EXHIBIT 10.18

 

SETTLEMENT AGREEMENT AND RELEASE

 

This Settlement Agreement and Release (“Agreement”) is effective as of November
15, 2002 (the “Effective Date”) among Spectrian Corporation (“Spectrian”), Cree,
Inc., and Cree Microwave, Inc., a wholly owned subsidiary of Cree, Inc. that was
formerly known as UItraRF, Inc. and, prior to that, as Zoltar Acquisition, Inc.
(Cree, Inc. and Cree Microwave, Inc. shall be collectively referred to herein as
“Cree.” Spectrian and Cree shall be referred to collectively herein as the
“Parties.”)

 

WHEREAS, the Parties entered into an Asset Purchase Agreement dated November 20,
2000 (the “Asset Purchase Agreement”); and

 

WHEREAS, Spectrian and Cree Microwave, Inc. entered into a Purchase and Supply
Agreement dated December 29, 2000, and subsequently entered into Amendments to
the Purchase and Supply Agreement dated October 19, 2001 and March 31, 2002
(collectively, the “Purchase and Supply Agreement”); and

 

WHEREAS, in a letter dated September 25, 2002, Cree gave Spectrian formal notice
of alleged claims against Spectrian under the Purchase and Supply Agreement and
its intent to arbitrate such claims if they were not otherwise resolved; and

 

WHEREAS, in a letter dated September 30, 2002, Spectrian responded to Cree’s
September 25 letter and informed Cree of alleged claims against Cree under the
Purchase and Supply Agreement; and

 

WHEREAS, the Parties desire to settle certain claims relating to the Asset
Purchase Agreement and the Purchase and Supply Agreement pursuant to the terms
and conditions set forth herein below;

 

 

SETTLEMENT AGREEMENT

AND RELEASE

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IT IS HEREBY AGREED by and among the Parties, in consideration of the mutual
covenants and undertakings set forth in this Agreement, as follows:

 

1. Spectrian shall pay to Cree Microwave, Inc. a total of $5,000,000 (five
million dollars) (the “Settlement Payment”) in cash. The Settlement Payment
shall be paid by wire transfer, to an account designated by Cree Microwave,
Inc., within five days of the Effective Date.

 

2. Provided that the Settlement Payment is paid to Cree Microwave, Inc. within
five days of the Effective Date, then as of the Effective Date, Cree and
Spectrian, along with their respective affiliates, subsidiaries, attorneys,
insurers, reinsurers, predecessors, successors, directors, officers, parents,
subsidiaries, employees and assigns, release and forever discharge each other
and their respective affiliates, subsidiaries, attorneys, insurers, reinsurers,
predecessors, successors, directors, officers, parents, subsidiaries, employees
and assigns, from all claims arising from or in any way relating to the Purchase
and Supply Agreement, except as set forth in Paragraph 3 herein. For purposes of
clarity, and without limiting the foregoing in any way, the Parties acknowledge
that the release set forth in this Paragraph 2 includes but is not limited to:
(i) all claims referenced in Cree’s letter to Spectrian dated September 25, 2002
indicating its intent to arbitrate; (ii) all claims referenced in Spectrian’s
letter to Cree dated September 30, 2002 responding to Cree’s September 25
letter; (iii) the remaining Minimum Commitment for the periods after September
30, 2002 of approximately $11.3 million; (iv) any and all Minimum Commitments
not already purchased for all periods prior to September 30, 2002; and (v) any
previously existing obligation on the part of Spectrian under the Purchase and

 

SETTLEMENT AGREEMENT

AND RELEASE

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Supply Agreement to use, purchase, or qualify any Cree Microwave or UltraRF
products, including but not limited to LDMOS 8, LDMOS 8.5 30-watt or 125-watt
parts.

 

3. The Parties agree that the Purchase and Supply Agreement shall be terminated
as of the Effective Date, provided that the Settlement Payment is paid to Cree
Microwave, Inc. within five days of the Effective Date. Article V (including the
warranties set forth in Schedules 5.1 and 5.2), Article VI, and Article VII of
the Purchase and Supply Agreement shall survive termination. Notwithstanding
anything else in this Agreement, any claims arising from or relating to Articles
V and VII of the Purchase and Supply Agreement shall be preserved, and are not
waived or released. Any purchase of products by Spectrian from Cree Microwave,
Inc. after termination of the Purchase and Supply Agreement shall instead be
governed by the terms set forth in the Volume Purchase Agreement executed
concurrently herewith, so long as the Volume Purchase Agreement remains in
effect, unless otherwise mutually agreed in writing by the Parties.

 

4. In consideration of and subject to its receipt of the Settlement Payment, and
as of the Effective Date, Cree and its affiliates, subsidiaries, attorneys,
insurers, reinsurers, predecessors, successors, directors, officers, parents,
subsidiaries, employees and assigns release and forever discharge Spectrian and
its affiliates, subsidiaries, attorneys, insurers, reinsurers, predecessors,
successors, directors, officers, parents, subsidiaries, employees and assigns
from all claims arising from or relating to the representations and warranties
made by Spectrian in the Asset Purchase Agreement, with the exception of the
representations and warranties set forth in Sections 5.18 and 5.20 thereof. Any
claims arising from the representations and warranties set forth in Sections
5.18 and 5.20 of the Asset Purchase Agreement shall survive this Agreement

 

SETTLEMENT AGREEMENT

AND RELEASE

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and are not released. Cree acknowledges and agrees that, as of the Effective
Date, it is not aware of any breaches of the representations and warranties made
by Spectrian in Sections 5.18 and 5.20 of the Asset Purchase Agreement.

 

5. Spectrian acknowledges that Cree’s LDMOS 8 family of products has
successfully passed Cree’s internal process and reliability qualification tests
and the Parties will include such acknowledgment in a mutually acceptable form
in the press release contemplated by Paragraph 20.

 

6. The Parties expressly waive and relinquish any and all rights and benefits
they now have or may have in the future under the terms of Section 1542 of the
Civil Code of the State of California, which section reads in full as follows:
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.” The
Parties being aware of said Code Section, hereby expressly, knowingly and
intentionally waive any rights they may have thereunder, as well as any other
statute or common law of similar effect. The Parties and each of them understand
and acknowledge the significance of this specific waiver of California Civil
Code Section 1542, and thereby assume full responsibility for any damages or
losses that they have incurred or hereafter incur in connection with the facts
and claims which are the subject of the releases as set forth in Paragraphs 2,3,
and 4 above.

 

SETTLEMENT AGREEMENT

AND RELEASE

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7. Each Party understands that if the facts with respect to which this Agreement
is executed are found hereafter to be other than or different from the facts now
believed by them to be true, the Parties expressly accept and assume the risk of
such possible differences in facts and agree that this Agreement shall be and
remain effective notwithstanding such difference in facts.

 

8. Each Party denies any liability for all claims against it referenced in this
Agreement and this compromise and settlement thereof shall never be treated as
an admission of liability or responsibility for such claims at any time for any
purpose.

 

9. Each party hereto declares that its decision in executing this Agreement is
not predicated on, or influenced by, any declaration or representation of any
other party hereto, but solely on the conditions, covenants, and agreements
contained or referred to in this Agreement.

 

10. The undersigned Parties each warrant and represent that it has the right and
authority to execute this Agreement as to the claims, demands, obligations, or
causes of action referred to in its release set forth in this Agreement; and
that it has not sold, assigned, transferred, conveyed, or otherwise disposed of
any of such claims, demands, obligations or causes of action and will not do so
concurrently with the execution of this agreement or after its execution. It is
agreed and acknowledged among the Parties that Spectrian’s execution on May 19,
2002 of an Agreement and Plan of Merger and Reorganization with REMEC, Inc., a
California corporation, and Reef Acquisition Corp., a Delaware corporation, and
its execution on October 29, 2002 of an amendment and restatement thereof, shall
not be deemed contrary to Spectrian’s representations and warranties in this
Paragraph 10.

 

SETTLEMENT AGREEMENT

AND RELEASE

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11. This Agreement shall inure to the benefit not only of the Parties, but also
to each and every one of their respective agents, representatives, employees,
attorneys and insurers, whether primary or excess, and also to the respective
assigns and successors in interest of each Party.

 

12. This Agreement contains the entire agreement among the parties hereto
relating to the subject matter within the scope of the release contained in this
Agreement and is intended by the parties hereto to be the final and exclusive
statement thereof. This Agreement shall not be construed as conferring on any
party hereto, by implication, estoppel, or otherwise, any rights except the
rights expressly granted herein. All prior or contemporaneous agreements,
written or oral, among the parties hereto regarding the subject matter within
the scope of the release contained in this Agreement are superseded by this
Agreement, except for the Volume Purchase Agreement referenced above. This
Agreement may not be modified except by written document signed by an authorized
representative of each party hereto.

 

13. It is expressly understood and agreed that no promises or representations
relating to the subject matter within the scope of the release contained in this
Agreement shall be binding on any Party except as expressly provided herein.

 

14. All controversies, disputes or claims arising among the parties in
connection with, or with respect to, any provision of this Agreement shall be
submitted for arbitration in accordance with the rules of the American
Arbitration Association or any successor thereof. Arbitration shall take place
in Sunnyvale, California. Cree, on the one hand, and Spectrian, on the other
hand, each shall select one independent arbitrator (who shall not be counsel for
such

 

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AND RELEASE

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party), and the two so designated shall select a third independent arbitrator.
If either party shall fail to designate an arbitrator within seven calendar days
after arbitration is commenced by filing a demand with the American Arbitration
Association, or if the two arbitrators shall fail to select a third arbitrator
within 14 calendar days after arbitration is commenced by filing a demand with
the American Arbitration Association, then such arbitrator shall be selected by
the American Arbitration Association or any successor thereto upon application
of either party. Judgment upon any award of the majority of arbitrators shall be
binding and may be entered in any court of competent jurisdiction. Subject to
the provisions of this Agreement, the award of the arbitrators may grant any
relief that a court of general jurisdiction has authority to grant, including,
without limitation, an award of damages and/or injunctive relief. Nothing herein
contained shall bar the right of any of the parties to seek temporary injunctive
relief from a court of competent jurisdiction in accordance with applicable law
against threatened conduct that will cause imminent loss or damage before relief
can be obtained through the arbitration process.

 

15. No term of this Agreement shall be considered waived and no breach excused
by any party hereto unless waived or excused in writing. No waiver or excuse of
a breach by any party hereto, express or implied, shall constitute a waiver or
excuse of any subsequent breach.

 

16. This Agreement shall be interpreted, enforced, and governed by and under the
laws of the State of California, notwithstanding its choice of law rules.

 

17. The parties hereto acknowledge and agree that this Agreement may be executed
in one or more counterparts, and that all such counterparts shall constitute one
and the same Agreement. This Agreement may be executed by exchange of facsimile
signatures to be

 

SETTLEMENT AGREEMENT

AND RELEASE

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followed with the originals being signed and exchanged by regular mail or
courier, which facsimile signatures the parties hereto agree shall be deemed for
all purposes as originals.

 

18. If any provision of this Agreement, or any portion thereof, is held invalid,
illegal or unenforceable, that provision of the Agreement shall be enforced to
the maximum extent permissible so as to effect the intention of the parties
hereto, and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired.

 

19. The parties hereto agree to act in good faith in carrying out all of the
terms of this Agreement.

 

20. The Parties agree to cooperate in the preparation of mutually acceptable
press releases announcing the execution of this Agreement but shall otherwise
make no public announcement or disclosure of the execution or terms of this
Agreement without the written consent of the other Parties, except that a Party
may, upon notice to the others Parties, make such public disclosures regarding
this Agreement as, in the Opinion of counsel for such Party, are required by
applicable securities laws.

 

SETTLEMENT AGREEMENT

AND RELEASE

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(Signature page to Settlement Agreement and Release)

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.

 

Spectrian Corporation

     

    Cree, Inc.

        By:  

/s/ Michael D. Angel

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              By:  

/s/ M. Todd Tucker

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Michael D. Angel

Executive Vice President, Finance

and Administration, and Chief

Financial Officer

         

M. Todd Tucker

Executive Vice President,

Operations

        Date: November 15, 2002

     

        Date: November 15, 2002

       

        Cree Microwave, Inc.

                        By:  

/s/ M. Todd Tucker

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M. Todd Tucker

President

           

            Date: November 15, 2002

 

SETTLEMENT AGREEMENT

AND RELEASE

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