, but not to exceed one month following
diagnosis.
. High - within the next maintenance release, which will be
issued no later than eight weeks after diagnosis.
. Medium - less than 6 months
. Low - less than 6 months
</TABLE>
2.3.4 Defect Fix Time. The time between Vendor receiving and accepting
----- ---------------
the problem from Newbridge and the delivery of an acceptable, final fix for the
problem:
<TABLE>
<S> <C>
. Emergency - less than 1 month
. High - less than 3 months or within next maintenance release
whichever is shorter
. Medium - less than 6 months
. Low - less than 12 months
</TABLE>
3. SUPPORT FOR THIRD-PARTY EQUIPMENT
3.1 Products Supported. Newbridge will provide support services, as
--- ------------------
described in this Schedule, for the Vendor Products, with the exception of
products not manufactured or created by Vendor ("Third Party Equipment').
3.2 Support for Third Party Equipment. Support services for Third Party
--- ---------------------------------
Equipment will be provided directly by the appropriate third party supplier.
3.3 Third Party Equipment Problem Escalation. Problems with Third Party
--- ----------------------------------------
Equipment will be escalated by Vendor to the appropriate third party supplier.
Upon completion of the problem fix, the third party supplier will provide Vendor
with a written report detailing the problem fix and time. Vendor will be
responsible for updating and closing the PTS after a Third Party Equipment fix.
28
<PAGE>
SCHEDULE E
STANDARDS COMPLIANCE
AND
PRODUCT CHANGES
1. STANDARDS COMPLIANCE
1.1 Vendor Responsibilities. Vendor shall be responsible for:
--- -----------------------
1.1.1 Verifying and maintaining compliance of the Vendor Product to
the Standards listed in the Technical Specifications listed in Schedule F and
attached hereto (hereinafter referred to as "Standards"). In the event of any
conflict or inconsistency between the terms of this Schedule E and the terms of
the Technical Specifications, the terms of the Technical Specifications shall
prevail.
1.1.2 Implementing any design changes required to the Vendor Product
for compliance of the Vendor Product to the Standards.
1.1.3 All applicable regulatory approvals for the Vendor Product
sought in Vendor's normal course of business and in accordance with Section 1.5
of this Schedule E. For such approvals required by Newbridge and not sought in
Vendor's normal course of business, the parties shall reasonably share the costs
incurred by the approval processes based on good faith negotiations.
1.1.4 Providing Newbridge with information, including but not limited
to soft copies of bills of materials and reliability information, as required
for Newbridge to complete evaluation of the Vendor Product to Standards.
1.1.5 Compiling the database of all the polymers used in the Vendor
Product and ensuring they meet Bellcore NEBS flammability requirements per
Standards. This database shall be submitted to Newbridge. (This paragraph shall
not apply to the use of Rogers 4003 millimeter-wave circuit board which is
enclosed within an 0-ring sealed metal housing.)
1.1.7 Providing Newbridge with copies of test reports, as applicable,
for product safety, Electromagnetic Compatibility (EMC), network interface, etc.
demonstrating compliance to the Standards.
1.1.8 Notifying Newbridge of systematic failures, defined as failures
exceeding predicted failure rates specified in the Technical Specifications
listed in Schedule F.
1.1.9 Submitting to Newbridge qualification test results for vital
components such as power supplies, fans, optical interfaces, batteries and
ASICs.
29
<PAGE>
1.1.10 Providing (under suitable non-disclosure provisions where
appropriate) documents such as PCB and mechanical drawings, schematics, Bills of
Materials, to Newbridge and Newbridge customers, on request.
1.2 Newbridge Responsibilities. Newbridge shall be responsible for:
--- --------------------------
1.2.1 Verifying and maintaining compliance of the Vendor Product
integrated with Newbridge cards and modules to the applicable Standards.
1.2.2 Advising Vendor of any design changes to the Vendor Product as
required for compliance of the Vendor Product to the applicable Standards.
1.2.3 Pursuing regulatory approvals as required on the Vendor Product
integrated with Newbridge cards and modules and in accordance with Section 1.5
of this Schedule E.
1.3 Ownership of Approvals. Ownership of the approvals shall reside with
--- ----------------------
the party responsible for obtaining and maintaining the regulatory approvals.
1.4 Transfer of Approvals. As applicable and upon request, Vendor shall
--- ---------------------
assist Newbridge in registering second approvals in Newbridge's name where
permitted by law. Any costs associated with second approvals shall be borne by
Newbridge.
1.5 Regulatory Approvals. The Vendor Product shall have the following
--- --------------------
regulatory approvals markings, as applicable:
1.5.1 Canadian Standards Association (CSA) logo or equivalent.
1.5.2 Underwriters Laboratories, Inc. (UL) logo or equivalent.
1.5.3 Federal Communications Commission (FCC) Part 15 and Part 68
markings.
1.5.4 Industry Canada (IC) ICES-003 and CS-03 markings.
1.5.5 Food and Drug Administration (FDA) markings.
1.5.6 European Community CE marking to the Low Voltage Directive
(LVD), EMC directive and Telecommunications Terminal Equipment (TTE) directive.
1.5.7 The Vendor Product documentation shall include all required
statements and markings for the Standards. Newbridge document GENO050 [15],
titled Regulatory Approvals Statement, can be used for guidance.
30
<PAGE>
2. PRODUCT CHANGES
2.1 After Newbridge approval of Pre-production Prototypes and immediately
after Vendor internal approval of an Engineering Change Order ("ECO") that
effects the Form, Fit or Function of a Product (as defined herein) and that may
affect the approvals for the Vendor Products, Vendor shall notify Newbridge in
writing, detailing the anticipated changes to such Product. Prior to
implementing the changes to the Product, Vendor must receive written approval
from Newbridge for the changes, such approval not to be unreasonably withheld.
2.1.1 "Form": Includes weight, density, chemical, or material
composition, size, shape, structure, appearance, protocol, pattern, composition,
configuration and marking/identification;
2.1.2 "Fit": Refers to suitability or readiness for a particular
application, including extremes or environment and marginal parameters, or
interfacing systems and physical, or signal compatibility with interfacing
systems or surroundings. This includes the Vendor Product level of performance,
safety margin, reliability, maintainability and installability; and
2.1.3 "Function": The set tasks or purposes for which the Vendor
Product are used by the customer including all the tasks generally accepted for
the Vendor Product and those specifically designated by the customer.
2.2 Vendor shall send copies of ECOs not affecting Form, Fit or Function of
the Vendor Product to Newbridge. These ECOs do not require Newbridge review
prior to implementation.
2.3 Newbridge and Vendor shall assign ECO primes who shall be responsible
for implementing the inter-company ECO obligations outlined herein.
2.4 Newbridge reserves the right to have Vendor continue to build older
versions of the Vendor Product for specific Newbridge customers for a period of
time, and at a price to be mutually agreed by the parties and subject to the
provisions of Section 8.3 of this Agreement.
31
<PAGE>
SCHEDULE F
TECHNICAL SPECIFICATIONS
[***]
[***] Confidential Treatment Requested.
32
<PAGE>
EXHIBIT 10.9
This PROFESSIONAL SERVICES AGREEMENT is made and entered into on August 7, 1998
(the "Effective Date").
BETWEEN:
NEWBRIDGE NETWORKS CORPORATION, a. corporation incorporated under the laws
of Canada, and having its offices at 600 March Road, P.O. Box 13600,
Kanata, Ontario, Canada K2K 2E6
("Newbridge")
AND:
MILLITECH CORPORATION, a Massachusetts corporation having its offices at 20
Industrial Drive, P.O. Box 109, South Deerfield, MA 01373
("Millitech")
WHEREAS:
A. Newbridge is engaged in a millimeter-wave wireless initiative for
which additional consulting, development or engineering services are required;
B. Millitech has agreed to provide such additional consulting or
engineering services in accordance with the terms of this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration (the receipt and sufficiency of which
are hereby acknowledged)the parties hereto agree as follows:
1. DEFINITIONS
In this Agreement, unless the context otherwise requires:
(a) "Agreement" shall mean this Professional Services Agreement and
all attached Statements of Work, schedules and exhibits, as may be amended in
accordance with the provisions herein.
(b) "Deliverables" shall mean all information, materials, hardware,
software and/or other items to be provided in connection with, or as a result
of, the Services specified in a Statement of Work.
(c) "Services" shall mean the services to be performed by Millitech
in accordance with a Statement(s) of Work, which shall include any Deliverables.
<PAGE>
(d) "Statement of Work" shall mean the description of Millitech's
Services and Deliverables in the form set forth in Schedule A hereto, which
shall from time to time, be executed by the parties and thereby incorporated
into, and made part of this Agreement. In the event of any conflict or
inconsistency between the terms of this Professional Services Agreement and any
Statement of Work the terms of the Statement of Work shall prevail.
2. DUTIES
2.1. Statements of Work. Millitech shall perform the Services in
------------------
accordance with this Agreement. Each Statement of Work shall become effective on
the date specified in the Statement of Work, and shall continue until completion
of the Services described in such Statement of Work, unless earlier terminated
in accordance with this Agreement.
2.2. Millitech Personnel. Millitech warrants that they have and will
-------------------
maintain on staff a sufficient number of individuals who possess the skills and
level of competency necessary to satisfactorily perform their obligations under
this Agreement in a timely manner, and will apply them to this Agreement and any
Statements of Work.
2.3. Independent Contractors. Before beginning any work, any independent
-----------------------
contractor must first sign: (i) a non-disclosure agreement with Millitech, and
(ii) an agreement assigning all rights, title and interest (including all
intellectual property and moral rights) in and to the Deliverables to Millitech.
2.4. Project Management.
------------------
(a) Each party shall appoint a project manager who shall be
responsible for all matters concerning the technical aspects, quality and
acceptance of the work performed under this Agreement.
(b) Each party shall supply information to the other, as reasonably
required to complete a Statement of Work.
(c) Millitech shall deliver monthly activity reports, in form and
content satisfactory to Newbridge, detailing the Services performed by Millitech
in the preceding month. Activity reports shall be delivered no more than fifteen
(15) days following the end of the calendar month to which they relate. Any such
reports shall be subject to verification and review.
(d) Any change to this Agreement, whether by modification or
addition, must be accomplished by a formal contract amendment signed by the
authorized representatives of Newbridge and Millitech. Millitech will quote to
Newbridge the cost associated with the change in the Statement of Work and the
effect on the deliverable schedule.
2
<PAGE>
2.5. Timeliness of Performance. Millitech acknowledges that timely
-------------------------
performance is critical to enable Newbridge to meet its schedules and
commitments, and Millitech shall use reasonable best efforts to meet the
delivery dates set forth in a Statement of Work.
2.6. Escalation. If the Services cannot be completed as scheduled,
----------
Millitech is late in meeting more than one delivery date, or Millitech fails to
meet any specific delivery date which may jeopardize the project, Millitech
agrees to escalate such matter to an employee of Vice-President level or higher.
Such employees shall seek to correct such delays as soon as possible.
2.7. Place for the Services. If the Services are performed at Newbridge's
----------------------
premises, Millitech may have access to Newbridge's premises only during
Newbridge's normal business hours. Millitech must observe Newbridge's
procedures for security and obey Newbridge's reasonable instructions while on
Newbridge's premises.
2.8. Third Party Intellectual Property. Before it accepts a Statement of
---------------------------------
Work or a change to a Statement of Work, Millitech may, at its option, review
and investigate such proposed Statement of Work to determine if it requires or
infringes any third party intellectual property. If after investigation,
Millitech believes in good faith that such Statement of Work requires or
infringes third party intellectual property, it shall promptly notify Newbridge
in detail of the reasons why it has come to such conclusions. Upon receipt of
such notice, Newbridge will, at its sole discretion either:
(a) procure at its own expense the necessary rights to such third
party intellectual property;
(b) request Millitech to procure itself the necessary rights to
such third party intellectual property at Millitech's expense, and the parties
agree to re-negotiate in good faith any changes this may require to the pricing
of the Statement of Work, so that Newbridge will reimburse the incremental
expenses incurred by Millitech for such procurement;
(c) alter the proposed Statement of Work so that it no longer
requires or infringes such third party intellectual property; or
(d) withdraw the proposed Statement of Work.
This section shall not apply to any Statement of Work or change to
Statement of Work which has been executed by Millitech. Except as expressly
provided in this Section 2.8, Millitech shall be responsible for obtaining, at
its expense, all rights to third party intellectual property, necessary to
comply with its obligations under this Agreement.
3. PAYMENT AND TAXES
3.1. Fees. The fees for the Services (the "Fee") is as follows:
----
3
<PAGE>
(a) FIXED PRICE
-----------
If the Statement of Work specifies a fixed price for the Services,
Newbridge will pay the fixed price stated in the Statement of Work.
Millitech may invoice Newbridge for the fixed price on the date(s) stated
in the Statement of Work.
(b) TIME AND MATERIALS
------------------
(i) If the Statement of Work specifies time and materials charges
for the Services, Newbridge will pay charges based on the time
Millitech takes to perform the Services (exclusive of time for
travel, meals, and other personal time). The charges will be
calculated using the rates stated in than Statement of Work.
Millitech may invoice Newbridge monthly (or as otherwise specified
in the Statement of Work) for charges for work performed in
accordance with this Agreement during the previous month. These
invoices must be accompanied by time sheets approved by Newbridge;
and
(ii) Millitech will perform the Services for not more than the
Maximum Charge specified in the Statement of Work.
3.2. Travel and Out-of-Pocket Expenses. If specified in a Statement of
---------------------------------
Work, Newbridge will reimburse Millitech for all reasonable and pre-approved
travel and out-of-pocket expenses that are documented by receipts and incurred
by Millitech's employees when traveling outside the metropolitan area of their
usual place of employment to perform the Services ("Expenses").
3.3. Taxes and Employee Benefits. Newbridge agrees to pay any applicable
---------------------------
sales taxes payable in respect of the performance of the Services (the "Taxes").
Newbridge may deduct from payments to non-residents of Canada any amounts
required to be withheld under Canadian legislation. For greater certainty, as of
the Effective Date,. amounts to be withheld are currently described in Section
212 and Regulation 105 of the Income Tax Act, Canada, as amended, all of which
are subject to change. Millitech shall be solely responsible for the payment of
its personnel's salaries, unemployment insurance, worker's compensation,
employee benefits and other employment related charges and deductions.
3.4. Payment. Millitech's invoices will conform to the reasonable
-------
requirements communicated from time to time to Millitech by Newbridge. Invoices
issued in accordance with this Agreement, are payable by wire transfer within
forty-five (45) days of receipt. Millitech will keep proper records of services
performed and amounts invoiced to Newbridge. Newbridge or its agents may audit
these records upon reasonable notice to Millitech, for expenses and time and
materials charged to Newbridge.
3.5. No Other Charges. Except as may be specifically agreed to in a
----------------
Statement of Work, there shall be no other charges or fees payable by Newbridge
to Supplier except for the Fees, Expenses and Taxes.
4
<PAGE>
4. TRAINING
4.1. The parties agree that Millitech's personnel may require specialized
training ("Training") in order to perform the Services. If such Training is
required, it shall be specified in the Statement of Work. The parties agree
that Newbridge shall not be responsible for any of Millitech's Fees and Expenses
during the Training period.
5. ACCEPTANCE
5.1. Newbridge may review or test any Deliverable for up to the period
specified in the Statement of Work, or thirty (`)O) days should no period be
specified (the "Testing Period"). Newbridge shall give reasonable advance
notice to Millitech of such test and Millitech shall have the right to witness
such tests, at its own expense. Promptly after or during the Testing Period,
Newbridge will notify Millitech of any errors or deficiencies in the
Deliverable, or failure of the Deliverable to conform to its specifications or
documentation (collectively "Deficiencies"). Millitech will then have up to
thirty (30) days to correct the Deficiencies, whereupon Newbridge will have an
additional Testing Period to verify that the Deficiencies have been corrected.
However, if after thirty (30) days from the end of the first Testing Period, the
Deliverables still contain Deficiencies, Newbridge may: (a) terminate the
Statement of Work and/or the Agreement, or (b) let Millitech continue its
attempts to correct the Deficiencies for a time specified by Newbridge. If at
the end of that specified time Millitech has not corrected the Deficiencies,
Newbridge may terminate the Agreement.
6. WARRANTY
6.1. Millitech hereby represents and war-rants to Newbridge that:
(a) Millitech has the right to enter into the Agreement, and
provide the Services;
(b) the Services shall be performed in a competent, professional,
workman-like manner, in accordance with current industry standards;
(c) Millitech's personnel performing the Services hereunder shall
be qualified to perform the tasks and functions which they are assigned;
(d) The Services and Deliverables shall not in any way be based
upon any confidential or proprietary information or materials derived from, or
owned by, any third-party source, unless Millitech is specifically authorized in
writing by such source;
(e) if software is developed by Millitech as part of the Services,
the software will not contain "product keys", "expiry codes" or other codes or
devices that may prevent Newbridge from using the software at any time, except
as specified in the software documentation. At the time of delivery to
Newbridge, the software, and the media on which the software is delivered, will
not contain any "computer viruses" or any other programs that may affect the
normal use of the software or any other software or data;
5
<PAGE>
(f) the Services, Deliverables, and their use and copying, will not
infringe any copyright, patent, trade secret, or other proprietary or
contractual right or obligation. This warranty does not extend to: (i) the use
of any Deliverable in manner for which is was not designed; (ii) the
unauthorized modification of the Deliverables by Newbridge; or (iii) the use of
any Deliverable in combination with any other equipment, products or other
materials, unless such equipment, products or other materials are provided by
Millitech, or referred to or recommended as appropriate for use in combination
with such Deliverable in any written material which has been: (1) made generally
available by Millitech (subject to any limitations or restrictions contained in
such materials), and/or (2) provided to Newbridge by Millitech; and
(g) any software provided to Newbridge is be designed to be used
prior to, during, and after the calendar year 2000 A.D., and shall operate
without any error relating to or arising from date data which represents or
references a leap year, different centuries, more than one century, and/or dates
from January 1, 2000. If requested to do so by Newbridge, Millitech will
promptly provide Newbridge with test results (using Newbridge's test
specification (document GFS-032)) which clearly show that the Deliverables
comply with this Year 2000 compliance warranty in all respects. Millitech shall,
without charge to Newbridge, promptly repair or replace any Deliverables which
are not compliant with the terms of this warranty, in addition to other remedies
available to Newbridge.
6.2. In the event of a breach of any of the foregoing representations and
warranties, in addition to any other remedies which may exist herein, in law or
in equity, Newbridge may require, at Millitech's expense the re-performance of
the Services sufficient to cure the breach.
7. INTELLECTUAL AND INDUSTRIAL PROPERTY
7.1. Except as may be expressly provided in a Statement of Work, all
rights, title and interest in and to the Deliverables, in any form, and
including any patents, copyrights, trade secrets, mask works and other
intellectual and industrial property rights therein, shall vest in Millitech.
7.2. Except as may be expressly provided in a Statement of Work, (a) all
rights, title and interest, including any intellectual or industrial property
rights, in and to any new or preexisting Newbridge information, materials and/or
technology shall remain vested in Newbridge or its suppliers, (b) except for the
limited right to use as necessary for the performance of the Services, Millitech
and Millitech's personnel obtain no rights, title or interest in or to any
Newbridge information, materials and/or technology, and (c) all rights, title
and interest, including any intellectual or industrial property rights, in and
to any new or pre-existing Millitech information, materials and/or technology
shall remain vested in Millitech or its suppliers.
6
<PAGE>
8. COVENANT OF CONFIDENTIALITY
8.1. Confidential Information. Each party acknowledges that, during the
------------------------
term of this Agreement, it may be exposed to certain confidential and/or
proprietary information and materials regarding the other party's business,
including but not limited to information concerning a party's technology,
customers and suppliers, which is identified as confidential or proprietary at
the time of disclosure ("Confidential Information").
8.2. Exclusions. However, Confidential Information shall not include any
----------
information or material which: (i) is in (or comes into) the public domain,
provided it came into the public domain through no fault of the receiving party;
(ii) can be demonstrated to have been independently developed by the receiving
party without reference to the Confidential Information; (iii) is rightfully
received by the receiving party from a third party not under an obligation of
confidence to the disclosing party with respect thereto; or (iv) is required by
law or regulation to be disclosed, but then only to the extent of such required
disclosure and under confidentiality to the extent reasonably possible.
8.3. Restrictions. Each party will: (i) use a reasonable standard of
------------
care to protect Confidential Information, (ii) not use Confidential Information
except as permitted by the party disclosing such Confidential Information, (iii)
not disclose Confidential Information except to its employees or representatives
to whom disclosure is necessary to effect the purposes of this Agreement, and
who are similarly bound to hold the Confidential Information in confidence; and
(iv) not reproduce Confidential Information without the disclosing party's prior
written consent.
8.4. Computer and Related Access. If it is necessary for Millitech to have
---------------------------
access to (either remotely or on-site) and/or use any Newbridge computer system
or network in performing the Services, Millitech shall limit such use and access
solely to that required for the performance of the Services, and shall not
access or attempt to access any other computer systems, networks, files,
software or services without the express prior written consent of Newbridge.
Upon request by Newbridge, Millitech shall provide the names of all Millitech
personnel having access to any Newbridge computer system or network. Millitech
shall, and shall ensure that its personnel shall, strictly follow any and all
security rules and procedures relating to the use of Newbridge computer systems.
In the event of actual or suspected misuse by Millitech or its personnel,
Newbridge reserves the right to restrict access to any of its computer systems
on such terms as it sees fit. All user identification numbers, codes and
passwords disclosed to Millitech and any information obtained by Millitech as a
result of Millitech's access to and/or use of Newbridge's computer systems shall
be deemed to be, and treated as, Confidential Information.
9. INFRINGEMENT
9.1. Defense and Indemnity. Millitech will defend Newbridge against any
---------------------
claim, legal proceeding or demand alleging the Services, any Deliverables, or
part thereof, infringe any copyright, patent, trade secret, or other contractual
or proprietary right (a "Claim"); provided Millitech is promptly notified of the
Claim and is given authority to defend and settle
------
7
<PAGE>
it. Millitech will indemnify and hold Newbridge harmless from and against all
costs, expenses, legal fees, damages, settlement amounts and other liabilities
arising out of or in respect of a Claim. Notwithstanding the foregoing,
Millitech shall have no obligation to indemnify or hold Newbridge harmless under
this Section 9.1 to the extent that any Claim arises from: (i) the use of any
Deliverable in manner for which is was not designed; (ii) the unauthorized
modification of the Deliverables by Newbridge; or (iii) the use of any
Deliverable in combination with any other equipment, products or other
materials, unless such equipment, products or other materials are provided by
Millitech, or referred to or recommended as appropriate for use in combination
with such Deliverable in any written material which has been: (1) made generally
available by Millitech (subject to any limitations or restrictions contained in
such materials), and/or (2) provided to Newbridge by Millitech.
9.2. Injunctions. In the event Newbridge, its distributors or End Users
-----------
are enjoined from their use of any of the Vendor Products due to a Claim that is
subject to an obligation to indemnify by Millitech under Section 9.1 above,
Millitech will (at no charge) promptly either:
(a) procure for Newbridge the right to continue using the
Deliverables;
(b) render the Deliverables non-infringing without materially
diminishing the Deliverables' performance, functionality or features;
(c) replace the Deliverables with equivalent non-infringing goods; or
(d) if Millitech determines in its reasonable opinion that the
provisions of Sections 9.2(a) through 9.2(c) are not reasonably possible, having
made reasonable efforts, remove the Deliverables and refund Newbridge all
amounts paid in respect thereof.
9.3. Not Applicable. Section 10 ("Limitation of Liability") shall not
--------------
apply in respect to this Section 9.
10. LIMITATION OF LIABILITY
10.1. GENERAL LIMITATION. EXCEPT FOR SECTIONS 8 AND 9, AND FOR ANY CLAIMS
------------------
RELATING TO WILLFUL INFRINGEMENT OF A PARTY'S INTELLECTUAL PROPERTY PROVIDED BY
ONE OF THP- PARTIES HEREUNDER, IN NO EVENT SHALL THE TOTAL CUMULATIVE LIABILITY
OF NEWBRIDGE AND MILLITECH (INCLUDING THEIR EMPLOYEES, DIRECTORS, OFFICERS OR
AGENTS), FOR ALL CLAIMS ARISING OUT OF OR RELATING TO THIS AGREEMENT, EXCEED
ACTUAL DIRECT, PROVABLE DAMAGES, UP TO THE TOTAL AIMOUNTS PAID BY NEWBRIDGE TO
MILLITECH HEREUNDER. THE FOREGOING PROVISION LIMITING THE LIABILITY OF
NEWBRIDGE AND MILLITECH (INCLUDING THEIR EMPLOYEES, DIRECTORS, OFFICERS OR
AGENTS) SHAI L APPLY REGARDLESS OF THE FORM OR CAUSE OF ACTION, WHETHER IN
CONTRACT OR TORT, OR A BREACH OF A FUNDAMENTAL TERM CONDITION.
8
<PAGE>
10.2. ECONOMIC LOSSES. EXCEPT FOR SECTION 9, NEWBRIDGE AND MILLITECH
---------------
(INCLUDING THEIR EMPLOYEES, DIREC RORS, OFFICERS OR AGENTS) SHALL NOT BE LIABLE
IN ANY WAY WHATSOEVER, FOR ANY INDIRECT, PUNITIVE, INCIDENTAL, SPECIAL OR
CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT LIMITED TO, LOSS OF REVENUE OR PROFIT.
THIS LIMITATION SHALL APPLY WHETHER OR NOT SUCH DAMAGES ARE FORESEEABLE, OR
NEWBRIDGE, OR MILLITECH (OR THEIR EMPLOYEES, AGENTS, OFFICERS OR DIRECTORS) HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
10.3. Trust. The foregoing provisions limiting the liability of
-----
Newbridge's and Millitech's employees, agents, officers and directors shall be
deemed to be trust provisions for the benefit of such employees, officers,
directors and agents and shall be enforceable by such as trust beneficiaries.
11. TERM & TERMINATION OF THE AGREEMENT
11.1. Term. This Agreement shall begin on the Effective Date, and shall
----
continue for the longer of five (5) years from the Effective Date or until
completion of all Statements of Work entered into hereunder, unless terminated
earlier as provided herein.
11.2. Termination for Cause. Either party may terminate this Agreement
---------------------
and/or Statement of Work(s) if: (a) if the other party breaches any material
term of this Agreement, and fails to remedy such breach within thirty (30) days
of receiving notice to do so by the nondefaulting party, or (b) in the event
that the other party becomes insolvent, makes a general assignment to creditors,
has a receiver appointed or files a petition in bankruptcy.
11.3. Termination Without Cause. Millitech hereby agrees that Newbridge
-------------------------
may terminate this Agreement and/or any Statement of Work at any time without
cause upon thirty (30) days written notice to Millitech. However, after
notification of its intent to terminate under this Section 1 1.3, Newbridge
agrees, at Millitech request, to discuss (without obligation to negotiate) at an
Executive Vice-President level or higher, the reasons for termination.
11.4. Termination for Non-Payment. In addition to its rights under
---------------------------
Section 1 1.2, Millitech may terminate this Agreement if Newbridge fails to pay
any undisputed amount which is in excess of ten thousand US dollars ($10,000),
either individually or in the aggregate with all other amounts past due, and
Newbridge fails to remedy such undisputed non-payment within five (5) business
days of receiving notice to do so by Millitech.
11.5. Effect of Termination.
---------------------
(a) Upon termination without cause, Millitech will deliver to
Newbridge all Deliverables (complete or incomplete) then in its possession or
control and Newbridge shall pay all the Fees, Expenses and Taxes due and payable
to Millitech for such Deliverables and Services completed or partially completed
up to the date of termination of the Agreement and/or any Statement of Work.
9
<PAGE>
(b) Upon termination with cause, and if any Deliverables are
incomplete as of the effective date of termination, Newbridge may, at its sole
option, return such incomplete Deliverable for a full refund of all amounts paid
to Millitech for such incomplete Deliverable.
(c) Upon termination of this Agreement with or without cause:
(i) Upon the termination of this Agreement, each parties
shall promptly destroy or return to the other all
Confidential Information, including all copies thereof,
and, upon request, shall certify in writing that all such
materials have been destroyed or returned;
(ii) Millitech shall promptly refund Newbridge all Fees or
other amounts paid in advance for Services not yet
provided; and
(iii) Sections 3, 6, 7, 8, 9, 10, 11.5 and 13 shall survive
any termination or expiry of this Agreement.
12. STANDARDS COMPLIANCE & PRODUCT CHANGES
Newbridge and Millitech shall comply with the standards compliance and
product change requirements, as set forth in Schedule B hereto.
13. GENERAL
13.1. Independent Contractors. Millitech and Newbridge are independent
-----------------------
contractors and neither party will act as the legal agent of the other or
otherwise case the other to incur liability in any manner whatsoever. Neither
party shall issue a news release, public announcement or advertisement
concerning the existence of this Agreement or its efforts in connection with
this Agreement without the prior written approval of the other party.
13.2. Assignment. Either party may assign or transfer (by operation of
----------
law or otherwise) this Agreement only by written notice to the other party. In
the event that a party wishes to assign or transfer this Agreement (the
"Assignor/Transferor") in accordance with this Section 13.2:
(i) The Assignor/Transferor must give the other party (the "Other
Party") at least thirty (30) days prior notice;
(ii) the assignee/transferee must accept the foregoing assignment/
transfer and agree that, from and after the date of such
assignment/transfer, it shall be bound by and perform all of
the provisions of this Agreement to the same extent as if the
assignee/transferee had been an original party to this
Agreement instead of the Assignor/Transferor; and
10
<PAGE>
(iii) in addition to its other rights under this Agreement, the
Other Party may, in its discretion, terminate the Agreement for
convenience upon ninety (90) days written notice.
13.3. Waiver. No waiver by either party of any delay, default or
------
omission by the other party shall affect or impair the rights of the non-
defaulting party in respect of any subsequent delay, default or omission of the
same or different kind.
13.4. Force Majeure. Neither party shall be deemed to failure to
-------------
perform its obligations resulting from ("Force Majeure"). Each party will use
its best efforts to anticipate such delays and failures, and to devise means to
eliminate or minimize them.
13.5. Notice. All notices, demands or requests required or permitted
------
hereunder shall be deemed property given when sent in writing to the designated
representative of the other party at the addresses set out above, or such other
address as a party may from time to time advise, by way of:
(a) registered first class mail;
(b) commercial courier, return receipt requested;
(c) personal delivery; or
(d) facsimile transmission, receipt of which ha been acknowledged by
recipient.
Notices shall be deemed received when physically received by the recipient.
Notice to Newbridge shall be sent to: VP Business Development (with a copy to
Newbridge's Legal Department)
Notices to Millitech shall be sent to: President
13.6. Severability. The provisions of this Agreement shall be deemed
------------
severable. If any provision of this Agreement shall be held unenforceable by
any court of competent jurisdiction, it shall be severed from this Agreement and
the remaining provisions shall remain in full force and effect.
13.7. Applicable Law. This Agreement shall be governed by the laws in
--------------
force in the State of Virginia (except for its conflict of laws provisions), and
the parties hereby irrevocably submit to the non-exclusive jurisdiction of the
courts located in the State of Virginia. The parties expressly exclude from this
Agreement all the provisions of the Vienna Convention, 1980 (The United Nations
Convention on Contracts for the International Sale of Goods). The remedies
specified in the Agreement will not be considered the sole remedies of the
parties.
11
<PAGE>
13.8. Attorney's Fees. If litigation or other judicial or administrative
---------------
action is commenced between the parties concerning, any dispute arising out of
or relating to this Agreement, the prevailing party in any contested ancillary
proceeding relating to the action (e.g. motions to transfer, to compel
discovery, etc.) and the prevailing party in the action itself will be entitled,
in addition to any other award that nay be made, to recover all court costs or
other official costs and all reasonable expenses associated with the ancillary
proceeding or action, including without limitation reasonable attorney's fees
and expenses.
13.9. Entire Agreement. This Agreement sets forth the entire agreement
----------------
between the parties pertaining to the services to be provided by Millitech to
Newbridge, and no modification, variation or amendment of it shall be binding
upon the parties unless it is in writing and signed by both parties. The parties
acknowledge that there are no collateral agreements, representations,
warranties, arrangements, understandings or otherwise, written or oral,
pertaining to the subject matter of this Agreement. All additional or
inconsistent terms or conditions contained in either party's purchase orders,
acknowledgments, invoices or other business forms shall be void and of no
effect.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized representatives.
Newbridge Networks Corporation Millitech Corporation
By: /s/ Conrad Lewis By: /s/ John L. Youngblood
------------------------------ ----------------------------
Name: Conrad Lewis Name: John L. Youngblood
---------------------------- ---------------------------
Title: Executive Vice President Title: President and CEO
--------------------------- --------------------------
12
<PAGE>
SCHEDULE A-1
Newbridge/Millitech
OTU (P/N 9031237801)
STATEMENT OF WORK #1
This is a Statement of Work entered into and pursuant to the Professional
Services Agreement between Newbridge Networks Corporation ("Newbridge") and
Millitech Corporation ("Millitech"), dated the 7th day of August, 1998.
SERVICES TO BE PERFORMED:
Millitech shall perform engineering services for Newbridge to implement the
Outdoor Transmitter Unit (referred to as the "Product") pursuant to the mutually
agreed technical specification attached hereto as Exhibit A-1 (the "Technical
Specification").
MILLITECH DELIVERABLES:
. Project Plan
. Critical Design Review Documentation Package
. Five (5) OTU Engineering Prototype units
. Design Verification Report for Engineering Prototypes
. Five (5) OTU Pre-production Units
. Design Verification Report for Pre-production Units
For the purposes of this Statement of Work:
. "Engineering Prototype" shall mean an OTU which must be functional with
all electrical and mechanical interfaces pursuant to the Technical
Specification. The units are intended for Research and Development use
primarily for integration, functional testing and limited characterization.
Although there may be non-conformance with the Technical Specification, the
Engineering Prototypes must be usable and Millitech must disclose known
problems to Newbridge in the design verification report.
. "Pre-Production Prototype" shall mean an OTU which is compliant to the
form, fit and function of the Technical Specification of the OTU. The units
are intended for Field Trial use to enable system testing and
characterization. Although there may be minor parametric non-conformance
with the Technical Specification, the Pre-Production Prototypes must be
usable with the final Product quality OTU and all non-conformance must be
disclosed to Newbridge in the design verification report. Newbridge would
have an option to purchase Pre-Production units until full production units
become available.
The parties shall provide technical information, to each other, which they
believe will be necessary to allow completion of the development activity.
DELIVERY DATE/PERFORMANCE SCHEDULE
Milestones Delivery Date Owner
---------- ------------- -----
1.0 Project Plan [***] Millitech
2.0 Critical Design Review [***] Both
[***] Confidential Treatment Requested.
<PAGE>
Page 13
3.0 Delivery of Two (2) Engineering Prototypes [***] Millitech
3.1 Delivery of Three (3) Engineering Prototypes [***] Millitech
4.0 Design Verification Report for Eng. Proto. [***] Millitech
5.0 Delivery of two (2) Pre-Production Proto.s [***] Millitech
5.1 Delivery of Three (3) Pre-Production Proto.s [***] Millitech
6.0 Design Verification Report for Pre-pro. Proto. [***] Millitech
7.0 Approval of Pre-production Prototypes [***] Newbridge
Millitech shall assume prime project management responsibility for the project.
The Project Managers will create a project plan which shall include milestones
for the deliverables as mutually agreed to by the parties. Millitech shall
provide the necessary bi-weekly update information to allow Newbridge to track
the project.
SPECIFICATIONS FOR SERVICES:
Millitech shall represents and warrants that its deliverables for the Products
and any other items developed pursuant to this Statement of Work shall comply
with and operate in accordance with a mutually agreed-to Technical Specification
and the Standards Compliance of Schedule B to the Agreement.
The parties shall address all technical issues through their respective
technical coordinators. Initially the technical coordinators will be Colin Soul
of Newbridge and Ken Wood of Millitech. Any change of the technical coordinators
would be mutually agreed to by the parties.
AMOUNT PAYABLE FOR SERVICES:
Newbridge shall fund Millitech for the development of the deliverables to a
maximum as provided below:
[***]
[***]
Amount shall be payable on the [***] as outlined below.
PAYMENT SCHEDULE:
Deliverables Payment (USD)
------------ -------------
[***] [***]
[***] [***]
[***] [***]
[***] [***]
Payment terms shall be net 30 days after receipt of invoice. Invoices shall be
submitted in accordance with the Payment Schedule above.
ACCEPTANCE TEST CRITERIA
The acceptance test of the Engineering and Pre-Production Prototypes will use
the most current revision of the Compliance Matrix as the pass/fail criteria for
such Prototypes and shall be in
[***] Confidential Treatment Requested.
<PAGE>
Page 14
accordance with the definition of "Engineering Prototype" and "Pre-Production
Prototype" as stated herein. Newbridge may, in its sole discretion, waive in
whole or in part any non-compliance of such Prototypes.
DISTRIBUTION/RESALE OF THE DELIVERABLES:
Millitech may commercially distribute and resell the Deliverables, provided that
in so doing, it does not disclose any Newbridge Confidential Information [***].
Subject to the foregoing Millitech may disclose the other specifications of the
Deliverables only for the distribution and resale of the Deliverables.
IN WITNESS WHEREOF, the parties have caused this Statement of Work to be
executed by their duly authorized representatives.
Newbridge Networks Corporation Millitech Systems Corporation
By: /s/ Conrad Lewis By: /s/ John L. Youngblood
----------------- -----------------------
Name: Conrad Lewis Name: John L. Youngblood
--------------- ---------------------
Title: Executive Vice President Title: Pres & CEO
------------------------- --------------------
[***] Confidential Treatment Requested.
<PAGE>
Page 15
EXHIBIT A-1
STATEMENT OF WORK #1
TECHNICAL SPECIFICATION
[***]
[***] Confidential Treatment Requested.
<PAGE>
SCHEDULE B
STANDARDS COMPLIANCE
1. STANDARDS COMPLIANCE
1.1 Millitech Responsibilities. Millitech shall be responsible for:
--------------------------
1.1.1 Verifying and maintaining compliance of the Vendor Product to the
Standards listed herein (hereinafter referred to as "Standards"),
except as specifically and to the extent modified by a Technical
Specification attached to a Statement of Work.
1.1.2 Implementing any design changes required to the Vendor Product
for compliance of the Vendor Product to the Standards.
1.1.3 All applicable regulatory approvals for the Vendor Product sought
in Millitech's normal course of business and in accordance with
Section 1.5 of this Schedule B. For such approvals required by
Newbridge and not sought in Millitech's normal course of
business, the parties shall reasonably share the costs incurred
by the approval process, based on good faith negotiations.
1.1.4 Providing Newbridge with information, including but not limited
to soft copies of bills of materials and reliability information,
as required for Newbridge to complete evaluation of the Vendor
Product to Standards.
1.1.5 Compiling the database of all the polymers used in the Vendor
Product and ensuring they meet Bellcore NEBS flammability
requirements per Standards. This database shall be submitted to
Newbridge. (This paragraph shall not apply to the use of Rogers
4003 millimeter-wave circuit board which is enclosed within an O-
ring sealed metal housing.)
1.1.6 Providing Newbridge with copies of test reports, as applicable,
for product safety, Electromagnetic Compatibility (EMC), network
interface, etc. demonstrating compliance to the Standards.
1.1.7 Notifying Newbridge of systematic failures, defined as failures
exceeding predicted failure rates as required under the
applicable Statement of Work.
1.1.8 Submitting to Newbridge qualification test results for vital
components such as power supplies, fans, optical interfaces,
batteries and ASICs.
1.1.9 Providing (under suitable non-disclosure provisions where
appropriate) documents such as PCB and mechanical drawings,
schematics, Bills of Materials, to Newbridge and Newbridge
customers, on request.
1.2 Newbridge Responsibilities: Newbridge shall be responsible for:
--------------------------
1.2.1 Verifying and maintaining compliance of the Vendor Product
integrated with Newbridge cards and modules to the applicable
Standards.
1.2.2 Advising Millitech of any design changes to the Vendor Product as
required for compliance of the Vendor Product to the applicable
Standards.
<PAGE>
Page 17
1.2.3 Pursuing regulatory approvals as required on the Vendor
Product integrated with Newbridge cards and modules and in
accordance with Section 1.5 of this Schedule B.
1.3 Ownership of Approvals. Ownership of the approvals shall reside with
----------------------
the party responsible for obtaining and maintaining the regulatory
approvals.
1.4 Transfer of Approvals. As applicable and upon request, Millitech shall
---------------------
assist Newbridge in registering second approvals in Newbridge's name
where permitted by law. Any costs associated with second approvals
shall be borne by Newbridge.
1.5 Regulatory Approvals. The Vendor Product shall have the following
--------------------
regulatory approvals markings, as applicable:
1.5.1 Canadian Standards Association (CSA) logo or equivalent.
1.5.2 Underwriters Laboratories Inc. (UL) logo or equivalent.
1.5.3 Federal Communications Commission (FCC) Part 15 and Part 68
markings.
1.5.4 Industry Canada (IC) ICES-003 and CS-03 markings.
1.5.5 Food and Drug Administration (FDA) markings.
1.5.6 European Community CE marking to the Low Voltage Directive
(LVD), EMC directive and Telecommunications Terminal
Equipment (TTE) directive.
1.5.7 The Vendor Product documentation shall include all required
statements and markings for the Standards. Newbridge
document GEN0050 [15], titled Regulatory Approvals
Statement, can be used for guidance.
<PAGE>
SCHEDULE A-2
Newbridge/Millitech
ORU (P/N 9031238101)
STATEMENT OF WORK #2
This is a Statement of Work entered into and pursuant to the Professional
Services Agreement between Newbridge Networks Corporation ("Newbridge") and
Millitech Corporation ("Millitech"), dated the 7 day of August 1998.
SERVICES TO BE PERFORMED:
Millitech shall perform engineering services for Newbridge to implement the
Outdoor Receiver Unit (referred to as the "Product") pursuant to the mutually
agreed technical specification attached hereto as Exhibit A-2 (the "Technical
Specification").
MILLITECH DELIVERABLES:
. Project Plan
. Critical Design Review Documentation Package
. Five (5) ORU Engineering Prototype units
. Design Verification Report for Engineering Prototypes
. Five (5) ORU Pre-production Units
. Design Verification Report for Pre-production Units
For the purposes of this Statement of Work:
. "Engineering Prototype" shall mean an ORU which must be functional
with all electrical and mechanical interfaces pursuant to the Technical
Specification. The units are intended for Research and Development use
primarily for integration, functional testing and limited characterization.
Although there may be non-conformance with the Technical Specification, the
Engineering Prototypes must be usable and Millitech must disclose known
problems to Newbridge in the design verification report.
. "Pre-Production Prototype" shall mean an ORU which is compliant to the
form, fit and function of the Technical Specification of the ORU. The units
are intended for Field Trial use to enable system testing and
characterization. Although there may be minor parametric non-conformance
with the Technical Specification, the Pre-Production Prototypes must be
usable with the final Product quality ORU and all non-conformance must be
disclosed to Newbridge in the design verification report. Newbridge would
have an option to purchase Pre-Production units until full production units
become available.
<PAGE>
Page 2
The parties shall provide technical information, to each other, which they
believe will be necessary to allow completion of the development activity.
DELIVERY DATE/PERFORMANCE SCHEDULE
<TABLE>
<CAPTION>
Milestones
----------
Delivery Date Owner
------------- -----
<S> <C> <C>
1.0 Project Plan [***] Millitech
3.0 Critical Design Review [***] Both
4.0 Delivery of Two (2) Engineering Prototypes [***] Millitech
4.1 Delivery of Three (3) Engineering Prototypes [***] Millitech
5.0 Design Verification Report for Eng. Proto. [***] Millitech
6.0 Delivery of Two (2) Pre-Prod Protos [***] Millitech
6.1 Delivery of Three (3) Pre-Prod Protos [***] Millitech
7.0 Design Verification Report for Pre-pro. Proto. [***] Millitech
8.0 Approval of Pre-production Prototypes [***] Newbridge
</TABLE>
Millitech shall assume prime project management responsibility for the project.
The Project Managers will create a project plan which shall include milestones
for the deliverables as mutually agreed to by the parties. Millitech shall
provide the necessary bi-weekly update information to allow Newbridge to track
the project.
SPECIFICATIONS FOR SERVICES:
Millitech shall represents and warrants that its deliverables for the Products
and any other items developed pursuant to this Statement of Work shall comply
with and operate in accordance with a mutually agreed-to Technical
Specification.
The parties shall address all technical issues through their respective
technical coordinators. The technical coordinators will be Colin Soul of
Newbridge and Ken Wood of Millitech. Any change of the technical coordinators
would be mutually agreed to by the parties.
AMOUNT PAYABLE FOR SERVICES:
Newbridge shall fund Millitech for the development of the deliverables to a
maximum as provided below:
[***]
[***] Confidential Treatment Requested.
<PAGE>
Page 3
[***]
Amounts shall be payable on the [***], as outlined below.
PAYMENT SCHEDULE:
Deliverables Payment(USD)
------------ ------------
[***] [***]
[***] [***]
[***] [***]
[***] [***]
Payment terms shall be net 30 days after receipt of invoice. Invoices shall be
submitted in accordance with the Payment Schedule above.
ACCEPTANCE TEST CRITERIA
The acceptance test of the Engineering and Pre-Production Prototypes will use
the most current revision of the Compliance Matrix as the pass/fail criteria for
such Prototypes and shall be in accordance with the definition of "Engineering
Prototype" and "Pre-Production Prototype" as stated herein. Newbridge may, in
its sole discretion, waive in whole or in part any non-compliance of such
Prototypes.
DISTRIBUTION/RESALE OF DELIVERABLES
Millitech may commercially distribute and resell the Deliverables, provided that
in so doing, it does not disclose any Newbridge Confidential Information [***].
Subject to the foregoing Millitech may disclose the other specifications of the
Deliverables only for the distribution and resale of the Deliverables.
[***] Confidential Treatment Requested.
<PAGE>
Page 4
IN WITNESS WHEREOF, the parties have caused this Statement of Work to be
executed by their duly authorized representatives.
Newbridge Networks Corporation Millitech Corporation
By: /s/ Conrad Lewis By: /s/ John L. Youngblood
------------------------------ ---------------------------
Name: Conrad Lewis Name: John L. Youngblood
---------------------------- -------------------------
Title: Executive Vice President Title: PRES & CEO
--------------------------- ------------------------
Title:___________________________ Title:________________________
<PAGE>
Page 5
EXHIBIT A-2
STATEMENT OF WORK #2
TECHNICAL SPECIFICATION
[***]
[***] Confidential Treatment Requested.
<PAGE>
SCHEDULE A-3
Newbridge/Millitech
OTRU (P/N 9031238401)
STATEMENT OF WORK #3
This is a Statement of Work entered into and pursuant to the Professional
Services Agreement between Newbridge Networks Corporation ("Newbridge") and
Millitech Corporation ("Millitech"), dated the 7 day of August, 1998.
SERVICES TO BE PERFORMED:
Millitech shall perform engineering services for Newbridge to implement the
Outdoor Transmitter Receiver Unit (referred to as the "Product") pursuant to the
mutually agreed technical specification attached hereto as Exhibit A-3 (the
"Technical Specification").
MILLITECH DELIVERABLES:
. Project Plan
. Critical Design Review Documentation Package
. Four (4) OTRU Engineering Prototype units
. Design Verification Report for Engineering Prototypes
. Ten (10) OTRU Pre-production Units
. Design Verification Report for Pre-production Units
For the purposes of this Statement of Work:
. "Engineering Prototype" shall mean an OTRU which must be functional with
all electrical and mechanical interfaces pursuant to the Technical
Specification. The units are intended for Research and Development use
primarily for integration, functional testing and limited characterization.
Although there may be non-conformance with the Technical Specification, the
Engineering Prototypes must be usable and Millitech must disclose known
problems to Newbridge in the design verification report.
. "Pre-Production Prototype" shall mean an OTRU which is compliant to the
form, fit and function of the Technical Specification of the OTRU. The units
are intended for Field Trial use to enable system testing and
characterization. Although there may be minor parametric non-conformance with
the Technical Specification, the Pre-Production Prototypes must be usable
with the final Product quality OTRU and all non-conformance must be disclosed
to Newbridge in the design verification report. Newbridge would have an
option to purchase Pre-Production units until full production units become
available.
<PAGE>
Page 2
The parties shall provide technical information, to each other, which they
believe will be necessary to allow completion of the development activity.
DELIVERY DATE/PERFORMANCE SCHEDULE
<TABLE>
<CAPTION>
Milestones
----------
Delivery Date Owner
------------- -----
<S> <C> <C>
1.0 Project Plan [***] Millitech
3.0 Critical Design Review [***] Both
4.0 Delivery of Four (4) Engineering Prototypes [***] Millitech
5.0 Design Verification Report for Eng. Proto. [***] Millitech
6.0 Delivery of ten (10) Pre-Prod. Protos [***] Millitech
7.0 Design Verification Report for Pre-Prod. Proto. [***] Millitech
8.0 Approval of Pre-production Prototypes [***] Newbridge
</TABLE>
Millitech shall assume prime project management responsibility for the project.
The Project Managers will create a project plan which shall include milestones
for the deliverables as mutually agreed to by the parties. Millitech shall
provide the necessary bi-weekly update information to allow Newbridge to track
the project.
SPECIFICATIONS FOR SERVICES:
Millitech shall represents and warrants that its deliverables for the Products
and any other items developed pursuant to this Statement of Work shall comply
with and operate in accordance with a mutually agreed- to detailed Technical
Specification.
The parties shall address all technical issues through their respective
technical coordinators. The technical coordinators will be Colin Soul of
Newbridge and Ken Wood of Millitech. Any change of the technical coordinators
would be mutually agreed to by the parties.
AMOUNT PAYABLE FOR SERVICES:
Newbridge shall fund Millitech for the development of the deliverables to a
maximum as provided below:
[***]
[***]
[***] Confidential Treatment Requested.
<PAGE>
Page 3
Amounts shall be payable on the [***], as outlined below.
PAYMENT SCHEDULE:
Deliverables Payment (USD)
------------ -------------
[***] [***]
[***] [***]
[***] [***]
[***] [***]
Payment terms shall be net 30 days after receipt of invoice. Invoices shall be
submitted in accordance with the Payment Schedule above.
ACCEPTANCE TEST CRITERIA
The acceptance test of the Engineering and Pre-Production Prototypes will use
the most current revision of the Compliance Matrix as the pass/fail criteria for
such Prototypes and shall be in accordance with the definition of "Engineering
Prototype" and "Pre-Production Prototype" as stated herein. Newbridge may, in
its sole discretion, waive in whole or in part any non-compliance of such
Prototypes.
DISTRIBUTION/RESALE OF DELIVERABLES
Millitech may commercially distribute and resell the Deliverables, provided that
in so doing, it does not disclose any Newbridge Confidential Information [***].
Subject to the foregoing Millitech may disclose the other specifications of the
Deliverables only for the distribution and resale of the Deliverables.
IN WITNESS WHEREOF, the parties have caused this Statement of Work to be
executed by their duly authorized representatives.
Newbridge Networks Corporation Millitech Corporation
By: /s/ Conrad Lewis By: /s/ John L. Youngblood
---------------------------------- ---------------------------
Name: Conrad Lewis Name: John L. Youngblood
-------------------------------- -------------------------
Title: Executive Vice President Title: PRES & CEO
------------------------------- ------------------------
[***] Confidential Treatment Requested.
<PAGE>
Page 4
EXHIBIT A-3
STATEMENT OF WORK #3
TECHNICAL SPECIFICATION
[***]
[***] Confidential Treatment Requested.
<PAGE>
EXHIBIT 10.10
[MOTOROLA LOGO APPEARS HERE] PURCHASE ORDER
SUPPLIER: MILLITECH CORPORATION PURCHASE ORDER NO. REVISION
PO BOX 109 527874 2
S. DEERFIELD RESEARCH PK, M-30
SOUTH DEERFIELD, MA 01373 PAGE
1 of 8
TELEPHONE: (413) 6658551 MOTOROLA PURCHASE ORDER
NUMBER MUST APPEAR ON ALL
FAX: SHIPPING LABELS, PACKAGING
SLIPS AND INVOICES OR THIS
ATTN: TONY HART MATERIAL MAY BE RETURNED.
SHIP TO:
MOTOROLA
8220 EAST ROOSEVELT STREET DATE OF ORDER BUYER
SCOTTSDALE, AZ 85257 11-AUG-1999 M ROBERTSON
BILL TO: DATE OF REVISION BUYER
20-SEP-99 M ROBERTSON
PO BOX 9B
SCOTTSDALE, AZ 85252
- --------------------------------------------------------------------------------
SUPPLIER NUMBER PAYMENT TERMS FREIGHT TERMS F.O.B.
5555 NET 15 CONSIGNEE BILLING COLLECT ORIGIN
- --------------------------------------------------------------------------------
SHIP VIA TAX EXEMPT LICENSE ORDER CONFIRMED WITH/DATE
UPS-Ground 07-041256-P P.O. FAXED TO TONY HART
- --------------------------------------------------------------------------------
BY: MOTOROLA INC. TELEPHONE FAX MAILDROP TOTAL P.O. VALUE
M ROBERTSON 480-441-5015 480-441-6543 R7114 [***]
LINE PART #/REVISION/DESCRIPTION NOT REQ'D COMMITTED DOCK QUANTITY
/LINE TYPE DATE DATE
NOTICES:
1. EXPORT/IMPORT-TECHNICAL INFORMATION SUBMITTED WITH THIS PURCHASE ORDER IS
SUBJECT TO U.S. EXPORT LAWS. ANY IMPORTS RESULTING FROM THIS PURCHASE ORDER
ARE SUBJECT TO U.S. IMPORT LAWS. (SEE NOTE A BELOW)
2. YEAR 2000 WARRANTY-THIS PURCHASE ORDER IS SUBJECT TO A SPECIAL YEAR 2000
WARRANTY PROVISION. (SEE NOTE BELOW)
1 9031310100 [***] [***] [***]
CPE ASSY, BLOCK B, UPSTREA
STANDARD PO
2 9031318101 [***] [***] [***]
HUB ASSY US BLOCK B, UPST
STANDARD PO
3 9031291001 [***] [***] [***]
HUB STACK US BLOCK A E-P
STANDARD PO
- --------------------------------------------------------------------------------
UOM UNIT PRICE EXTENSION TAX PRIORITY RATING
CONTRACT REQUESTOR
/ACCOUNT
[***] [***] [***] N
CLARK, JEANNE L
14104-01100
[***] [***] [***] N
CLARK, JEANNE L
14104-01100
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
- --------------------------------------------------------------------------------
The Purchase Order Terms and Conditions incorporated herein and made part of
this order are contained in either the following identified Motorola Terms and
Conditions Form, or Memorandum of Understanding:
THIS ORDER IS AN OFFER BY MOTOROLA TO SELLER IN ACCORDANCE WITH THE TERMS AND
CONDITIONS SET FORTH OR REFERENCED HEREIN AND ATTACHED HERETO. THIS OFFER
EXPRESSLY LIMITS ACCEPTANCE TO THE WRITTEN TERMS HEREOF. ADDITIONAL OR DIFFERENT
TERMS PROPOSED BY SELLER SHALL NOT BECOME PART OF THE CONTRACT UNLESS MOTOROLA
EXPRESSLY ASSENTS IN WRITING TO ANY SUCH ADDITIONAL OR DIFFERENT TERMS. THIS
OFFER BECOMES A FIRM CONTRACT UNDER MOTOROLA'S TERMS AND CONDITIONS BY
ACCEPTANCE OF SELLER OR SELLER'S STARTING PERFORMANCE HEREOF. SAID CONTRACT
SHALL CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND SHALL SUPERSEDE
ALL PRIOR OFFERS. NEGOTIATONS, AND AGREEMENTS ON THE SUBJECT MATTERS COVERED BY
THIS ORDER.
[***] Confidential Treatment Requested.
<PAGE>
[MOTOROLA LOGO APPEARS HERE] PURCHASE ORDER
SUPPLIER: MILLITECH CORPORATION PURCHASE ORDER NO. REVISION
PO BOX 109 527874 2
S. DEERFIELD RESEARCH PK M-30
SOUTH DEERFIELD, MA 01373 PAGE
2 of 8
TELEPHONE: (413) 6658551 MOTOROLA PURCHASE ORDER
NUMBER MUST APPEAR ON ALL
FAX: SHIPPING LABELS, PACKAGING
SLIPS AND INVOICES OR THIS
SHIP TO: MATERIAL MAY BE RETURNED.
MOTOROLA
8220 EAST ROOSEVELT STREET DATE OF ORDER BUYER
SCOTTSDALE, AZ 85257 11-AUG-1999 M ROBERTSON
BILL TO: DATE OF REVISION BUYER
20-SEP-99 M ROBERTSON
PO BOX 9B
SCOTTSDALE, AZ 85252
- --------------------------------------------------------------------------------
SUPPLIER NUMBER PAYMENT TERMS FREIGHT TERMS F.O.B.
5555 NET 15 CONSIGNEE BILLING COLLECT ORIGIN
- --------------------------------------------------------------------------------
SHIP VIA TAX EXEMPT LICENSE ORDER CONFIRMED WITH/DATE
UPS-Ground 07-041256-P P.O. FAXED TO TONY HART
- --------------------------------------------------------------------------------
BY: MOTOROLA INC. TELEPHONE FAX MAILDROP TOTAL P.O. VALUE
M ROBERTSON 480-441-5015 480-441-6543 R7114 [***]
LINE PART #/REVISION/DESCRIPTION NOT REQ'D COMMITTED DOCK QUANTITY
/LINE TYPE DATE DATE
4 9031291002 [***] [***] [***]
HUB STACK US BLOCK A, H-P
STANDARD PO
5 9031295600 [***] [***] [***]
CPE A-BAND
STANDARD PO
6 9031318101 [***] [***] [***]
HUB ASSY US BLOCK B, UPST
STANDARD PO
7 9031318102 [***] [***] [***]
HUB ASSY, US BLOCK B, UPST
STANDARD PO
- --------------------------------------------------------------------------------
UOM UNIT PRICE EXTENSION TAX PRIORITY RATING
CONTRACT REQUESTOR
/ACCOUNT
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
- --------------------------------------------------------------------------------
The Purchase Order Terms and Conditions incorporated herein and made part of
this order are contained in either the following identified Motorola Terms and
Conditions Form, or Memorandum of Understanding:
THIS ORDER IS AN OFFER BY MOTOROLA TO SELLER IN ACCORDANCE WITH THE TERMS AND
CONDITIONS SET FORTH OR REFERENCED HEREIN AND ATTACHED HERETO. THIS OFFER
EXPRESSLY LIMITS ACCEPTANCE TO THE WRITTEN TERMS HEREOF. ADDITIONAL OR DIFFERENT
TERMS PROPOSED BY SELLER SHALL NOT BECOME PART OF THE CONTRACT UNLESS MOTOROLA
EXPRESSLY ASSENTS IN WRITING TO ANY SUCH ADDITIONAL OR DIFFERENT TERMS. THIS
OFFER BECOMES A FIRM CONTRACT UNDER MOTOROLA'S TERMS AND CONDITIONS BY
ACCEPTANCE OF SELLER OR SELLER'S STARTING PERFORMANCE HEREOF. SAID CONTRACT
SHALL CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND SHALL SUPERSEDE
ALL PRIOR OFFERS. NEGOTIATONS, AND AGREEMENTS ON THE SUBJECT MATTERS COVERED BY
THIS ORDER.
[***] Confidential Treatment Requested.
<PAGE>
[MOTOROLA LOGO APPEARS HERE] PURCHASE ORDER
SUPPLIER: MILLITECH CORPORATION PURCHASE ORDER NO. REVISION
PO BOX 109 527874 2
S. DEERFIELD RESEARCH PK, M-30
SOUTH DEERFIELD, MA 01373 PAGE
3 of 8
TELEPHONE: (413) 6658551 MOTOROLA PURCHASE ORDER
NUMBER MUST APPEAR ON ALL
FAX: SHIPPING LABELS, PACKAGING
SLIPS AND INVOICES OR THIS
SHIP TO: MATERIAL MAY BE RETURNED.
MOTOROLA
8220 EAST ROOSEVELT STREET DATE OF ORDER BUYER
SCOTTSDALE, AZ 85257 11-AUG-1999 M ROBERTSON
BILL TO: DATE OF REVISION BUYER
20-SEP-99 M ROBERTSON
PO BOX 9B
SCOTTSDALE, AZ 85252
- --------------------------------------------------------------------------------
SUPPLIER NUMBER PAYMENT TERMS FREIGHT TERMS F.O.B.
5555 NET 15 CONSIGNEE BILLING COLLECT ORIGIN
- --------------------------------------------------------------------------------
SHIP VIA TAX EXEMPT LICENSE ORDER CONFIRMED WITH/DATE
UPS-Ground 07-041256-P P.O. FAXED TO TONY HART
- --------------------------------------------------------------------------------
BY: MOTOROLA INC. TELEPHONE FAX MAILDROP TOTAL P.O. VALUE
M ROBERTSON 480-441-5015 480-441-6543 R7114 [***]
LINE PART #/REVISION/DESCRIPTION NOT REQ'D COMMITTED DOCK QUANTITY
/LINE TYPE DATE DATE
8 9031310100 [***] [***] [***]
CPE ASSY, BLOCK B, UPSTREA
STANDARD PO
9 9031291001 [***] [***] [***]
HUB STACK US BLOCK A E-P
STANDARD PO
10 9031291002 [***] [***] [***]
HUB STACK US BLOCK A H-P
STANDARD PO
11 9031295600 [***] [***] [***]
CPE A-BAND
STANDARD PO
- --------------------------------------------------------------------------------
UOM UNIT PRICE EXTENSION TAX PRIORITY RATING
CONTRACT REQUESTOR
/ACCOUNT
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
- --------------------------------------------------------------------------------
The Purchase Order Terms and Conditions incorporated herein and made part of
this order are contained in either the following identified Motorola Terms and
Conditions Form, or Memorandum of Understanding:
THIS ORDER IS AN OFFER BY MOTOROLA TO SELLER IN ACCORDANCE WITH THE TERMS AND
CONDITIONS SET FORTH OR REFERENCED HEREIN AND ATTACHED HERETO. THIS OFFER
EXPRESSLY LIMITS ACCEPTANCE TO THE WRITTEN TERMS HEREOF. ADDITIONAL OR DIFFERENT
TERMS PROPOSED BY SELLER SHALL NOT BECOME PART OF THE CONTRACT UNLESS MOTOROLA
EXPRESSLY ASSENTS IN WRITING TO ANY SUCH ADDITIONAL OR DIFFERENT TERMS. THIS
OFFER BECOMES A FIRM CONTRACT UNDER MOTOROLA'S TERMS AND CONDITIONS BY
ACCEPTANCE OF SELLER OR SELLER'S STARTING PERFORMANCE HEREOF. SAID CONTRACT
SHALL CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND SHALL SUPERSEDE
ALL PRIOR OFFERS. NEGOTIATONS, AND AGREEMENTS ON THE SUBJECT MATTERS COVERED BY
THIS ORDER.
[***] Confidential Treatment Requested.
<PAGE>
[MOTOROLA LOGO APPEARS HERE] PURCHASE ORDER
SUPPLIER: MILLITECH CORPORATION PURCHASE ORDER NO. REVISION
PO BOX 109 527874 2
S. DEERFIELD RESEARCH PK, M-30
SOUTH DEERFIELD, MA 01373 PAGE
4 of 8
TELEPHONE: (413) 6658551 MOTOROLA PURCHASE ORDER
NUMBER MUST APPEAR ON ALL
FAX: SHIPPING LABELS, PACKAGING
SLIPS AND INVOICES OR THIS
SHIP TO: MATERIAL MAY BE RETURNED.
MOTOROLA
8220 EAST ROOSEVELT STREET DATE OF ORDER BUYER
SCOTTSDALE, AZ 85257 11-AUG-1999 M ROBERTSON
BILL TO: DATE OF REVISION BUYER
20-SEP-99 M ROBERTSON
PO BOX 9B
SCOTTSDALE, AZ 85252
- --------------------------------------------------------------------------------
SUPPLIER NUMBER PAYMENT TERMS FREIGHT TERMS F.O.B.
5555 NET 15 CONSIGNEE BILLING COLLECT ORIGIN
- --------------------------------------------------------------------------------
SHIP VIA TAX EXEMPT LICENSE ORDER CONFIRMED WITH/DATE
UPS-Ground 07-041256-P P.O. FAXED TO TONY HART
- --------------------------------------------------------------------------------
BY: MOTOROLA INC. TELEPHONE FAX MAILDROP TOTAL P.O. VALUE
M ROBERTSON 480-441-5015 480-441-6543 R7114 [***]
LINE PART #/REVISION/DESCRIPTION NOT REQ'D COMMITTED DOCK QUANTITY
/LINE TYPE DATE DATE
12 9031318101 [***] [***] [***]
HUB ASSY, US BLOCK B, UPST
STANDARD PO
13 9031318102 [***] [***] [***]
HUB ASSY, US BLOCK B, UPST
STANDARD PO
14 9031310100 [***] [***] [***]
CPE ASSY, BLOCK B, UPSTREA
STANDARD PO
15 9031291001 [***] [***] [***]
HUB STACK US BLOCK A E-P
STANDARD PO
- --------------------------------------------------------------------------------
UOM UNIT PRICE EXTENSION TAX PRIORITY RATING
CONTRACT REQUESTOR
/ACCOUNT
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
- --------------------------------------------------------------------------------
The Purchase Order Terms and Conditions incorporated herein and made part of
this order are contained in either the following identified Motorola Terms and
Conditions Form, or Memorandum of Understanding:
THIS ORDER IS AN OFFER BY MOTOROLA TO SELLER IN ACCORDANCE WITH THE TERMS AND
CONDITIONS SET FORTH OR REFERENCED HEREIN AND ATTACHED HERETO. THIS OFFER
EXPRESSLY LIMITS ACCEPTANCE TO THE WRITTEN TERMS HEREOF. ADDITIONAL OR DIFFERENT
TERMS PROPOSED BY SELLER SHALL NOT BECOME PART OF THE CONTRACT UNLESS MOTOROLA
EXPRESSLY ASSENTS IN WRITING TO ANY SUCH ADDITIONAL OR DIFFERENT TERMS. THIS
OFFER BECOMES A FIRM CONTRACT UNDER MOTOROLA'S TERMS AND CONDITIONS BY
ACCEPTANCE OF SELLER OR SELLER'S STARTING PERFORMANCE HEREOF. SAID CONTRACT
SHALL CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND SHALL SUPERSEDE
ALL PRIOR OFFERS. NEGOTIATONS, AND AGREEMENTS ON THE SUBJECT MATTERS COVERED BY
THIS ORDER.
[***] Confidential Treatment Requested.
<PAGE>
[MOTOROLA LOGO APPEARS HERE] PURCHASE ORDER
SUPPLIER: MILLITECH CORPORATION PURCHASE ORDER NO. REVISION
PO BOX 109 527874 2
S. DEERFIELD RESEARCH PK, M-30
SOUTH DEERFIELD, MA 01373 PAGE
5 of 8
TELEPHONE: (413) 6658551 MOTOROLA PURCHASE ORDER
NUMBER MUST APPEAR ON ALL
FAX: SHIPPING LABELS, PACKAGING
SLIPS AND INVOICES OR THIS
SHIP TO: MATERIAL MAY BE RETURNED.
MOTOROLA
8220 EAST ROOSEVELT STREET DATE OF ORDER BUYER
SCOTTSDALE, AZ 85257 11-AUG-1999 M ROBERTSON
BILL TO: DATE OF REVISION BUYER
20-SEP-99 M ROBERTSON
PO BOX 9B
SCOTTSDALE, AZ 85252
- --------------------------------------------------------------------------------
SUPPLIER NUMBER PAYMENT TERMS FREIGHT TERMS F.O.B.
5555 NET 15 CONSIGNEE BILLING COLLECT ORIGIN
- --------------------------------------------------------------------------------
SHIP VIA TAX EXEMPT LICENSE ORDER CONFIRMED WITH/DATE
UPS-Ground 07-041256-P P.O. FAXED TO TONY HART
- --------------------------------------------------------------------------------
BY: MOTOROLA INC. TELEPHONE FAX MAILDROP TOTAL P.O. VALUE
M ROBERTSON 480-441-5015 480-441-6543 R7114 [***]
LINE PART #/REVISION/DESCRIPTION NOT REQ'D COMMITTED DOCK QUANTITY
/LINE TYPE DATE DATE
16 9031295600 [***] [***] [***]
CPE A-BAND
STANDARD PO
17 9031318101 [***] [***] [***]
HUB ASSY, US BLOCK B, UPST
STANDARD PO
18 9031318102 [***] [***] [***]
HUB ASSY, US BLOCK B, UPST
STANDARD PO
19 9031310100 [***] [***] [***]
CPE ASSY,BLOCK B, UPSTREA
STANDARD PO
- --------------------------------------------------------------------------------
UOM UNIT PRICE EXTENSION TAX PRIORITY RATING
CONTRACT REQUESTOR
/ACCOUNT
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
[***] [***] [***] N
CLARK, JEANNE L
14104-03200
The following notes apply to the entire Purchase Order unless otherwise noted:
NOTE A: EXPORT/IMPORT-U.S. EXPORT LAW AS CONTAINED IN THE INTERNATIONAL TRAFFIC
IN ARMS REGULATIONS (ITAR) AND THE EXPORT ADMINISTRATION
- --------------------------------------------------------------------------------
The Purchase Order Terms and Conditions incorporated herein and made part of
this order are contained in either the following identified Motorola Terms and
Conditions Form, or Memorandum of Understanding:
THIS ORDER IS AN OFFER BY MOTOROLA TO SELLER IN ACCORDANCE WITH THE TERMS AND
CONDITIONS SET FORTH OR REFERENCED HEREIN AND ATTACHED HERETO. THIS OFFER
EXPRESSLY LIMITS ACCEPTANCE TO THE WRITTEN TERMS HEREOF. ADDITIONAL OR DIFFERENT
TERMS PROPOSED BY SELLER SHALL NOT BECOME PART OF THE CONTRACT UNLESS MOTOROLA
EXPRESSLY ASSENTS IN WRITING TO ANY SUCH ADDITIONAL OR DIFFERENT TERMS. THIS
OFFER BECOMES A FIRM CONTRACT UNDER MOTOROLA'S TERMS AND CONDITIONS BY
ACCEPTANCE OF SELLER OR SELLER'S STARTING PERFORMANCE HEREOF. SAID CONTRACT
SHALL CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND SHALL SUPERSEDE
ALL PRIOR OFFERS. NEGOTIATONS, AND AGREEMENTS ON THE SUBJECT MATTERS COVERED BY
THIS ORDER.
[***] Confidential Treatment Requested.
<PAGE>
[MOTOROLA LOGO APPEARS HERE] PURCHASE ORDER
SUPPLIER: MILLITECH CORPORATION PURCHASE ORDER NO. REVISION
PO BOX 109 527874 2
S. DEERFIELD RESEARCH PK, M-30
SOUTH DEERFIELD, MA 01373 PAGE
6 of 8
TELEPHONE: (413) 6658551 MOTOROLA PURCHASE ORDER
NUMBER MUST APPEAR ON ALL
FAX: SHIPPING LABELS, PACKAGING
SLIPS AND INVOICES OR THIS
SHIP TO: MATERIAL MAY BE RETURNED.
MOTOROLA
8220 EAST ROOSEVELT STREET DATE OF ORDER BUYER
SCOTTSDALE, AZ 85257 11-AUG-1999 M ROBERTSON
BILL TO: DATE OF REVISION BUYER
20-SEP-99 M ROBERTSON
PO BOX 9B
SCOTTSDALE, AZ 85252
- --------------------------------------------------------------------------------
SUPPLIER NUMBER PAYMENT TERMS FREIGHT TERMS F.O.B.
5555 NET 15 CONSIGNEE BILLING COLLECT ORIGIN
- --------------------------------------------------------------------------------
SHIP VIA TAX EXEMPT LICENSE ORDER CONFIRMED WITH/DATE
UPS-Ground 07-041256-P P.O. FAXED TO TONY HART
- --------------------------------------------------------------------------------
BY: MOTOROLA INC. TELEPHONE FAX MAILDROP TOTAL P.O. VALUE
M ROBERTSON 480-441-5015 480-441-6543 R7114 [***]
LINE PART #/REVISION/DESCRIPTION NOT REQ'D COMMITTED DOCK QUANTITY
/LINE TYPE DATE DATE
- --------------------------------------------------------------------------------
UOM UNIT PRICE EXTENSION TAX PRIORITY RATING
CONTRACT REQUESTOR
/ACCOUNT
REGULATIONS (EAR) IS APPLICABLE TO THE TECHNICAL INFORMATION SUBMITTED WITH
THIS P.O. THIS TECHNICAL INFORMATION IS NOT TO BE PLACED IN THE PUBLIC
DOMAIN, EXPORTED FROM THE U.S., OR GIVEN TO ANY FOREIGN PERSON IN THE U.S.,
WITHOUT THE PRIOR, SPECIFIC WRITTEN AUTHORIZATION OF MOTOROLA SSTG AND THE
U.S. DEPARTMENT OF STATE OR THE U.S. DEPARTMENT OF COMMERCE AS APPLICABLE.
IF THIS PURCHASE ORDER WILL RESULT IN AN IMPORT SHIPMENT FOR WHICH MOTOROLA
WILL BE THE IMPORTER OF RECORD, APPROVAL FOR SUCH FOREIGN PROCUREMENT MUST BE
OBTAINED FROM THE BUYER PRIOR TO SHIPMENT.
NOTE B: SPECIAL YEAR 2000 WARRANTY-IN ADDITION TO ALL OTHER REPRESENTATIONS
AND WARRANTIES CONTAINED IN THE APPLICABLE TERMS AND CONDITIONS, THE
FOLLOWING "SPECIAL YEAR 2000 WARRANTY" PROVISION GOVERNS PERFORMANCE UNDER
THIS PURCHASE ORDER.
TO THE EXTENT THIS PURCHASE ORDER INCLUDES SOME FORM OF INFORMATION
TECHNOLOGY, INCLUDING ANYTHING THAT PROCESSES, PROVIDES, AND/OR RECEIVES DATE
DATA, SUPPLIER REPRESENTS AND WARRANTS, IN ADDITION TO ALL OTHER
REPRESENTATIONS AND WARRANTIES, THAT UNTIL JULY 31, 2001 THE PRODUCTS
SUPPLIED WILL: 1) BE FREE FROM ANY ERROR(S) RELATING TO THE DATE DATA
(INCLUDING LEAP YEAR CALCULATIONS), 2) WILL NOT GENERATE ANY INVALID AND/OR
INCORRECT DATE-RELATED RESULTS AND 3) SUCH DATE DATA WILL NOT IMPAIR THE
PERFORMANCE OUTPUT OR ACCURACY OF MOTOROLA'S SYSTEMS OR PRODUCTS.
SHIPPING NOTICE: DO NOT DECLARE VALUE-DO NOT INSURE. ALL FOB ORIGIN/SOURCE
MUST SHIP COLLECT/CONSIGNEE BILLING. COLLECT SHIPMENTS REQUIRE PO NUMBER ON
BILL OF LADING/AIRBILL.
ACCOUNTS PAYABLE NOTICE: ITEMS DELIVERED BEFORE THE SCHEDULED DOCK DATE AND
MOTOROLA'S REQUIRED DATE ARE SUBJECT TO RETURN AT THE SUPPLIERS EXPENSE. IF
MOTOROLA ELECTS TO RETAIN THESE MATERIALS, PAYMENTS WILL BE MADE USING THE
DOCK DATE OR MOTOROLA'S REQUIRED DATE TO COMPUTE THE PAYMENT TERMS. PAYMENTS
MAY BE WITHHELD WITHOUT THE LOSS OF DISCOUNT, PENDING RECEIPT OF A COMPLETE
AND ACCURATE INVOICE.
NOTE 1: -CPE prices include the following accessories; CPE Mast Mount, Bias-T
Assy and Power Supply.
-The quantities and prices on this Purchase Order (items 1 & 2) apply
to any radio that Motorola procures, may it be Block A, Block B,
Korea or any other major radio opportunities which may develop as
long as Motorola pays for any new NRE (NRE will not exceed
[***]. If the right business opportunity comes to Motorola for
a new radio, Motorola has the rights to negotiate with Millitech and
pay 100% of the NRE cost (as opposed to sharing these cost with
Millitech on a
- --------------------------------------------------------------------------------
The Purchase Order Terms and Conditions incorporated herein and made part of
this order are contained in either the following identified Motorola Terms and
Conditions Form, or Memorandum of Understanding:
THIS ORDER IS AN OFFER BY MOTOROLA TO SELLER IN ACCORDANCE WITH THE TERMS AND
CONDITIONS SET FORTH OR REFERENCED HEREIN AND ATTACHED HERETO. THIS OFFER
EXPRESSLY LIMITS ACCEPTANCE TO THE WRITTEN TERMS HEREOF. ADDITIONAL OR DIFFERENT
TERMS PROPOSED BY SELLER SHALL NOT BECOME PART OF THE CONTRACT UNLESS MOTOROLA
EXPRESSLY ASSENTS IN WRITING TO ANY SUCH ADDITIONAL OR DIFFERENT TERMS. THIS
OFFER BECOMES A FIRM CONTRACT UNDER MOTOROLA'S TERMS AND CONDITIONS BY
ACCEPTANCE OF SELLER OR SELLER'S STARTING PERFORMANCE HEREOF. SAID CONTRACT
SHALL CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND SHALL SUPERSEDE
ALL PRIOR OFFERS. NEGOTIATONS, AND AGREEMENTS ON THE SUBJECT MATTERS COVERED BY
THIS ORDER.
[***] Confidential Treatment Requested.
<PAGE>
[MOTOROLA LOGO APPEARS HERE] PURCHASE ORDER
SUPPLIER: MILLITECH CORPORATION PURCHASE ORDER NO. REVISION
PO BOX 109 527874 2
S. DEERFIELD RESEARCH PK, M-30
SOUTH DEERFIELD, MA 01373 PAGE
7 of 8
TELEPHONE: (413) 6658551 MOTOROLA PURCHASE ORDER
NUMBER MUST APPEAR ON ALL
FAX: SHIPPING LABELS, PACKAGING
SLIPS AND INVOICES OR THIS
SHIP TO: MATERIAL MAY BE RETURNED.
MOTOROLA
8220 EAST ROOSEVELT STREET DATE OF ORDER BUYER
SCOTTSDALE, AZ 85257 11-AUG-1999 M ROBERTSON
BILL TO: DATE OF REVISION BUYER
20-SEP-99 M ROBERTSON
PO BOX 9B
SCOTTSDALE, AZ 85252
- --------------------------------------------------------------------------------
SUPPLIER NUMBER PAYMENT TERMS FREIGHT TERMS F.O.B.
5555 NET 15 CONSIGNEE BILLING COLLECT ORIGIN
- --------------------------------------------------------------------------------
SHIP VIA TAX EXEMPT LICENSE ORDER CONFIRMED WITH/DATE
UPS-Ground 07-041256-P P.O. FAXED TO TONY HART
- --------------------------------------------------------------------------------
BY: MOTOROLA INC. TELEPHONE FAX MAILDROP TOTAL P.O. VALUE
M ROBERTSON 480-441-5015 480-441-6543 R7114 [***]
LINE PART #/REVISION/DESCRIPTION NOT REQ'D COMMITTED DOCK QUANTITY
/LINE TYPE DATE DATE
- --------------------------------------------------------------------------------
UOM UNIT PRICE EXTENSION TAX PRIORITY RATING
CONTRACT REQUESTOR
/ACCOUNT
- --------------------------------------------------------------------------------
50/50 basis) to obtain sole source for a limited amount of time.
- -- Hubs will be configured in Motorola's desired polarization configuration, the
polarization will be identified when Motorola "issues releases" to Millitech.
- -- When "releases are issued" to Millitech new line items will be added to this
Purchase Order and the quantities will be reduced on line item 1 and 2.
- -- Warranty is [***] from the date of shipment from Millitech for all items
shipped against this Purchase Order.
- -- Motorola will provide Millitech with a delivery forecast (forecast will be
for [***] Hubs and [***] CPE's spread out by month until 12-31-01) with the
release of this Purchase Order and it will be updated on a monthly basis.
- -- Motorola will finalize hand delivery requirements 16 weeks prior to delivery.
This firm release will identify the quantities and delivery dates as well as
the part numbers and/or technical requirements for the hardware. Once a
month, Motorola will "issue revised releases" to reflect the new forecast
(hard deliveries).
NOTE 2: -- Millitech will execute advance procurement and planning to meet our
delivery forecast. With this, Millitech may commit to procure up to
20 weeks of material (per our schedule). In the event that Motorola's
sales do not develop as planned for the LMDS Program, Motorola will
be liable to Millitech for material procured by Millitech within the
20-week window. If hardware has not been assembled, Motorola's
maximum liability will not exceed [***] per CPE and [***] per Hub.
Motorola will be 100% responsible for all hard commits within the 16-
week delivery window and has the option to change the quantities in
weeks 12-16 by 33% with no charge.
-- In the event that Motorola's LMDS sales do not develop as planned,
Motorola will be liable to Millitech for 20-weeks of production as
stated above only. The unit prices as shown on this P.O. will remain
the same (Hubs [***] each and [***] each for the CPE's) in the event
that sales are not as high as projected.
-- Program reviews will be held monthly between Millitech and Motorola,
we will rotate facilities.
-- Millitech has the rights to convert the (Release 2 CPE's) to the
(Release 3 CPE's) any time after written acceptance by Motorola.
NOTE 3: -- Revision I changes the wording of NOTE 1 as requested by Millitech in
their 8/19/99 fax. The wording that was changed is bracketed by
"quote marks". This is an
- --------------------------------------------------------------------------------
The Purchase Order Terms and Conditions incorporated herein and made part of
this order are contained in either the following identified Motorola Terms and
Conditions Form, or Memorandum of Understanding:
THIS ORDER IS AN OFFER BY MOTOROLA TO SELLER IN ACCORDANCE WITH THE TERMS AND
CONDITIONS SET FORTH OR REFERENCED HEREIN AND ATTACHED HERETO. THIS OFFER
EXPRESSLY LIMITS ACCEPTANCE TO THE WRITTEN TERMS HEREOF. ADDITIONAL OR DIFFERENT
TERMS PROPOSED BY SELLER SHALL NOT BECOME PART OF THE CONTRACT UNLESS MOTOROLA
EXPRESSLY ASSENTS IN WRITING TO ANY SUCH ADDITIONAL OR DIFFERENT TERMS. THIS
OFFER BECOMES A FIRM CONTRACT UNDER MOTOROLA'S TERMS AND CONDITIONS BY
ACCEPTANCE OF SELLER OR SELLER'S STARTING PERFORMANCE HEREOF. SAID CONTRACT
SHALL CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND SHALL SUPERSEDE
ALL PRIOR OFFERS. NEGOTIATONS, AND AGREEMENTS ON THE SUBJECT MATTERS COVERED BY
THIS ORDER.
[***] Confidential Treatment Requested.
<PAGE>
[MOTOROLA LOGO APPEARS HERE] PURCHASE ORDER
SUPPLIER: MILLITECH CORPORATION PURCHASE ORDER NO. REVISION
PO BOX 109 527874 2
S. DEERFIELD RESEARCH PK, M-30
SOUTH DEERFIELD, MA 01373 PAGE
8 of 8
TELEPHONE: (413) 6658551 MOTOROLA PURCHASE ORDER
NUMBER MUST APPEAR ON ALL
FAX: SHIPPING LABELS, PACKAGING
SLIPS AND INVOICES OR THIS
SHIP TO: MATERIAL MAY BE RETURNED.
MOTOROLA
8220 EAST ROOSEVELT STREET DATE OF ORDER BUYER
SCOTTSDALE, AZ 85257 11-AUG-1999 M ROBERTSON
BILL TO: DATE OF REVISION BUYER
20-SEP-99 M ROBERTSON
PO BOX 9B
SCOTTSDALE, AZ 85252
- --------------------------------------------------------------------------------
SUPPLIER NUMBER PAYMENT TERMS FREIGHT TERMS F.O.B.
5555 NET 15 CONSIGNEE BILLING COLLECT ORIGIN
- --------------------------------------------------------------------------------
SHIP VIA TAX EXEMPT LICENSE ORDER CONFIRMED WITH/DATE
UPS-Ground 07-041256-P P.O. FAXED TO TONY HART
- --------------------------------------------------------------------------------
BY: MOTOROLA INC. TELEPHONE FAX MAILDROP TOTAL P.O. VALUE
M ROBERTSON 480-441-5015 480-441-6543 R7114 [***]
LINE PART #/REVISION/DESCRIPTION NOT REQ'D COMMITTED DOCK QUANTITY
/LINE TYPE DATE DATE
- --------------------------------------------------------------------------------
UOM UNIT PRICE EXTENSION TAX PRIORITY RATING
CONTRACT REQUESTOR
/ACCOUNT
- --------------------------------------------------------------------------------
administrative change that does not affect purchase order pricing.
NOTE 4: Rev 02 issued to change the quantities on line items 1 & 2 and to add
line items 3-19.
- --------------------------------------------------------------------------------
The Purchase Order Terms and Conditions incorporated herein and made part of
this order are contained in either the following identified Motorola Terms and
Conditions Form, or Memorandum of Understanding:
THIS ORDER IS AN OFFER BY MOTOROLA TO SELLER IN ACCORDANCE WITH THE TERMS AND
CONDITIONS SET FORTH OR REFERENCED HEREIN AND ATTACHED HERETO. THIS OFFER
EXPRESSLY LIMITS ACCEPTANCE TO THE WRITTEN TERMS HEREOF. ADDITIONAL OR DIFFERENT
TERMS PROPOSED BY SELLER SHALL NOT BECOME PART OF THE CONTRACT UNLESS MOTOROLA
EXPRESSLY ASSENTS IN WRITING TO ANY SUCH ADDITIONAL OR DIFFERENT TERMS. THIS
OFFER BECOMES A FIRM CONTRACT UNDER MOTOROLA'S TERMS AND CONDITIONS BY
ACCEPTANCE OF SELLER OR SELLER'S STARTING PERFORMANCE HEREOF. SAID CONTRACT
SHALL CONSTITUTE THE ENTIRE AGREEMENT OF THE PARTIES HERETO AND SHALL SUPERSEDE
ALL PRIOR OFFERS. NEGOTIATONS, AND AGREEMENTS ON THE SUBJECT MATTERS COVERED BY
THIS ORDER.
[***] Confidential Treatment Requested.
<PAGE>
MOTOROLA TERMS AND CONDITIONS, PART D
FIXED PRICE CONTRACT (COMMERCIAL)
THIS CONTRACT EXPRESSLY LIMITS ACCEPTANCE TO THE WRITTEN TERMS HEREOF.
ADDITIONAL OR DIFFERENT TERMS PROPOSED BY SELLER SHALL NOT BECOME A PART OF THE
CONTRACT UNLESS MOTOROLA EXPRESSLY ASSENTS IN WRITING TO ANY SUCH ADDITIONAL OR
DIFFERENT TERMS. NONE OF THE PROVISIONS CONTAINED HEREIN EXPRESSLY OR IMPLIED
ARE INTENDED TO CREATE PRIVITY OF CONTRACT BETWEEN SELLER AND MOTOROLA
CUSTOMERS, IF ANY.
TABLE OF CONTENTS
1. Definitions
2. Order of Precedent
3. Changes
4. Notices
5. Insurance and Indemnification
6. Inspection
7. Title and Risk of Loss
8. Payments
9. Assignment
10. Rights and Use of Technical Information
11. Indemnity
12. Patent Indemnity
13. Commercial Acquisition for Government Contracts
14. Taxes
15. Default
16. Disputes
17. Stop Work Order
18. Warranty
19. Property and Tooling
20. Packing and Shipping
21. Waiver
22. Plant Visits
23. Advertising and Publicity
24. Material Safety Data Sheets
25. Ozone Depleting Substances
26. Radiological Health
27. Motorola Access
28. Export Control
29. Termination
30. Entire Agreement
31. Governing Law
32. Socio-Economic Compliance Clauses
33. Year 2000 Compliance
34. Discontinuance of Product
35. Subcontracts for Commercial Items and Commercial Components
36. New Materials
37. Assignment
<PAGE>
1. DEFINITIONS. As used throughout this contract, including, if any,
provisions incorporated by reference the following terms shall have the meaning
set forth below:
(a) The term "Seller" means the person, firm or corporation executing this
contract with Motorola and who will furnish the work or services provided
for herein.
(b) The term "Motorola" unless otherwise defined shall mean the Space and
Systems Technology Group of Motorola, Inc.
(c) The term "prime contract" means the contract with the customer.
(d) The word "contract" unless otherwise modified shall mean the agreement.
(e) Except as otherwise provided in this contract, the term "subcontract"
includes purchase orders placed by the Seller under this contract and all
references to "supplies" shall include "services", if the contract wholly
or in party provides for the furnishing of services.
2. ORDER OF PRECEDENCE. The rights and obligations of the parties to this
contract shall be subject to and governed by the Statement of Work, these Terms
and Conditions, and any proposals, specifications or other documents or
provisions which are made a part of this contract by reference or otherwise. To
the extent of any inconsistency between (i) the Statement of Work and these
Terms and Conditions and (ii) proposals, specifications or other documents or
provisions which are made a part of this contract by reference or otherwise, the
Statement of Work and these Terms and Conditions shall control. To the extent of
any inconsistency between (i) the Statement of Work and (ii) these Terms and
Conditions, the Statement of Work shall control.
3. CHANGES.
(a) Motorola may at any time, without notice to the sureties of any, through
written directions, require reduction or addition or work, issue additional
restrictions, or extend the performance of the work all within the general
scope of this contract.
(b) If any such direction causes an increase or decrease in the cost of, or the
time required or the performance of, this contract, or otherwise affects
any other provision of this contract, whether changes or not changed by any
such direction, an equitable adjustment shall be made (1) in the contract
price or time of performance or both, and (2) in such other provisions of
the contract as may be so affected, and the contract shall be modified in
writing accordingly.
(c) Any claim by the Seller for adjustment under this article must be asserted
in writing within 30 days from the date of receipt by the Seller of the
notification of change provided, however, that Motorola, if it decides that
the facts justify such action, may receive and act upon any such claim
asserted at any time prior to final payment
<PAGE>
under this contract. Nothing in this article shall excuse the Seller from
proceeding with the contract as changed. Failure to agree to any adjustment
shall be a dispute concerning a question of fact within the meaning of the
article of this contract entitled "Disputes".
(d) Where the full cost, or substantially the full cost, of property made
obsolete or excess as a result of a change is included in the Seller's
claim for adjustment, Motorola shall have the right to prescribe the manner
of disposition of such property.
(e) Motorola engineering and technical personnel may from time to time render
assistance or give technical advice to, or discuss or effect and exchange
of information with the Seller's personnel concerning the work hereunder.
Such actions shall not be deemed to be a change under this article and
shall not vest Seller with authority to change the work hereunder. In the
event Seller receives an instruction, order or advice that he deems to be a
change from anyone other than Motorola's Supply Management Department, he
shall immediately advise Motorola's Purchasing Department of that
instruction, order or advice, Seller shall not be entitled to any
adjustment of the contract price, delivery schedule or other contract
provisions because of actions taken by the Seller pursuant to said
instruction, order or advice unless and until and only to the extent such
instruction, order or advice shall be included in a Purchase Order Revision
or Change Order or Supplemental Agreement to this contract issued by
Motorola's Supply Management Department, in writing, whenever any change
received from any representative of Motorola affects specifications,
quantities, delivery, prices or other conditions of this contract.
(f) The Seller shall not make any changes in the work or end items (including
assemblies, subassemblies, parts and components thereof) which do not
conform to the requirements of this contract without the prior written
consent of Motorola. Motorola may present as a procedure for the reporting
and approval of changes initiated by the Seller.
4. NOTICES. All notices required or permitted to be sent by either party
hereto shall be deemed sufficiently given if sent by prepaid certified mail to
the address shown on the first page of this contract for each party and to the
attention of the individual who executes this contract on behalf of the party to
whom the notice is sent. All notices shall be deemed given when they are sent
by certified mail and deposited in the mail addressed in the aforesaid manner.
Either party may designate, in writing, a different manner of address for
notices under this contract.
5. INSURANCE AND INDEMNIFICATION. In the event the Seller, its employees,
agent, subcontractors, or lower-tier subcontractors enter premises occupied by
or under the control of Motorola in the performance of this contract, the Seller
agrees that it will be responsible to Motorola for, and indemnify and hold
harmless Motorola, its officers and employees, from any loss, cost, damage,
expense or liability by reason of property damage or personal injury of
whatsoever kind or character arising out of, as a result of, or in connection
with such performance occasioned by the negligence or other fault, act or
<PAGE>
omission, of the Seller, its employees, agents, subcontractors, or lower-tier
subcontractors and the Seller agrees that it and its subcontractors will
maintain public liability and property damage insurance in reasonable limits
covering the obligations set forth above and will maintain Worker's Compensation
Insurance covering all employees performing this contract on premises occupied
or under the control of Motorola provided, however, that the Seller may maintain
a self-insurance program in lieu of Worker's Compensation Insurance if
authorized and qualified to do so pursuant to statutory authority. Seller shall
provide certificates of such insurance upon request.
6. INSPECTION.
(a) All services and supplies (which term throughout this article includes the
Seller without limitation raw material, components, intermediate assemblies
and end products) may be subject to inspection and test by Motorola, to the
extent practicable at all reasonable times and places including the period
of manufacture and, in any event, prior to final acceptance.
(b) In case any supplies or lots of supplies are defective in material or
workmanship or otherwise not in conformity with the requirements of this
contract, Motorola shall have the right either to reject them (with or
without instructions as to their disposition) or to require their
correction. Supplies or lots of supplies which have been rejected or
required to be corrected shall be removed or, if permitted or required by
Motorola, corrected in place by and at the expense of the Seller promptly
after notice, and shall not thereafter be tendered for acceptance unless
the former rejection or requirement for correction is disclosed. If the
Seller fails to promptly remove such supplies or lots of supplies which are
required to be removed or promptly to replace or correct such supplies or
lots of supplies, Motorola (i) may, by contract or otherwise, replace or
correct such supplies and charge to the Seller the cost occasioned to
Motorola, or (ii) may terminate this contract for default as provide din
the article of this contract entitled "Default". Unless the Seller
corrects or replaces such supplies within the delivery schedule, Motorola
may require the delivery of such supplies at a reduction in price which is
equitable under the circumstances. Failure to agree to such reduction in
price shall be a dispute concerning a question of fact within the meaning
of the article of this contract entitled "Disputes."
(c) If any inspection or test is made by Motorola on the premises of the Seller
without additional charge shall provide all reasonable facilities and
assistance for the safety and convenience of inspectors in the performance
of their duties. If the Motorola inspection or test is made at a point
other than the premises of the Seller, it shall be at the expense of
Motorola except as otherwise provided in this contract, provided that, in
case of rejection, Motorola shall not be liable for any reduction in value
of samples used in such inspection or test. All inspections and tests
shall be performed in such a manner as not to unduly delay the work.
Motorola reserves the right to charge to the Seller any additional cost of
inspection or test when supplies are not ready at the time such inspection
or test is requested by the Seller or when reinspection or retest is
necessitated
<PAGE>
by a prior rejection. Acceptance or rejection of the supplies shall be made
as promptly as practicable after delivery except as otherwise provided in
this contract, but failure to inspect and accept or reject supplies shall
neither relieve the Seller from responsibility for such supplies as are not
in accordance with the contract requirements nor impose liability to
Motorola therefore.
(d) The inspection and test by Motorola of any supplies or lots thereof does
not relieve the Seller from any responsibility regarding defects or other
failures to meet the contract requirements which may be discovered prior to
acceptance. Unless otherwise provided in this contract, acceptance shall
be conclusive except with respect to latent defects, fraud, such gross
mistakes amounting to fraud, and the Seller's warranty obligations.
(e) The Seller shall provide and maintain a quality and inspection system
acceptable to Motorola covering the supplies hereunder. Records of all
inspection work by the Seller shall be kept complete and available to
Motorola during the performance of this contract and for such longer
periods as may be specified in this contract.
(f) Seller hereby certifies that all supplies in the quantities so called for
on the face of this contract will conform with all requirements, drawings,
and related documents referenced by or in this contract. The required test
and inspection reports resulting from compliance with this contract will be
maintained on file and be made available for review by Motorola's
representative, at any reasonable time.
7. TITLE AND RISK OF LOSS.
(a) Unless this contract specifically provides for earlier passage of title,
title to supplies covered by this contract shall pass to Motorola upon
final acceptance by Motorola or the Government, regardless of when Motorola
takes physical possession.
(b) Unless this contract specifically provides otherwise, the transportation of
supplies to be delivered by Seller to Motorola shall be F.O.B. destination
and all risk of loss of or damage to the supplies covered by this contract
shall remain with the Seller until final acceptance by Motorola or receipt
of the supplies by Motorola at the destination specified in this contract,
whichever is later.
(c) If the contract specifies the transportation of supplies to be delivered by
Seller to Motorola as F.O.B. origin (i.e. Seller's facility), all risk or
loss of or damage to the supplies covered by this contract shall remain
with the Seller until Seller delivers the supplies to an authorized carrier
for shipment to Motorola.
(d) Notwithstanding (b) and (c) above, risk of loss of or damage to supplies
which fail to conform to the requirements of this contract as to give a
right or rejection shall remain with Seller until cure by Seller or final
acceptance by Motorola, whichever is later, at which time (b) or (c) above
shall apply.
<PAGE>
8. PAYMENTS.
(a) Payment of the contract price or any portion thereof for supplies delivered
or services rendered shall not constitute acceptance. The Seller shall be
paid, upon admission of property certified invoices or vouchers, the prices
stipulated herein for supplies delivered or services rendered less
deductions, if any, as herein provided.
(b) If more than one article of this contract authorizes the temporary
withholding of amounts otherwise payable to the Seller for supplies
delivered or services performed, the total of the amounts so withheld at
any one time shall not exceed the greatest amount which may be withheld
under any one such article at that time, provided that this limitation
shall not apply to (i) withholdings pursuant to any article relating to
wages or hours of employees; (ii) withholdings not specifically provided
for by this contract, and (iii) the recovery of overpayments.
(c) It is understood that the efficient use by Motorola of the supplies called
for hereunder require that the data called for by this contract be
delivered not later than the time or respective times herein specified. If
such data is not delivered at said time or times, Motorola may at its
election, so long as such data remains undelivered, unless the delay in
delivery thereof arises out of causes beyond the control and without the
fault or negligence of the Seller within the meaning of the article hereof
entitled "Default," withhold payment to the Seller for any of the amounts
then due, refuse approval of the Seller's vouchers and refuse to accept
further delivers hereunder form the Seller or may take any other action
authorized by law or regulation now or hereafter in effect including
termination or this contract for default to the extent and in the manner
authorized by the "Default" article of this contract and may take any or
all of the foregoing actions separately or in combination.
(d) The supplies shipped or work performed against this contract must not be
invoiced at a higher price than that shown on this contract without
Motorola's written consent. No charges will be allowed or paid by Motorola
for packing, crating, freight, cartage service charges or interest unless
shown on the order. If the price is omitted on the order, the price shall
be the current market price but shall not exceed the price currently
charged Seller's most favored customer.
9. ASSIGNMENT.
(a) No assignment or other transfer in whole or in part of this contract or of
any monies due or to become due hereunder shall be binding upon Motorola
without written consent thereto by Motorola. Any claim, demand or request
for payment under this contract shall be subject to setoff or recoupment
for any present or future claims which Motorola or any of its affiliated
companies may have against Seller of any of its affiliated companies.
<PAGE>
(b) No contract shall be made by Seller with any other party for furnishing any
of the completed or substantially completed supplies or services herein
contracted or without the prior written approval of Motorola.
10. RIGHTS AND USE OF TECHNICAL INFORMATION
(a) Any specifications, drawings, reports, technical information or data
furnished by Motorola to Seller hereunder shall remain Motorola's property
shall be kept confidential and shall be returned at Motorola's request.
Such documents shall be used in performing this contract and shall not be
used for other purposes unless agreed to by Motorola in writing.
Furthermore, patents embodied in designs, tools, patterns, drawings,
information or equipment supplied by Motorola under this contract and all
rights for the use and reproduction thereof are reserved by Motorola.
(b) Unless otherwise agreed to in writing by Motorola, any information
disclosed, in whatever form and regardless of any markings, to Motorola by
the Seller in connection with this contract shall not be deemed to be
confidential or proprietary information and shall be disclosed without any
restrictions (other than a claim for patent infringement) as part of the
consideration for this contract.
(c) Motorola shall have the right to reproduce and use any and all information
and technical data delivered hereunder.
(d) In the event the Seller, prior to completion of the work hereunder develops
(i) any improvement in the design of the supplies called for by this
contract which is not incorporated in the supplies to be delivered
hereunder, or (ii) any alternative or improved method of accomplishing the
objectives of this contract which is not employed in the performance
thereof, the Seller shall promptly give full information with respect
thereto to Motorola.
11. INDEMNITY. Seller shall indemnify and hold harmless Motorola against and
from any liability, claims, obligations, losses, cost and expenses, including
attorney's fees (hereafter collectively refereed to in this provision as
"damages" resulting from any failure or alleged failure of Seller, or Seller's
lower-tier subcontractors to comply with any federal or state law, statute,
regulation, ruling, order or directive.
12. PATENT INDEMNITY. By acceptance of this contract, Seller agrees to
indemnify Motorola and its customers against all claims, judgments, decrees,
costs and expenses and attorney's fees incident to any infringement or to any
claimed infringement of any patent arising out of the use of sale by Motorola
and its customers of supplies covered by this contract, or the use thereof by
Motorola in the manufacture and sale of supplies, unless the supplies are solely
to Motorola design or formula. Seller agrees that it will, upon request of
Motorola, and at Seller's own expense, defend or assist in the defense of any
action which may be brought against Motorola or its customers for such
infringement or claimed infringement. Motorola agrees to notify Seller promptly
upon receipt of notice or information of such a suit.
<PAGE>
13. COMMERCIAL ACQUISITION FOR GOVERNMENT CONTRACTS. If this agreement is for
the procurement of commercial computer software for a U.S. Government contract,
then the licensor's standard license agreement may be used, except that for non-
Department of Defense Agency procurements FAR 52.227-19. Commercial Computer
Software Restricted Rights (JUNE 1987) shall take precedence over any
inconsistent terms with the standard license agreement.
14. TAXES. Except as otherwise provided in this contract, the Seller
represents that the prices stated shall include any and all applicable
federal, state and local taxes which cannot be excluded by action of the Seller
or operation of law. The Seller represents that the price stated excludes all
such taxes which can be excluded by action of the Seller or by action of law.
Any tax not so excluded shall be entered on invoices as a separate line item.
15. DEFAULT.
(a) Motorola may, subject to the previsions of paragraph (c) below, by written
Notice of Default to the Seller terminate the whole or any part of this
contract (i) if the Seller fails to make delivery of supplies or to perform
the services within the time specified herein or any extension thereof; or
(ii) if the Seller fails to perform any of the other provisions of this
contract or so fails to make progress as to endanger performance of this
contract in accordance with its terms, and if either of these two later
circumstances does not cure such a failure within a period of 10 days, or
such longer period as Motorola may authorize in writing, after receipt, of
notice from Motorola specifying such failure.
(b) In the event Motorola terminates this contract in whole or in part as
provided in paragraph (a) of this article, Motorola may procure, upon such
terms and such manner as Motorola may deem appropriate, supplies or
services similar to those so terminated and the Seller shall be liable to
Motorola for any excess cost for such similar supplies or services and or
other damages. The Seller shall continue the performance of this contract
to the extent not terminated under the provisions of this article.
(c) Except with respect to defaults of subcontractors, the Seller shall not be
liable for any excess costs or other damages if any failure to perform
arises out of causes beyond the control and without the fault or negligence
of the Seller. Such causes may include, but are not restricted to, acts of
God or of the public enemy, acts of the Government in either its sovereign
or contractual capacity, fires, flood, epidemics, quarantine, restrictions,
strikes, freight embargoes, unusually severe weather, but in every case the
failure to perform must be beyond the control and without the fault or
negligence of the Seller. If the failure to perform is caused by the
default of a subcontractor and if such default arises out of causes beyond
the control of both the Seller and subcontractor and without the fault or
negligence of either of them, the Seller shall not be liable for any
<PAGE>
excess costs or other damages for failure to perform unless the supplier or
services to be furnished by the subcontractor were obtained from other
sources in sufficient time to permit the Seller to meet the required
delivery schedule. The term "subcontractor" as used in this clause means a
subcontractor at any tier.
(d) If this contract is terminated as provided in paragraph(a) of this article,
Motorola, in addition to any other rights provided in this article, may
require the Seller to transfer title and deliver to Motorola in the manner
and to the extent directed by Motorola free and clear of all liens and
claims, (i) any completed supplies and (ii) such partially completes
supplies and materials, parts, tools, designs, fixtures, plans, drawings,
information and contract rights (hereinafter call "manufacturing
materials") as the Seller has specifically produced or specifically
acquired for the performance of any part of this contract which has been
terminated. Seller shall protect and preserve property in possession of
the Seller in which Motorola has an interest. Payment for completed
supplies delivered to and accepted by Motorola shall be at the contract
price. Payment for manufacturing materials delivered to and accepted by
Motorola and for its protection and preservation of property shall be an
amount agreed upon by the parties. Failure to agree shall be a dispute
concerning a question of fact within the meaning of the article of this
contract entitled "Disputes."
(e) If, after notice of termination of this contract under the provisions of
paragraph (a) of this article, it is determined that the failure to perform
is due to causes beyond the control and without the fault or negligence of
the Seller or subcontractor pursuant to the provisions of paragraph(c) of
this article, such Notice of Default shall be deemed to have been issued
pursuant to the articles of this contract entitled "Termination" and the
rights and obligations of the parties hereto shall in such an event be
governed by that article.
(f) The rights and remedies of Motorola provided in this article shall not be
exclusive and are in addition to any other rights and remedies provided by
law or under this contract.
(g) Seller shall give written notice and explanation to Motorola within
ten (10) days after the commencement thereof of any delay encountered
in the performance of this contract.
16. DISPUTES. Except as otherwise specifically provided in this contract, all
disputes concerning questions of fact under this contract which are not promptly
disposed of by mutual agreement may be decided by recourse to any available,
legal or equitable remedy. Pending decision of any disputes hereof, the Seller
shall diligently proceed with performance of this contract as directed by
Motorola.
<PAGE>
17. STOP WORK ORDER.
(a) Motorola may, at any time, by written order to the Seller, require the
Seller to stop all, or any part, of the work called for by this contract
for a period of up to 90 days after the order is delivered to the Seller,
and for any further period to which the parties may agree. Any such order
shall be specifically identified as a Stop Work Order issued pursuant to
this article. Upon receipt of such an order, the Seller shall forthwith
comply with its terms and take all reasonable steps to minimize the
incurrence of costs allocable to the work covered by the order during the
period of work stoppage. Within a period of 30 days after a Stop Work
Order is delivered to the Seller, or within any extension of that period to
which the parties shall have agreed, Motorola shall either (i) cancel the
Stop Work Order, or (ii) terminate the work covered by such order as
provided in the "Default" or the "Termination" article of the contract.
Only written notice by Motorola shall constitute cancellation of a Stop
Work Order issued under this article.
(b) If a Stop Work Order issued under this article is canceled or the period of
the order or any extension thereof expires, the Seller shall resume work.
An equitable adjustment shall be made in the delivery schedule or contract
price, or both, and the contract shall be modified in writing accordingly,
if (i) the Stop Work Order results in an increase in the time required for,
or in the Seller's cost property allocable to, the performance of any part
of the contract, and (ii) the Seller asserts a claim at any time prior to
final payment under this contract. Failure to agree to any adjustment
shall be a dispute within the meaning of the "Disputes" article of this
contract.
(c) If a Stop Work Order is not canceled and the work covered by such order is
terminated for reasons other than default, reasonable costs resulting from
the Stop Work Order shall be allowed in arriving at the termination
settlement.
(d) If a Stop Work Order is not canceled and the work covered by such order is
terminated for default, the reasonable costs resulting from the Stop Work
Order shall be allowed by equitable adjustment or otherwise.
18. WARRANTY. Seller warrants that for a period of [***] after final acceptance
by Motorola, each article delivered hereunder, including all components and
materials included therein, will be free from defects in material and
workmanship, and will meet and comply with all requirements of samples, drawings
and specifications referred to or incorporated by reference herein. If Seller is
responsible for the design of the supplies, Seller further warrants that the
supplies will be free from defects in design. It is recognized and understood by
Seller that the supplies purchased hereunder are to be used with, installed or
incorporated into equipment or other supplies to be made by Motorola and
subsequently resold and that defects in the supplies purchased hereunder may
cause special damage to Motorola. Seller further warrants that any services
ordered hereunder will be done by careful, efficient and qualified workers in
the best and most workmanlike manner and that the services will conform to the
requirements hereof and to the highest standards applicable in the field. The
foregoing provisions shall survive acceptance, shall be construed as conditions
as well as warranties and shall extend equally to Motorola and its customers.
[***] Confidential Treatment Requested.
<PAGE>
19. PROPERTY AND TOOLING.
(a) All materials, tooling, equipment or facilities (i) provided to Seller by
Motorola on other than a charge basis; or (ii) furnished by Seller but
specified in this contract to be retained for use and later delivered to
Motorola, are hereby identified as "furnished property". Title to
furnished property provided to Seller shall at all times remain in
Motorola. Title to furnished property specified to be delivered to
Motorola shall pass to Motorola upon its deliver to or completion of
fabrication by Seller, as appropriate. Seller assumes the risk of and
shall be responsible for any and all loss and/or damage to furnished
property except for reasonable wear and tear and except to the extent that
such property is consumed in the performance of this contract or
incorporated into supplies delivered hereunder.
(b) In the manufacture of the supplies to be delivered under the contract,
Seller agrees to use jigs, fixtures, dies, molds, patters and other devices
and manufacturing aids (herein called "tooling") in all processes and
otherwise to perform the work in a manner that will accomplish the maximum
degree of interchangeability and uniformity of the end items to be
delivered hereunder and their subassemblies or components. Seller further
agrees to establish, as part of its inspection procedure, a system for
inspection of all tooling and end items, subassemblies, or components.
Whenever any of the tooling becomes incorrect, worn, damaged, or defective
to such an extent that interchangeability or uniformity of and items,
subassemblies or components are adversely affected, as determined by
Seller's inspectors or any Motorola inspectors at Seller's plant, the
tooling will be removed from service and will no longer be used in the
manufacture of end items, subassemblies or components for delivery under
this contract.
(c) Seller shall give Motorola written notice within ten (10) days after
accomplishment of any changes in tooling or performance made because of
this article.
20. PACKING AND SHIPPING.
(a) All delivered supplies shall be preserved, packaged, packed and marked in
accordance with instructions or specifications referred to or incorporated
by reference in this contract. In the absence of such instructions or
specifications, best commercial practice for domestic shipments shall
apply, adequate (i) to assure safe arrival at destination; (ii) for storage
and for protection against the elements and transportation; (iii) to comply
with carrier regulations appropriate to the method of shipment used and
(iv) to secure lowest transportation cost.
(b) All shipments against this contract to be forwarded on one day via the same
route must be consolidated. A packing list, showing Motorola's contract
number, contract item number and description of contents must be included
in each package and a separate copy mailed to the address shown in (d)
below on the date of shipment.
<PAGE>
(c) Motorola's contract number must appear on all packages, boxes, bills of
lading, invoices, correspondence and other documents pertaining to this
contract.
(d) At the time of delivery of any shipment of supplies to a carrier for
transportation, the Seller shall give prepaid notice of shipment to
Motorola at the address shown on the first page of this contract,
Attention: Purchasing, and to such persons or installations as may be
designated by Motorola.
(e) If Seller's deliveries fail to meet schedule, Seller at its expense will
use that expedited method of shipment requested and specified by Motorola
until all deficiencies are corrected and deliveries are on schedule.
21. WAIVER.
(a) Any failure or delay on the part of Motorola to exercise any right, power
or privilege hereunder or to insist upon observance of performance by
Seller of the provisions of this contract shall not be deemed a waiver
thereof. Payments of any sum by Motorola to Seller or receipt by Motorola
of any products or work with knowledge of any default by Seller shall not
be deemed a waiver of such default or any other or subsequent default.
(b) No waiver shall be binding on Motorola unless it is in writing and designed
by an authorized representative of Motorola. Any such written waiver shall
apply only to the specific default or to the instance specified.
(c) The rights and remedies of Motorola hereunder shall be cumulative and are
not exclusive of each other and my be exercised separately or concurrently
as Motorola determines.
22. PLANT VISITS. During performance of this contract, authorized
representatives of Motorola shall have the right to visit Seller's facilities
involved in the performance hereunder at any time during normal business hours
to review, monitor, coordinate or expedite performance and to secure necessary
information for such purposes. Such visits will be coordinated with Seller's
cognizant personnel to minimize any effect on Seller's normal operations.
23. ADVERTISING AND PUBLICITY. Seller shall not issue any advertising, news
releases, publicity or otherwise disclose any information about this contract
without Motorola's written consent, except as is required directly in connection
with performance of the work hereunder.
<PAGE>
24. MATERIAL SAFETY DATE SHEETS. All chemicals purchased under the terms and
conditions of this contract shall be accompanied with a Material Safety Data
Sheet, provided by the chemical contractor. All chemical contractors certify by
acceptance of this contract that chemicals purchased are on the Toxic Substances
Control Act, 15 U.S.C. Section 2601, et seq. Chemical inventory, or are subject
to an exemption and that such exemption is specified in the Material Safety Data
Sheet.
25. OZONE DEPLETING SUBSTANCES. The Seller of any material purchased under
this contract is certifying by acceptance of this contract that either the
material is not manufactured with any substance that harms public health and
environment by destroying ozone in the upper atmosphere or, if the material was
manufactured with ozone destroying substances, the manufacturer/supplier
certifies that the material is labeled according to the Clean Air Act Amendments
of 1990 Public Law 101-549 Section 611(d)(2) or any alternative labeling that
the Environmental Protection Agency has determined acceptable.
26. RADIOLOGICAL HEALTH. In accordance with Title 21, Code of Federal
Regulations (CFR), Chapter 1, Subchapter J, RADIOLOGICAL HEALTH, all suppliers
of electronic products are required to certify that such electronic products
conform to all applicable radiation safety certification requirements specified
therein. Unless Seller obtains an exception therefrom and furnishes a written
confirmation of such exemption to Motorola, Seller agrees to comply with such
applicable certification requirements on all electronic products furnished to
Motorola under this contract and require similar certification compliance from
any of its subcontractors of electronic products where such products will be
delivered to Motorola, or its customers, as an end item or component thereof
under this contract. Seller agrees to provide evidence of certification, upon
request, for itself and its subcontractors. Seller further agrees to indemnify
and hold Motorola and its customers harmless from any claim, suit, loss,
cost, damage, expense including attorneys' fees, or liability arising out of, as
a result of, or in connection with Seller's (or its subcontractor's) failure to
so certify or comply with the applicable requirements as specified above.
27. MOTOROLA ACCESS. For the purpose of observing the status and quality of
Seller's performance of work, Seller shall afford a limited number of employees
of Motorola and employees of any customer of Motorola, and their designees as
approved by Seller, subject to the Article herein entitled "EXPORT CONTROL",
access to all contract activities including design reviews, systems and
subsystems testing, program management reviews, test reviews and failure reviews
at the Seller's facilities on a noninterference basis. Seller's approval of any
designee requested by Motorola or Motorola's customer shall not be unreasonably
withheld; provided, however, that such approval may be withheld and Seller has
reasonable concerns as to the protection of its proprietary information or
potential injury to its competitive market position(s).
28. EXPORT CONTROL. Seller shall not export, directly or indirectly, any
information or technical data disclosed under this contract to any individual or
country for which the
<PAGE>
U.S. Government, at the time of export, requires an export license or other
governmental approval, without first obtaining such license or approval. Seller
shall indemnify and hold Motorola harmless for all claims, demands, damages,
costs, fines, penalties, attorney's fees and other expenses arising from
Seller's failure to comply with this clause.
29. TERMINATION. Motorola may terminate all or any part of this contract at
any time by written or telegraphic notice to Seller, specifying the extent to
which the contract is terminated and the date upon which such termination
becomes effective. Motorola will pay Seller's cost, property allocable to the
termination together with reasonable profit on any work performed prior to
the effective date of termination. IN NO EVENT SHALL MOTOROLA BE LIABLE FOR
LOST OR ANTICPATED PROFIT, OR UNABSORBED INDIRECT COSTS OR OVERHEAD, NOR SHALL
MOTOROLA'S TOTAL LIABILITY FOR SUCH TERMINATION EXCEED THE UNNPAID BALANCE OF
THE CONTRACT PRICE.
30. ENTIRE AGREEMENT. This contract document manifests integration of the
entire agreement of the parties hereto and shall supersede all correspondence,
offers, negotiations, and agreements pertaining to the subject matter whether
prior to or contemporaneous with this contract. Any work done under any
previous Letter Contract, Purchase Order or Notice of Award relating to the
subject matter of this contract shall be considered work done under this
contract.
31. GOVERNING LAW. It is mutually understood and agreed that this contract
shall be governed by the laws of the State of Arizona, except for its conflict
of law rules, both as to interpretation and performance. Venue for any
dispute arising hereunder shall be in Arizona.
32. SOCIO-ECONOMIC COMPLIANCE CLAUSES. The Seller shall comply with the
following:
(a) Equal Employment Opportunity and Affirmative Action. This order
incorporated by reference: (a) all provisions of 41 C.F.R. 60-1.4 and 60-
2, as implemented by Federal Acquisition Regulation (FAR) 52.222-26(b)(1)-
(11), pertaining to the Equal Opportunity clause; (b) all provisions of 41
C.F.R. 60-250, as implemented by FAR 52.222-35 and FAR 52.222-37,
pertaining to employment reports and affirmative action for disabled
veterans and veterans of the Vietnam Era; and (c) all provisions of 41
C.F.R. 60-741, as implemented by FAR 52.222-36, pertaining to affirmative
action for handicapped/disabled workers.
(b) EEO-1 Representation. Seller represents that it has submitted Standard
Form 100 (EEO-1) compliance reports as required by 41 C.F.R. 60-1.7, as
implemented by FAR 52.222-22.
(c) Certification of Nonsegregated Facilities. Seller certifies that, in
compliance with 41 C.F.R. 60-1.8, as implemented by FAR 52.222.-21, it does
not and
<PAGE>
will not maintain or provide for its employees any segregated facilities at
any of its establishments, and that it does not and will not permit its
employees to perform their services at any location under its control where
segregated facilities are maintained. Seller agrees that breach of this
certification is in violation of the Equal Opportunity clause incorporated
herein. Seller further agrees that it will either: (a) obtain
certifications of nonsegregated facilities from proposes subcontractors for
specific time periods; or (b) obtain certifications of nonsegregated
facilities from proposed subcontractors before the award of any
subcontracts subject to the Equal Opportunity clause, will retain such
certifications in its files and will forward the Notice set forth in FAR
52.222-21 to proposed subcontractors.
33. YEAR 2000 COMPLIANCE. The Seller expressly guarantees and warrants that
the software and/or hardware it is providing under this contract/subcontract is
Year 2000 Complaint. Year 2000 Compliant means that the software and/or
hardware accurately processes date/time data (including, but not limited to,
calculating, comparing, and sequencing) from, into and between the twentieth
and twenty-first centuries and the years 1999 and 2000 and leap year
calculations. Furthermore, Year 2000 compliant technology, when used in
combination with other information technology shall accurately process date/time
date if the other information technology properly exchanges date/time data with
it. The software design to ensure Year 2000 compatibility shall include, but
not be limited to, date, date century recognition, and calculations that
accommodate same century and multi-century formulas and date values and
date data interface values that reflect the century.
34. DISCONTINUANCE OF PRODUCT. Should Seller decide to discontinue manufacture
of the product(s) purchased by Motorola under the purchase order, Seller (1)
shall provide written notice to Motorola of the intended product discontinuance;
and (2) shall provide Motorola a minimum of twelve (12) months from the written
notification date to allow Motorola to place the "lifetime buy" purchase orders
for the product(s) at a unit price to be negotiated, but in no event higher than
the unit price provided in this purchase order. IN the event one or multiple
"lifetime buy" purchase orders are made during such twelve (12) month period,
Seller shall deliver the purchased product(s) to Motorola no later than six (6)
months after the end of the "lifetime buy" period. Seller's obligation under
this clause shall extend for five (5) years beyond the date of issue of this
purchase order, irrespective of whether their purchase order is closed within
the five (5) year period.
35. SUBCONTRACTS FOR COMMERCIAL ITEMS AND COMMERCIAL COMPONENTS
(a) Commercial Item, as used in this clause, has the meaning contained in the
clause at FAR 62.202-1, Definitions. Subcontract, as used in this clause
includes a transfer of commercial items between divisions, subsidiaries or
affiliates of the Contractor or subcontractor (Seller) at any tier.
<PAGE>
(b) To the maximum extent practicable, the Seller shall incorporate and require
its subcontractors at all tiers to incorporate, commercial items or
nondevelopmental items as components of items to be supplied under this
purchase order.
(c) Notwithstanding any other clause of this purchase order, the Seller is not
required to include any FAR provision or clause, other than those listed
below to the extent they are applicable and as may be required to establish
the reasonableness of prices under FAR Part 13, in a purchase order at any
tier for commercial items or commercial components. (1) 52.222-24 Equal
Opportunity (E.O. 11246); (2) 52.222-36 Affirmative Action for Special
Disabled and Vietnam Era Veterans (38 U.S.C. 4212(e)); (3) 52.222-3C
Affirmative Action for Handicapped Workers (29 U.S.C. 793).
(d) The Seller shall include the terms of this clause, including this paragraph
(d), in purchase orders awarded under this purchase order.
36. NEW MATERIAL. Unless the Purchase Order specifies otherwise, Seller
represents that the materials (including, but not limited to raw materials,
parts, items, components, supplies and end products) delivered to Motorola under
this Purchase Order are new. New, as used in this clause, means previously
unused and composed of previously unused materials. If the Seller believes that
furnishing other than new materials will be in Motorola's interest, Seller shall
notify Motorola in writing and request authorization to use such materials.
37. ASSIGNMENT.
(a) No assignment or other transfer in whole or in part of this contract or of
any monies due or to become due hereunder shall be binding upon Motorola
without written consent thereto by Motorola. Any claim, demand or request
for payment under this contract shall be subject to setoff or recoupment
for any present or future claims which Motorola or any of its affiliated
companies may have against Seller or any of its affiliated companies.
(b) No contract shall be made by Seller with any other party for furnishing any
of the completed or partially completed supplies or services herein
contracted for without the prior written approval of Motorola.
<PAGE>
EXHIBIT 10.11
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT is made this 14th day of October 1999 BY AND BETWEEN:-
(1) Telaxis Communications Corporation whose registered office is situated at
20 Industrial Drive East Deerfield, MA 01373-0109 ("Telaxis")
AND
(2) California Amplifier, Inc. whose registered office is situated at 460 Calle
San Pablo, Camarillo, California 93012, USA ("Supplier")
IT IS AGREED AS FOLLOWS:
1. DEFINITIONS
This Agreement incorporates certain phrases which are defined as follows:
"Design Verification Tests" means the tests conducted by Supplier after
design of Products to ensure that the design meets the Product
Specifications. Design Verification Tests shall be defined by Supplier, and
approved by Telaxis in accordance with Supplier's normal guidelines and
procedure for developing such tests.
"Delivery" means the shipment of Product by Supplier from its facility to
Telaxis.
"Release to Manufacturing" means Supplier's normal procedure to release
products into its manufacturing floor, after Product passes its Design
Verification Tests.
"Acceptance Tests" means the tests conducted by Supplier, and approved by
Telaxis while producing Products to ensure that the Product Specifications
are met. The Acceptance Tests are detailed in Schedule 3 to this Agreement
and may be modified from time to time by the parties, in order to
facilitate cost reduction and design changes to Products.
"Confidential Information" derives its meaning from the non-disclosure
agreement dated June 1, 1998 , executed by the parties.
"Force Majeure" means delay in performing obligations under the Agreement,
which is caused by (i) Acts of God (ii) outbreak of hostilities, riot,
civil disturbance, acts of terrorism (iii) act of any government or
authority (iv) fire, explosion, flood, fog or bad weather (v) power failure
(vi) wordwide shortage of materials and (vii) any cause or circumstance
beyond either party's reasonable control.
"Intellectual Property Rights" means patents, registered and unregistered
designs, copyright and all other intellectual property protection wherever
in the world enforceable.
"Translator PWB", "Phase 0 Product", "Phase 2 Product", "Product" and
"Products" means those products to be delivered under this Agreement by the
Supplier to Telaxis as listed in Schedule 4.
"Product Units" means the aggregate quantity of Phase 0 Products, Phase 2
Products and Translator PWBs purchase by Telaxis from Supplier.
Page 1 of 15
<PAGE>
"Product Specifications" are those specifications to which Products must
conform. Product Specifications are listed in Schedule 4, and may from time
to time be revised by mutual agreement by the parties.
"Production Delivery Schedule" means a schedule such as will be finalized
for each Product at the time of Release to Manufacturing of that product
and subsequently modified by mutual agreement or clause 8 as applicable.
"Purchase Order" means Telaxis's standard purchase order, provided however,
to the extent that such purchase order contains standard terms or
conditions in conflict with terms and conditions of this Agreement, this
Agreement shall prevail, unless the variance is agreed to by both parties
in writing.
"Product Availability" means the availability for prototype and production
quantities of Products, as specified in Schedule 2, and which from time to
time will be modified by the parties, to reflect changes in development
schedule.
2. SCOPE OF WORK
2.1 The Supplier shall have the personnel capacity necessary to build,
integrate and test Products to be supplied to Telaxis. Telaxis agrees to
supply all required test equipment and fixtures to test Phase 0 Product and
Phase 2 Product. Supplier shall provide assembly and test equipment to
build and test Translator PWBs and facilities to assemble Phase 0 Product
and Phase 2 Product. As additional capacity is required from time to time,
the parties will determine which party shall supply additional capital
equipment and facilities through mutual agreement. The list of capital
equipment necessary to integrate and test Products is listed in Schedule 3.
2.2 The Supplier shall develop Phase 2 Products to meet Product Specification
for supply to Telaxis.
2.3 Telaxis shall supply antenna assemblies and millimeter wave modules that
are incorporated into Phase 0 Products and Phase 2 Products on consignment
to Supplier. Telaxis shall supply all material, except any that may be
listed on Schedule 5, to Supplier to allow Supplier to produce Phase 0
Products.
2.4 The Supplier shall manufacture and sell Products in accordance with
Schedule 1. Telaxis shall purchase Products in accordance with Schedule 1.
If Telaxis does not purchase in accordance with Schedule 1 then Telaxis
shall pay to the Supplier cancellation charges as set forth herein.
2.5 Both parties submit exclusively to the terms and conditions of this
Agreement for the supply of Product by the Supplier and purchase by
Telaxis. No other terms shall have any force and effect and no course of
dealing, usage of trade or course of performance shall be relevant to
explain or modify any terms expressed in this Agreement unless such
amendments or modifications are executed in writing and agreed by both
parties.
3. TERM & TERMINATION OF AGREEMENT
3.1 This Agreement shall remain in place until both parties have fulfilled all
the requirements placed on them hereunder, or December 30, 2002, whichever
is earlier, or unless terminated for the reasons specified in clause 3.2
and 3.3.
3.2 The Agreement may be terminated by either party if the other party commits
a material breach of any of the terms and conditions of this Agreement and
fails to remedy such breach within 30 days after receipt of a written
notice specifying the breach or default. Notwithstanding the foregoing,
Supplier may terminate this Agreement if Telaxis fails to pay an undisputed
amount hereunder and fails to remedy such breach within 15 days after
receipt of a written notice specifying the breach.
Page 2 of 15
<PAGE>
3.3 3.3.1 This Agreement shall terminate immediately upon written notice from
either party in the following events:
i) Upon assignment of all the assets of either party creditors. for the
benefits of its
ii) Upon either party becoming insolvent.
iii) Upon either party becoming bankrupt or being entry into receivership.
placed in liquidation or upon
3.3.2 Telaxis may terminate this Agreement by written notice to the
Supplier if the prices for the Phase 2 Products are not equal to or less than
the numbers set forth below by the dates set forth below:
- --------------------------------------------------------------------------------
Date Price
- --------------------------------------------------------------------------------
[***] [***]
- --------------------------------------------------------------------------------
[***] [***]
- --------------------------------------------------------------------------------
[***] [***]
- --------------------------------------------------------------------------------
3.3.3 Telaxis may terminate this Agreement by written notice to the
Supplier if the prices for the Phase 2 Products are not equal to or less than
the numbers set forth below by the dates set forth below. Prices in the table
below shall be modified to reflect any change in specifications based on cost
increases (including consistent markups).
- --------------------------------------------------------------------------------
Date Price
- --------------------------------------------------------------------------------
[***] [***]
- --------------------------------------------------------------------------------
[***] [***]
- --------------------------------------------------------------------------------
[***] [***]
- --------------------------------------------------------------------------------
3.4 Upon termination of this Agreement both parties shall return to the other
party all documents and materials (and all copies) containing the other
party's Confidential Information and certify in writing to the other party
that it has complied with the requirements of this clause.
3.5 Upon termination of the Agreement, Supplier shall return to Telaxis all
material, capital equipment and tooling which has been paid for by Telaxis
except as set forth in the following sentence, unless otherwise agreed upon
by the parties. If termination is due to Telaxis's material breach with
regard to payment of Supplier invoices, Supplier may dispose of material
and capital equipment and deduct amounts owed from proceeds.
3.6 Termination of this Agreement shall be without prejudice to the rights of
either party which may have accrued prior to the date of such termination.
3.7 Termination of this Agreement for reasons other than 3.2 or 3.3, shall not
relieve the Supplier of the obligation of fulfilling orders already placed
by Telaxis with the Supplier, and shall not relieve Telaxis of the
obligation of purchasing Products already ordered from Supplier under the
Agreement prior to its termination, unless agreed otherwise by both
parties.
3.8 Upon termination of this Agreement by Telaxis pursuant to Section 3.3.2 or
3.3.3 above, Telaxis shall pay Supplier a sum equal to the cost of work in
process material and any other material committed to by Supplier that is
not usable in other product, limited to the scheduled deliveries within
[***] days (or [***] days for any material that has a longer lead time than
[***] days) of termination plus the lesser of (a) non-recurring capital,
development and tooling costs incurred by Supplier to the date of
termination multiplied by a fraction, the numerator of
[***] Confidential Treatment Requested.
Page 3 of 15
<PAGE>
which shall be the number of Products purchased by Telaxis under this
Agreement and the denominator of which shall be [***] and (b) the amount
that would have been paid by Telaxis pursuant to the first two sentences of
the last paragraph of Schedule 1.
4. ORDERING, DELIVERY & INVOICING
4.1 Telaxis shall order the Products under this Agreement by placing a Purchase
Order. The Purchase Order shall not be in conflict with the terms of this
Agreement. The Purchase Order shall be either in writing or by facsimile.
Each Purchase Order will state:
4.1.1 the type and quantity of Products required
4.1.2 the shipping address
4.1.3 the purchase price of Products
4.1.4 a reference to this Agreement
Telaxis shall place an initial Purchase Order under this Agreement in
accordance with Schedule 1 within 30 days of execution of this Agreement.
Delivery dates for Products will be determined in accordance with
Article 8.
4.2 The Supplier shall accept and acknowledge in writing within 5 business days
each Purchase Order placed in accordance with Section 4.1.
4.3 The terms of all purchases and Deliveries shall be FCA in accordance with
Incoterms 1990.
5. FORCE MAJEURE
Not withstanding anything contained herein or in any Schedule to the
contrary, neither party will be liable for any delay or non performance of
its obligations under this Agreement as a result of circumstances caused by
a Force Majeure event. In these circumstances the party affected by a Force
Majeure event must promptly notify the other party in writing of the reason
for its delay and its likely duration. The delaying party's obligations
shall be suspended during the period of delay. Force Majeure shall not
apply to payment due for Products ordered by Telaxis and shipped by
Supplier and shall not apply to payment of cancellation charge identified
in Schedule 1.
6. ACCEPTANCE TEST
6.1 Prior to Delivery of Products by Supplier to Telaxis, Supplier shall
conduct Acceptance Tests to ensure that Products meet their specifications.
6.2 Both the Supplier and Telaxis shall each appoint a representative who shall
liaise and co-operate with each other in all matters pertaining to
Acceptance Testing.
6.3 The Supplier shall allow Telaxis to attend and witness Acceptance Tests at
the Supplier's premises or any of the Supplier's subcontractors premises if
it so wishes. Telaxis shall give Supplier 5 working days written notice of
its intention to witness Acceptance Tests.
6.4 Product acceptance shall occur or be deemed to occur upon Delivery of
Product.
7. QUALITY REQUIREMENTS
The Supplier shall comply with ISO 9001 requirements when performing its
obligations under this Agreement.
8. PRODUCTION DELIVERY SCHEDULE
8.1 The parties will finalize a Production Delivery Schedule for each Product
upon issuance of each Purchase Order or Release to Manufacturing of that
Product, whichever comes later.
[***] Confidential Treatment Requested.
Page 4 of 15
<PAGE>
8.2 Telaxis shall have the right to modify the Production Delivery Schedule in
accordance with the following parameters:
8.2.1 Deliveries scheduled within 1 month of date of modification shall
not be permitted to change.
8.2.2 Deliveries scheduled between 1 month and 2 months of date of
modification may increase or decrease once by 25% from the previous
schedule for said time period.
8.2.3 Deliveries scheduled between 2 months and 3 months of date of
modification may increase or decrease once by 50% from the previous
schedule for said time period.
8.2.4 Deliveries scheduled between 3 months and 4 months of date of
modification may increase or decrease once by 75% from the previous
schedule for said time period.
Deliveries in excess of 4 months of date of modification will have no
restrictions on change.
8.3 Telaxis may have to issue a stop work order under the following conditions:
1. Customer driven engineering change notice
2. Telaxis driven engineering change notice
3. Customer order cancellation
If Telaxis issues a stop work order due to a customer cancellation, Telaxis
will purchase all work in process material and any other material committed
to by Supplier that is not usable in other product, limited to the
scheduled deliveries within [***] days (or [***] days for any material that
has a longer lead time than [***] days) of the issuance of the stop work
order. Telaxis will pay the actual costs incurred up to the date of the
stop work order, plus normal overhead, G&A and profit. Product paid for
under these conditions will be considered part of the Schedule 1 quantity
commitment.
9. WARRANTY
9.1 The Supplier warrants that the Products Delivered under this Agreement will
be free from defects in material and workmanship and conform to Product
Specifications, provided Product is used for its intended purpose and has
not been abused or subjected to conditions outside of its specified
parameters.
9.2 The Supplier warrants that the Product is free from any encumbrance,
charge, lien or similar right.
9.3 If within [***] months of Delivery of the Products, Telaxis gives notice in
writing to the Supplier of any defect in the Products then the Supplier
shall free of charge either repair or at its option replace the defective
Products returned to Supplier within [***] working days from Supplier's
receipt of Products. Freight and insurance charges for shipment of
defective Products to Supplier shall be borne by Telaxis and for shipment
of repaired or replacement Products back to Telaxis or Telaxis's customer
shall be borne by Supplier. Telaxis may purchase a limited number of
Products at cost to permit faster replacements of Products.
9.4 Products shall be returned to the Supplier under the Suppliers RMA number.
Said number shall not be withheld provided that Telaxis supplies the serial
number of the defective Products.
9.5 The provisions of Section 9.3 shall be the exclusive remedy for any
liability of Supplier under Sections 9.1 and 9.2 above. THE WARRANTIES SET
FORTH IN SECTION 9.1 AND 9.2 ABOVE ARE IN LIEU OF ALL OTHER WARRANTIES AS
TO PERFORMANCE OF THE PRODUCTS, EXPRESS OR IMPLIED, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.
[***] Confidential Treatment Requested.
Page 5 of 15
<PAGE>
10. PRODUCT CHANGE/DISCONTINUED PRODUCT
10.1 At any time during the performance of this Agreement if the Supplier
proposes to modify any of the specifications to any of the Products then
the Supplier must provide to Telaxis in writing the proposed change and
associated price changes. Telaxis will then have 60 days to review and
obtain approval from their customer of the proposed change. If the
change is approved then an implementation plan must be developed so that
there is no negative financial impact to Telaxis or its customers.
10.2 Telaxis shall have the right to incorporate engineering changes into a
Product under the following guideline.
10.2.1 Telaxis will normally provide a minimum of 30 days notice to incorporate
a change to a Product in production. However, it is recognised by both
parties that a customer driven change may cause a production stop order
to be issued and that the change may have to be incorporated
immediately.
10.2.2 Upon receiving the engineering change notice and as soon as possible
but, in no case more than 10 working days from receiving the notice, the
Supplier will provide a detailed quote of the price of the change based
on cost (including obsoleted material at Supplier and in its supply
chain) and consistent mark-up and a timetable to incorporate the change.
10.2.3 The engineering change will be implemented in accordance with the
agreed-to timetable and price.
10.3 If the Supplier wishes to discontinue the manufacture of any Product
then the Supplier must give Telaxis notice of such discontinuance and
continue to accept Purchase Orders for Product received up to 6 months
from the notice and for scheduled delivery within 18 months from such
notice. Supplier shall fulfill all such Purchase Orders.
10.4 If Supplier wishes to discontinue to manufacture all Products, Telaxis
may purchase from Suppliertooling and capital equipment used to
manufacture the Products, at a price to be agreed upon by the parties.
11. REGULATORY APPROVALS
11.1 Telaxis is responsible for obtaining all regulatory approvals for
Products. Supplier shall supply Telaxis and Telaxis shall purchase
protoypes and production units of Products as reasonably necessary to
facilitate testing requirements.
12. PACKAGING
Except as otherwise specified by Telaxis, Supplier will be responsible
for packaging the Product and such packaging shall be approved by
Telaxis.
13. PRICE AND PAYMENT
The price and payment terms are specified in Schedule 1. Telaxis will
make payment for amounts due in accordance with Schedule 1 within [***]
days of receipt of an invoice quoting the Purchase Order.
14. IPR INDEMNITY
14.1 The Supplier shall indemnify Telaxis against any claim for infringement
of Intellectual Property Rights from Telaxis's use or sale of the
Products provided by the Supplier provided that:
[***] Confidential Treatment Requested.
Page 6 of 15
<PAGE>
i) the infringement or alleged infringement is due to design changes made
by Supplier to Telaxis's design of Product; and
ii) Telaxis notifies the Supplier promptly if it is aware of any alleged
infringement; and
iii) Telaxis makes no admission without the Supplier's written consent;
and
iv) Telaxis assists the Supplier to conduct all negotiations and
litigation where so requested.
14.2 If at any time any allegations of infringement of IPR is made in respect
of the Product or any part thereof or in the Supplier's opinion is likely
to be made, the Supplier may at its own expense modify or replace the
infringing Product with other Product with same fit, functionality and
performance in order to avoid the infringement and Telaxis will ensure
that the Supplier is provided with all reasonable assistance required to
exercise such rights.
14.3 Telaxis reciprocally indemnifies the Supplier in relation to infringement
or alleged infringement due to designs or specifications which Telaxis
supplies and in relation to any design or processes which the Supplier
uses at the request or with the consent of Telaxis.
14.4 The indemnity under sub-clause 14.1 above shall not apply to infringement
by use of the Products or any part thereof with any other product not
supplied by the Supplier where there would be no infringement without such
combination, nor to infringement by use of the Product or any part thereof
in a manner which could not be reasonably foreseen by the Supplier at the
effective date of this Agreement unless, in either case, such use is
consented to by the Supplier in writing in response to a request for a
consent from Telaxis making reference to IPR infringement.
16. LIMITATION OF LIABILITY
In no circumstances shall either party be liable for any loss of profit,
business contracts, revenues or any special indirect or consequential
damage of any nature. This section shall not limit or restrict any
recourse or remedies pursuant to the non-disclosure agreement discussed in
Section 19 below.
19. CONFIDENTIALITY
The parties have executed a non-disclosure agreement dated June 1, 1998.
This agreement is incorporated herein by reference and shall govern
disclosure of Confidential Information by either party.
20. NOTICES
20.1 Any notice, which expression includes any other communication whatsoever
shall be sufficiently served if it is sent by a recognised courier service
to the other party at such address appearing below or by facsimile to the
numbers shown below with confirmation of proper transmission. Every notice
shall be deemed to have been received and given within three (3) business
days if sent by a recognised courier service, or in the case of fax, such
notice shall be deemed to have been received and given at the time of
transmission.
Telaxis Communications Corporation California Amplifier, Inc.
Attn: Chief Executive Officer Attn: Chief Executive Officer
20 Industrial Drive East 460 Calle San Pablo
Deerfield, MA Camarillo, California
01373 93012
Fax: (413) 665-0089 Fax: (805) 482-5842
Page 7 of 15
<PAGE>
21. SEVERABILITY
21.1 If any part, term or provision of this Agreement not being of a
fundamental nature should be held illegal or unenforceable the validity or
enforceability of the remainder of this Agreement shall not be affected.
22. WAIVER
22.1 No failure to exercise and no delay in exercising on the part of either
party of any right, power or privilege preclude the enforcement of any
other right, power or privilege. Nor shall the waiver of any breach of any
such provision herein be taken or held to be a waiver of any subsequent
breach of any such provision or be a waiver of the provision itself. Any
waiver to be effective must be in writing.
27. ARBITRATION
This Agreement shall be construed in accordance with and governed by the
Laws of the State of Delaware. Any dispute, controversy or claim arising
out of or relating to this Agreement, or the breach, termination or
invalidity thereof, shall be settled by final and binding arbitration
conducted pursuant to the Rules of Conciliation and Arbitration of the
American Arbitration Association (AAA); provided, however, that nothing
herein shall be deemed to prohibit any party from seeking from relevant
courts of law immediate injunctive relief to prevent or restrain
infringement of valid intellectual property rights. Such arbitration shall
be conducted in Boston, Massachusetts if commenced by the Supplier and in
Los Angeles, California if commenced by Telaxis. The number of arbitrators
shall be three (3) with each party appointing one arbitrator and those two
arbitrators choosing the third arbitrator. If a party hereto fails to
appoint an arbitrator, such arbitrator shall be appointed by the AAA. If
the arbitrators chosen by the parties (or by the AAA as the case may be)
are unable to agree upon a third arbitrator, such third arbitrator shall
be appointed by the AAA. A judgement upon any award rendered in such
arbitration may be entered in any court having jurisdiction over the party
against whom the award is made.
28. OWNERSHIP OF INVENTIONS
28.1 Any patents, know-how, trade secrets or other technical information made
available to Supplier by Telaxis in connection with the development and
manufacture of the Products shall remain the property of Telaxis;
provided, however, Telaxis hereby grants Supplier a royalty-free license
to use such information in connection with the manufacture of Products for
sale to Telaxis. Any patents, know-how, trade secrets or other technical
information made available to Telaxis by Supplier in connection with the
development and manufacture of the Products shall remain the property of
Supplier; provided, however, Supplier hereby grants Telaxis a royalty-free
license to use such information in connection with the resale and use of
Products. Any and all patents, know-how, trade secrets, or other technical
information discovered, developed or designed in connection with the
transactions contemplated by this Agreement shall be the property of the
Supplier; provided, however, (a) the Supplier hereby grants Telaxis a
royalty-free license to use such information in connection with the resale
and use of the Products and (b) the Supplier hereby grants Telaxis a
royalty-free license to use such information in connection with the
manufacture, resale and use of the Products effective only if Telaxis
terminates this Agreement pursuant to Section 3.3.3 above.
28.2 Supplier agrees to keep confidential technical specifications for
Products, whether such specifications were provided to Supplier by Telaxis
or were established by Supplier in connection with development of the
Products.
28.3 Supplier agrees that it will not include Products among its standard
product offerings and that it will not offer, sell or otherwise give or
deliver any Products, or any other products or components of products
using or incorporating any of Telaxis's intellectual property (as
described in Section 28.1 above), to any other person or entity. Further,
Supplier agrees that it will not use any patents, know-how, trade secrets,
or other technical information discovered,
Page 8 of 15
<PAGE>
developed or designed in connection with the transactions contemplated by
this Agreement to, directly or indirectly, compete with the Telaxis's
millimeter wave broadband communications products.
28.4 Except as set forth in this Agreement, no licence, express or implied,
under any patents, copyrights, trademarks or trade secrets are granted by
Telaxis or Supplier to the other hereunder.
IN WITNESS WHEREOF duly authorised executives on behalf of Telaxis and the
Supplier have executed this Agreement as of the date first written above.
SIGNED BY: [UNREADABLE] SIGNED BY:[UNREADABLE]
---------------------------- -------------------------
on behalf of California Amplifier, Inc. on behalf of TELAXIS COMMUNICATIONS
CORPORATION
NAME: Kris Kelkar NAME: Mervyn N. FitzGerald
TITLE: Vice President TITLE: Senior Vice President
Page 9 of 15
<PAGE>
SCHEDULE 1
PRODUCTS, PRELIMINARY PRICES AND PAYMENT SCHEDULE
Pricing is set out below. All prices are FCA Camarillo, California and do not
include sales, use or any other taxes, duties or freight charges.
- --------------------------------------------------------------------------------
PRODUCT PRICE
- --------------------------------------------------------------------------------
Phase 0 Product [***]
Translator PWA PN# [***]
Transceiver PN# [***]
- --------------------------------------------------------------------------------
Cost Reduced Translator PWA PN# [***]
- --------------------------------------------------------------------------------
Phase 2 Product [***]
Transceiver PN#
- --------------------------------------------------------------------------------
The parties acknowledge that if there are specification changes, the price may
change.
Should Telaxis fail to purchase [***] Product Units prior to April 1, 2002 (or
two years after availability of Phase 2 Products), Telaxis shall pay to the
Supplier a cancellation charge to reimburse Supplier for non-recurring
development costs, plus amounts necessary to cover any material and equipment
purchased by Supplier to produce Products, per the Production Delivery Schedule.
This cancellation charge shall be equal to [***] per unit for the difference
between Product Units purchased by Telaxis during this period and [***].
Product for which a fee is paid pursuant to Section 8.3 shall be included in the
[***] Product Unit minimum. This cancellation fee shall not apply (a) unless
the Supplier has offered for sale and has demonstrated its capability and
capacity to offer for sale at least [***] Product Units meeting the
requirements of this Agreement during this period in accordance with the
Production Delivery Schedule or (b) if Telaxis terminates this Agreement
pursuant to Section 3.3.2 or 3.3.3.
[***] Confidential Treatment Requested.
Page 10 of 15
<PAGE>
SCHEDULE 2
PROJECT MILESTONE SCHEDULE
The parties shall use their best efforts to meet the Target Dates set out in the
following schedule.
- ------------------------------------------------------------------------------
PHASE 0 PROJECT SCHEDULE
- ------------------------------------------------------------------------------
NUMBER ITEM DESCRIPTION TARGET DATE
- ------------------------------------------------------------------------------
001 Telaxis to provide to Supplier [***]
missing information
- Phase 0 Product specifications
- Phase 0 Product qualification plan
- Phase 0 PWB function test procedure
- ------------------------------------------------------------------------------
002 Telaxis pre-orders test equipment for [***]
delivery to Supplier on 10/4/99
- ------------------------------------------------------------------------------
003 Agreement execution [***]
- ------------------------------------------------------------------------------
003A Supplier staff to visit Telaxis to [***]
better understand test equipment setup
- ------------------------------------------------------------------------------
004 Prototype run for Phase 0 PWB [***]
- Supplier to ship 10 units to
Telaxis
- Supplier to retain 10 units
- Cal Amp technician to Telaxis [***]
- ------------------------------------------------------------------------------
005 Telaxis to assemble 10 complete [***]
transceivers using Supplier produced
PWBs and ship to Supplier
- ------------------------------------------------------------------------------
006 Test Equipment available at Supplier [***]
facility [***]
- ------------------------------------------------------------------------------
007 Supplier and Telaxis to commission [***]
test equipment at Supplier facility
- ------------------------------------------------------------------------------
008 Supplier to produce 10 transceivers [***]
using Supplier produced PWB ship to
Telaxis for evaluation
- ------------------------------------------------------------------------------
009 Start pilot run 50 unit target [***]
- 25 units into Supplier design
verification testing
- 25 units to Telaxis for evaluation
- ------------------------------------------------------------------------------
010 Production start [***]
- ------------------------------------------------------------------------------
011 Ramp to 100 units / week [***]
- ------------------------------------------------------------------------------
012 Ramp to 200 units / week [***]
- ------------------------------------------------------------------------------
[***] Confidential Treatment Requested.
Page 11 of 15
<PAGE>
SCHEDULE 2 (CONTINUED)
PROJECT MILESTONE SCHEDULE
- ------------------------------------------------------------------------------
PHASE 2 PRODUCT DEVELOPMENT SCHEDULE
- ------------------------------------------------------------------------------
NUMBER ITEM DESCRIPTION TARGET DATE
- ------------------------------------------------------------------------------
001 Supplier to provide schedule in [***]
greater detail
- ------------------------------------------------------------------------------
002 Partition design into sub-system [***]
blocks
- ------------------------------------------------------------------------------
003 Telaxis and Supplier to finalize [***]
frequency plan
- ------------------------------------------------------------------------------
003 Complete design of sub-system blocks [***]
- ------------------------------------------------------------------------------
004 Test sub-system blocks [***]
- ------------------------------------------------------------------------------
005 Integrate sub-system blocks and [***]
develop prototype 1
- ------------------------------------------------------------------------------
006 Develop prototype 2 [***]
- ------------------------------------------------------------------------------
007 Tooling first article [***]
- ------------------------------------------------------------------------------
008 Pilot run [***]
- ------------------------------------------------------------------------------
009 Design verification testing and [***]
process optimization
- ------------------------------------------------------------------------------
009 Production start [***]
- ------------------------------------------------------------------------------
012 Ramp to 200 units / week [***]
- ------------------------------------------------------------------------------
[***] Confidential Treatment Requested.
Page 12 of 15
<PAGE>
SCHEDULE 3
ACCEPTANCE TEST PLAN
Production verification testing of Products shall be performed by the Supplier
in accordance with a mutually-agreed production test protocol to verify that the
product has been manufactured and assembled in a manner consistent with the
approved design. The basis for the test protocol shall be the test matrix to be
finalized by the parties prior to Release to Manufacturing.
[***]
Commercial terms and conditions in this Agreement are based on the following
information provided by Milliech to Supplier:
[***]
[***] Confidential Treatment Requested.
Page 13 of 15
<PAGE>
SCHEDULE 4
PRODUCT SPECIFICATIONS
Phase 0 Product is the current design of BWA Transceivers which Telaxis
manufactures.
Phase 2 Product is Supplier's cost reduced PWB design, new design for housing
and cover to accommodate revised floor plan of cost reduced PWB, revised
design of millimeter wave board from Telaxis integrated to form a cost
reduced BWA Transceiver with substantially the same specifications as
Phase 0 product
Translator PWB is the microwave circuit PWB used in Phase 2 Product
Product and Products means any and all of the above products.
The parties acknowledge that Phase 2 and Translator PWB are development efforts
with a goal of cost reduction to Phase 0 Product. The parties acknowledge that
specifications for these products may change based on decisions made by mutual
agreement during the development process.
[***]
[***] Confidential Treatment Requested.
Page 14 of 15
<PAGE>
SCHEDULE 5
MATERIAL SUPPLIED BY SUPPLIER
None currently. May be amended from time to time upon mutual agreement by
Supplier and Telaxis.
Page 15 of 15
<PAGE>
EXHIBIT 10.12
LEASE
-----
THIS LEASE, made this 16th day of January, 1990 by and between EDWARD J.
O'LEARY - RAYMOND M. VINCUNAS PARTNERSHIP (hereinafter referred to as
"Landlord") and MILLITECH CORPORATION, a corporation existing under the laws of
the Commonwealth of Massachusetts (hereinafter referred to as "Tenant").
WITNESSETH
Landlord, for and in consideration of the payment of the rent and the
performance of the covenants and agreements by Tenant herein contained, does
hereby lease to Tenant, and Tenant hereby lease from Landlord, the following
described premises:
A free-standing building ("Building 1") of 31,395 square feet of floor
space located on a certain parcel of land on the south side of East Site Access
Road, Deerfield Industrial Park, South Deerfield, Massachusetts, known as Lot 9
containing approximately 3.096 acres ("Parcel 1"). The land is more
particularly described in Exhibit A attached hereto and made a part hereof. A
second free-standing building ("Building 2") consisting of 7200 square feet of
one-story floor space and a 2-story building addition of 24,000 square feet of
floor space located on a certain parcel of land located on the south side of
East Site Access Road, Deerfield Industrial Park, South Deerfield,
Massachusetts, known as Lot 8 containing approximately two (2) acres ("Parcel
2"). Parcel 2 is more particularly described in Exhibit B attached hereto and
made a part hereof. The 24,000 square foot addition to Building 2 is to be
constructed for use by the Tenant in accordance with the plans and
specifications described in Exhibit C which plans and specifications were
supplied to Landlord and Tenant and are incorporated herein by reference.
Building 1 and Building 2 and Parcels 1 and 2 are hereafter collectively
referred to as the "Premises" or "Leased Premises."
ARTICLE 1. TERM
----
a. The initial term of this Lease shall be for ten (10) years commencing on
the Commencement Date as hereinafter defined and expiring without further notice
or act on the tenth anniversary of the Commencement Date, as defined herein,
said period being hereinafter referred to as the "Initial Term."
b. Provided that the Tenant has provided notice thereof one hundred eighty
(180) days prior to the expiration of the immediately preceding lease term, the
Tenant shall have the right to extend the term of this Lease for an additional
five (5) year term upon and subject to the provisions of this Lease.
<PAGE>
ARTICLE 2. COMMENCEMENT DATE
-----------------
The Commencement Date shall be the date upon which the addition to Building
2 is substantially completed in accordance with the plans and specifications
attached hereto as Exhibit C as indicated by the proper municipal authorities of
a Certificate of Occupancy for the addition to Building 2.
Promptly after the date hereof, Landlord will begin and prosecute the
construction of the Building 2 Addition in accordance with Exhibit C which
construction shall hereinafter be referred to as the "Improvements." In order
to determine that the Improvements are being built in accordance with the plans
and specifications, the Tenant and its representatives, shall have access to the
Improvements at all reasonable times during the construction thereof for the
purpose of making inspections of the work.
The Improvements shall be substantially completed and premises made
available to Tenant not later than June 30, 1990. Provided however, if the
construction of the Improvements shall be delayed by causes beyond the
reasonable control of Landlord, such as, but not limited to, strikes, inclement
weather making construction not feasible, scarcity of materials, acts of God,
war and governmental restrictions, the Commencement Date shall be adjusted
accordingly and rental payments shall abate until delivery of possession occurs.
Landlord shall advise Tenant in writing of the Commencement Date not less than
ten (10) days prior thereto and immediately after the Commencement Date, the
Landlord and Tenant will enter into a written memorandum of the date of
commencement. Any work provided to be done under the plans and specifications
which shall not have been completed at the Commencement Date, shall be promptly
completed by Landlord and if not completed within thirty (30) days after the
delivery of possession, the Tenant may after fifteen (15) days written notice to
the Landlord complete the same and deduct the cost thereof from the rent for the
next ensuing month or months.
ARTICLE 3. RENT
----
Tenant in consideration of the Lease, covenants and agrees to pay to
Landlord, as minimum annual rent (hereinafter referred to as "Base Rent") for
said Premises the following:
(i) for the first through fifth years of the initial term, the sum of Three
Hundred Thirty-Eight Thousand Six Hundred Seventy-Three and 73/100 Dollars
($338,673.74) payable in equal monthly installments of Twenty-Eight Thousand Two
Hundred Twenty-Two and 81/100 Dollars ($28,222.81);
(ii) during the sixth through tenth years of the initial term, at an annual
rate equal to the Base Rent of the first though fifth years of the initial term
increased by the greater of a) 20% or b) the percentage increase in the Consumer
Price Index during the first through fifth years of the initial term;
<PAGE>
(iii) during the five year optional extension period, at an annual rate
which is the greater of the Base Rent during the sixth through tenth years of
the initial term increased by the greater of a) Twenty Percent (20%); or b) the
percentage increase in the Consumer Price Index during the sixth through tenth
years of the initial term.
Rent shall be paid in advance on the first day of each and every calendar
month during the term hereof. If the Commencement Date is other than the first
day of the calendar month, rent for the portion of the calendar month at the
beginning of the term and at the end of the term shall be apportioned. Said
payment shall be made in such manner and at such place or places as Landlord may
direct and until further notice said rental payments shall be made to the
Landlord; c/o Development Associates, 630 Silver Street, Unit 3C, P.O. Box 528,
Agawam, Massachusetts 01001-0528.
The Base Rent for the Initial Term has been established, in part, based
upon the cost to the Landlord of financing improvements to Building 1,
construction of Building 2, and construction of the addition to Building 2 with
a loan from Shawmut Bank N.A. at an initial rate of interest of eleven and 1/4
percent (11.25%) per annum for a twenty-five (25) year loan term. The rate of
interest on the loan is subject to changes monthly. In the event that the
interest rate on the Landlord's loan increases in any year, the Tenant shall pay
as Additional Rent any increases in the Landlord's debt service cost by
reimbursing the Landlord annually for interest in excess of eleven and 1/4
percent (11.25%) per annum (the "Excess Interest") paid to a lending institution
to service the above mentioned debt. The Tenant's responsibility to pay Excess
Interest shall be limited in any one year to a three percent (3%) increase in
said interest rate, it being the intention of the parties however that said
increases by cumulative, using the highest interest rate paid any prior year as
a base for calculating the three percent (3%) interest rate increase ceiling in
the succeeding year.
Any payment of Rent shall be considered overdue and assessed an interest
fee equal to one percent (1%) of the current monthly Base Rent unless said
payment is a) personally delivered to Landlord's place of business not more than
fifteen (15) calendar days after date due, or b) sent to Landlord postmarked not
more than ten (10) days after date due. In the event that an interest fee is
incurred, Landlord will promptly notify Tenant in writing of such event and
specify the amount of interest fee assessed. Tenant acknowledges that any such
amounts are due immediately and shall pay the full amount of interest fee to
Landlord within ten (10) days of receipt of said written notice.
It is the intention of the Landlord and Tenant that the rents and other
charges due the Landlord are "net" to the Landlord and that except for the
Landlord's obligations to pay for certain items of repair and/or replacement
specifically set forth in this Lease that the Tenant shall pay for all services,
utilities, repairs, insurances, taxes, and all other operating expenses of the
Premises whether or not specifically enumerated in this Lease.
ARTICLE 4. USE OF PREMISES
---------------
Tenant shall use the Premises solely for the purposes of maintaining an
office and manufacturing facility. No other use shall be permitted without
prior written consent of
<PAGE>
Landlord and Shawmut Bank N.A. or its subsidiary, or such other individual or
institution as may be holding a mortgage on the Premises during the term hereof.
Tenant shall at its own cost and expense, promptly observe and comply with all
laws, ordinances, requirements, orders, directive, rules and regulations of the
federal, state, county, municipal or town governments and of all governmental
authorities affecting the Premises and Improvements, whether the same are in
force at the commencement of the term of this lease or may be in the future
passed, enacted or directed. Provided, however, that in observing and complying
with all laws, ordinances, requirements, orders, directives, rules and
regulations of all governmental authorities, Tenant shall not be required, at
its expense, to make any structural repairs or changes in the Improvements or
any nonstructural repairs or changes in the Improvements or any nonstructural
repairs made necessary by defects in construction.
Tenant shall not use or permit the Premises to be used for any purpose
other than as specified herein and shall not use or permit the Premises to be
used for any unlawful, immoral, or disreputable purposes, not for any use or
occupation which would be in conflict with provisions of the Zoning Ordinance of
the Town of Deerfield, Massachusetts, applicable to the use and occupancy of
said Premises, or which would jeopardize or invalidate any of the insurance
coverage on said Premises or which would violate the restriction applicable to
the use of property in the Deerfield Industrial Park (the "Park Restriction").
ARTICLE 5. PAYMENT OF UTILITY CHARGES
--------------------------
Tenant shall after the Commencement Date furnish and pay for its own gas,
water, telephone, electricity, sewage, including the installation of any meters
to calculate flowage, refuse disposal, and other utility services used or wasted
by it on said Premises. Gas, water and electricity shall be separately metered
for Premises, apart from other adjacent space rented, owned or reserved by
Landlord.
ARTICLE 6. TAXES AND ASSESSMENTS
---------------------
Tenant shall pay when due as Additional Rent, all state, city and county
real estate taxes, assessments, and other charges, including annual fees of the
Deerfield Economic Development and Industrial Corporation, that become due and
payable in connection with the premises, and any Improvements now thereon or
hereafter placed upon said Premises during the original term of this Lease or
during any extended terms in the event Tenant exercises its option to extend.
In the event of any such taxes, assessments, or charges levied on the Premises
may be paid on an installment basis, Landlord agrees to choose this method of
payment and Tenant shall be obligated to pay only those installments which
become due during the original term hereof or any renewal or extension thereof,
provided, however, that if the first mortgagee of the Landlord shall require the
payment of taxes, assessments, or charges on a periodic basis the Tenant shall
make such payments accordingly.
In the event the Premises are not separately assessed, but are a part of a
larger tax parcel, real estate taxes applicable to the Premises shall be a
prorata share of all real estate taxes levied
<PAGE>
or assessed with respect to any tax period during the term hereof against the
land and Improvements comprising the tax parcel. Such prorata share shall be
determined as follows:
1. The amount of real estate taxes assessment with respect to any such tax
period against the land comprising the tax parcel multiplied by a fraction,
the numerator of which shall be the number of square feet of land area in
the Leased Premises and the denominator of which shall be the number of
square feet of land area in the tax parcel;
2. The amount of real estate taxes assessed with respect to any such tax
period against the Improvements located upon the tax parcel multiplied by a
fraction, the numerator of which shall be the number of square feet of
floor area then located on the Leased Premises and the denominator of which
shall be the number of square feet of floor area in the buildings so
assessed which are located on the tax parcel (including, but not limited to
Improvements located on the Leased Premises).
It is the intention of the parties hereto that Tenant shall pay the tax
assessment herein provided for a period equal to the original term or any
extension thereof, regardless of when such taxes become a lien. In no event
shall Tenant be required to pay such taxes for a period longer than the original
term or any extension thereof.
It is expressly agreed, however, that Tenant shall not be required to pay,
discharge or remove any taxes, assessments, charges or levies against the
Premises, or any part thereof, which Tenant may deem illegal or excessive or to
pay any judgments rendered therefor so long as Tenant shall at its own expense,
in good faith, contest the same or the validity thereof by proper proceedings
which shall operate to prevent the collection of the tax, assessment, lien or
imposition so contested on the sale of said Premises, or any part thereof, to
satisfy the same, so long as Tenant shall furnish to Landlord and its first
Mortgagee indemnity satisfactory to them against any loss or damage by reason of
such contest, including all costs and expenses thereof, and that pending any
such legal proceedings, and Landlord shall not have the right to pay or
discharge such tax or assessments thereby contested. In any such case, Tenant
shall fully protect and preserve the title and rights of Landlord as well as
Tenant's leasehold estate in and to the Premises.
ARTICLE 7. HAZARD INSURANCE
----------------
During the term of this Lease or any extensions thereof Tenant at its own
expense, covenants that it will keep the Improvements now standing upon, or
which may hereafter be erected upon, the Premises insured against loss or damage
by fire and the hazards covered by extended coverage insurance in a responsible
insurance company or companies authorized to do business in the Commonwealth of
Massachusetts and to maintain such insurance at all times during the original
term of this Lease or any extensions thereof in an amount equal to not less than
the greater of $2,925,000 or the full insurable value of said Improvements. The
policy or policies thereof shall be taken out by Tenant and shall name Landlord
as an additional insured and each Mortgagee of the Landlord under the standard
Massachusetts mortgage clauses. Tenant shall provide Landlord and its
Mortgagees with a Certificate of Insurance in evidence of such
<PAGE>
coverage. Should Tenant fail to carry such fire and extended coverage insurance,
Landlord or its Mortgagees may at its option cause such insurance as aforesaid
to be issued, and in such event, Tenant agrees to pay the premiums for such
insurance upon Landlord's or Mortgagee's demand, as additional rent.
Tenant shall be solely responsible for obtaining any fire or extended
coverage insurance for its personal property and improvements of Tenant and for
all goods, commodities and materials stored by Tenant in or about the Premises.
ARTICLE 8. LIABILITY INSURANCE
-------------------
At all times during the term hereof or any extension thereof, Tenant at its
own expense shall maintain and keep in force for the mutual benefit of Landlord
and Tenant general public liability insurance against claims for personal
injury, death or property damage occurring in or about the Premises or sidewalks
or areas adjacent to the Premises to afford protection to the combined single
limit of not less than One Million and 00/100 ($1,000,000.00) Dollars in respect
to injury or death to persons and property damage. The policy or policies shall
name the Landlord as an additional insured. In order to evidence the coverage
in effect, the Tenant shall provide the Landlord with a Certificate of Insurance
and will obtain a written obligation from the insurers to notify Landlord in
writing at least ten (10) days prior to cancellation or refusal to renew any
such policies. Should Tenant fail to carry such public liability insurance,
Landlord may, at its option, cause public liability insurance as aforesaid to be
issued, and in such event, Tenant agrees to pay the premiums for such insurance
promptly, upon Landlord's demand, as additional rent.
ARTICLE 9. INDEMNIFICATION
---------------
Except as hereinafter provided, Tenant shall indemnify and save Landlord
harmless from and against any and all liability, claims, damages, penalties, or
judgments arising from or in any way connected with injury to person or property
sustained in action in and about the Premises in custody and control of Tenant,
during the term of this Lease. If Landlord shall, without fault on its part, be
made a part of any litigation commenced by or against Tenant, Tenant shall
protect and hold Landlord harmless and pay all costs, expenses and reasonable
attorneys fees that may be incurred or paid by Landlord in enforcing the
covenants and agreements of this Lease.
Except for the negligence of the Landlord or the negligence of Landlord's
officers, agents, servants, employees or contractors, Landlord shall not be
responsible or liability for any damage or injury to any property, fixtures,
buildings or other Improvements, or to any person or person at any time on the
Premises, including any damage or injury to Tenant or to any of Tenant's
officers, agents, servants, employees, contractors, customers or sublessees.
ARTICLE 10. MAINTENANCE AND REPAIRS
-----------------------
Tenant will repair and maintain the Leased Premises at Tenants' own
expense, and make every repair and replacement which may be needed to maintain
the Improvements, water, sewer,
<PAGE>
pumping and heating systems, plumbing system, electrical wiring system,
sprinkler system and air conditioning in good condition and repair as the same
shall be on the Commencement Date. Tenant agrees to replace all glass with
glazing of the same size and quality of that broken. Tenant shall also maintain
and repair at its expense, lawn, landscaping, exterior paving and snow removal
where applicable. Notwithstanding any other provision of this Lease, the Tenant
shall not be required to make any repair to the structural members, including
roof, exterior walls, and foundations, of the Premises, except to such extent
such repairs are necessitated by the negligence of Tenant or Tenant's
overloading the floor or other structural elements or by Tenant's having made
substantial additional improvements to the Premises after the Commencement Date
repair and maintenance of which shall be the responsibility of the Tenant.
As of the commencement Date the Landlord will warrant that all structural
and mechanical systems of Buildings 1 and 2 are in good working order and
repair. Tenant shall have the benefit of all contractor and subcontractor
warranties relative to the Improvements.
If the repairs required to be made by Landlord or Tenant are not completed
within a reasonable time after request for such repair by the other party,
Landlord or Tenant, as the case may be, shall have the option to make such
repairs after first giving the other party fifteen (15) days notice of its
intention to do so, and any amounts expended by virtue thereof shall be added to
or subtracted from the next month's rent in the full amount of the expenditures.
ARTICLE 11. ALTERATIONS AND ADDITIONS
-------------------------
Tenant at its expense, shall have the right to make such nonstructural
changes in the interior of the Premises, as it shall deem necessary or advisable
in adapting the Premises for its use. No structural changes shall be made
without the prior written consent of Landlord, which consent shall not be
unreasonably withheld. All changes, alterations or installments shall be of
first class construction and shall, if required, be made only after obtaining
all permits for the same. The Tenant shall immediately pay all charges for such
changes, alterations or installations and shall not permit any liens for unpaid
labor or materials to arise.
All fixtures shall become a part of the Premises and the property of the
Landlord at the termination of the Lease except that trade fixtures, machinery
and equipment installed by Tenant shall be considered as its own and Tenant may
recover same at any time during the term of this Lease or any extension thereof,
provided that Tenant shall repair any damage caused to said Premises by such
removal.
ARTICLE 12. DAMAGE OR DESTRUCTION OF IMPROVEMENTS
-------------------------------------
In the event the Premises shall be rendered untenantable by insured
casualty, the Landlord will within one hundred twenty (120) days from the date
of said damage or destruction, repair and replace said Premises to substantially
the same condition as prior to the damage or destruction less wear and tear
caused by Tenant's use and occupation. If the Landlord fails to commence repair
of the damage or destruction within ten (10) business days (unless the repair or
restoration is of such character that it cannot be commenced within such time,
provided that in
<PAGE>
any event that commencement thereof will occur within thirty (30) days of such
damage or destruction) from the date of such damage or destruction, or if the
Premises have not been replaced or repaired to such condition within one hundred
twenty (120) days, Tenant may at its option, (to be exercised by written notice
to the Landlord and to the Trustee) terminate this Lease. The Base Rent herein
required to be paid shall abate during the period of such untenantability.
If the premises shall be damaged in part by insured casualty, but still
remain tenantable, the landlord shall repair said Premises to substantially the
same condition as prior to the damage less wear and tear caused by Tenant's use
and occupation. Landlord shall commence repair of the damage or destruction
within thirty (30) days from the date of occurrence. During the period of such
repairs and restorations, the Lease shall continue in full force and effect,
provided, however, that Tenant shall be required to pay the Base Rent, herein
reserved, abated by the percentage of area destroyed as compared to the total
area herein demised.
In the event that any damage or destruction occurring during the last
twelve (12) months of the original or extended term of this Lease to the extent
of ten (10%) percent or more of the insurable value of the Premises, Landlord or
Tenant may elect to terminate this Lease as of the date of the destruction or
damage, by giving notice of such election to the other and to the Trustee within
fifteen (15) days after such damage or destruction provided, however, that if
Tenant has exercised its option to purchase the Premises no such termination
shall take place and upon the payment of the purpose price the proceeds of
insurance shall be paid to the tenant.
Except as otherwise provided in the preceding paragraph, the Tenant shall
cause all insurance proceeds to be assigned to the Landlord in the event of fire
or other insured damage to be used for repair or restoration. In no event shall
the Landlord's obligations herein to restore the premises in the event of damage
or casualty exceed the amount of insurance proceeds made available to landlord
by the insurance carrier and released to Landlord by its Mortgagees for such
repair and/or restoration.
ARTICLE 13. LANDLORD'S RIGHT TO ACCESS
--------------------------
Tenant shall permit Landlord and Trustee and their agents to enter upon
said Premises at all reasonable times during business hours to examine the
condition of the same, provided that Landlord and/or Trustee gives Tenant
twenty-four (24) hour notice thereof except for in time of emergency, and
provided further that such entry is consistent with the Tenant's security
regulations, and shall permit Landlord and/or Trustee to make such repairs as
may be required. Tenant shall permit Landlord for a period of one hundred
eighty (180) days prior to the expiration of the original or extended term of
this Lease, to place upon the Premises the usual "For Rent" or "For Sale" signs,
and shall permit Landlord and his agents, at reasonable times, to conduct
prospective Tenants or Purchasers through said Premises after giving notice as
aforesaid.
<PAGE>
ARTICLE 14. SURRENDER OF PREMISES
---------------------
Tenant shall surrender and deliver up said Premises and appurtenances at
the end of said term broom-clean and in as good condition and order as they were
at commencement of the term hereof, reasonable use and ordinary wear and tear
thereof and damage by fire or other casually and leasehold improvements made
with Landlord's consent excepted. Tenant may remove all the trade fixtures,
signs, equipment, stock and trade, and other items of a similar nature used in
connection with its business, including such as may have been temporarily
attached to the realty, provided all rents stipulated to be paid hereunder have
been paid and all damage to said Premises is properly repaired. If said removal
results in injury to or defacement of said Premises, Tenant shall immediately
repair the Premises at its expense.
ARTICLE 15. SIGNS
-----
Tenant shall have the privilege and right of placing on the Premises such
signs as it deems necessary and proper in the conduct of its business subject to
Landlord's prior written approval, which approval may not be unreasonably
withheld. Tenant shall comply with all laws, ordinances, deed and municipal
regulations and Industrial Park Restrictions applicable to the erection,
maintenance and the removal of said signs. Any damage to any Improvements by
said signs shall be restored by Tenant forthwith at its expense.
ARTICLE 16. ASSIGNMENT AND SUBLETTING
-------------------------
Provided Tenant is not in default of any of the terms, conditions or
covenants contained in this Lease, Tenant may assign this Lease or sublet the
Premises or any part thereof after first obtaining the prior written consent of
Landlord and Trustee which consent shall not be unreasonably withheld and upon
the further condition that the use of the property by a sublessee or assignee
are permitted by Municipal Ordinance, Industrial Park Restrictions, and that
such use will not create any default under any mortgage against the Premises.
No assignment or subletting consented to by Landlord shall relieve Tenant from
its liability hereunder, and each and every assignee or sublessee shall be
charged with all of the provisions hereof by a separate writing. Tenant shall
provide Landlord and Trustee with written identification of subtenant or
assignee, and terms of such subletting or assignment.
ARTICLE 17. EMINENT DOMAIN
--------------
If the entire Premises, or such part thereof, as, in the parties' judgment,
renders the remainder unsuitable for Tenant's continued use, shall be taken in
appropriation proceedings or by any rights of eminent domain, then this Lease
shall terminate and be void from the time when possession thereof is required
for public use, and such taking shall not operate as or be deemed an eviction of
the Tenant or a breach of Landlord's covenant for quiet enjoyment; but Tenant
shall pay all rent due, and perform and observe all other covenants hereof, up
to the time when possession is required for public use. Provided, however, that
if only a part of said Premises be so taken and in the Landlord and Tenant's
judgment the Leased Premises remain unsuitable for Tenant's continued use, and
if two (2) years or more of the term hereof then remains unexpired,
<PAGE>
and if the remaining Premises can be substantially restored within sixty (60)
days, then this Lease shall not terminate, but Landlord will, at its sole
expense, restore the Leased Premises. Rent payable by Tenant during the period
of restoration shall be reduced by a reasonable amount, but after such
restoration, the rent herein reserved shall be paid by Tenant as herein provided
during the remainder of the term hereof abated by the percentage that the fair
market value of the Premises, attributable solely to the land and Improvements,
has been reduced because of such taking. Said market value immediately before
and after such taking shall be determined by agreement of the parties or,
failing agreement of the parties within thirty (30) days of the effective date
of such taking, by a local Independent Fee Appraiser selected by mutual
agreement of Landlord and Tenant, which appraiser's decision will be final and
binding on the parties. The cost of such appraiser shall be borne equally by
Landlord and Tenant.
Tenant shall have the right at its sole cost and expense to assert a
separate claim or join in Landlord's claim in any condemnation proceeding for
its personal property, its improvements, moving expenses, or any other claims it
may have; provided, however, that no award to the Tenant shall reduce the award
which would otherwise be due the Landlord and in no event prevent the Mortgagee
from collecting award proceeds. Tenant shall be entitled to and shall receive
that portion of any award or payment made which is attributable solely to its
claim, as set forth above and Landlord shall be entitled to and shall receive
that portion of any award of payment made which is attributable solely to the
land and Improvements erected thereon.
ARTICLE 18. DEFAULT
-------
The following events shall be deemed to be events of default by Tenant
under this Lease:
a. Tenant shall fail to pay any installment of the rent hereby reserved and
such failure shall continue for fifteen (15) days.
b. Tenant shall fail to comply with any term, provision or covenant of this
Lease, other than the payment of rent, and shall not cure such failure within
thirty (30) days after due written notice thereof to Tenant; or if such failure
shall be of such a nature that the same cannot be completely cured within the
said thirty (30) days and Tenant shall not have commenced to cure such failure
within such thirty (30) day period and shall not thereafter with reasonable
diligence and good faith proceed to cure such failure.
c. Tenant shall become insolvent, or shall make a transfer in fraud of
creditors, or shall make an assignment for the benefit of creditors.
d. Tenant shall file a petition under any section or chapter of the
National Bankruptcy Act, as amended, or under any similar law or statute of the
United States or any State thereof; or an involuntary petition in bankruptcy
shall be filed against Tenant thereunder.
e. A receiver or trustee shall be appointed for all or substantially all of
the assets of Tenant.
<PAGE>
f. Tenant shall abandon or vacate the Premises during the term of this
Lease for a period in excess of three (3) months.
g. Tenant or anyone claiming under or through Tenant shall use the premises
in violation of zoning ordinances or in material violation of Park Restrictions.
h. Tenant or anyone claiming under or through Tenant shall use the Premises
in violation of the covenants of any mortgage applicable to the Premises.
Upon the occurrence of any of such events of default, Landlord shall have
the right, at Landlord's election subject to rules relating to government
security to pursue, in addition to and cumulative of any other rights Landlord
may have, at law or in equity, any one or more of the following remedies without
any notice or demand whatsoever:
a) Terminate this Lease, in which event Tenant shall immediately surrender
the Premises to Landlord, and if Tenant fails so to do, Landlord may, without
prejudice to any other remedy which it may have for possession or arrearages in
rent, enter upon and take possession of the demised premises and expel or remove
Tenant and any other person who may be occupying said Premises or any part
thereof, without being liable for prosecution or any claim of damages therefore;
and Tenant agrees to pay to Landlord on demand the amount of all loss and damage
which Landlord may suffer by reason of such termination.
b) Enter upon and take possession of the demised Premises and expel or
remove Tenant and any other person who may be occupying said Premises or any
part thereof without being liable for prosecution or any claim for damages
therefore, and relet the Premises and receive the rent thereof; crediting Tenant
therefore; and Tenant agrees to pay to Landlord on demand any deficiency that
may arise by reason of such reletting.
c) Enter upon the demised Premises without being liable for prosecution of
any claim for damages therefore, and do whatever Tenant is obligated to do under
the terms of this Lease, and Tenant agrees to reimburse Landlord on demand for
any expense which Landlord may incur in thus effecting compliance with Tenant's
obligations under the Lease, and Tenant further agrees that Landlord shall not
be liable for any damages resulting to the Tenant from such action, whether
caused by the negligence of Landlord or otherwise.
d) Require all rental payments by "subtenants" (including within that term
the third parties occupying various portions of the demised Premises under the
terms of Lease agreements with Tenant, as primary lessor or as sublessor) which
would otherwise be paid to Tenant to be paid directly to Landlord and apply such
rentals so paid to or collected by Landlord against any rents or other charges
due to Landlord by Tenant hereunder. No direct collection by Landlord from any
such "subtenants" shall release Tenant from the further performance of Tenant's
obligations hereunder.
Pursuit of any of the foregoing remedies shall not preclude pursuit of any
of the other remedies herein provided or any other remedies provided by law, nor
shall pursuit of any remedy
<PAGE>
herein provided constitute a forfeiture or waiver of any rent due to Landlord
hereunder or of any damages accruing to Landlord by reason of the violation of
any of the terms, provisions and covenants herein contained. Failure by Landlord
to enforce one or more of the remedies herein provided upon an event of default
shall not be deemed or construed to constitute a waiver of such default or of
any other violation or breach of any of the terms, provisions and covenants
herein contained. In determining the amount of loss or damage which Landlord may
suffer by reason of termination of this Lease or the deficiency arising by
reason of the reletting by Landlord as above provided, allowance shall be made
for the expense of repossession and any repairs. The Landlord shall use
reasonable efforts to relet the Leased Premises on commercially reasonable terms
and to apply all rents received in reduction of the Tenant's liability
hereunder.
ARTICLE 19. OPTION TO PURCHASE
------------------
a. Landlord grants Tenant the option, exercisable by Tenant at any time
during the term and any extension of this Lease, to purchase the Premises at a
purchase price in 1990 of Two Million, Nine Hundred Twenty-five Thousand Eight
Hundred Sixty-six ($2,925,866) which price shall increase at the rate of four
(4) percent per annum on the first day of each calendar year after 1990 during
the term and any extension of this Lease.
Tenant shall exercise its option to purchase by notice in writing thereof
delivered to or mailed by registered or certified mail to Landlord at Landlord's
address, which notice shall specify a closing date of not more than sixty (60)
days and not less than thirty (30) days from the date thereof. On the closing
date so specified or such other closing date as may be otherwise mutually agreed
upon between the parties, Landlord shall deliver to Tenant a good and sufficient
quitclaim deed running to Tenant or to the nominee designated in writing by
Tenant to Landlord prior to the closing date, which deed shall convey to Tenant
or Tenant's nominee a good and clear record and marketable title to the Premises
free and clear from all liens, encumbrances and restrictions, except:
1. Provisions of existing building and zoning laws;
2. Such taxes for the then current year as are not due and payable on the
date of delivery of such deed; and
3. Such other easements, restrictions and encumbrances of record which do
not materially interfere with the continuing use and operations of the
Premises.
Upon the delivery of such deed Tenant shall pay Landlord the purchase price in
full in cash or by bank or certified check and there upon all obligations of
Tenant under this Lease with respect to the Premises shall cease and determine
(except that the rent shall be apportioned as of such date).
b. In the event Landlord is unable to deliver the Premises to Tenant upon
the exercise of its option to purchase, this Lease shall automatically revive
and continue for a period of sixty (60) days during which time Landlord shall
use its best efforts (said obligation being limited by Landlord's expectation of
net proceeds from said sale) to deliver title to Tenant at the end of said
period. At the end of said sixty (60) days, tenant may elect to continue this
lease or terminate this lease, vacating the premises promptly.
<PAGE>
ARTICLE 20. SERVICE OF NOTICE.
-----------------
Every notice, approval, consent or other communication authorized or
required by this Lease shall be in writing and sent by certified or registered
mail to the other party at the following address or at such other address as may
be designated by notice in writing given from time to tome and shall be deemed
given as of the date of mailing. If notice is to be given to Landlord it shall
be given at the following address:
c/o Development Associates
630 Silver Street
Post Office Box 528
Agawam, Massachusetts 01001
If notice is to be given to Tenant is shall be given at the following address:
Millitech Corporation
South Deerfield Research Park
Post Office Box 109
South Deerfield, Massachusetts 01373
ARTICLE 21. QUIET ENJOYMENT
---------------
Landlord hereby covenants and agrees to and with the Tenant that the Tenant
shall have the peaceable possession and enjoyment of the Premises throughout the
term of this Lease without any hindrance, disturbance or ejectment by the
Landlord, its successors and assigns. Landlord represents and warrants that it
has full right and authority to enter into and perform its obligations as
Landlord under this Lease for the full term hereof.
ARTICLE 22. SUBORDINATION AND NONDISTURBANCE
--------------------------------
This Lease and all of the rights of Tenant hereunder are and shall be
subject and subordinate to the lien of any mortgage or mortgages hereinafter
placed on the Premises or any part thereof, except the Tenant's property or
trade fixtures, and to any and all renewals, modifications, replacements,
extensions or substitutions of any such mortgage or mortgages (all of which are
hereinafter termed the mortgage or mortgages) provided, nevertheless, each or
all of such mortgage or mortgages shall contain a provision to the effect that
so long as the Tenant is not in default under this Lease, or any renewal
thereof, no foreclosure of the lien of said mortgage or any other proceeding in
respect thereof shall divest, impair, modify, abrogate or otherwise adversely
effect any interest or rights whatsoever of the Tenant under the said Lease.
<PAGE>
ARTICLE 23. RIGHTS OF MORTGAGEE
-------------------
Any Mortgagee of the Landlord shall have the following rights:
a. Any notice required to be given to the Landlord by the Tenant shall be
given as well in the same manner to the Mortgagee.
b. In the event that the Tenant shall have any excuse from paying rent or
right to set off its expenses from the rent, as a result of any default by the
Landlord or shall have any excuse from the performance of any obligation imposed
upon the Tenant by the terms of this Lease then and in such event, the tenant
shall give notice of its intended exercise of such right in the manner provided
for herein to the Mortgagee and thereafter the Trustee shall have the right, but
not the obligation, to cure said defaults within the time provided for cure of
the same as set forth in this Lease.
c. Upon the request of the Mortgagee or any assignee of the Mortgagee the
Tenant will furnish an estoppel certificate certifying that (i) the improvements
have been substantially completed or if not, the extent to which work remains,
and when completed that the Improvements have been completed in accordance with
the Lease; (ii) that the Tenant is in possession of the Premises; (iii) that
rent payments have commenced or are due and not paid more than one month in
advance; (iv) that the Lease is in full force and effect and has not been
amended, modified or superceded; (v) that the Tenant has received no notice that
the Lease has been assigned, transferred or pledged by the Landlord, not that
rentals under the Lease have been assigned other than to the Mortgagee; (vi)
that the Tenant has not advanced any unreimbursed sums to or on behalf of the
Landlord; (vii) that the Tenant holds no claim against the Landlord which is a
set off against rents due under the Lease; and (viii) such other information
concerning this tenancy as Mortgagee may from time to time require.
d. Upon the request of the Mortgagee the Tenant will furnish a copy of its
most recent annual report.
ARTICLE 24. HOLDOVER
--------
In the event Tenant remains in possession of the demised Premises after the
expiration of this Lease, it shall operate and be construed to be a tenancy from
month-to-month only, at a monthly rental equal to the annual rent charged at the
last and highest amount and additional rent paid for the last and highest amount
and additional rent paid for the last month of the term of this Lease plus
twenty (20%) percent of such amount, unless otherwise agreed in writing, and
otherwise subject to the conditions, provisions and obligations of this Lease
insofar as the same are applicable to a month-to-month tenancy. Written notice
thirty (30) days in advance given either Party to the other shall constitute
compliance with conditions of the month-to-month tenancy and establish the
termination date of the holdover term.
<PAGE>
ARTICLE 25. TERMINATION OF PRIOR LEASE ON COMMENCEMENT DATE
-----------------------------------------------
Landlord and Tenant are parties to a certain "Lease" dated August 31, 1987
governing the portion of the Leased Premises described herein as Building 1 and
Building 2 ("Prior Lease"). Landlord and Tenant agree that the Prior Lease will
terminate on the Commencement Date as defined in Article 2 and all of the rights
of the Landlord and Tenant shall be thereafter governed by this Lease.
ARTICLE 26. GOVERNING LAW
-------------
This Lease and the performance thereof shall be governed, interpreted,
construed and regulated by the laws of the Commonwealth of Massachusetts.
ARTICLE 27. PARTIAL INVALIDITY
------------------
If any term, covenant, condition or provision of this Lease, or the
application thereof, to any person or circumstances, shall at any time or to any
extent be invalid or unenforceable, the remainder of this Lease, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term, covenant, condition or provision of this Lease shall be
valid and be enforced to the fullest extent permitted by law.
ARTICLE 28. INTERPRETATION
--------------
Wherever in this Lease the singular number is used, the same shall include
the plural, and the masculine gender shall include the feminine and neuter
genders, and vice versa, as the context shall require. The section headings
used herein are for reference and conveniences only and shall not enter into the
interpretation thereof. This Lease may be executed in several counterparts,
each of which shall be an original but all of which shall constitute one and the
same instrument.
ARTICLE 29. SECURITY DEPOSIT
----------------
Tenant has deposited with the Landlord the sum of $12,938.35 as security
for the performance by the Tenant of the terms of this lease. The Landlord may
use, apply, or retain the whole or any part of this security deposit to the
extent required for the payment of any rent and additional rent or any sums as
to the Landlord may expand by reason of the Tenant's default in respect to any
of the terms of this lease, including but not limited to any damage or
deficiency in reletting of the leased property, whether such damages or
deficiency accrued before or after summary proceedings or any other reentry by
Landlord. In the event that the Tenant complies with all of the terms of the
lease, the security deposit shall be returned to the Tenant within 30 days after
the date fixed as the end of the lease. In the event of a sale of the premises
by the Landlord, they shall have the right to transfer the security deposit to
the purchaser and the Landlord shall thereupon be released from all liability
for the return of such security deposit. The Tenant shall look solely to the
new Landlord for the return of such deposits. The Tenant shall not assign or
encumber the money deposited as security and neither Landlord nor its successors
or assigns shall be bound by any such assignment or encumbrance.
<PAGE>
ARTICLE 30. ENTIRE AGREEMENT
----------------
No oral statement or prior written matter shall have any force or effect.
Tenant agrees that it is not relying on any representations or agreements other
than those contained in this Lease. This agreement shall not be modified or
canceled except by writing subscribed by all parties.
ARTICLE 31. PARTIES
-------
The term "Landlord" as used in this Lease means only the owner, or
mortgagee in possession of the Leased Premises. Landlord Warrants to Tenant
that Landlord has the full right and lawful authority to enter into this Lease
and is fee simple owner of the Premises and title to the Leased Premises is free
and clear of any liens or encumbrances which would affect Tenant's use and
occupancy of said premises except those set forth in Exhibit A. Except as
otherwise expressly provided herein, the covenants, conditions and agreements
contained in this Lease shall bind and inure to the benefit of Landlord and
Tenant and their respective successors and assigns.
Executed as a sealed instrument as of the day and year first written above.
TENANT LANDLORD
MILLITECH CORPORATION EDWARD J. O'LEARY/RAYMOND M.
VINCUNAS PARTNERSHIP
By /s/ unreadable By /s/ Edward J. O'Leary
--------------------------- ---------------------------
Its President Edward J. O'Leary
General Partner
By /s/ Willie S. Day By /s/ Raymond M. Vincunas
--------------------------- ---------------------------
Its Vice President Raymond M. Vincunas
General Partner
<PAGE>
EXHIBIT A
O'LEARY-VINCUNAS/MILLITECH LEASE
The land situate in South Deerfield, Franklin County, Massachusetts which
is shown as Lot 9 on a certain plan entitled "Deerfield Industrial Park
Disposition Parcels and Easements" recorded in the Franklin County Registry of
Deeds in Book of Plans 57, Page 93.
<PAGE>
EXHIBIT B
O'LEARY-VINCUNAS/MILLITECH LEASE
The land situate in South Deerfield, Franklin County, Massachusetts which
is shown as Lot 8 on a certain plan entitled "Deerfield Industrial Park
Disposition Parcels and Easements" recorded in the Franklin County Registry of
Deeds in Book 57, Page 93.
<PAGE>
EXHIBIT C
O'LEARY-VINCUNAS/MILLITECH LEASE
Plans by The O'Leary Company, Inc., College Highway Southampton,
Massachusetts, all numbered 82073 and entitled "New Building Addition for
Millitech Corporation South Deerfield, MA" sheets 1-1, A-1, A-2, A-3, and A-4.
Specifications entitled "Outline specifications for Millitech Corporation"
revised October 17, 1989.
<PAGE>
EXHIBIT 10.13
LEASE
1. PARTIES. LLOYD C. GREEN and MILDRED E. GREEN, both of Greenfield,
-------
Massachusetts, hereinafter referred to as the LESSOR, do hereby lease to
MILLITECH CORP. a Massachusetts corporation having its principal place of
business in Deerfield, Massachusetts, hereinafter referred to as the LESSEE.
2. PREMISES. The LESSEE hereby leases the following described premises:
--------
Land and Buildings at 6 North Street,
South Deerfield, Massachusetts
3. TERM. The term of this Lease shall be for three (3) years, commencing on
----
August 1, 1998 and ending on July 31, 2001. The LESSEE shall have the option
upon ninety (90) days prior written notice to LESSOR to renew this Lease upon
the same terms and conditions for an additional two (2) year term at a rent to
be agreed upon by the parties.
4. RENT. The annual rent under this Lease is SEVENTY EIGHT THOUSAND and 00/100
----
DOLLARS ($78,000.00), payable by the LESSEE to the LESSOR in advance in monthly
installments of SIX THOUSAND FIVE HUNDRED DOLLARS and 00/100 ($6,500.00)
beginning on August 1, 1998, with succeeding payments due on the 1st day of each
month thereafter during the term of this Lease.
In addition to all other remedies, the LESSOR shall be entitled to a late
charge equal to five percent (5%) of the amount of any payment which is not made
as hereinbefore provided within ten (10) days of the due date.
5. TAXES, ETC. This Lease shall be net, net, net to the LESSOR. The LESSEE
----------
shall pay all real estate taxes, insurance charges, all repairs and maintenance
and all capital improvements. The LESSEE shall pay for all of LESSEE's
utilities, water and sewer use charges.
Notwithstanding the provisions of the previous paragraph, the LESSOR agrees
to reimburse the LESSEE for one half (1/2) of the cost of making the repairs
described on the list entitled "Repairs and Improvements to be made to 6 North
Street, South Deerfield, MA" attached hereto as Exhibit A and incorporated
herein by reference. The amount reimbursed to the LESSEE by the LESSOR shall not
exceed $70,000.00. The LESSEE shall submit all invoices for said repairs to the
LESSOR within 10 days of LESSEE'S receipt for LESSOR'S approval, which approval
shall not be unreasonably withheld. The LESSOR, after approval, shall pay said
one half (1/2) of the invoice amount to the LESSEE within 15 days of receipt of
said invoice. The cost of all other repairs, maintenance and capital
improvements shall be born solely by the LESSEE.
6. USE OF LEASED PREMISES. The LESSEE shall use the leased premises
----------------------
exclusively for the assembly and testing of electronic equipment.
<PAGE>
7. COMPLIANCE WITH LAWS. The LESSEE acknowledges that no trade or occupation
--------------------
shall be conducted in the leased premises or use made thereof which will be
unlawful, improper, noisy or offensive, or contrary to any law or any municipal
by-law or ordinance in force in the Town of Deerfield, Massachusetts.
8. FIRE INSURANCE. The LESSEE shall not do or suffer to be done any act, matter
--------------
or thing objectionable to insurance companies whereby the fire insurance or any
other insurance now in force, or hereafter to be placed on the premises, shall
become void or suspended or whereby the same shall be rated as a more hazardous
risk than that contemplated by the parties pursuant to this lease.
9. MAINTENANCE AND REPAIR OF PREMISES. The LESSEE covenants to keep the
----------------------------------
premises in such repair, order and condition as the same are at the commencement
of this Lease, or as the same may be put in by reason of alterations or
improvements made during the term thereof, damage by reasonable and ordinary use
and wear thereof, and fire or other casualty excepted. The LESSEE shall also
keep the premises including drives, walkways, sidewalks and parking lot clear of
all ice and snow, and debris and shall maintain lawns and shrubs by regular
cutting, trimming, mowing, feeding and watering, and shall be responsible for
sweeping the parking lot.
10. SIGNS. The LESSEE shall be entitled to erect such signage as are:
-----
(a) in compliance with all state and municipal statutes, by laws and
regulations, and
(b) meet with the LESSOR's approval, which approval shall not be
unreasonably withheld.
11. ALTERATIONS/ADDITIONS. The LESSEE shall not make structural alterations or
---------------------
additions to the leased premises, but may make nonstructural alterations,
provided the LESSOR consents thereto in writing. All such allowed alterations
shall be at LESSEE's expense and shall be of good workmanlike quality. The
parties agree and acknowledge that the LESSEE may make the alterations and
improvements described on the list attached hereto as Exhibit A. LESSEE shall
not permit any mechanics' liens or similar liens to remain upon the leased
premises for labor and material furnished to LESSEE or claimed to have been
furnished to LESSEE in connection with work of any character performed or
claimed to have been performed at the direction of LESSEE, and shall cause any
such lien to be released of record forthwith without cost to LESSOR. Any
alterations or improvements made by the LESSEE shall become the property of the
LESSOR at the termination of occupancy as provided herein. Notwithstanding the
provisions of this paragraph and paragraph 21, if required by the LESSOR when
this lease terminates, the LESSEE agrees to re-install the truck docks as they
were on June 20, 1998.
2
<PAGE>
12. ASSIGNMENT/SUBLEASING. The LESSEE shall not assign, mortgage, pledge or
---------------------
sublet the whole or any part of the premises without LESSOR's prior written
consent. Notwithstanding such consent, LESSEE shall remain liable to LESSOR for
the payment of all rent and for the full performance of the covenants and
conditions of this Lease.
13. SUBORDINATION. This Lease shall be subject and subordinate to any and all
-------------
mortgages, deeds of trust and other instruments in the nature of a mortgage, now
or at any time hereafter a lien or liens on the leased premises and the LESSEE
shall, when requested, promptly execute and deliver such written instruments as
shall be necessary to show the subordination of this Lease to said mortgages,
deeds of trust or other such instruments in the nature of a mortgage.
14. LESSOR's ACCESS. The LESSOR or agents of the LESSOR may, at reasonable
---------------
times, enter to view the leased premises and may remove placards and signs not
approved and affixed as herein provided, and make repairs and alterations as
LESSOR should elect to do, and may show the leased premises to others, and at
any time, within six (6) months before the expiration of the term, may affix to
any suitable part of the leased premises a notice for letting or selling the
leased premises.
15. INDEMNIFICATION AND LIABILITY. The LESSEE shall indemnify and hold harmless
-----------------------------
the LESSOR from and against any and all claims arising out of LESSEE's use and
occupation of the Premises and exercise of LESSEE's rights hereunder.
16. INSURANCE. The LESSEE shall maintain an "all risk" business owners policy,
---------
including fire and extended coverage on the premises in amounts equal to at
least 80% of the replacement cost of the building on the premises and
Comprehensive General Liability Insurance in the amount of at least THREE
MILLION DOLLARS ($3,000,000.00)* in responsible companies qualified to do
business in Massachusetts, and in good standing therein, insuring the LESSOR as
well as LESSEE against injury to persons or damage to the Leased Premises or
other property as provided herein. The LESSEE shall furnish the LESSOR
certificates for such insurance at or prior to the commencement of the lease
term which state the limits insured and contain clauses stating (i) that the
policy will not be materially changed or canceled by either party thereto
without thirty (30) days prior written notice to the LESSOR (ii) that new
certificates of said insurance shall be filed with the LESSOR prior to ten (10)
days of the expiration date (iii) that the insurance company issuing such policy
waives all rights of subrogation against the LESSOR in a form satisfactory to
the LESSOR's counsel if such waiver is obtainable without affecting the LESSEE's
against the LESSOR for loss or injury to the extent the LESSEE is protected by
insurance containing such waiver of subrogation clause and agrees that at least
ten (10) days prior to the expiration of any of the foregoing insurance to
furnish the LESSOR with proper certificates of continuation of such coverage.
17. FIRE AND CASUALTY. Should a substantial portion of the leased premises be
-----------------
substantially damaged by fire or other casualty, the LESSOR may elect to
terminate
* Per Incident, Five Million Dollars ($5,000,000.00) In The Agregate.
3
<PAGE>
this Lease. When such fire or casualty renders the leased premises
substantially unsuitable for their intended use and if such fire or casualty was
not a result of the intentional, wilful or grossly negligent acts of the LESSEE
or those employed by or acting for the LESSEE, a just and proportionate
abatement of rent shall be made, and the LESSEE may elect to terminate this
Lease if:
17.1 the LESSOR fails to give written notice within thirty (30) days of
intention to restore the leased premises, or
17.2 the LESSOR fails to restore the leased premises to a condition
substantially suitable for their intended use within ninety (90) days of
said fire or casualty.
18. EMINENT DOMAIN. It is agreed by and between the LESSOR and the LESSEE that
--------------
should the premises or any part thereof be taken under the right of eminent
domain in condemnation proceedings against the LESSOR during the term of this
Lease, no part of the award made or the amount paid for such taking shall go to
the LESSEE but the LESSOR shall be entitled to receive the entire amount paid or
awarded therefore and the LESSEE covenants and agrees that LESSEE will in the
event of such taking execute such assignment or assignments as may be necessary
to fully carry out the intent and purpose of these provisions. If the whole or a
significant portion of the said premises shall be taken by any public authority
under the power of eminent domain, then the term of this Lease as to the entire
premises shall terminate as of the time that possession is so taken and all rent
shall be paid up to that date.
19. DEFAULT AND BANKRUPTCY. In the event that:
----------------------
19.1. The LESSEE shall default in the payment of any installment of rent or
other sum herein specified, and such default shall continue for ten (10)
days after written notice thereof; or
19.2. The LESSEE shall default in the observance or performance of any
other of the LESSEE's covenants, agreements or obligations hereunder, and
such default shall not be corrected within thirty (30) days after written
notice thereof; or
19.3. The LESSEE shall be declared bankrupt or insolvent according to law,
or, if any assignment shall be made of LESSEE's property for the benefit
of creditors,
then the LESSOR shall have the right thereafter, while such default continues,
to reenter and take complete possession of the leased premises, to declare the
term of the lease ended, and remove the LESSEE's effects, without prejudice to
any remedies which might be otherwise used for arrears of rent or other default.
The LESSEE shall indemnify the LESSOR against all loss of rent and other
default. The LESSEE shall indemnify the LESSOR against all loss of rent and
other payments which the
4
<PAGE>
LESSOR may incur by reason of such termination during the residue of the term.
If the LESSEE shall default, after reasonable notice thereof, in the
observance or performance of any conditions of covenants on LESSEE's part to be
observed or performed under or by virtue of any of the provisions in any article
of this lease, the LESSOR, without being under any obligation to do so, and
without thereby waiving such default, may remedy such default for the account
and at the expense of the LESSEE. If the LESSOR makes any expenditures or incurs
any obligations for the payment of money in connection therewith, including, but
not limited to, reasonable attorney's fees in instituting, prosecuting or
defending any action or proceeding, such sums paid or obligations incurred, with
interest at the rate of twelve (12%) percent per annum, and costs, shall be paid
to the LESSOR by the LESSEE as additional rent.
In any litigation between the LESSOR and the LESSEE, the LESSEE shall pay
the LESSOR's costs and attorney's fees in the event that the final judgment is
in favor of the LESSOR and the LESSOR shall pay the LESSEE's costs and
attorney's fees in the event that the final judgment is in favor of the LESSEE.
The LESSEE further covenants that in case the LESSOR shall, without fault
on LESSOR's part, be made a party to any litigation commenced against the
LESSEE, then the LESSEE shall pay all expenses, costs and reasonable attorney's
fees incurred by or imposed upon the LESSOR in connection with such litigation,
and such expenses, costs and attorney's fees shall be additional rent due on the
last rent day after service of notice of such payment or payments, together with
interest at the rate of twelve (12) percent per annum from the date of payment,
and shall be collected as any other rent specifically reserved herein, unless
the LESSOR shall be made a party by reason of any independent liability of the
LESSOR caused by some act or omission on the part of the LESSOR and not
resulting from any act or omission on the part of the LESSEE or from the
execution of the lease by the LESSOR.
20. NOTICES. Any notice from the LESSOR to the LESSEE relating to the
-------
leased premises or to the occupancy thereof shall be deemed duly served if
delivered to the leased premises, addressed to the LESSEE and acknowledged by
any occupant of the leased premises, or, if mailed to the leased premises,
registered or certified mail, return receipt requested, postage prepaid,
addressed to the LESSEE. Any notice from the LESSEE to the LESSOR relating to
the leased premises or to the occupancy thereof, shall be deemed duly served, if
mailed to the LESSOR by registered or certified mail, return receipt requested,
postage prepaid, addressed to the LESSOR at such address as the LESSOR may from
time to time advise in writing. All rent and notices shall be paid and sent to
the LESSOR at 9 George Street, Greenfield, MA 01301.
21. SURRENDER. The LESSEE shall, at the expiration or other termination of
---------
this Lease, remove all of LESSEE'S goods and effects from the leased premises
(including, without hereby limiting the generality of the foregoing, all signs
and
5
<PAGE>
lettering affixed or painted by the LESSEE, either inside or outside the leased
premises). LESSEE shall deliver to the LESSOR the leased premises and all keys
and locks thereto, and other fixtures connected therewith and all alterations
and additions made to or upon the leased premises, in the same condition as they
were at the commencement of the term, or as they were put in during the term
hereof, reasonable wear and tear and damage by fire or other casualty only
excepted. In the event of the LESSEE'S failure to remove any of the LESSEE'S
property from the premises, LESSOR is hereby authorized, without liability to
LESSEE for loss or damage thereto, and at the sole risk of LESSEE, to remove and
store any of the property at LESSEE'S expense, or to retain same under LESSOR'S
control, or to sell at public or private sale, without notice, any or all of the
property not so removed and to apply the net proceeds of such sale to the
payments of any sum due hereunder, or to destroy such property.
22. SECURITY DEPOSIT. The LESSEE acknowledges that no security deposit has been
----------------
paid to the LESSOR.
23. LESSEE'S FAILURE TO PERFORM.
---------------------------
23.1 If the LESSEE shall at any time fail to take out, pay for,
maintain or deliver any of the insurance policies provided for in this
Lease or shall fail to make any other payment or perform any other act
on its part to be made or performed under this Lease, then the LESSOR,
after ten (10) days' written notice to the LESSEE, except when other
notice is expressly provided for in this Lease (or without notice in
case of an emergency), and without waiving or releasing the LESSEE
from any obligation of the LESSEE contained in this Lease, may, but
shall not be required to:
(1) Pay any tax or assessment payable by the LESSEE;
(2) Take out, pay for and maintain any of the insurance policies
provided for in this Lease; or
(3) Make any other payments or perform or cause to be performed
any act on the LESSEE'S part to be made or performed as in this
Lease provided; and may enter upon the leased premises for any
such purpose, and take all such action thereon as may be necessary
therefor.
23.2 All sums so paid by the LESSOR and all costs and expenses incurred
by the LESSOR in connection with the performance of any such act,
together with interest thereon at the rate of twelve percent (12%) per
annum or such lesser rate as may at the time be the maximum rate
permitted by law, from the respective dates of the LESSOR'S making of
such payment or incurring of each such cost and expense, shall be paid
by the LESSEE to the LESSOR on demand as additional rent hereunder.
6
<PAGE>
24. ESTOPPEL CERTIFICATE. Upon not less than fifteen (15) days prior written
--------------------
request, the LESSOR and the LESSEE agree, each in favor of the other, to
execute, acknowledge and deliver a statement in writing certifying that this
Lease is unmodified and in full force and effect or, if there have been any
modifications that the same is in full force and effect as modified and stating
the modifications, and the date to which the rent hereunder and other charges
have been paid and any other information reasonably requested. Any such
statement delivered pursuant to this paragraph may be relied upon by any
prospective purchaser, mortgagee or lending source.
25. QUIET ENJOYMENT. The LESSOR further covenants and agrees with the LESSEE
---------------
that it, paying the rent aforesaid and performing the covenants herein contained
on their part, shall peaceably hold and enjoy the demised premises without
hinderance or interruption by the LESSOR or any person or persons whomsoever,
subject only to the right of the LESSOR to enter the premises pursuant to the
provisions of Paragraph 14.
26. BROKERS. The LESSEE warrants and represents to the LESSOR that the LESSEE
-------
had dealt with no broker or third person with respect to this Lease or the
Premises except Colebrook Realty Services, Inc. (the "Broker"). The LESSEE
covenants and agrees to indemnify the LESSOR against any brokerage claims by
third persons claiming to have dealt with the LESSEE or to have brought the
Premises or LESSOR to the attention of the LESSEE, except for commissions due
the Broker, which shall be paid for by the LESSOR and in furtherance thereof, at
the LESSOR'S request, to enter and defend in the LESSOR'S name and behalf any
action or proceeding commenced against the LESSOR to establish any such
brokerage claim. The indemnification hereunder shall include the LESSOR'S
reasonable attorney's fees in resisting any such brokerage claim.
27. MISCELLANEOUS PROVISIONS.
------------------------
27.1 Applicable Law. This Agreement shall be construed in accordance with
--------------
the laws of the Commonwealth of Massachusetts.
27.2 Modification, Waiver or Change. No modifications, waiver or change
------------------------------
shall be made in the terms and conditions of this Agreement, except as may
be mutually agreed upon in writing by all the parties hereto.
27.3 Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties
hereto.
27.4 Entire Understanding. This Agreement, together with the exhibits
--------------------
attached hereto, if any, represent the entire understanding of the parties,
and neither party is relying upon any representation not contained herein.
27.5 Severability. In the event that any provision of this Agreement shall
------------
be deemed invalid, unreasonable or unenforceable by any court of competent
7
<PAGE>
jurisdiction, such provision shall be stricken from the Agreement or
modified so as to render is reasonable, and the remaining provisions of
this Agreement, or the modified provision as provided above, shall continue
in full force and effect and be binding upon the parties so long as such
remaining or modified provisions reflect the intent of the parties as of
the date of this Agreement.
27.6 Marginal Headings: Pronouns. The marginal headings used in this
---------------------------
Agreement are for convenience only and shall not be deemed to be a binding
portion of this Agreement. The pronouns he, she or it are also used for
convenience, and in the event that an improper pronoun has been used, it
shall be deemed changed so as to render the sentence in which it is
contained effective in accordance with its terms.
IN WITNESS WHEREOF, the LESSOR and LESSEE have hereunto set their hands and
seals this 30th day of June, 1998.
In the presence of:
/s/ (Unreadable) /s/ Lloyd C. Green
- ---------------------------------- ----------------------------------
Lloyd C. Green (Lessor)
/s/ (Unreadable) /s/ Mildred E. Green
- ---------------------------------- ----------------------------------
Mildred E. Green (Lessor)
Millitech Corp.
/s/ R. Reynolds by: /s/ Roger Boyce
- ---------------------------------- its Sr. Contracts Administrator
8
<PAGE>
EXHIBIT A
Repairs and Improvements to be made to
6 North Street, South Deerfield, MA
Millitech
June 15, 1998
Mr. Mitchell Bolotin
The Colebrook Group
1441 Main Street
Springfield, MA 01103
Dear Mr. Bolotin:
As I mentioned in my voice mail message, we inadvertently left the roof coating
off of our previous listing of renovation tasks. Please understand that although
our new estimate exceeds $140,000, we would not expect Mr. Greene's contribution
to be greater than $70,000.
<TABLE>
<CAPTION>
Task Description Cost
---------------- -----
<S> <C>
- Frame, drywall and paint interior perimeter $ 35,500
- Add high intensity halite fixtures as required $ 7,800
- Enclose 40' x 50' area for range room; move existing Millitech 4 ton hoist; $ 24,900
all framing, drywall, paint, vinyl tile flooring, and removal, replacement,
reuse of existing 10' x 12' Millitech door
- Enclose 25' x 50' lab area (includes all framing, drywall, paint, vinyl tile $ 19,900
flooring, and acoustic ceilings (Millitech to supply light fixtures)
- Paint exterior of building $ 5,800
- Reframe exterior loading dock wall, supply and install new 10' x 12' $ 4,400
insulated overhead door
- Shotblast and abrade interior floor areas, prime and paint all untiled floor $ 3,400
areas
- HVAC (AC in CATR & Assy areas, air movers in lab) $ 25,000
- Telephone/Voice Mail/PA $ 2,000
- Smoke alarms/Security $ 4,000
- Landscaping $ 2,000
- Utility upgrade (200-400 Amps) $ 2,500
- Carpet/Paint 6 offices $ 3,500
- Roof coating with 2-3 year life $ 6,000
--------
Total $146,000
</TABLE>
Please contact me at (413) 665-8551 Ext. 320 if you should have any questions or
concerns.
Best Regards,
MILLITECH CORPORATION
/s/ Roger G. Boyce
- ------------------
Roger G. Boyce
Sr. Contracts Administrator
<PAGE>
EXHIBIT 10.15
FOURTH AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
-----------------------------
THIS FOURTH AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT is made this
17th day of September, 1999, by and among Millitech Corporation, a Massachusetts
corporation (the "Company"), the persons or entities listed on Schedule I
attached hereto (individually, a "Stockholder" and collectively, the
"Stockholders"), and the persons or entities who are listed on Schedule II
attached hereto (individually, a "Purchaser" and collectively, the
"Purchasers").
WHEREAS, the Third Amended and Restated Registration Rights Agreement dated
as of October 27, 1998 by and among the Company and the Stockholders (the
"Registration Agreement") grants the Stockholders certain rights with respect to
certain securities of the Company;
WHEREAS, the Purchasers have agreed to purchase up to 6,666,667 shares of
Class E Preferred Stock, par value $.01 per share, of the Company (the "Class E
Preferred Stock") pursuant to a Stock Purchase Agreement between the Company and
the Purchasers (the "Class E Agreement") of even date herewith; and
WHEREAS, the parties desire to amend and restate the Registration Agreement
in order to take into account the issuance of additional Class E Preferred
Stock, such amendment being a condition precedent to the execution, delivery and
performance of the Class E Agreement;
NOW THEREFORE, in consideration of the transactions contemplated by the
Class E Agreement and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, including without limitation the issuance
and sale to the Purchasers of shares of the Class E Preferred Stock and the
receipt by the Company of the consideration therefor, the parties hereto agree
to amend and restate the Registration Agreement in its entirety as follows:
Section 1. Certain Definitions. As used in this Agreement, the following
-------------------------------
terms shall have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Act.
"Holder" shall mean any Stockholder or Purchaser or assignee under Section
10 hereof who holds outstanding Registrable Securities which have not been sold
to the public.
<PAGE>
"Initial Public Offering" shall mean the effective date of a registration
statement under the Act in connection with the initial public offering of the
Company's securities for its own account.
"Initiating Holders" shall mean Holders who in the aggregate hold forty
percent (40%) or more of the Registrable Securities.
"1934 Act" shall mean the Securities Exchange Act of 1934.
"Other Shareholders" shall mean any holders of securities of the Company
who are entitled, by agreement with the Company, to have securities included in
a requested registration of securities of the Company.
"Purchased Securities" shall mean the Company's Class A Preferred Stock,
Class B Preferred Stock, Class D Preferred Stock, Class E Preferred Stock and
the Warrants.
"Registrable Securities" shall mean (i) the shares of the Company's common
stock ("Common Stock") issuable upon conversion of the Purchased Securities
except the Warrants, (ii) the Common Stock issued upon exercise of the Warrants,
(iii) the Common Stock purchased by a Purchaser or a Stockholder pursuant to
Section 3 of the Stockholders Agreement (or Common Stock for or into which New
Securities (as therein defined) purchased by a Purchaser or a Stockholder
pursuant to such Section 3 may be exercised or converted), (iv) any Common Stock
issued as a dividend or other distribution with respect to, or in exchange or in
replacement of, such Purchased Securities or Common Stock, (v) any Common Stock
issuable upon conversion, exercise or exchange of convertible securities,
warrants, options or similar rights issued as a dividend or other distribution
with respect to, or in exchange or in replacement of, such Purchased Stock or
Common Stock and (vi) any other shares of Common Stock acquired by a Purchaser
or a Stockholder. In addition, for purposes of all calculations, and notices
under, and all provisions of this Agreement, where the context permits, a holder
of Purchased Securities (except the Warrants) shall be deemed the holder of all
Registrable Securities issuable upon conversion thereof.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act and applicable rules and regulations thereunder, and the
declaration or ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company in
connection with a registration, including without limitation all registration
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses, fees and disbursements of a single counsel
for all the selling Holders and other security holders for a "due diligence"
examination of the Company, and the expense of any special audits incident to or
<PAGE>
required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company).
"Restricted Securities" shall mean the securities of the Company which have
not been registered.
"Warrants" shall mean the Company's Warrants for Common Stock dated
December 7, 1992, September 25, 1996 and July 31, 1997.
Section 2. Requested Registration.
----------------------------------
(a) Request for Registration. If at any time after the earlier to occur of
------------------------
(i) the third anniversary of the date hereof and (ii) the date which is six
months after the Initial Public Offering, the Company shall receive from
Initiating Holders, a written request that the Company effect any registration
with respect to all or a part of the Registrable Securities, the Company will:
(i) promptly give written notice of the proposed registration to all
other Holders and the holders of the Warrants at least 45 days prior to the date
the Company anticipates filing the registration statement covering the
Registrable Securities so requested to be registered; and
(ii) as soon as practicable, use its diligent best efforts to effect
such registration as may be so requested and which would permit or facilitate
the sale and distribution of all or such portion of such Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as are
specified in a written request given within 30 days after receipt of such
written notice from the Company. The Company shall not be obligated to effect
any registrations pursuant to this Section 2 after the Company shall have
effected two such registrations pursuant to this Section 2 and such
registrations shall have been declared or ordered effective by the Commission
and the sales of such Registrable Securities shall have closed.
The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provisions of Section 2, include securities of the
Company for its own account, or other securities of the Company which are held
by officers or directors of the Company or which are held by persons who, by
virtue of agreements with the Company, are entitled to include their securities
in any such registration.
(b) Underwriting. If the Initiating 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
paragraph 2 hereof and the Company shall include such information in the written
notice referred to in Section 2(a)(i). The right of any Holder to registration
pursuant to this Section 2 shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting (unless otherwise mutually agreed by a majority in interest
of the Initiating Holders
3
<PAGE>
and such Holder with respect to such participation and inclusion) to the extent
provided herein. A Holder may elect to include in such underwriting all or a
part of the Registrable Securities it holds.
If officers or directors of the Company holding other securities of the
Company shall request inclusion in any registration pursuant to this Section 2,
or if Other Shareholders request such inclusion, the Initiating Holders shall,
on behalf of all Holders, offer to include the securities of such officers,
directors and Other Shareholders in the underwriting and may condition such
offer on their acceptance of the further applicable provisions of this
Agreement. The Company shall (together with all Holders, officers, directors
and Other Shareholders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by a majority in interest of the Initiating Holders and reasonably acceptable to
the Company. Notwithstanding any other provision of this Section 2, if the
representative of the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation on the number of shares to be
underwritten, the securities of the Company held by officers or directors (other
than Registrable Securities) of the Company shall be excluded from such
registration to the extent so required by such limitation and if a limitation of
the number of shares is still required, the Initiating Holders shall so advise
all Other Shareholders whose securities would otherwise be included pursuant to
the request described herein, and the number of other securities that may be
included in the registration and underwriting shall be allocated among all such
Other Shareholders in proportion, as nearly as practicable, to the respective
amounts of securities which they had requested to be included. If a limitation
of the number of shares is still required, the Initiating Holders shall so
advise all Holders whose Registrable Securities would otherwise be included
pursuant to the request described herein, and the number of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all such Holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities which they had requested be
included. No Registrable Securities or any other securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Holder of Registrable Securities,
officer, director or Other Shareholder who has requested inclusion in such
registration as provided above disapproves of the terms of the underwriting,
such person may elect to withdraw therefrom by written notice to the Company,
the underwriter and the Initiating Holders. The securities held by such person
shall then be withdrawn from registration. If the underwriter has not limited
the number of Registrable Securities or other securities to be underwritten, the
Company may include its securities for its own account in such registration if
the underwriter so agrees and if the number of Registrable Securities and other
securities which would otherwise have been included in such registration and
underwriting has not thereby been limited.
Section 3. Company Registration.
--------------------------------
(a) If the Company shall determine to register any of its securities either
for its own account or the account of a security holder or holders exercising
their respective demand registration rights, other than a registration relating
solely to a Commission Rule 145 transaction,
4
<PAGE>
or a registration on any registration form which does not permit secondary
sales or does not include substantially the same information as would be
required to be included in a registration statement covering the sale of
Registrable Securities, the Company will:
(i) promptly give to each Holder and each holder of a Warrant written
notice thereof; and
(ii) include in such registration and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by any Holder within 15 days after receipt of the written notice
from the Company described in clause (i) above, except as set forth in Section
3(b). Such written request may specify all or a part of a Holder's Registrable
Securities be included in the Company's registration.
(b) Underwriting. If the registration of which the Company gives notice is
------------
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
3(a)(i). In such event the right of any Holder to registration pursuant to
Section 3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the Other Shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting by the Company. Notwithstanding any
other provision of Section 3, if the underwriter determines that marketing
factors require a limitation on the number of shares to be underwritten, and (a)
if such registration is the Initial Public Offering, the underwriter may
(subject to the allocation priority set forth below) exclude from such
registration and underwriting some or all of the Registrable Securities which
would otherwise be underwritten pursuant to the notice described herein, and (b)
if such registration is other than the Initial Public Offering, the underwriter
may (subject to the allocation priority set forth below) limit the number of
Registrable Securities to be included in the registration and underwriting to
not less than fifty percent (50%) of the securities included therein (based on
aggregate market values). The Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner. The securities of the Company held by officers and
directors of the Company (other than Registrable Securities) shall be excluded
from such registration and underwriting to the extent required by such
limitation, and, if a limitation on the number of shares is still required, the
number of shares that may be included in the registration and underwriting shall
be allocated among all such Holders and Other Shareholders in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities and
other securities which they had requested to be included in such registration at
the time of filing the registration statement, except that Registrable
Securities held by any of the Purchasers, or any other Holder shall be the last
to be limited. If any Holder of Registrable Securities or any officer, director
or Other Shareholder disapproves of the terms of any such underwriting, he may
elect to withdraw therefrom by written notice to the Company
5
<PAGE>
and the underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
Section 4. Registration on Form S-2 or Form S-3. The Company shall use
------------------------------------------------
its best efforts to qualify for registration of its securities on Form S-2 or
Form S-3 or any comparable or successor form or forms; the Company shall
register (whether or not required by law to do so) the Common Stock under the
Exchange Act in accordance with the provisions thereof, following the effective
date of the first registration of any securities of the company on Form S-1 or
Form S-18 or any comparable or successor form or forms. If, at any time after
the Corporation becomes eligible to file a registration statement on Form S-2 or
S-3 (or any successor form regardless of its designation), the Corporation shall
receive a written request from any Holder or Holders of twenty percent (20%) of
the then-outstanding Registrable Securities that the Corporation file a
registration statement on Form S-2 or S-3 (or any successor form regardless of
its designation) for a public offering of shares of the Registrable Securities
the reasonably anticipated aggregate price to the public of which would exceed
One Million Dollars ($1,000,000), then the Corporation shall use its best
efforts to cause such shares to be so registered.
Section 5. Expenses of Registration. All Registration Expenses incurred
------------------------------------
in connection with any registration pursuant to Section 2 or 3 shall be borne by
the Company; provided, however, that the Company shall not be required to pay
any Registration Expenses if, as a result of the withdrawal of a request for
registration by Initiating Holders, the registration statement does not become
effective, in which case the Holders and Other Shareholders requesting
registration shall bear such Registration Expenses pro-rata on the basis of the
number of their shares so included in the registration request, and provided,
further, that such registration shall not be counted as a requested registration
pursuant to Section 2(a)(ii)(B). All Registration Expenses incurred in
connection with the first two registrations pursuant to Section 4 shall be borne
by the Company; thereafter such Registration Expenses shall be borne by the
selling Holder or Holders.
Section 6. Registration Procedures. In the case of each registration
-----------------------------------
effected by the Company pursuant to this Agreement, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will:
(a) Prepare and file with the Commission a registration statement covering
the Registrable Securities requested to be registered as expeditiously as
reasonably possible and keep such registration effective for a period of nine
months; provided, however, that (i) such nine-month period shall be extended for
a period of time equal to the period the Holder refrains from selling any
securities included in such registration in accordance with the provisions of
Section 11; and (ii) in the case of any registration of Registrable Securities
on Form S-3 which are intended to be offered on a continuous or delayed basis,
such nine-month period shall be extended, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold, provided
that Rule 415, or any successor rule under the Act, permits an
6
<PAGE>
offering on a continuous or delayed basis, and provided further that applicable
rules under the Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (y) includes any
prospectus required by Section 10(a)(3) of the Act or (z) reflects facts or
events representing a material or fundamental change in the information set
forth in the registration statement, the incorporation by reference of
information required to be included in (y) and (z) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement;
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request;
(c) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably appropriate for the distribution of the
securities covered by the registration statement, provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions;
(d) Provide a transfer agent for the Common Stock no later than the
effective date of the first registration of any Registrable Securities;
(e) Otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission;
(f) Use its best efforts to cause all the Registrable Securities either (i)
to be listed on a national securities exchange (if the Registrable Securities
are not already so listed) and on each additional national securities exchange
on which similar securities issued by the Company are then listed, if the
listing of the Registrable Securities is then permitted under the rules of such
exchange, or (ii) to secure designation of all the Registrable Securities as a
NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 of
the Commission or, failing that, to secure listing on NASDAQ for the Registrable
Securities and, without limiting the generality of the foregoing, to arrange for
at least two (2) market makers to register as such with respect to Registrable
Securities with the National Association of Securities Dealers, Inc.;
(g) Enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions as sellers of
Registrable Securities shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(h) In the case of an underwritten offering, on the date of delivery of the
Registrable Securities sold pursuant thereto, cause to be delivered to the
selling Holders and the underwriters, opinions of counsel for the Company, which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to counsel for the underwriters and counsel for the selling
Holders, covering the matters customarily covered in opinions given to
underwriters in primary underwritten public offerings. At the time of delivery
of any Registrable Securities sold pursuant
7
<PAGE>
to an underwritten offering, the Company shall cause to be delivered to the
selling Holders and the underwriters a letter from the Company's independent
public accountants, addressed to the underwriters and the selling Holders,
stating that they are independent public accountants within the meaning of the
Act and the applicable published rules and regulations of the Commission
thereunder, and otherwise in customary form and covering such financial and
accounting matters as are customarily covered by letters of the independent
public accountants delivered in connection with underwritten public offerings;
(i) Make available for inspection by any seller of Registrable Securities,
by any underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent financial and
other records and pertinent corporate documents and properties of the Company
and cause all of the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement; in each case
as permitted by law and contractual confidentiality restrictions;
(j) Permit any Holder of Registrable Securities which Holder, in the sole
and exclusive judgment, exercised in good faith, of such Holder, might be deemed
to be a controlling person of the Company (within the meaning of the Act or the
1934 Act) 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 judgment of such controlling Holder should be included and
which is reasonably acceptable to the Company;
(k) Use every reasonable effort to prevent the issuance of any stop order
suspending the effectiveness of such registration statement or of any order
preventing or suspending the use of any preliminary prospectus and, if any such
order is issued, to obtain the lifting thereof at the earliest reasonable time;
and
(l) Make such representations and warranties to the selling Holders and the
underwriters as are customarily made by issuers to underwriters and selling
Holders, as the case may be, in underwritten public offerings.
Section 7. Indemnification.
---------------------------
(a) The Company will indemnify each Holder, each of its officers, directors
and partners, and each person who controls such Holder, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter (within the meaning of the Act and the rules and regulations
thereunder) against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
8
<PAGE>
necessary to make the statements therein not misleading, or any violation by the
Company of the Act or any rule or regulation thereunder 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 its officers, directors and partners, and each person who
controls such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and other expenses reasonably incurred in
connection with investigating and defending any such claim, loss, damage,
liability or action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense
arises from or is based on any untrue statement or omission or alleged untrue
statement or omission based upon written information furnished to the Company by
such Holder or underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by it are included in
the securities as to which such registration, qualification or compliance is
being effected, and each Other Shareholder who has the right to register its
securities pursuant to this Agreement will be required by the Company to,
indemnify the Company, each of its directors and officers and each underwriter,
if any, of the Company's securities covered by such a registration statement,
each person who controls the Company or such underwriter (within the meaning of
the Act and the rules and regulations thereunder) each other such Holder and
Other Shareholder and each of their officers, directors and partners, and each
person who controls such Holder or Other Shareholder, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained if any such registration statement, prospectus, offering circular
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 and such Holders, Other
Shareholders, directors, officers, partners, persons, underwriters or
controlling persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, 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, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder or Other Shareholder and stated to be
specifically for use therein; provided, however, that the obligations of such
Holders and Other Shareholders hereunder shall be limited to an amount equal to
the proceeds to each such Holder or Other Shareholder of securities sold as
contemplated herein.
(c) Each party entitled to indemnification under this Section 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, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further
9
<PAGE>
that the failure of any Indemnified Party to give notice as provided herein
shall not relieve the Indemnifying Party of its obligations under this
Agreement. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party (which
consent shall not unreasonably be withheld), consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation. Each
Indemnified Party shall furnish such information regarding itself or the claim
in question as an Indemnifying Party may reasonably request in writing and as
shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(d) In order to provide for just and equitable contribution to joint
liability under the Act in any case in which either (i) any Holder of
Registrable Securities exercising rights under this Agreement, or any
controlling person of any such Holder, makes a claim for indemnification
pursuant to this Section 7 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 7 provides for indemnification in such case, or (ii) contribution
under the Act may be required on the part of any such selling Holder or any such
controlling person in circumstances for which indemnification is provided under
this Section 7; then, and in each such case, the Company and such Holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that such
Holder is responsible for the portion represented by the percentage that the
public offering price of its Registrable Securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such Holder of
-------- -------
Registrable Securities will be required to contribute any amount in excess of
the net proceeds received from the sale of all such Registrable Securities
offered by it pursuant to such registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
Section 8. Information by Holder. Each Holder of Registrable Securities,
---------------------------------
and each Other Shareholder holding securities included in any registration,
shall furnish to the Company such information regarding such Holder or Other
Shareholder and the distribution proposed by such Holder or Other Shareholder as
the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in Section 2, 3 or 4.
Section 9. Limitations on Registration of Issues of Securities. From and
---------------------------------------------------------------
after the date of this Agreement, the Company shall not enter into any agreement
with any holder or prospective holder of any securities of the Company giving
such holder or prospective holder the right to require the Company to initiate
any registration of any securities of the Company, provided that this Section 9
shall not limit the right of the Company to enter any agreements with any holder
or prospective holder of any securities of the Company giving such holder or
prospective holder the
10
<PAGE>
right to require the Company, upon any registration of any of its securities, to
include, among the securities which the Company is then registering, securities
owned by such holder. Any right given by the Company to any holder or
prospective holder of the Company's securities in connection with the
registration of securities shall be conditioned such that it shall be consistent
with the provisions of this Agreement and with the rights of the Holders
provided in this Agreement.
Section 10. Transfer or Assignment of Registration Rights. The rights to
----------------------------------------------------------
cause the Company to register the Registrable Securities granted by the Company
under Sections 2, 3 and 4 may be transferred or assigned by a Holder to a
transferee or assignee of any of the Holder's Registrable Securities, provided
that the Company is given written notice by a Holder at the time of or within a
reasonable time after said transfer or assignment, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned and provided
further that the transferee or assignee of such rights assumes the obligations
of such Holder under this Agreement.
Section 11. "Market Stand-off" Agreement. Each Purchaser agrees, if
-----------------------------------------
requested by the Company and an underwriter of Common Stock (or other
securities) of the Company, not to sell or otherwise transfer or dispose of any
Common Stock (or other securities) of the Company held by it during the time
period following the effective date of a registration statement of the Company
filed under the Act requested by the underwriter, or in the absence of such
request, 90 days, provided that:
(a) such agreement only applies to the first such registration statement of
the Company including securities to be sold on its behalf to the public in an
underwritten offering; and
(b) all other Holders, Other Shareholders, principal officers and directors
of the Company 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 shares (or securities) subject to the foregoing restriction until
the end of the restricted period.
Section 12. Reports Under the 1934 Act. With a view to making available
---------------------------------------
to the Holders the benefits of Rule 144 promulgated under the Act and any other
rule or regulation of the Commission that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
agrees to use its best efforts to:
(a) make and keep public information available, within the meaning of Rule
144, at all times after the effective date of (i) the first registration
statement covering an underwritten public offering filed by the Company or (ii)
registration by the Company under the 1934 Act;
11
<PAGE>
(b) following a public offering or a registration under the 1934 Act, file
with the Commission in a timely manner all reports and other documents required
of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder forthwith upon request a written statement by the
Company that it has complied with the reporting requirements of Rule 144 (at any
time after ninety (90) days after the effective date of said first registration
statement filed by the Company), and of the Act and the 1934 Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents filed by the Company with the Commission as may be reasonably
requested to permit any such holder to take advantage of any rule or regulation
of the Commission permitting the selling of any such securities without
registration.
Section 13. Mergers, Etc.. The Company shall not, directly or
--------------------------
indirectly, enter into any merger, consolidation or reorganization in which the
Company shall not be the surviving corporation unless the proposed surviving
corporation shall, prior to such merger, consolidation or reorganization, agree
in writing to assume the obligations of the Company under this Agreement, and
for that purpose references hereunder to "Registrable Securities" shall be
deemed to be references to the securities which the Holders would be entitled to
receive in exchange for Registrable Securities under any such merger,
consolidation or reorganization; provided, however, that the provisions of this
Agreement shall not apply in the event of any merger, consolidation or
reorganization in which the Company is not the surviving corporation if the
Holders of Registrable Securities are entitled to receive in exchange therefor
(i) cash or (ii) securities of the acquiring corporation which may be
immediately sold to the public without registration under the Act.
Section 14. Miscellaneous.
--------------------------
14.1 Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of The Commonwealth of Massachusetts.
14.2 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
14.3 Entire Agreement; Amendment. This Agreement constitutes the full
---------------------------
and entire understanding and agreement between the parties with regard to the
subject hereof. Neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated, except by a written instrument signed by the
Company and the holders of sixty-six and two-thirds percent (66-2/3%) or more of
the Registrable Securities. Notice of any proposed amendment will be given to
the holders of the Warrants at least 15 days prior to the effective date of any
such amendment. Notwithstanding the foregoing, in no event shall the obligation
of any Purchaser or Stockholder hereunder be increased, except with such party's
written consent.
12
<PAGE>
14.4 Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed effectively given
upon personal delivery or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid, if to the Company, at South
Deerfield Research Park, South Deerfield, Massachusetts, 01373, with a copy to
David L. Lougee, Esq., Mirick, O'Connell, DeMallie & Lougee LLP, 100 Front
Street, Worcester, MA 01608; if to a Stockholder, at its address on Schedule I,
with a copy to Testa Hurwitz & Thibeault, 53 State Street, Boston, MA 02109; if
to a Purchaser, at its address set forth on Schedule II, with a copy to Arnold
M. Zaff, Esq., Foley, Hoag & Eliot LLP, One Post Office Square, Boston, MA
02109; or at such other address as any party may designate by ten days' prior
written notice to the other party.
14.5 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any holder of any Registrable Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or in any similar
breach or default occurring thereafter; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or, default theretofore
or thereafter occurring. Any waiver; permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either
under this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
14.6 Rights; Separability. Unless otherwise expressly provided herein,
--------------------
each Purchaser's rights hereunder are several rights, not rights jointly held
with, any of the other Purchasers.
14.7 Titles. The titles of the Sections, paragraphs and subparagraphs of
------
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
14.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one Agreement.
14.9 Termination. The rights granted the Holders pursuant to Sections 2,
-----------
3 and 4 hereof shall terminate after the fifth anniversary of the Initial Public
Offering.
14.10 Replacement Agreement. This Agreement supersedes and replaces in its
---------------------
entirety the Registration Agreement.
13
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MILLITECH CORP
By: /s/ John L. Youngblood
---------------------------------
John L. Youngblood, Chief
Executive Officer
ALLIANCE TECHNOLOGY VENTURES II,
L.P.
By: Alliance Associates II, LLC
By: /s/ Michael R. Slawson
---------------------------------
Michael R. Slawson
Manager
ATV II AFFILIATES FUND, L.P.
By: Alliance Associates II, LLC
By: /s/ Michael R. Slawson
---------------------------------
Michael R. Slawson
Manager
PRISM VENTURE PARTNERS I, L.P.
By: Prism Investment Partners, L.P.
its general partner
By: Prism Venture Partners, L.L.C.
its general partner
By: /s/ unreadable
---------------------------------
Managing Director
14
<PAGE>
SPRING POINT PARTNERS L.P.
By: /s/ unreadable
---------------------------------
General Partner
SPRING POINT OFFSHORE FUND
By: /s/ unreadable
---------------------------------
Title: General Partner
AXIOM VENTURE PARTNERS II L.P.
By: /s/ unreadable
---------------------------------
Title:
------------------------------
SVE Star Ventures Enterprises No. V, a German
Civil Law Partnership (with limitation of
liability)
By: SVM Star Ventures Management GmbH No. 3-
Managing Partner
By: /s/ Dr. Meir Barel
-----------------------------
Title: Managing Director
-------------------------
SVE Star Ventures Managementgesellschaft mbH
Nr. 3 & Co. Betelligungs KG Nr. 2
By: SVM Star Ventures Management GmbH No. 3-
Managing Partner
By: /s/ Dr. Meir Barel
-----------------------------
Title: Managing Director
--------------------------
15
<PAGE>
SVM Star Ventures Management GmbH No. 3
By: /s/ Dr. Meir Barel
---------------------------------
Title: Managing Director
------------------------------
SVE STAR VENTURE ENTERPRISES VII, a German Civil
Law Partnership (with limitation of liability)
By: /s/ Dr. Meir Barel
---------------------------------
Title: Managing Director
------------------------------
STAR GROWTH ENTERPRISES, a German Civil Law
Partnership (with limitation of liability)
By: /s/ Dr. Meir Barel
---------------------------------
Title: Managing Director
------------------------------
TECHNOLOGY ASSOCIATES MANAGEMENT CO., LTD.
By: /s/ unreadable
---------------------------------
Title: Managing Director
------------------------------
TECHGAINS INTERNATIONAL CORP.
By: /s/ unreadable
---------------------------------
Title: Managing Director
------------------------------
TECHGAINS CORP.
By: /s/ unreadable
---------------------------------
Title: Managing Director
------------------------------
16
<PAGE>
Richard J. Testa
------------------------------------
Richard J. Testa
K.D. PARTNERS, INC.
By: /s/ unreadable
---------------------------------
Title: Director
------------------------------
/s/ Michael E. Frank
------------------------------------
Michael E. Frank
/s/ Timothy C. Maguire
------------------------------------
Timothy C. Maguire
/s/ Lior Bregman
------------------------------------
Lior Bregman
____________________________________
Stanley Stern
UNITED OF OMAHA LIFE INSURANCE
COMPANY
By:_________________________________
Title:______________________________
MASSACHUSETTS CAPITAL RESOURCE
COMPANY (MCRC)
By:_________________________________
Title:______________________________
17
<PAGE>
MASSACHUSETTS TECHNOLOGY
DEVELOPMENT CORPORATION/
COMMONWEALTH FUND (MTDC)
By: /s/ unreadable
---------------------------------
Title:______________________________
FLEET GROWTH RESOURCES, INC.
By: Massachusetts Technology Development
Corporation, Attorney-in-Fact
By: /s/ unreadable
---------------------------------
Title: President, MTDC
------------------------------
Attorney-in-Fact
BANC BOSTON INVESTMENTS, INC.
By: Massachusetts Technology Development
Corporation, Attorney-in-Fact
By: /s/ unreadable
---------------------------------
Title: President, MTDC
------------------------------
Attorney-in-Fact
PRINCE VENTURE PARTNERS II
By: /s/ James W. Fordyce
---------------------------------
Title: General Partner
------------------------------
NEWMARKET VENTURE CAPITAL PLC
By:_________________________________
Title:______________________________
/s/ James W. Fordyce
------------------------------------
James W. Fordyce
____________________________________
Mark J. Gabrielson
18
<PAGE>
/s/ James G. Bass
------------------------------------
James G. Bass
/s/ Jasper A. Welch, Jr.
------------------------------------
Jasper A. Welch, Jr.
/s/ John L. Youngblood
------------------------------------
John L. Youngblood
/s/ Raymond M. Vincunas
------------------------------------
Raymond M. Vincunas
____________________________________
Howard R. Schlossberg
/s/ William G. Maloney
------------------------------------
William G. Maloney
/s/ Robert Ammerman
------------------------------------
Robert Ammerman
____________________________________
Robert G. Loewy
____________________________________
Henry E. Blair
/s/ Allan M. Doyle, Jr.
------------------------------------
Allan M. Doyle, Jr.
____________________________________
G.S. Beckwith Gilbert
____________________________________
Harold McCray
/s/ Albert E. Paladino
------------------------------------
Albert E. Paladino
/s/ Ransom D. Reynolds
------------------------------------
Ransom D. Reynolds
/s/ Edward J. O'Leary
------------------------------------
Edward J. O'Leary, General Partner
19
<PAGE>
____________________________________
Anne C. Crudge
/s/ Royce Diener
------------------------------------
Royce Diener
FRAP CO.
By:_________________________________
Title:______________________________
PANTHEON VENTURES, INC.
By:_________________________________
Title:______________________________
PHILIP HILL INVESTMENT TRUST PLC
By:_________________________________
Title:______________________________
PRINCE VENTURE PARTNERS
By:/s/ James W. Fordyce
---------------------------------
Title: General Partner
-----------------------------
RAYTHEON COMPANY
By: /s/ unreadable
---------------------------------
Title:Attorney-in-Fact
------------------------------
20
<PAGE>
ESTATE OF T.F. WALKOWICZ
By:_________________________________
Title:______________________________
WESTPOOL INVESTMENT TRUST PLC
By:_________________________________
Title:______________________________
KOLLMORGEN CORPORATION
By:/s/ unreadable
---------------------------------
Title:Attorney-in-Fact
------------------------------
____________________________________
Richard Lapin
____________________________________
Martha R. Morgan
NSI, Inc.
By:_________________________________
Title:______________________________
____________________________________
Shirley Nunziato
21
<PAGE>
LATE STAGE FUND 1990
LIMITED PARTNERSHIP
By:/s/ unreadable
---------------------------------
Title: Attorney-in-Fact
------------------------------
KENNETH VINCUNAS and LYNN TRAVERS,
TRUSTEES 1988 VINCUNAS FAMILY TRUST
By: /s/ Kenneth Vincunas
---------------------------------
Kenneth Vincunas
By: /s/ Lynn Travers
---------------------------------
Lynn Travers
CSR-10 TRUST
____________________________________
Joseph M. Fee, Trustee
TRUSTEES OF GENERAL ELECTRIC PENSION TRUST
By:_________________________________
Title:______________________________
____________________________________
Sam Croland
/s/ Vicki L. Schnell
------------------------------------
Vicki L. Schnell
/s/ Nancy T. Schnell
------------------------------------
Nancy Schnell
22
<PAGE>
/s/ Lois Shugar
------------------------------------
Lois Shugar
/s/ Richard A. Rapaport
------------------------------------
Richard Rapaport
/s/ Eric A. Schnell
------------------------------------
Eric A. Schnell
____________________________________
Anthony Gilbert Summers
____________________________________
Christine Helen Summers
/s/ Pieter J. Schiller
------------------------------------
Pieter J. Schiller
____________________________________
Jos C. Henkens
/s/ Robert F. Sproull
------------------------------------
Robert F. Sproull
____________________________________
Ivan E. Sutherland
/s/ William R. Sutherland
------------------------------------
William R. Sutherland
THE ESTATE OF RALPH P. NUNZIATO--
TRUST A
23
<PAGE>
By:_________________________________
Title:______________________________
THE ESTATE OF RALPH P. NUNZIATO--
TRUST B
By:_________________________________
Title:______________________________
/s/ David A Norbury
------------------------------------
David A. Norbury
____________________________________
Erik van der Kaay
____________________________________
April Evans
____________________________________
Dennis C. Stempel
____________________________________
Matthew Robison
KUMMEL INVESTMENTS LIMITED
By:_________________________________
Title:______________________________
24
<PAGE>
Schedule I
----------
Prism Venture Partners I, L.P.
100 Lowder Brook Drive, Suite 2500
Westwood, MA 02090
Spring Point Partners L.P.
655 Montgomery Street, Suite 600
San Francisco, CA 94111
Axiom Venture Partners II L.P.
City Place II - 17/th/ Floor
185 Asylum Street
Hartford, CT 06103
SVE Star Ventures Enterprises No. V,
a German Civil Law Partnership
(with limitation of liability)
Possart Strasse No. 9
81679 Munich, Germany
SVE Star Ventures Enterprises No. VII,
a German Civil Law Partnership
(with limitation of liability)
Possart Strasse No. 9
81679 Munich, Germany
SVM Star Ventures Management GmbH No. 3
Possart Strasse No. 9
81679 Munich, Germany
SVE Star Ventures Managementgesellschaft mbH Nr. 3
& Co. Betelligungs KG Nr. 2
Possart Strasse No. 9
81679 Munich, Germany
Techgains Corp.
2378 West 239/th/ Street
Torrence, CA 90501
Technology Associates Management Co., Ltd.
2378 West 239/th/ Street
Torrence, CA 90501
25
<PAGE>
Richard J. Testa
c/o Testa, Hurwitz & Thibeault
High Street Tower
125 High Street
Boston, MA 02110
K.D. Partners, Inc.
c/o Santanu Das
Transwitch Corporation
3 Enterprise Drive
Shelton, CT 06484
Michael E. Frank
c/o Advanced Technology Ventures
281 Winter Street, Suite 305
Waltham, MA 02154
Timothy C. Maguire
c/o Testa, Hurwitz & Thibeault
High Street Tower
125 High Street
Boston, MA 02111
Lior Bregman
c/o Oppenheimer & Co.
200 Liberty Street
World Financial Center
New York, NY 10281
Stanley Stern
c/o Oppenheimer & Co.
200 Liberty Street
World Financial Center
New York, NY 10281
Massachusetts Capital Resource Company (MCRC)
Attn: Kenneth J. Lavery
The Berklee at 420 Boylston Street
Boston, MA 02116
26
<PAGE>
CSR -10 Trust
Dodge & Cox
One Sansone Street
San Francisco, CA 94104
Attn: Joseph M. Fee, Trustee
Trustees of General Electric Pension Trust
3003 Summer St., 7th Floor
Stamford, CT 06905
Attn: Davis Stewart, GE Investments
Sam Croland
10 Scarborough Circle
Rock Hill, New York 12775
Vicki L. Schnell
120 West 70th Street, Apt. 5A
New York, NY 10023
Nancy Schnell
37 West 72nd Street
New York, NY 10023
Lois Shugar
35 West 92nd Street
New York, NY 10025
Richard Rapaport
18 East 48th Street, 19th Floor
New York, NY 10017
Eric A. Schnell
104 West 70th Street Apt. 5A
New York, NY 10023
Anthony Gilbert Summers
Apt. 42, 2 Old Brompton Road
London, England SW7 3DQ
England
27
<PAGE>
Christine Helen Summers
Apt. 42, 2 Old Brompton Road
London, England SW7 3DQ
England
Pieter J. Schiller
18 South Meadow Ridge
Concord, MA 01742
Jos C. Henkens
6 Princeton Road
Menlo Park, CA 94025
Robert F. Sproull
239 Kenrick Street
Newton, MA 02158
Ivan E. Sutherland
P.O. Box 1160
Palo Alto, CA 94302
William R. Sutherland
344 View Street
Mountain View, CA 94041
The Estate of Ralph P. Nunziato - Trust A
c/o Margo Desmond
6131 East Mirmar Drive
Tucson, AZ 85715
The Estate of Ralph P. Nunziato - Trust B
c/o Margo Desmond
6131 East Mirmar Drive
Tucson, AZ 85715
Robert C. Ammerman
c/o Capital Resource Partners
85 Merrimac Street, Suite 200
Boston, Massachusetts 02114
Anne C. Crudge
129 East 69/th/ Street
New York, NY 10021
28
<PAGE>
Royce Diener
1038 Palisades Beach Road
Santa Monica, CA 90403
Frap Co.
c/o National Westminster Bank USA
100 Wall Street, 20/th/ Floor
New York, NY 10005-3769
Attn: Jim Collins
Pantheon Ventures, Inc.
c/o Pantheon International Participations PLC
43-44 Albemarle Street
Mayfair
London, England W1X 3FE
Attn: Margaret Quarrington
Edward J. O'Leary
c/o Development Associates
P.O. Box 528
630 Silver Street
Unit 3-C
Agawam, Massachusetts 01001
Jonathan Guy Anthony Phillips, Liquidator
Philip Hill Investment Trust PLC
c/o Crispin Hayhoe
Price Waterhouse
No. 1 London Bridge
London SE1 9QL
Prince Venture Partners
25 Ford Road
Westport, CT 06880
ATTN: James W. Fordyce, General Partner
29
<PAGE>
Prince Venture Partners II
25 Ford Road
Westport, CT 06880
ATTN: James W. Fordyce, General Partner
with a courtesy copy to:
Carter Emerson, Esq.
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Raytheon Company
141 Spring Street
Lexington, Massachusetts 02173
ATTN: Philip Fisk
Howard R. Schlossberg
4811 Hercules Court
Annandale, VA 22003
Raymond M. Vincunas
c/o Development Associates
P.O. Box 528
630 Silver Street
Unit 3-C
Agawam, Massachusetts 01001
Kenneth Vincunas and Lynn Travers, Trustees
1988 Vincunas Family Trust
c/o Development Associates
P.O. Box 528
630 Silver Street
Unit 3-C
Agawam, Massachusetts 01001
Estate of T. F. Walkowicz
Mrs. M. L. Walkowicz, Executrix
c/o Donald J. Bezahler, Esq.
Baer, Marks & Upham
805 Third Avenue
New York, NY 10022
30
<PAGE>
Jasper A. Welch, Jr.
2129 Foothills Road
Santa Fe, NM 87505
Westpool Investment Trust PLC
c/o Mr. Robert A. Rayne
Carlton House
33 Robert Adam Street
London W1M 5AH
England
John L. Youngblood
c/o Millitech Corporation
South Deerfield Research Park
P.O. Box 109
South Deerfield, Massachusetts 01373
James G. Bass
c/o Ivy Hill Partners
7 Shipwright Harbor
Annapolis, MD 21401
Massachusetts Technology Development
Corporation/Commonwealth Fund
148 State Street
Boston, Massachusetts 02109
Attn: John F. Hodgman
James W. Fordyce
370 Lake Avenue
Greenwich, CT 06830
Fleet Growth Resources, Inc.
c/o Massachusetts Technology Development Corporation
148 State Street
Boston, Massachusetts 02109
Attn: John F. Hodgman
Robert G. Loewy
3420 Wood Valley Road
Atlanta, GA 30327
31
<PAGE>
William G. Maloney
155 Oenoke Lane
New Canaan, CT 06840
Mark J. Gabrielson
165 Lounsbury Road
Ridgefield, CT 06877
BancBoston Investments, Inc.
c/o Massachusetts Technology Development Corporation
148 State Street
Boston, MA 02109
Attn: John F. Hodgman
Newmarket Venture Capital PLC
5/th/ Floor
222 The Strand
London, England WC2R 1DE
Attn: Alan Duncan
Henry E. Blair
275 Mill Way
Box 648
Barnstable, Massachusetts 02630
Allan M. Doyle, Jr.
17 Soo-Nipi Park Road
New London, NH 03257
G.S. Beckwith Gilbert
Field Point Capital Management
104 Field Point Road
Greenwich, CT 06830
Harold McCray
McCray, Shriver, Eckdahl
& Associates, Inc.
10880 Wilshire Boulevard
Suite 2050
Los Angeles, CA 90024
Albert E. Paladino
12 Wachusett Road
Chestnut Hill, Massachusetts 02167
32
<PAGE>
Ransom D. Reynolds
147 Parker Road
Framingham, Massachusetts 01702
Kollmorgen Corporation
1601 Trapelo Road
Waltham, Massachusetts 02154
Attn: Robert Cobuzzi
with a copy to:
James Eder, Esq.
968 Farmington Avenue
West Hartford, CT 06107
Richard B. Lapin
16639 Columbia Drive
Castro Valley, CA 94552
Martha R. Morgan
67 E. Baffert Drive
Nogales, AZ 85621
NSI, Inc.
c/o United Technologies Corporation
Legal Department--Attn: Patty Nolan
United Technologies Building
Hartford, Connecticut 06101
Shirley Nunziato
6141 East San Leandro
Tucson, AZ 85716
Late Stage Fund
1990 Limited Partnership
c/o MVP Ventures
45 Milk Street
Boston, Massachusetts 02109
Attn: John G. Turner
33
<PAGE>
United of Omaha Life Insurance Company
c/o Mutual of Omaha Insurance Company
Mutual of Omaha Plaza
Omaha, Nebraska 68175
Attn: John Maginn
Alliance Technology Ventures, II,
L.P.
8995 Westside Parkway
Suite 200
Alpharetta, GA 30004
ATV II Affiliates Fund, L.P.
c/o Alliance Technology Ventures,
II, L.P.
8995 Westside Parkway
Suite 200
Alpharetta, GA 30004
Spring Point Offshore Fund
655 Montgomery St.
Suite 600
San Francisco, CA 94111
34
<PAGE>
Schedule II
-----------
David A. Norbury
President and Chief Executive
Officer
RF Micro Devices, Inc.
6705 Palo Farms Drive
Summerfield, NC 27358
Erik van der Kaay
President and CEO
Datum Corporation
500 Dahlia Avenue
Carona De Mar, CA 92625
April Evans
21 Rockwood Street
Boston, MA 02130
Dennis C. Stempel
Vice President and Chief Financial
Officer
Millitech Corporation
South Deerfield Research Park
P. O. Box 209
South Deerfield, Massachusetts 01373
Matthew Robison
Ferris Baker Watts
100 Light Street
8/th/ Floor
Baltimore, MD 21202
Alliance Technology Ventures II,
L.P.
8995 Westside Parkway
Suite 200
Alpharetta, GA 30004
35
<PAGE>
ATV II Affiliates Fund, L.P.
c/o Alliance Technology Ventures,
II, L.P.
8995 Westside Parkway
Suite 200
Alpharetta, GA 30004
Prism Venture Partners I, L.P.
c/o Prism Venture
Management, Inc.
100 Lowder Brook Drive
Suite 2500
Westwod, MA 02090
Spring Point Partners L.P.
655 Montgomery St., Suite 600
San Francisco, CA 94111
Spring Point Offshore Fund
655 Montgomery St.
Suite 600
San Francisco, CA 94111
Axiom Venture Partners II L.P.
City Place II - 17/th/ Floor
185 Asylum Street
Hartford, CT 06103
Technology Associates
Management Co., Ltd.
2378 West 239/th/ Street
Torrance, CA 90501
Techgains Corp.
2378 West 239/th/ Street
Torrance, CA 90501
Techgains International Corp.
2378 West 239/th/ Street
Torrance, CA 90501
36
<PAGE>
Richard J. Testa
c/o Testa, Hurwitz & Thibeault
High Street Tower
125 High Street
Boston, MA 02110
Michael E. Frank
c/o Advanced Technology
Ventures
281 Winter Street, Suite 305
Waltham, MA 02154
Timothy C. Maguire
c/o Testa, Hurwitz & Thibeault
High Street Tower
125 High Street
Boston, MA 02111
Massachusetts Technology
Development Corporation/
Commonwealth Fund (MTDC)
Attn: John F. Hodgman
148 State Street
Boston, MA 02109
Fleet Growth Resources, Inc.
c/o Massachusetts Technology
Development Corp. (MTDC)
Attn: John F. Hodgman
148 State Street
Boston, MA 02109
BancBoston Investments, Inc.
c/o Massachusetts Technology
Development Corp. (MTDC)
Attn: John F. Hodgman
148 State Street
Boston, MA 02109
37
<PAGE>
Prince Venture Partners II
Limited Partnership
Attn: James W. Fordyce
25 Ford Road
Westport, CT 06880
James W. Fordyce
370 Lake Avenue
Greenwich, CT 06830
James G. Bass
c/o Ivy Hill Partners
7 Shipwright Harbor
Annapolis, MD 21401
Jasper A. Welch, Jr.
2129 Foothills Road
Santa Fe, NM 87505
John L. Youngblood
c/o Millitech Corporation
20 Industrial Drive East
P.O. Box 109
South Deerfield, MA 01373
Raymond M. Vincunas
c/o Development Associates
P.O. Box 528
630 Silver Street, Unit 3-C
Agawam, MA 01001
William G. Maloney
155 Oenoke Lane
New Canaan, CT 06840
Royce Diener
1038 Palisades Beach Road
Santa Monica, CA 90403
Robert F. Sproull
239 Kenrick Street
Newton, MA 02158
38
<PAGE>
William R. Sutherland
344 View Street
Mountain View, CA 94041
Pieter J. Schiller
18 South Meadow Ridge
Concord, MA 01742
Nancy Schnell
37 West 72/nd/ Street
New York, NY 10023
Albert E. Paladino
12 Wachusett Road
Chestnut Hill, MA 02167
Robert C. Ammerman
c/o Capital Resource Partners
85 Merrimac St., Ste. 200
Boston, MA 02114
Eric A. Schnell
104 West 70th Street Apt. 5A
New York, NY 10023
Lior Bregman
c/o Oppenheimer & Co.
200 Liberty Street
World Financial Center
New York, NY 10281
Vicki L. Schnell
120 West 70th Street, Apt. 5A
New York, NY 10023
Lois Shugar
35 West 92nd Street
New York, NY 10025
39
<PAGE>
Ransom D. Reynolds
147 Parker Road
Framingham, Massachusetts
01702
Allan M. Doyle, Jr.
17 Soo-Nipi Park Road
New London, NH 03257
Richard Rapaport
18 East 48th Street, 19th Floor
New York, NY 10017
Edward J. O'Leary
c/o Development Associates
P.O. Box 528
630 Silver Street, Unit 3-C
Agawam, MA 01001
K.D. Partners, Inc.
c/o Santanu Das
Transwitch Corporation
3 Enterprise Drive
Shelton, CT 06484
SVE Star Ventures Enterprises
No. VII, a German Civil Law
Partnership (with limitation of
liability)
Possart Strasse No. 9
81679 Munich, Germany
SVM Star Ventures Management
GmbH No. 3
Possart Strasse No. 9
81679 Munich, Germany
40
<PAGE>
Star Growth Enterprises, a
German Civil Law
Partnership (with limitation of
liability)
Possart Strasse No. 9
81679 Munich, Germany
Kummell Investments Limited
Suite 922C
Europort, Gibraltar (via London)
with copies to:
1) Springfield & Company
1188 Centre Street
Newton Centre, MA 02159
Attention: Stephanie Monaghan
O'Brien, Esq.
2) Springfield Financial Advisory
22/F, Hang Lung Centre
2-20 Paterson Street
Causeway Bay, Hong Kong
3) Morningside Ventures
200 Putnam Street
Suite 728
Marietta, Ohio 45750
41
<PAGE>
EXHIBIT 10.17
PHOENIX REGISTRATION RIGHTS AGREEMENT
-------------------------------------
THIS PHOENIX REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
May 19, 1999 by and between Millitech Corporation, a Massachusetts corporation
(the "Company"), and Phoenix Leasing Incorporated, a California corporation
("Phoenix").
WHEREAS, Phoenix has agreed to loan money to the Company pursuant to the
Senior Loan and Security Agreement No. 6240, dated as of May 19, 1999 (the "Loan
Agreement");
WHEREAS, in connection with the Loan Agreement, the Company has issued
Phoenix warrants to purchase 44,445 shares (the "Warrant Shares") of Class E
Preferred Stock, par value $.01 per share, of the Company pursuant to a Warrant
to Purchase Shares of Class E Preferred Stock (the "Class E Warrant") of even
date herewith; and
WHEREAS, as contemplated by the Class E Warrant, the parties desire to
enter into this Agreement to grant Phoenix certain rights with respect to the
Warrant Shares;
NOW THEREFORE, in consideration of the transactions contemplated by the
Loan Agreement and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties hereto agree as follows:
Section 1. Certain Definitions. As used in this Agreement, the following
-------------------------------
terms shall have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Act.
"Holder" shall mean Phoenix or any assignee under Section 7 hereof who
holds outstanding Registrable Securities which have not been sold to the public.
"Initial Public Offering" shall mean the effective date of a registration
statement under the Act in connection with the initial public offering of the
Company's securities for its own account.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"Other Shareholders" shall mean any holders of securities of the Company
who are entitled, by agreement with the Company, to have securities included in
a registration of securities of the Company.
"Registrable Securities" shall mean (i) the shares of the Company's common
stock ("Common Stock") issuable upon conversion of the Warrant Shares, (ii) any
Common Stock
<PAGE>
issued as a dividend or other distribution with respect to, or in exchange or in
replacement of, such Warrant Shares or Common Stock, and (iii) any Common Stock
issuable upon conversion, exercise or exchange of convertible securities,
warrants, options or similar rights issued as a dividend or other distribution
with respect to, or in exchange or in replacement of, such Warrant Shares or
Common Stock.
The terms "register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Act and applicable rules and regulations thereunder, and the
declaration or ordering of the effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company in
connection with a registration, including without limitation all registration
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, blue sky fees and expenses, fees and disbursements of a single counsel
for all the selling Holders and other security holders for a "due diligence"
examination of the Company, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company, which shall be paid in any event by the Company).
Section 2. Company Registration.
--------------------------------
(a) If the Company shall determine to register any of its securities either
for its own account or the account of a security holder or holders exercising
their respective demand registration rights, other than a registration relating
solely to a Commission Rule 145 transaction, or a registration on any
registration form which does not permit secondary sales or does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company
will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made by any Holder within 15 days after receipt of the written notice
from the Company described in clause (i) above, except as set forth in Section
2(b). Such written request may specify all or a part of a Holder's Registrable
Securities be included in the Company's registration.
(b) Underwriting. If the registration of which the Company gives notice is
------------
for a registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
2(a)(i). In such event the right of any Holder to registration pursuant to
Section 2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the Other Shareholders distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for underwriting by the Company.
2
<PAGE>
Notwithstanding any other provision of Section 2, if the underwriter
determines that marketing factors require a limitation on the number of shares
to be underwritten, and (a) if such registration is the Initial Public Offering,
the underwriter may (subject to the allocation priority set forth below) exclude
from such registration and underwriting some or all of the Registrable
Securities which would otherwise be underwritten pursuant to the notice
described herein, and (b) if such registration is other than the Initial Public
Offering, the underwriter may (subject to the allocation priority set forth
below) limit the number of Registrable Securities to be included in the
registration and underwriting to not less than fifty percent (50%) of the
securities included therein (based on aggregate market values). The Company
shall so advise all holders of securities requesting registration, and the
number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated in the following manner. The
securities of the Company held by officers and directors of the Company (other
than Registrable Securities) shall be excluded from such registration and
underwriting to the extent required by such limitation, and, if a limitation on
the number of shares is still required, the number of shares that may be
included in the registration and underwriting shall be allocated among all such
Holders and Other Shareholders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities and other securities which they had
requested to be included in such registration at the time of filing the
registration statement, except that Registrable Securities held by the Other
Shareholders shall be the last to be limited. If any Holder of Registrable
Securities or any officer, director or Other Shareholder disapproves of the
terms of any such underwriting, he may elect to withdraw therefrom by written
notice to the Company and the underwriter. Any Registrable Securities or other
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
Section 3. Expenses of Registration. All Registration Expenses incurred
------------------------------------
in connection with any registration pursuant to Section 2 shall be borne by the
Company.
Section 4. Registration Procedures. In the case of each registration
-----------------------------------
effected by the Company pursuant to this Agreement, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will:
(a) Prepare and file with the Commission a registration statement covering
the Registrable Securities requested to be registered as expeditiously as
reasonably possible and keep such registration effective for a period of nine
months; provided, however, that (i) such nine-month period shall be extended for
a period of time equal to the period the Holder refrains from selling any
securities included in such registration in accordance with the provisions of
Section 8; and (ii) in the case of any registration of Registrable Securities on
Form S-3 which are intended to be offered on a continuous or delayed basis, such
nine-month period shall be extended, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold, provided
that Rule 415, or any successor rule under the Act, permits an offering on a
continuous or delayed basis, and provided further that applicable rules under
the Act governing the obligation to file a post-effective amendment permit, in
lieu of filing a post-effective amendment which (y) includes any prospectus
required by Section 10(a)(3) of the Act or (z) reflects facts or events
representing a material or fundamental change in the information set
3
<PAGE>
forth in the registration statement, the incorporation by reference of
information required to be included in (y) and (z) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement;
(b) Furnish such number of prospectuses and other documents incident
thereto as a Holder from time to time may reasonably request;
(c) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably appropriate for the distribution of the
securities covered by the registration statement, provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions;
(d) Provide a transfer agent for the Common Stock no later than the
effective date of the first registration of any Registrable Securities;
(e) Otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission;
(f) Use its best efforts to cause all the Registrable Securities either (i)
to be listed on a national securities exchange (if the Registrable Securities
are not already so listed) and on each additional national securities exchange
on which similar securities issued by the Company are then listed, if the
listing of the Registrable Securities is then permitted under the rules of such
exchange, or (ii) to secure designation of all the Registrable Securities as a
NASDAQ "national market system security" within the meaning of Rule 11Aa2-1 of
the Commission or, failing that, to secure listing on NASDAQ for the Registrable
Securities and, without limiting the generality of the foregoing, to arrange for
at least two (2) market makers to register as such with respect to Registrable
Securities with the National Association of Securities Dealers, Inc.;
(g) Enter into such customary agreements (including an underwriting
agreement in customary form) and take such other actions as sellers of
Registrable Securities shall reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities;
(h) In the case of an underwritten offering, on the date of delivery of the
Registrable Securities sold pursuant thereto, cause to be delivered to the
selling Holders and the underwriters, opinions of counsel for the Company, which
counsel and opinions (in form, scope and substance) shall be reasonably
satisfactory to counsel for the underwriters and counsel for the selling
Holders, covering the matters customarily covered in opinions given to
underwriters in primary underwritten public offerings. At the time of delivery
of any Registrable Securities sold pursuant to an underwritten offering, the
Company shall cause to be delivered to the selling Holders and the underwriters
a letter from the Company's independent public accountants, addressed to the
underwriters and the selling Holders, stating that they are independent public
accountants within the meaning of the Act and the applicable published rules and
regulations of the Commission thereunder, and otherwise in customary form and
covering such financial and accounting matters
4
<PAGE>
as are customarily covered by letters of the independent public accountants
delivered in connection with underwritten public offerings;
(i) Make available for inspection by any seller of Registrable Securities,
by any underwriter participating in any disposition to be effected pursuant to
such registration statement and by any attorney, accountant or other agent
retained by any such seller or any such underwriter, all pertinent financial and
other records and pertinent corporate documents and properties of the Company
and cause all of the Company's officers, directors and employees to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement; in each case
as permitted by law and contractual confidentiality restrictions;
(j) Permit any Holder of Registrable Securities which Holder, in the sole
and exclusive judgment, exercised in good faith, of such Holder, might be deemed
to be a controlling person of the Company (within the meaning of the Act or the
1934 Act) 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 judgment of such controlling Holder should be included and
which is reasonably acceptable to the Company;
(k) Use every reasonable effort to prevent the issuance of any stop order
suspending the effectiveness of such registration statement or of any order
preventing or suspending the use of any preliminary prospectus and, if any such
order is issued, to obtain the lifting thereof at the earliest reasonable time;
and
(l) Make such representations and warranties to the selling Holders and the
underwriters as are customarily made by issuers to underwriters and selling
Holders, as the case may be, in underwritten public offerings.
Section 5. Indemnification.
---------------------------
(a) The Company will indemnify each Holder, each of its officers, directors
and partners, and each person who controls such Holder, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter (within the meaning of the Act and the rules and regulations
thereunder) against all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document incident to any such
registration, qualification or compliance, 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 the Act or any rule or regulation thereunder 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 its officers, directors and partners, and each person who
controls such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and other expenses reasonably incurred in
connection with
5
<PAGE>
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises from or is based on
any untrue statement or omission or alleged untrue statement or omission based
upon written information furnished to the Company by such Holder or underwriter
and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by it are included in
the securities as to which such registration, qualification or compliance is
being effected, and each Other Shareholder who has the right to register its
securities pursuant to this Agreement will be required by the Company to,
indemnify the Company, each of its directors and officers and each underwriter,
if any, of the Company's securities covered by such a registration statement,
each person who controls the Company or such underwriter (within the meaning of
the Act and the rules and regulations thereunder) each other such Holder and
Other Shareholder and each of their officers, directors and partners, and each
person who controls such Holder or Other Shareholder, against all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained if any such registration statement, prospectus, offering circular
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 and such Holders, Other
Shareholders, directors, officers, partners, persons, underwriters or
controlling persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, 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, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder or Other Shareholder and stated to be
specifically for use therein; provided, however, that the obligations of such
Holders and Other Shareholders hereunder shall be limited to an amount equal to
the proceeds to each such Holder or Other Shareholder of securities sold as
contemplated herein.
(c) Each party entitled to indemnification under this Section 5 (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, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and 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 Agreement. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party (which consent shall not unreasonably be
withheld), consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the
6
<PAGE>
claim in question as an Indemnifying Party may reasonably request in writing and
as shall be reasonably required in connection with defense of such claim and
litigation resulting therefrom.
(d) In order to provide for just and equitable contribution to joint
liability under the Act in any case in which either (i) any Holder of
Registrable Securities exercising rights under this Agreement, or any
controlling person of any such Holder, makes a claim for indemnification
pursuant to this Section 5 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Act may be required on the part of any such selling Holder or any such
controlling person in circumstances for which indemnification is provided under
this Section 5; then, and in each such case, the Company and such Holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that such
Holder is responsible for the portion represented by the percentage that the
public offering price of its Registrable Securities offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; provided, however, that, in any such case, (A) no such Holder of
-------- -------
Registrable Securities will be required to contribute any amount in excess of
the net proceeds received from the sale of all such Registrable Securities
offered by it pursuant to such registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
Section 6. Information by Holder. Each Holder of Registrable Securities,
---------------------------------
and each Other Shareholder holding securities included in any registration,
shall furnish to the Company such information regarding such Holder or Other
Shareholder and the distribution proposed by such Holder or Other Shareholder as
the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in Section 2 or 4.
Section 7. Transfer or Assignment of Registration Rights. The rights to
---------------------------------------------------------
cause the Company to register the Registrable Securities granted by the Company
under Section 2 may be transferred or assigned by a Holder to a transferee or
assignee of any of the Holder's Registrable Securities, provided that the
Company is given written notice by a Holder at the time of or within a
reasonable time after said transfer or assignment, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being transferred or assigned and provided
further that the transferee or assignee of such rights assumes the obligations
of such Holder under this Agreement.
Section 8. "Market Stand-off" Agreement. Each Holder agrees, if requested
----------------------------------------
by the Company and an underwriter of Common Stock (or other securities) of the
Company, not to sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by it during the time period following the
effective date of a registration statement of the
7
<PAGE>
Company filed under the Act requested by the underwriter, or in the absence of
such request, 90 days, provided that:
(a) such agreement only applies to the first such registration statement of
the Company including securities to be sold on its behalf to the public in an
underwritten offering; and
(b) all other Holders, Other Shareholders, principal officers and directors
of the Company 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 shares (or securities) subject to the foregoing restriction until
the end of the restricted period.
Section 9. Reports Under the 1934 Act. With a view to making available to
--------------------------------------
the Holders the benefits of Rule 144 promulgated under the Act and any other
rule or regulation of the Commission that may at any time permit a Holder to
sell securities of the Company to the public without registration, the Company
agrees to use its best efforts to:
(a) make and keep public information available, within the meaning of Rule
144, at all times after the effective date of (i) the first registration
statement covering an underwritten public offering filed by the Company or (ii)
registration by the Company under the 1934 Act;
(b) following a public offering or a registration under the 1934 Act, file
with the Commission in a timely manner all reports and other documents required
of the Company under the Act and the 1934 Act; and
(c) furnish to any Holder forthwith upon request a written statement by the
Company that it has complied with the reporting requirements of Rule 144 (at any
time after ninety (90) days after the effective date of said first registration
statement filed by the Company), and of the Act and the 1934 Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents filed by the Company with the Commission as may be reasonably
requested to permit any such holder to take advantage of any rule or regulation
of the Commission permitting the selling of any such securities without
registration.
Section 10. Mergers, Etc. The Company shall not, directly or indirectly,
--------------------------
enter into any merger, consolidation or reorganization in which the Company
shall not be the surviving corporation unless the proposed surviving corporation
shall, prior to such merger, consolidation or reorganization, agree in writing
to assume the obligations of the Company under this Agreement, and for that
purpose references hereunder to "Registrable Securities" shall be deemed to be
references to the securities which the Holders would be entitled to receive in
exchange for Registrable Securities under any such merger, consolidation or
reorganization; provided, however, that the provisions of this Agreement shall
not apply in the event of any merger, consolidation or reorganization in which
the Company is not the surviving corporation if
8
<PAGE>
the Holders of Registrable Securities are entitled to receive in exchange
therefor (i) cash or (ii) securities of the acquiring corporation which may be
immediately sold to the public without registration under the Act.
Section 11. Miscellaneous.
--------------------------
11.1 Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of The Commonwealth of Massachusetts.
11.2 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
11.3 Entire Agreement; Amendment. This Agreement constitutes the full
---------------------------
and entire understanding and agreement between the parties with regard to the
subject hereof. Neither this Agreement nor any term hereof may be amended,
waived, discharged or terminated, except by a written instrument signed by the
Company and Phoenix.
11.4 Notices. All notices and other communications required or permitted
-------
under this Agreement shall be in writing and shall be deemed effectively given
upon personal delivery or upon deposit with the United States Post Office, by
registered or certified mail, postage prepaid, if to the Company, at South
Deerfield Research Park, South Deerfield, Massachusetts, 01373, with a copy to
David L. Renauld, Esq., Mirick, O'Connell, DeMallie & Lougee LLP, 100 Front
Street, Worcester, MA 01608; if to Phoenix, at 2401 Kerner Boulevard, San
Rafael, California, 94901, Attention: Asset Management or at such other address
as any party may designate by ten days' prior written notice to the other party.
11.5 Delays or Omissions. No delay or omission to exercise any right,
-------------------
power or remedy accruing to any holder of any Registrable Securities, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or in any similar
breach or default occurring thereafter; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or, default theretofore
or thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement must be made in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
11.6 Rights; Separability. Unless otherwise expressly provided herein,
--------------------
each Holder's rights hereunder are several rights, not rights jointly held with,
any of the other Holders.
11.7 Titles. The titles of the Sections, paragraphs and subparagraphs of
------
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
9
<PAGE>
11.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one Agreement.
11.9 Termination. The rights granted the Holders pursuant to Section 2
-----------
hereof shall terminate after the fifth anniversary of the Initial Public
Offering.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
MILLITECH CORP
By: /s/ Unreadable
----------------------------------
Name:
Title:
PHOENIX LEASING INCORPORATED
By: /s/ Unreadable
----------------------------------
Name:
Title:
10
<PAGE>
EXHIBIT 10.18
TDC / MILLITECH
PURCHASE AGREEMENT
Dated as of June ___, 1988
between
MASSACHUSETTS TECHNOLOGY DEVELOPMENT CORPORATION
and
MILLITECH CORPORATION
________________________________________________________________
TABLE OF CONTENTS
________________________________________________________________
<TABLE>
<CAPTION>
Page
<S> <C>
Section 1. Terms of Investment..................................................................
-------------------
1.1 The Loan.............................................................................
1.2 The Stock Purchase Warrant...........................................................
Section 2. Use of Investment Proceeds...........................................................
--------------------------
Section 3. Prepayment...........................................................................
----------
3.1 Optional Prepayment..................................................................
3.2 Mandatory Prepayment.................................................................
Section 4. Representations and Warranties of Company............................................
-----------------------------------------
4.1 Organization and Corporate Power.....................................................
4.2 Capitalization.......................................................................
4.3 Subsidiaries.........................................................................
4.4 Financial Statements.................................................................
4.5 Corporate Authority; Valid Agreement; Enforceability.................................
4.6 Title to Properties; Liens...........................................................
4.7 Patents, Trademarks, etc.............................................................
4.8 Litigation...........................................................................
4.9 Leases...............................................................................
4.10 Tax Returns and Payments.............................................................
4.11 Contracts............................................................................
4.12 Transactions with Affiliates.........................................................
4.13 Compliance with other Instruments, etc...............................................
</TABLE>
<PAGE>
<TABLE>
<S> <C>
4.14 Disclosure.........................................................................
4.15 Brokers............................................................................
4.16 ERISA..............................................................................
Section 5. Representations and Warranties of MTDC.............................................
--------------------------------------
5.1 Corporate Authority; Valid Agreement; Enforceability...............................
5.2 Litigation.........................................................................
5.3 Investment Representation..........................................................
5.4 Confidentiality....................................................................
Section 6. Closing Date; Conditions to Closing................................................
-----------------------------------
6.1 Closing Date.......................................................................
6.2 Conditions to Closing..............................................................
6.2.1 Representations and Warranties Correct......................................
6.2.2 Performance.................................................................
6.2.3 Opinion of Company's Counsel................................................
6.2.4 Other Agreements............................................................
6.2.5 Proceedings and Documents...................................................
Section 7. Affirmative Covenants of Company...................................................
--------------------------------
7.1 Maintenance of Corporate Existence.................................................
7.2 Maintenance of Property, Plant and Equipment.......................................
7.3 Maintenance of Casualty Insurance..................................................
7.4 Maintenance of Records.............................................................
7.5 Inspection Rights..................................................................
7.6 Furnishing Financial Statements and Related Reports................................
7.6.1 Annually....................................................................
7.6.2 Quarterly...................................................................
7.6.3 Monthly.....................................................................
7.6.4 Budgets.....................................................................
7.6.5 Discussions.................................................................
7.6.6 Consolidated and Consolidating Statements...................................
7.7 Prompt Payment of Taxes............................................................
7.8 Trade Obligations..................................................................
7.9 Notification of Default Under This or Other Financing Arrangements.................
7.10 Notification of Litigation.........................................................
7.11 Composition of Management..........................................................
7.12 Maintenance of Life Insurance......................................................
7.13 Record Retention Compliance........................................................
7.14 Civil Right Compliance.............................................................
7.15 Affirmative Action.................................................................
7.16 Plant Closing Compliance...........................................................
7.17 Statutory Compliance...............................................................
7.18 Observer Rights....................................................................
7.19 Noncompetition, Nondisclosure and Inventions Agreement.............................
7.20 Stock Option Plans.................................................................
</TABLE>
ii
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<TABLE>
<S> <C>
7.21 New Developments...................................................................
7.22 Compliance by Subsidiaries.........................................................
7.23 Expiration and Waiver of Affirmative Covenants.....................................
7.24 Miscellaneous......................................................................
Section 8. Negative Covenants of Company......................................................
-----------------------------
8.1 Merger or Consolidation............................................................
8.2 Nature and Scope of Business.......................................................
8.3 Payment of Dividends and Redemption of Stock.......................................
8.4 Guarantees.........................................................................
8.5 Voluntary Prepayment of Other Indebtedness.........................................
8.6 Investments, Advances and Acquisitions.............................................
8.7 Liens and Mortgages................................................................
8.8 Sale or Disposition of Assets......................................................
8.9 Lease and Rental Obligations.......................................................
8.10 Capital Expenditures...............................................................
8.11 Executive Compensation.............................................................
8.12 Expiration and Waiver of Negative Covenants........................................
Section 9. Registration Rights................................................................
-------------------
9.1 Definitions........................................................................
9.2 Demand Registration................................................................
9.3 Company Registration...............................................................
9.4 Short-form Registration............................................................
9.5 Obligations of the Company.........................................................
9.6 Furnish Information................................................................
9.7 Indemnification....................................................................
9.8 Termination of Company's Obligations...............................................
9.9 Reports Under Securities Exchange Act of 1934......................................
9.10 Transfer of Registration Rights....................................................
9.11 Legends; Stop Transfer.............................................................
9.12 Lockup Agreement...................................................................
Section 10. Events of Default..................................................................
-----------------
Section 11. Reimbursement for Expenses.........................................................
--------------------------
Section 12. Miscellaneous Provisions...........................................................
------------------------
12.1 Entire Agreement and Waivers.......................................................
12.2 Remedies Cumulative................................................................
12.3 Survival of Covenants..............................................................
12.4 Governing Law......................................................................
12.5 Assurance of Execution and Delivery of Additional Instruments......................
12.6 Extension of Time..................................................................
12.7 Notices............................................................................
12.8 Counterparts.......................................................................
</TABLE>
iii
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<TABLE>
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Section 13. List of Schedules....................................................................
-----------------
SIGNATURES........................................................................................
</TABLE>
iv
<PAGE>
PURCHASE AGREEMENT
This Purchase Agreement dated June ____, 1988, (the "Agreement") is between
Massachusetts Technology Development Corporation ("MTDC"), a body politic and
corporate and a public instrumentality of the Commonwealth of Massachusetts
organized under G.L. c.40G (the "Act") having it principal place of business at
131 State Street, Boston, Massachusetts 02109, and Millitech Corporation (the
"Company"), a Massachusetts corporation having its principal place of business
at South Deerfield, Massachusetts.
Section 1. Terms of Investment.
--------- -------------------
Subject to the terms and conditions of this Agreement:
1.1 The Loan. On the Closing Date, MTDC agrees to lend to the Company the
--------
sum of $250,000 (the "Loan"). The Loan shall be evidenced by a Subordinated
Promissory Note in the principal amount of the Loan (the "Note"), in
substantially the form attached hereto as Schedule 1.1.
1.2 The Stock Purchase Warrant. On the Closing Date, the Company agrees
--------------------------
to issue to MTDC a stock purchase warrant (the "Warrant") in substantially the
form set forth in Schedule 1.2 attached hereto to subscribe for and purchase
20,000 shares of the Company's Convertible Preferred Stock (the "Stock") at an
exercise price of $3.25 per share. The terms of the Stock shall be
substantially as set forth in Schedule 1.2 attached hereto.
Section 2. Use of Investment Proceeds.
---------- --------------------------
The proceeds of MTDC'S investment in the Company shall be used by the
Company for the development, refinement, and commercialization of a product or
process and other working capital needs. The proceeds of the Loan shall not be
used by the Company for projects and activities prohibited by the provisions of
13 CFR (S)(S)309.3 (Non-relocation) and 309.15 (Flood hazard).
<PAGE>
Section 3. Prepayment.
--------- ----------
3.1 Optional Prepayment. From and only after the second anniversary of
-------------------
the Closing Date, the Company may prepay the Loan at any time upon thirty (30)
days' prior written notice to the holder of the Note in whole or in part in any
multiple of $5,000 without premium or penalty; provided, however, if the Loan is
prepaid directly or indirectly with proceeds obtained from or in anticipation of
financing with a Lender other than MTDC, a premium of five percent (5%) of the
portion of the Loan so prepaid shall be due and payable to MTDC at the time of
the prepayment. All prepayments shall be accompanied by interest on the amount
prepaid to the date of prepayment and shall be applied to the payment of
installments of principal in inverse order or maturity.
3.2 Mandatory Prepayment. The Company shall immediately prepay the Loan
--------------------
in full, together with all interest accrued thereon to the date of prepayment,
without premium or penalty, in the event that the Company's principal place of
business ceases to be located in an area in Massachusetts qualified for
designation as a Title IV redevelopment area under the Public Works and Economic
Development Act of 1965, as amended.
Section 4. Representations and Warranties of the Company.
--------- ---------------------------------------------
The Company represents and warrants that:
4.1 Organization and Corporate Power. The Company is a corporation duly
--------------------------------
organized, validly existing and in good standing under the laws of Massachusetts
and has the corporate power to own its property and to carry on its business as
it is now conducted as it is described in its Business Plan submitted to MTDC.
Attached hereto as Schedule 4.1A is a complete and correct copy of the Company's
charter. Attached hereto as Schedule 4.1B is a complete and correct copy of the
Company's bylaws. The Company is duly qualified to do business and is in good
standing in the
2
<PAGE>
Commonwealth of Massachusetts and in each jurisdiction in which the failure to
qualify to do business would have a material adverse effect upon its financial
condition, business or properties.
4.2 Capitalization. The authorized capital stock of the Company consists
--------------
of 6,000,000 shares of common stock, $.01 par value, of which 936,200 shares are
issued and outstanding and 3,270,000 shares of Preferred Stock, $.01 par value,
of which 2,855,112 shares are issued and outstanding. All of such issued and
outstanding shares have been validly issued and are fully paid and non-
assessable. Attached hereto as Schedule 4.2 is a complete and correct list of
the present stockholders of the Company and of the holders of all options,
warrants or other rights to purchase or otherwise acquire any shares of capital
stock of the Company. Except as set forth in the Company's charter or bylaws, or
as shown on Schedule 4.2, there are no restrictions on the disposition of
capital stock of the Company by the holder thereof and the Company is not under
any obligation to register under the Securities Act of 1933, as amended (the
"Securities Act"), any of its presently outstanding capital stock other
securities or any of its capital stock or other securities that may be issued in
the future.
4.3 Subsidiaries. Each present Subsidiary of the Company (as defined
------------
below) is listed in Schedule 4.3 attached hereto. Except as shown in Schedule
4.3, all of the outstanding shares of stock of, or other interests in, each
Subsidiary have been validly issued, are fully paid and non-assessable and are
owned, beneficially and of record, free of any lien, encumbrance or claim, by
the Company. For the purpose of this Agreement, "Subsidiary" means any
corporation, trust or other entity, a majority of the outstanding voting power
of which is owned, directly or indirectly, by the Company.
4.4 Financial Statements. The Company has delivered to MTDC its balance
--------------------
sheet as of December 31, 1987 together with statements of operations,
stockholders' equity and cash flows for
3
<PAGE>
its fiscal year then ended, certified by Touch Ross & Co., independent certified
public accountants, and its unaudited balance sheet as of March 31, 1988,
together with a statement of income for the three-month period then ended,
certified by the chief financial officer of the Company (collectively, the
"Financial Statements"). The Financial Statements have been prepared in
accordance with generally accepted accounting principles consistently applied,
fairly present the condition of the Company as at the respective dates and for
the respective periods indicated (subject in the case of the unaudited
statements to normal year-end audit adjustments), and reflect all material
liabilities, contingent or otherwise, as at the respective dates indicated. No
material adverse change has occurred in the financial condition, business or
properties of the Company since December 31, 1987, and no material liabilities
have been incurred by the Company since that date other than in the ordinary
course of business.
4.5 Corporate Authority; Valid Agreement; Enforceability. The Company has
----------------------------------------------------
full corporate power and authority to enter into this Agreement, to borrow
hereunder, to execute and deliver the Note, to execute and deliver the Warrant,
and to incur the other obligations provided for herein, all of which have been
duly authorized by all proper and necessary corporate action. All
authorizations, approvals, consents and other actions by, and all notices to and
filing with, any federal, state or other governmental authority or regulatory
body required for the execution, delivery and performance of this Agreement by
the Company have been, or prior to the Closing Date (as hereafter defined) will
have been, obtained or given. The Agreement constitutes, and the Note and the
Warrant when issued and delivered pursuant to this Agreement will constitute,
the valid and legally binding obligations of the Company, enforceable in
accordance with their terms. The Warrant Shares have been duly authorized and,
when issued upon exercise of the Warrant, will be
4
<PAGE>
validly issued, fully paid and nonassessable. Twenty Thousand (20,000) shares of
preferred stock of the Company have been duly reserved for issuance upon
exercise of the Warrant.
4.6 Title to Properties; Liens. Except as described in Schedule 4.6, (i)
---------------------------
the Company has good and sufficient title to all of its properties and assets,
including all properties and assets reflected in the balance sheets included in
the Financial Statements (except properties and assets deemed by the Company to
be no longer useful in its business or which have been sold for fair
consideration in the ordinary course of business), and (ii) none of its
properties or assets is subject to any mortgage, pledge, lien, conditional sale
or other title retention agreement, security interest, lease, charge or
encumbrance.
4.7 Patents, Trademarks, etc. The Company owns or has a valid right to
------------------------
use the patents, patent rights, licenses, trade secrets, trademarks or trademark
rights, trade names or trade name rights or franchises, copyrights, inventions
and intellectual property rights used in its business as now conducted and as
now proposed to be conducted (a complete list of which is attached hereto as
Schedule 4.7). The business of the Company as now conducted and as now proposed
to be conducted does not and will not conflict with patents, patent rights,
licenses, trade secrets, trademarks, trademark rights, trade names or trade name
rights or franchises, copyrights, inventions and intellectual property rights
owned by other. The Company has no obligation to compensate any person,
corporation or other organization for the use of any patents or rights and has
granted to no person, corporation or other organization any license or other
right to use in any manner any of the patents or rights of the Company, whether
requiring the payment of royalties or not.
4.8 Litigation. Except as described in Schedule 4.8, there is no action,
----------
proceeding or investigation pending or, to the best knowledge of the Company,
threatened which questions the validity of this Agreement or any action taken or
to be taken pursuant hereto or contemplated
5
<PAGE>
hereby, or which might result, either in any case or in the aggregate, in any
material adverse change in the financial condition, business, or properties of
the Company and its Subsidiaries. The foregoing includes, without limiting its
generality, actions pending or threatened involving the prior employment of any
employees of the Company or their use of any information or technique allegedly
proprietary to their former employer.
4.9 Leases. All leases to which the Company is a party as lessee or
------
sublessee are valid and the Company is not in default thereunder, has not
assigned or encumbered any of its rights thereunder and enjoys peaceful and
undisturbed possession under each lease to which it is a party.
4.10 Tax Return and Payments. All tax returns and reports of the Company
-----------------------
required by law to be filed have been duly filed and all taxes, fees and other
governmental charges shown thereon which are due and payable have been paid
(other than those being contested in good faith by appropriate proceedings
diligently conducted and with respect to which adequate reserves have been
established and no proceedings to foreclose have been commenced). The charges
and reserves on the books of the Company in respect of all income and other
taxes are adequate, and the Company knows of no additional assessment or any
basis therefore.
4.11 Contracts. Set forth in Schedule 4.11 or another Schedule to the
---------
Agreement attached hereto is a list of all contracts and agreements, written or
oral, which are of material importance to the business of the Company or any
Subsidiary, including without limitation all contracts and agreements (i) not
made in the ordinary course of business, (ii) having a value in excess of
$25,000, whether or not made in the ordinary course of business, but excluding
contracts for the purchase and sale of services and supplies made in the
ordinary course of business, (iii) with any labor union, (iv) for the future
purchase of fixed assets or for the future purchase of materials, supplies or
equipment in excess of normal operating requirements, (v) for the employment of
any officer, individual
6
<PAGE>
employee or other person on a full-time basis or with any individual on a
consulting basis pursuant to which the Company or any Subsidiary has ongoing
obligations in excess of $10,000, (vi) setting forth bonus, pension, profit-
sharing, retirement, stock purchase, or stock option plans in effect with
respect to officers or employees, (vii) relating to the borrowing of money or to
the mortgaging, pledging or otherwise placing a lien on any assets of the
Company, (vii) constituting a guaranty of or pledge of property with respect to
any obligation for borrowed money or otherwise, (ix) constituting a lease or
agreement under which the Company is lessee or lessor of, or holds or operates,
or permits a third party to hold or operate, any real or personal property, (x)
constituting a license under which the Company sells or permits any third party
to sell any product or service, or (xi) under which the Company is obligated to
pay any broker's fees, finder's fees or any such similar fees, to any third
party. No such contract or agreement, and no other contract or agreement to
which the Company is a party or by which it is bound, contains any term which
now has, or as far as can be foreseen may have, a material adverse effect on the
financial condition, business or properties of the Company. The Company has
furnished to MTDC true, correct and complete copies of all such contracts and
agreements requested by MTDC.
4.12 Transactions with Affiliates. The only transactions in which the
----------------------------
Company and any person or entity controlling, controlled by or under common
control with the Company or any Subsidiary is presently engaged or proposes to
engage, directly or indirectly, are set forth in Schedule 4.12 attached hereto.
The terms and conditions of each such transaction are fair and reasonable to the
Company or the Subsidiary, as the case may be, and at least as favorable as
would obtain in a comparable transaction with an unaffiliated person or entity.
4.13 Compliance with other Instruments, etc. The Company is not in
--------------------------------------
violation of any term of its charter or its bylaws, or of any agreement,
instrument, judgment, decree or order, or, to
7
<PAGE>
the best knowledge of the Company, any statute, rule or governmental regulation
applicable to it. The execution, delivery and performance of this Agreement and
the taking of action contemplated hereby will not result in any violation of or
be in conflict with or constitute a default under any such term, or result in
the creation of any mortgage, lien, charge or encumbrance upon any of the
properties or assets of the Company pursuant to any such term.
4.14 Disclosure. Neither this Agreement nor any Schedule hereto, nor any
-----------
certificate or other instrument furnished to MTDC by the Company, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading. The Company has
furnished MTDC with a copy of its Five Year Business Plan dated January, 1988 as
well as supplementary memoranda outlining significant events occurring
subsequent to the date thereof (together the "Business Plan"), which set forth
the Company's current plans, forecasts and strategies. The materials presented
in the Business Plan do not contain any untrue statement of a material fact or
omit any material facts necessary to make the statements contained therein not
misleading; provided, however, that with respect to projections, the Company
represents and warrants only that such projections were prepared in good faith
on funding the basis of information and assumptions which the Company believes
to be reasonable. Without limiting the generality of the foregoing; (a) the
Company has no reason to believe that the Company will be unable to meet the
projections appearing in such Business Plan; (b) no employee or consultant of
the Company, the loss of whose services could materially and adversely affect
the Company or the business or prospects of the Company, has left the employ of
the Company, has given any indication that he or she intends to do so or is
considering doing so, or is being terminated; and (c) there has been no
discovery, change or development in the development, design, manufacture or
marketing of any product or proposed
8
<PAGE>
product of the Company or any product that is or may be competitive with any
such product or of any new or improved materials, products or processes useful
in the business or proposed business of the Company to which an informed
investor in the Company would attach importance in its decision to make an
investment in the Company. There is no fact known to the Company relating to the
business, affairs, operation, condition or prospects of the Company materially
adversely affecting the same which has not been disclosed to MTDC in writing by
the Company.
4.15 Brokers. No finder, broker, agent, financial adviser or other
-------
intermediary has acted on behalf of the Company in connection with the
negotiation or consummation of this Agreement or any of the transactions
contemplated hereby.
4.16 ERISA. The Company has not incurred any accumulated funding
------
deficiency within the meaning of the Employee Retirement Income Security Act of
1974 ("ERISA") nor has it incurred any liability to the Pension Benefit Guaranty
Corporation established under ERISA (or any successor thereto) in connection
with any employee pension benefit plan established or maintained by it, and
there have been no "reportable events" or "prohibited transactions" with respect
to any such plan, as those terms are defined in Section 4043 of ERISA and
Section 4975 of the Internal Revenue Code of 1954, as amended, respectively.
Section 5. Representations and Warranties of MTDC.
--------- --------------------------------------
MTDC represents and warrants that:
5.1 Corporate Authority; Valid Agreement; Enforceability. It has full
----------------------------------------------------
power and authority to enter into this Agreement and to lend and to purchase the
Stock hereunder, as the case may be, and to incur the other obligations provided
for herein, all of which have been duly authorized by all proper and necessary
action. The Agreement constitutes the valid and legally binding obligation of
MTDC, enforceable in accordance with its terms.
9
<PAGE>
5.2 Litigation. There is no action, proceeding or investigation pending
----------
or threatened which questions the validity of this Agreement or any action taken
or to be taken pursuant hereto or contemplated hereby.
5.3 Investment Representation. MTDC is acquiring the Note and the Warrant
-------------------------
for its own account for investment and not with a view to any distribution
thereof which might cause a violation of the Securities Act, or any rules or
regulations pertaining thereto.
5.4 Confidentiality. Information furnished pursuant to this Agreement
---------------
shall be for the information of MTDC and, until the same shall have come into
the public domain without breach of this Agreement, shall not be disclosed to
others without the approval of the Company except in connection with any sale or
proposed sale of the Note, or the Warrant and except as may be required by law
or any authority to the jurisdiction of which MTDC may be subject, provided that
information furnished to MTDC and designated by the Company as confidential or
as involving trade secrets shall not be disclosed other than as required by law
or such authority.
Section 6. Closing Date; Conditions to Closing.
--------- -----------------------------------
6.1 Closing Date. The closing of the transaction contemplated by this
------------
Agreement shall take place at the office of Messrs. Palmer & Dodge, One Beacon
Street, Boston, Massachusetts 02108 at 10:00 a.m. on June ___, 1988 ( the
"Closing Date"), or at such other place, or such later date or other time, as
may be agreed upon by MTDC and the Company.
6.2 Conditions to Closing. MTDC's obligation to make the Loan is subject
---------------------
to the fulfillment to its reasonable satisfaction, prior to or at the closing,
of the following conditions:
6.2.1 Representations and warranties correct. The representations
--------------------------------------
and warranties of the Company made in this Agreement, including its Schedules,
shall be correct in all material respects at and as of the Closing Date.
10
<PAGE>
6.2.2 Performance. The Company shall have performed and complied in
-----------
all material respects with all agreements and conditions herein required to be
performed or complied with by it prior to or at the closing.
6.2.3 Opinion of the Company's Counsel. MTDC shall have received
---------------------------------
from Messrs. Mirick, O'Connell, DeMallie & Lougee, counsel for the Company, a
favorable opinion, dated the Closing Date, satisfactory in scope and form to
MTDC and its counsel, in substantially the form attached hereto as Schedule
6.2.4 and as to such other matters incident to the transactions contemplated
hereby as MTDC or its counsel may reasonably request.
6.2.4 Other Agreements. Noncompetition, Nondisclosure and Inventions
----------------
Agreements in substantially the form attached hereto as Schedule 7.19 shall have
been entered into by each key employee of the Company designated by MTDC.
6.2.5 Proceedings and Documents. All corporate and other proceedings
--------------------------
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in form and substance to MTDC and its counsel, and MTDC and its
counsel shall have received all such counterpart originals or certified or other
copies of such documents as MTDC or its counsel may reasonably request.
Section 7. Affirmative Covenants of Company.
--------- --------------------------------
Subject to the provisions of Section 7.23, the Company will, unless MTDC
shall otherwise consent in writing:
7.1 Maintenance of Corporate Existence. Maintain its corporate existence.
----------------------------------
7.2 Maintenance of Property, Plant and Equipment. Maintain its property,
---------------------------------------------
plant and equipment in good working order, subject only to wear and tear and
insured casualty losses, and make all necessary repairs and replacements
thereto.
11
<PAGE>
7.3 Maintenance of Casualty Insurance. Maintain with financially sound
---------------------------------
and reputable insurance companies public liability and worker's compensation
insurance and casualty insurance on tangible real and personal property in such
amount as is customarily carried by other companies in similar businesses,
owning like properties and operating in similar locations.
7.4 Maintenance of Records. Maintain correct and adequate books, records
----------------------
and accounts in accordance with generally accepted accounting principles.
7.5 Inspection Rights. Permit any person designated by MTDC to inspect,
-----------------
upon reasonable notice to the Company and during regular business hours, any of
the properties of the Company or any Subsidiary, including its books, records
and accounts (and including the making of copies thereof and extracts
therefrom).
7.6 Furnishing Financial Statements and Related Reports. Furnish the
---------------------------------------------------
following financial reports to MTDC:
7.6.1 Annually. Within 90 days after the end of each fiscal year of
--------
the Company, a consolidated balance sheet of the Company as at the end of such
year, together with statements or operation, stockholders' equity and cash flows
for such year, setting forth in each case in comparative form the figures for
the previous fiscal year, all in reasonable detail and accompanied by the report
thereon of Touche Ross & Co., or other independent certified public accountants
satisfactory to MTDC which report shall state that such financial reports have
been prepared in accordance with generally accepted accounting principles
applied on a basis consistent with that of the preceding fiscal year (except as
otherwise approved by the Board of Directors), and shall state that the audit by
such accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards.
12
<PAGE>
Such financial statements shall be accompanied by (i) a certificate from
the auditor stating that they have reviewed this Agreement and the terms of the
Note and have no knowledge of any default by the Company in the performance or
observance of any of the provisions of this Agreement or of the Note or, if such
auditor has such knowledge, specifying such default and the nature thereof and
the corrective action being taken or planned by the Company in regard thereto
and (ii) any other written report submitted to the Company by its auditor in
connection with the annual audit of the books of the Company and its
Subsidiaries, and (iii) if requested by MTDC, a written report submitted to the
Company by its auditor with respect to the adequacy of the Company's internal
accounting controls.
7.6.2 Quarterly. Within 45 days after the end of each of the first
---------
three quarterly fiscal periods in each fiscal year of the Company, a
consolidated balance sheet of the Company as at the end of such period and a
consolidated statement of operations of the Company for such period and, in the
case of the second and third quarterly periods, for the period from the
beginning of the current fiscal year to the end of such quarterly period,
setting forth in each case in comparative form the figures for the corresponding
period of the previous fiscal year, all in reasonable detail and certified,
subject to changes resulting from normal year-end audit adjustments, by the
chief financial officer of the Company; and accompanied by a certificate from
such officer stating that he has reviewed this Agreement and the terms of the
Note and has no knowledge of any default by the Company in the performance or
observance of any of the provisions of this Agreement or of the Note or, if such
officer has such knowledge, specifying such default and the nature thereof and
the corrective action being taken or planned by the Company in regard thereto.
7.6.3 Monthly. Within 30 days after the end of each month in each
-------
fiscal year of the Company, a consolidated statement of operations of the
Company for such period and for the
13
<PAGE>
period from the beginning of the current fiscal year to the end of such month,
setting forth in each case in comparative form the figures for the corresponding
period of the previous fiscal year, all in reasonable detail and certified,
subject to changes resulting from normal year-end audit adjustment, by the chief
financial officer of the Company.
7.6.4 Budgets. Within 45 days before the end of each fiscal year of
-------
the Company, a copy of the Company's annual budget for the next succeeding
fiscal year which has been submitted to and approved by the Company's Board of
Directors, including a majority of the members of such Board of Directors who
are not also officers or employees of the Company and, as soon as available,
copies of any amendments thereto or revisions thereof.
7.6.5 Discussion. MTDC is hereby authorized to discuss the Company's
----------
financial statements and financial affairs at any time with the Company's
independent auditors and to request any representative of such auditors to
participate in such discussions.
7.6.6 Consolidated and Consolidating Statements. If the Company has
-----------------------------------------
any Subsidiary, the financial statements required by this Section 7.6 shall be
on a consolidated and consolidating basis, except that only the consolidated
statements for the fiscal year need be audited. For the purpose of this
Agreement, "Subsidiary" means any corporation, trust or other entity, a majority
of the outstanding voting power of which is owned, directly or indirectly, by
the Company.
7.7 Prompt Payment of Taxes. Accrue its tax liability in accordance with
-----------------------
generally accepted accounting principles and file returns with respect to and
pay or discharge as they become due all taxes, assessments and government
charges upon its property, operation, income and products, which, if unpaid,
might become a lien upon any of its property, unless and to the extent that
these are being contested in good faith and by appropriate action, adequate
reserves therefore have been established and no proceedings to foreclose have
been commenced.
14
<PAGE>
7.8 Trade Obligations. Promptly notify MTDC in writing of receipt by the
-----------------
Company of any notice that its trade obligations have been referred by any of
its trade creditors for collection.
7.9 Notification of Default Under This or Other Financing Arrangements.
------------------------------------------------------------------
Promptly notify MTDC in writing of the occurrence of any event of default, or
any event which, with the giving of notice or lapse of time, would constitute an
event of default, under this Agreement or any other loan or financing
arrangement to which the Company is a party or by which its property is bound.
7.10 Notification of Litigation. Promptly notify MTDC in writing of any
--------------------------
litigation that has been instituted or is pending, or to the Company's knowledge
threatened, the outcome of which might have a material adverse effect on the
Company's financial condition, business or properties.
7.11 Composition of Management. Insure that Erik Van Der Kaay is at all
-------------------------
times employed in a full-time capacity to serve as chief executive officer of
the Company performing such duties as are customary for such office and that he
does not undertake commitments inconsistent with his performance of such duties;
maintain other management and executive personnel with qualifications and
experience comparable to the qualifications and experience of the persons now
holding such offices and promptly notify MTDC in writing of any significant
change in the management staff, including the positions of Chairman of the
Board, President, Vice President-Finance, Vice President-Sales and Marketing,
Vice President-Operations, Vice President-Research and Development and Vice
President-Engineering.
7.12 Maintenance of Life Insurance. Maintain at the Company's expense
-----------------------------
insurance on the lives of Erik Van Der Kaay and G. Richard Huguenin each in the
amount of the Loan and assign such life insurance to MTDC as collateral security
for the Loan.
15
<PAGE>
7.13 Record Retention Compliance. Maintain and retain records as required
---------------------------
by the provisions of 13 C.F.R. (S)(S)308.29 (c) (General Requirements) and 309.9
(Records and audit), and provide to MTDC such data and evidence as MTDC requests
for its compliance with the provisions of 13 C.F.R. (S)308.29.
7.14 Civil Rights Compliance. Comply with Title VI of the Civil Rights Act
-----------------------
of 1964, as amended; with Civil Rights Regulations of the Department of Commerce
(15 CFR, Subtitle A, Part 8, as amended); and with Section 112 of Public Law 92-
65 relating to discrimination on the basis of sex.
7.15 Affirmative Action. Undertake affirmative action programs designed to
------------------
eliminate patterns and practices of discrimination due to race, color, sex or
national origin as required under Article XIII of the Governor's Code of Fair
Practices, Executive Order No. 227, as amended.
7.16 Plant Closing Compliance. In the event of a plant closing by the
------------------------
Company covered by the Employment Security Law (Massachusetts General Laws,
Chapter 151, Section 71A), make a good faith effort to provide every employee
affected with the maximum practicable combination of the following: the longest
practicable advance notice in cases where notice is possible and appropriate;
and maintenance of income and health insurance benefits, as provided in
Massachusetts General Laws, Chapter 149, Section 182. Whenever possible, notice
required by this Section 7.16 shall be at least ninety (90) days in advance of a
plant closing or equivalent benefits shall be provided. The Company shall also,
if possible, help to re-employ affected employees.
7.17 Statutory Compliance. Comply with the requirements of the National
--------------------
Environmental Policy Act and the National Historic Preservation Act applicable
to the Company's projects or activities funded with proceeds of the Loan and the
Stock purchased by MTDC.
16
<PAGE>
7.18 Observer Rights. Furnish MTDC timely notice of, and permit a
---------------
representative chosen by MTDC to attend as a nonvoting observer, all meetings of
the Board of Directors of the Company, and deliver to MTDC as and when delivered
to the Company's directors, copies of all notices, minutes, consents and other
materials that the Company provides to its directors.
7.19 Noncompetition, Nondisclosure and Inventions Agreement. Cause each
------------------------------------------------------
key employee now or hereafter employed by the Company to promptly execute a
Noncompetition, Nondisclosure and Inventions Agreements substantially in the
form of Schedule 7.19 attached hereto.
7.20 Stock Option Plans. Maintain stock option plans reasonably
------------------
satisfactory to MTDC designed to provide key employees of the Company an
opportunity to obtain an equity participation in the Company upon terms
prevailing among other companies in the Company's industry and at its stage of
development.
7.21 New Developments. Cause all technological developments, inventions,
----------------
discoveries or improvements of Company employees to be fully documented in
accordance with the prevailing standards of good practice for similar businesses
and, where possible and appropriate, to file and prosecute patent applications
relating to and protecting such developments on behalf of the Company.
7.22 Compliance by Subsidiaries. Cause each Subsidiary (whether now
--------------------------
existing or hereafter acquired or created) to perform and observe each
affirmative and negative covenant set forth in Sections 7 and 8 of this
Agreement. All references to the Company in each such covenant shall be deemed
to refer to each Subsidiary to the extent such covenant is applicable to such
Subsidiary.
17
<PAGE>
7.23 Expiration and Waiver of Affirmative Covenants. The Company will
----------------------------------------------
comply with the affirmative covenants set forth in Sections 7.8, 7.9, 7.11,
7.12, 7.13, 7.14, 7.16 and 7.17 until payment in full of the Note; provided,
however, that compliance with such affirmative covenants may be waived from time
to time by the holder of the Note acting alone. The Company will comply with all
of the other affirmative covenants set forth in this Section 7 until the later
of the payment in full of the Note or the closing of the Company's Initial
Public Offering. For purposes of this Agreement, "Initial Public Offering" shall
mean an underwritten public offering pursuant to an effective registration
statement under the Securities Act covering the offer and sale of its common
stock by the Company to the general public where the proceeds of sale (before
underwriting discounts, fees and other expenses) are at least $5,000,000.
7.24 Miscellaneous. Upon exercise of the Warrant (in whole or in part) by
--------------
MTDC, MTDC shall, with respect to the Stock acquired upon such exercise and
without further action on its part, have the benefit of all of the covenants
contained in Section 7.4 of the 8% Convertible Preferred Stock Purchase
Agreement dated March 11, 1988 between the Company and certain purchases (which
Section is hereby incorporated by reference).
Section 8. Negative Covenants of the Company.
--------- ---------------------------------
Subject to the provisions of Section 8.12, the Company will not, unless
MTDC shall otherwise consent in writing:
8.1 Merger or Consolidation. Merge or consolidate with any other
-----------------------
corporation or organization other than in the case of a merger or consolidation
in which the Company is the surviving entity.
8.2 Nature and Scope of Business. Engage in any business other than that
----------------------------
in which it is presently engaged or which is reasonably related thereto.
18
<PAGE>
8.3 Payment of Dividends and Redemption of Stock. Declare or pay any
--------------------------------------------
dividends or purchase any of its outstanding capital stock or make any other
distribution to its stockholders, except to the extent that the Company is
required to pay dividends with respect to its preferred stock or redeem such
stock by the terms of its Restated Articles or Organization.
8.4 Guarantees. Guaranty or become surety with respect to the obligations
----------
of any person, partnership, corporation or other entity.
8.5 Voluntary Prepayment of Other Indebtedness. Voluntarily prepay any
-------------------------------------------
indebtedness other than the Note or Senior Indebtedness as defined in the Note.
8.6 Investments, Advances and Acquisitions. Purchase or otherwise
--------------------------------------
acquire, or hold, any stock or obligations of, or make or permit to exist any
loans or advances to, or investments in, any person, partnership, corporation,
trust or other entity, or organization, except that the Company may (a) invest
in direct obligations of the United States of America, or in tax-exempt
municipal bonds, or so-called "money market funds," (b) purchase commercial
paper rated prime by any national rating organization, (c) extend normal credit
in the ordinary course of business in connection with the sale of its products
or services, or (d) purchase for an amount not to exceed $100,000 or hold not
less than 80% of the voting stock and outstanding stock of any corporation
organized and existing under the laws of any state of the United States, which
is engaged in a business reasonably related to the business of the Company and
substantially all of whose assets and business are located or conducted in the
United States and which shall be operated as a subsidiary of the Company;
provided that no minority interest in such subsidiary may be owned directly or
indirectly by any person or organization who was or is a stockholder or
affiliate of the Company.
8.7 Liens and Mortgages. Create, incur, assume or suffer to exist any
-------------------
mortgage, pledge, lien or other charge or encumbrance upon or with respect to
any of its assets, or assign or otherwise
19
<PAGE>
convey any right to receive income, except (i) to the holder of the Note, (ii)
mortgages, pledges, liens or other encumbrances existing on the date of this
Agreement and described in Schedule 4.6 attached hereto, or any refinancing of
any of them, (iii) liens in connection with worker's compensation, unemployment
insurance or other social security obligations, (iv) liens securing the
performance of bids, tender, contracts (other than for the repayment of borrowed
money), leases, statutory obligations, surety and appeal bonds, (v) liens to
secure progress or partial payments made to the Company and other liens of like
nature made in the ordinary course of business, (vi) mechanics', worker's,
materialmen's or other like liens arising in the ordinary course of business in
respect of obligations which are not due or which are being contested in good
faith, (vii) liens for taxes not yet due or being contested in good faith and by
appropriate proceedings by the Company, (viii) liens or retained title of
vendors to equipment hereafter acquired, provided that the indebtedness secured
thereby does not exceed the purchase price or the fair market value thereof,
whichever is less, (ix) leases or subleases granted in the ordinary course of
business, and (x) easements, rights or way, restrictions and other similar
encumbrances incurred with the ordinary course of the business of the Company.
8.8 Intentionally omitted.
8.9 Lease and Rental Obligations. Permit aggregate rental payments under
----------------------------
leases of more than one year , excluding capital leases, to exceed in any fiscal
year $750,000.
8.10 Intentionally omitted.
8.11 Compensation Committee. Pursuant to a certain 1984 Stock Purchase
----------------------
Agreement, the Company has established a Compensation Committee of the Board of
Directors. No compensation or other remuneration at an annualized rate in excess
of $60,000 shall be paid to, nor shall any capital stock of the Company be
issued to or options to purchase any of its capital stock
20
<PAGE>
granted to, any director, officer or employee of, or any consultant to, the
Company or any of its subsidiaries, without the approval of the Compensation
Committee.
8.12 Expiration and Waiver of Negative Covenants. The Company will comply
-------------------------------------------
with the negative covenants set forth in Sections 8.4 through 8.11, inclusive,
until payment in full of the Note; provided, however, that compliance with such
negative covenants may be waived from time to time by the holder of the Note
acting alone. The Company will comply with all of the other negative covenants
set forth in this Section 8 until the later of either (i) or (ii): (i) the
payment in full of the Note and (ii) the closing of the Company's Initial Public
Offering, as such term is defined in Section 7 or, in the alternative of such
Public Offering, the exercise in full of the Warrant.
Section 9. Registration Rights.
--------- -------------------
9.1 Definitions. For purposes of Section 9:
-----------
(a) The terms "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of
effectiveness of such registration statement;
(b) The term "Registrable Securities" means any preferred stock issuable
or issued upon exercise of the Warrant and any common stock issuable or issued
upon conversation of the preferred stock and any common stock of the Company
issued as a dividend or other distribution with respect to, or in exchange or in
replacement of, the Note or such stock; and
(c) The term "Holder" means MTDC and any person holding Registrable
Securities to whom these registration rights have been transferred pursuant to
Section 9.10 of this Agreement.
9.2 Company Registration. If at any time the Company proposes to register
--------------------
any of its preferred or common stock under the Securities Act in connection with
the public offering of such securities solely for cash on a form that would also
permit the registration of the Registrable
21
<PAGE>
Securities, the Company shall, each such time, promptly give each Holder written
notice of such determination. Upon the written request of any Holder given
within twenty (20) days after mailing of any such notice by the Company, the
Company shall use its best efforts to cause to be registered under the
Securities Act all of the Registrable Securities that each such Holder has
requested be registered.
In the case of any registration effected pursuant to this Section, the
Company shall bear all registration and qualification fees and expenses
(excluding underwriters' discounts and commissions), and any costs and
disbursements of counsel for the Company and one counsel for the selling
Holders, if any, that result from the inclusion of securities held by the
Holders in such registration.
The Company shall not be required under this Section 9.2 to include any of
the Holders' Registrable Securities in an underwriting unless such Holders
accept the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it, and then only in such quantity as will not, in the
written opinion of the underwriters, jeopardize the success of the offering by
the Company. If the total amount of securities that all selling stockholders
with a contractual right to participate in such offering request to be included
in such offering exceeds the amount of securities that the underwriters
reasonably believe compatible with the success of the offering, the Company
shall only be required to include in the offering so many of the securities of
the selling Holders as the underwriters believe will not jeopardize the success
of the offering (the securities so included to be apportioned pro rata among all
selling stockholders according to the total amount of securities owned by them.
22
<PAGE>
9.3 Obligations of the Company. Whenever required under Section 9.2, to
--------------------------
use its best efforts to effect the registration of any Registrable Securities,
the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange Commission ("SEC") a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become and remain
effective; provided, however, that in connection with any proposed registration
intended to permit an offering of any securities from time to time, the Company
shall in no event be obligated to cause any such registration to remain
effective for more than ninety (90) days.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of such
jurisdiction as shall be reasonably appropriate for the distribution of the
securities covered by the registration statement, provided that the Company
shall not be required in connection therewith or as a condition thereto to
qualify to do business or to file a general consent to service of process in any
such states or jurisdictions, and further provided that (anything in this
Agreement to the contrary notwithstanding with respect to the
23
<PAGE>
bearing of expenses) if any jurisdiction in which the securities are to be
qualified shall require that expenses incurred in connection with the
qualification of the securities in that jurisdiction be borne by selling
shareholders, then such expenses shall be payable by selling shareholders pro
rata, to the extent required by such jurisdiction.
9.4 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to Section 9 that the
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such securities as the Company shall reasonably request and as shall be required
in connection with the action to be taken by the Company.
9.5 Indemnification. In the event any Registrable Securities are included
---------------
in a registration statement under Section 9:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder requesting or joining in a registration, any underwriter
(as defined in the Securities Act) for it, and each person, if any, who controls
such underwriter within the meaning of the Securities Act, against any losses,
claims, damages, or liabilities, joint or several, to which they may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based on any untrue or alleged untrue statement of any material fact contained
in such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments of supplements thereto, or arise
out of or are based upon the 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 arise out of any violation by the Company of any rule
or regulation promulgated under the Securities Act applicable to the Company and
relating to action or inaction required of the Company in connection with any
such registration;
24
<PAGE>
and will reimburse each such Holder, such underwriter, or controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
9.7(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld) nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
connection with such registration statement, preliminary prospectus, final
prospectus, or amendments or supplements thereto, in reliance upon and in
conformity with written information furnished expressly for use in connection
with registration by any such Holder, underwriter, or controlling person.
(b) To the extent permitted by law, each Holder requesting or joining in a
registration will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, and each agent and any underwriter for the Company (within the meaning of
the Securities Act) against any losses, claims, damages, or liabilities to which
the Company or any such director, officer, controlling person, agent, or
underwriter may become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereto)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent, but
25
<PAGE>
only to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such registration statement,
preliminary or final prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will reimburse any legal or other expenses reasonably incurred by the
Company or any such director, officer, controlling person, agent, or underwriter
in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 9.7(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of such Holder (which consent shall not be unreasonably
withheld).
(c) Promptly after receipt by an indemnified party under this subsection
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under this
subsection, notify the indemnifying party in writing of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel mutually
satisfactory to the parties. The failure to notify an indemnifying party
promptly of the commencement of any such action, if and only if prejudicial to
his ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this subsection, but the omission so to
notify the indemnifying party will not relieve him of any liability that he may
have to any indemnified party otherwise than under this Section 9.7.
9.6 Termination of the Company's Obligations. The Company shall have no
----------------------------------------
obligation pursuant to Section 9.2 with respect to any request or requests made
by any Holder more than seven
26
<PAGE>
(7) years after the effective date of the first registration statement filed by
the Company under the Securities Act.
9.7 Reports Under Securities Exchange Act of 1934. With a view to making
---------------------------------------------
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration, the Company agrees to use its best efforts to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times subsequent to ninety (90) days
after the effective date of the first registration statement covering an
underwritten public offering filed by the Company;
(b) file with the SEC in a timely manner all reports and other documents
required of the Company under the Securities Act and the Securities Exchange Act
of 1934, as amended (the "Exchange Act"); and
(c) furnish to any Holder so long as such Holder owns any Registrable
Securities forthwith upon request a written statement by the Company that it has
complied 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 may
be reasonably requested in availing any Holder of any rule or regulation of the
SEC permitting the selling of any such securities without registration.
9.8 Transfer of Registration Rights. The registration rights of MTDC
-------------------------------
under this Section 9 may be transferred to any transferee of Registrable
Securities provided, however, that the Company is given written notice by MTDC
at the time of such transfer stating the name and address of the transferee and
identifying the securities with respect to which the rights under this Section 9
are being transferred.
27
<PAGE>
9.9 Legends; Stop Transfer.
----------------------
(a) All certificates for shares issuable upon exercise of the Warrant (the
"Warrant Shares") shall bear substantially the following legend:
"These securities have not been registered under the Securities Act of
1933. They may not be sold, offered for sale, pledged or hypothecated in
the absence of an effective registration statement as to the securities
under said Act or an opinion of counsel satisfactory to the Company that
such registration is not required."
(b) The certificates for Warrant Shares shall also bear any legend
required by any applicable state law.
(c) In addition, the Company may make a notation regarding the
restrictions on transfer of Warrant Shares 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 an
exemption from such registration.
9.10 Lockup Agreement. In consideration for the Company agreeing to its
----------------
obligations under this Section 9, MTDC agrees in connection with any
registration of the Company's securities that, upon the request of the Company
or the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for the
purchase of, or otherwise dispose of any Registrable Securities (other than
those included in the registration) without the prior written consent of the
Company or such underwriters, as the case may be, for such period of time (not
to exceed ninety (90) days) from the effective date of such registration as the
Company or the underwriters may specify.
Section 10. Events of Default.
---------- -----------------
The occurrence of any one or more of the following events shall constitute
an event of default by the Company under this Agreement:
10.1 Default by the Company in any principal or interest payment on the
Note when due.
28
<PAGE>
10.2 Default by the Company in the performance or observance of the
provisions of sections 7.1 or 8.1 through 8.11 of this Agreement.
10.3 Default by the Company in the performance or observance of any of the
other provisions, terms, conditions, warranties or covenants of this Agreement,
if such default remains unremedied for thirty (30) days after receipt by the
Company of written notice from MTDC.
10.4 Default by the Company or any Subsidiary in the payment when due of
the principal of any other indebtedness for borrowed money or default in any
other obligation relating to such indebtedness if the result thereof has been to
cause the holder of such indebtedness to declare the same due and payable.
10.5 Any written representation or warranty made by the Company in this
Agreement or in connection therewith or any financial statement, report,
schedule, or certificate furnished by the Company or any of its officers or
accountants to MTDC during the term of this Agreement shall prove to have been
incorrect as of its date in any material respect.
10.6 The Company or any Subsidiary shall file a voluntary petition in
bankruptcy or any petition or answer seeking for itself any reorganization,
readjustment, arrangement, composition or similar relief; or shall commence a
voluntary case under the federal bankruptcy laws; or shall admit in writing its
insolvency or its inability to pay its debts as they become due; or shall make
an assignment for the benefits of creditors; or shall apply for, consent to or
acquiesce in the appointment of, or the taking of possession by, a trustee,
receiver, custodian or similar official or agent of the Company or any
Subsidiary or of substantially all of its property; or a trustee, receiver,
custodian or similar official or agent of the Company or any Subsidiary or of
substantially all of its property; or a trustee, receiver, custodian or similar
official or agent shall be appointed for the Company or any Subsidiary or for
substantially all of its property and shall not be discharged within
29
<PAGE>
60 days; or a petition seeking reorganization, readjustment, arrangement,
composition, or other similar relief as to the Company or any Subsidiary under
the federal bankruptcy laws or any similar law for the relief of debtors shall
be brought against the Company or any Subsidiary and shall be consented to by it
or shall remain undismissed for sixty days.
Upon the occurrence of any event of default, the Note will immediately
become due and payable without demand, notice, or protest, all of which are
hereby expressly waived. In addition, the Note will similarly immediately become
due and payable in the event that the Company redeems any of its preferred stock
for a consideration in excess of $40,000 in any twelve month period. Thereafter,
the holder of the Note may proceed to protect and enforce its rights, at law, in
equity or otherwise, against the Company and any indorser or guarantor of the
Company's obligations to the holder of the Note, either jointly or severally,
and may proceed to liquidate and realize upon any of its collateral, if any, in
accordance with the rights of a secured party under the Uniform Commercial Code
or any other applicable law.
Section 11. Reimbursement for Expenses.
---------- --------------------------
Whether or not the transactions contemplated hereby shall be consummated,
the Company shall reimburse MTDC for all reasonable out-of-pocket expenses,
including without limitation all reasonable attorneys' fees and disbursements,
incurred in connections with the making and collection of the Loan or the
exercise of the Warrant and the preparation of this Agreement and any amendments
hereto or waivers of the provisions hereof. Said expenses shall include all
costs and expenses, legal or otherwise, incurred by MTDC in the exercise of any
of its rights, powers or privileges whether or not such action or proceeding
follows an event of default.
Section 12. Miscellaneous Provisions.
---------- ------------------------
30
<PAGE>
12.1 Entire Agreement and Waivers. This Agreement, the Note and the
----------------------------
Warrant together constitute the entire agreement between the Company and MTDC,
and no covenant, term, condition or other provision thereof nor any default in
connection therewith may be waived except by an instrument in writing signed by
MTDC and delivered to the Company. MTDC's failure to exercise or enforce any of
its rights, powers or privileges under this Agreement, the Note or the Warrant
shall not operate as a waiver thereof, and no waiver by MTDC of a breach of any
provision of this Agreement shall be deemed to be a waiver of any preceding or
subsequent breach of the same or any other provision hereof.
12.2 Remedies Cumulative. All remedies provided under this Agreement, the
-------------------
Note and the Warrant or afforded by law shall be cumulative and available to
MTDC until all of the Company's obligations to MTDC have been satisfied.
12.3 Survival of Covenants. All covenants, agreements, representations and
---------------------
warranties made herein and in certificates and Schedules delivered in connection
herewith shall be deemed material and relied on by MTDC, notwithstanding any
investigation made by MTDC or on its behalf, and shall survive the execution and
delivery of this Agreement, the Note and the Warrant. All such covenants,
agreements, representations and warranties shall bind and inure to the benefit
of the Company's and MTDC's successors and assigns, whether so expressed or not.
12.4 Governing Law. This Agreement, the Warrant and the Note shall be
-------------
construed in accordance with the laws of the Commonwealth of Massachusetts.
12.5 Assurance of Execution and Delivery of Additional Instruments. The
-------------------------------------------------------------
Company agrees to execute and deliver, or to cause to be executed and delivered,
to MTDC all such further instruments, and to do or cause to be done all such
further acts and things, as MTDC may reasonably request or as may be necessary
or desirable to effect further the purposes of this Agreement.
31
<PAGE>
12.6 Extension of Time. Whenever any payment to be made under the Note
-----------------
shall be due on a Saturday, Sunday or a public holiday under the laws of the
Commonwealth of Massachusetts, said payment may be made on the next succeeding
business day and such extension of time shall in such case be included in
computing interest in connection with said payment.
12.7 Notices. Any notices required or provided for under this Agreement
-------
shall be deemed to have been sufficiently given or served for all purposes by
being sent by registered or certified mail, return receipt requested, to the
following addresses or to such subsequent addresses as may hereafter be
designated in writing:
To MTDC: Massachusetts Technology Development Corporation
131 State Street
Boston, Massachusetts 02109
Attention: President
Copy to: Palmer & Dodge
One Beacon Street
Boston, Massachusetts 02108
Attention: Peter Wirth, Esquire
To the Company: South Deerfield Research Park
South Deerfield, Massachusetts 01373
Attention: President
Copy to: Mirick, O'Connell, DeMallie & Lougee
100 Front Street
Worcester, Massachusetts 01608
Attention: Jeffrey L. Donaldson, Esquire
12.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same.
Section 13. List of Schedules.
---------- -----------------
The following Schedules are annexed to and made a part of this Agreement:
1.1 The Note
1.2 The Warrant
4.1A Company's Charter
4.1B Company's Bylaws
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<PAGE>
4.2 List of Company's security holders
4.3 List of Subsidiaries
4.6 Description of liens
4.7 List of Patents, Trademarks, etc.
4.8 Description of litigation
4.11 List of material contracts
4.12 Description of transactions with affiliates
6.2.4 Opinion of Company's Counsel
7.19 Form of Noncompetition, Nondisclosure and Inventions
Agreement
IN WITNESS WHEREOF, the Company and MTDC have caused this Agreement to be
executed as an instrument under seal by their proper officers duly authorized,
all as of the day and year first above written.
MILLITECH CORPORATION
By /s/ Erik van der Kaay
---------------------------
Title: President
(Corporate Seal)
Attest:
/s/ David L. Lougee
- -------------------------
Clerk
MASSACHUSETTS TECHNOLOGY DEVELOPMENT
CORPORATION
By /s/ unreadable
---------------------------
Title
(MTDC Seal)
33
<PAGE>
THE FOLLOWING IS A SUMMARY OF THE INFORMATION PROVIDED
IN THE EXHIBITS OF THE PURCHASE AGREEMENT. FURTHER INFORMATION
WILL BE FURNISHED UPON REQUEST.
Schedule 1.1
Subordinated Promissory Note no longer outstanding.
Schedule 1.2
Convertible Preferred Stock Purchase Warrant which expired.
Schedule 4.1A
Restated Articles of Organization. See Exhibit 3.1 for Restated Articles
of Organization.
Schedule 4.1B
By-laws, as amended. See Exhibit 3.2 for Amended and Restated By-laws.
Schedule 4.2
List of the Company's security holders.
Schedule 4.3
List of the Company's subsidiaries.
Schedule 4.6
List of liens against the Company.
Schedule 4.7
List of Patents and Trademarks.
Schedule 4.8
Nothing listed.
Schedule 4.11
List of material contracts.
<PAGE>
Schedule 4.12
Descriptions of transactions with affiliates.
Schedule 6.2.4
Opinion of the Company's counsel pursuant to the Purchase Agreement.
Schedule 7.19
Form of Noncompetition, Nondisclosure and Inventions Agreement.
