Exhibit 10.12
October 23, 2001
CONFIDENTIAL
Xx. Xxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
California Micro Devices Corporation
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Dear Xxx:
This letter agreement (this "Agreement") confirms the understanding and
agreement between Xxxxxxx & Company, Inc. (the "Placement Agent") and California
Micro Devices Corporation (the "Company") as follows:
1. The Company hereby engages the Placement Agent as the Company's
exclusive placement agent in connection with the proposed private placement to
accredited investors of securities of the Company (the "Offering"). The
Placement Agent hereby accepts such engagement upon the terms and conditions set
forth in this Agreement. It is currently contemplated that the Offering will be
structured as a private offering with a planned maximum of 2.0 million shares of
Common Stock of the Company (the "Securities"). The final terms of the Offering
will be determined by negotiation between the Company and interested investors
in consultation with the Placement Agent. This Agreement shall not give rise to
any commitment or obligation by the Placement Agent to purchase any of the
Securities or, except as provided in Section 2 below, to find purchasers for the
Securities.
2. The Placement Agent will provide the following services:
(a) Advise the Company with regard to the size of the Offering and
the structure and terms of the Securities that might be
realized in the current market environment;
(b) Work with the Company to prepare a private placement
memorandum (the "Memorandum") and, if deemed desirable, create
an investor road show concerning the Company for use with
qualified investors. The Memorandum would not be made
available to or used in discussions with prospective qualified
investors until such Memorandum and such prospective qualified
investors have been approved by the Company. The Memorandum
that will be initially circulated will incorporate publicly
available documents and will not include any non-public
material information about the Company;
(c) Assist the Company in identifying and evaluating prospective
qualified investors;
(d) Approach prospective qualified investors regarding an
investment in the Company; and
(e) Work with the Company to develop a negotiating strategy and
assist in negotiations with potential qualified investors.
The Placement Agent will have no authority under this Agreement to bind
the Company in any way to any party. In addition, nothing contained in this
Agreement will require the Company to accept the terms of any proposal. The
Company agrees to coordinate any discussions regarding any investment in the
Company with the Placement Agent and agrees to instruct Company directors and
officers that if they receive any inquiry or are
Exhibit 10.12
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California Micro Devices Corporation
October 23, 2001
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Xxxxxxx & Company, Inc.
otherwise aware of the interest of any third party concerning an investment in
the Company during the term of this Agreement, they should notify the Company
CEO who, on behalf of the Company, will promptly notify the Placement Agent of
the prospective investor and its interest. The prior sentence will not apply to
potential strategic investors who have, or are proposing, commercial business
relationships with the Company ("Strategic Investors") if such Strategic
Investors express an interest in investing in the Company separate from the
Offering being placed by Placement Agent.
3. The Offering will be made by means of the Memorandum, which shall be
prepared and approved by the Company and its counsel. The Company will also be
responsible for updating and supplementing the Memorandum prior to closing to
reflect developments affecting the Company. The Memorandum and any amendment or
supplement thereto will be in form reasonably acceptable to the Placement Agent.
The Company agrees that the Placement Agent may rely on the information
contained in the Memorandum and shall have no responsibility for any information
contained therein except for any information concerning the Placement Agent
supplied by the Placement Agent in writing to the Company for inclusion therein.
All other documents and materials to be used for circulation to investors
(collectively "Investor Materials") in connection with the Offering will be
provided by the Company to the Placement Agent in advance, and no such documents
or materials will be provided to investors without the Placement Agent's prior
approval. The Memorandum and all Investor Materials shall be the sole
responsibility of the Company. The Memorandum will include all information
required to be provided to accredited investors pursuant to Regulation D under
the Securities Act of 1933, as amended (the "Securities Act"). Neither the
Memorandum nor any of the Investor Materials shall contain an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
4. Each of the Company and the Placement Agent agrees to conduct the
Offering in a manner intended to qualify for the exemption from the registration
requirements of the Securities Act provided by Section 4(2) thereof and
Regulation D thereunder and in a manner intended to comply with the applicable
state "blue sky" laws and applicable securities laws of other jurisdictions.
Other than as provided in the prior sentence, the Company will be responsible
for compliance with the Securities Act and Regulation D and with applicable
state and other securities laws with respect to offers and sales made by the
Company and for compliance with the filing requirements and other actions
required under such laws.
5. The Company will, at each closing of the Offering, furnish Xxxxxxx &
Company with an opinion of counsel relating to the Company and the Offering in
form and substance reasonably satisfactory to Xxxxxxx & Company and its counsel.
Such opinion shall include legal assurances regarding compliance with applicable
corporate and securities laws and comfort with respect to the accuracy and
completeness of the disclosure in the Memorandum and the Investor Materials as
well as those of the matters addressed in the opinion such counsel renders to
the purchasers in the Offering as Xxxxxxx & Company shall request. In addition,
at each closing the Company will provide Xxxxxxx & Company with the same
certificates of the officers of the Company, comfort letters and other documents
and certificates as are furnished to the purchasers in the Offering.
6. The Company agrees to pay the following fees to the Placement Agent
for its services rendered under this Agreement:
(a) An advisory fee of $50,000 payable in cash upon signing of
this Agreement, which advisory fee, to the extent paid and to
the extent the Placement Agent's out of pocket expenses
specified in Section 7 total less than $50,000, shall be
credited against the fee described in 6(b) below;
(b) A fee equal to 6.0% of the gross proceeds on all sales of
Securities made in the Offering, payable
Exhibit 10.12
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California Micro Devices Corporation
October 23, 2001
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Xxxxxxx & Company, Inc.
in cash upon the closing to which such fee relates except that
the fee shall be equal to (i) 3% of the gross proceeds on such
sales to persons who are currently Company shareholders or
their affiliates if such persons invest in the Company
separate from the Offering being placed by Placement Agent;
(ii) 3% of the gross proceeds on such sales to persons who are
friends and family of Company management; and (iii) 0% of the
gross proceeds on such sales to Strategic Partners if such
Strategic Investors invest in the Company separate from the
Offering being placed by Placement Agent;
(c) Warrants (the "Warrants"), issuable at the first and any
subsequent closing of the sales of the Securities, to purchase
such number of Securities equal to one-half of the percentage
specified in 6(b) of the Securities sold in the Offering. The
Warrants shall be exercisable at an exercise price equal to
the price per share of the Securities sold in the Offering and
shall contain other customary provisions, including
anti-dilution provisions and demand and "piggyback"
registration rights similar to those contained in warrants
issued to investors in the Offering. The Warrants shall have a
term identical to that of warrants issued to investors in the
Offering and if, but only if, the investor warrants have a net
issuance (cashless exercise) provision, then so shall the
Warrants; provided however, that if no warrants are issued to
investors in the Offering, then the term of the Warrants shall
be five (5) years and the Warrants shall contain a net
issuance (cashless exercise) provision; and
(d) If during the nine-month period following the expiration or
termination of this Agreement other than by the Company for
cause (cause shall be deemed to exist if Placement Agent has
not cured a material breach within five (5) business days
notice thereof) or by the Placement Agent for convenience, the
Company sells any equity securities to any investor (i) that
the Placement Agent identified to the Company prior to such
expiration or termination and which the Company approved to
receive the Memorandum, (ii) as to which the Placement Agent
advised the Company prior to such expiration or termination,
or (iii) with which the Company or the Placement Agent had
discussions prior to such expiration or termination, the fees
payable pursuant to clauses (b) and (c) of this paragraph;
provided, however, that if no Securities were sold in the
Offering, no fees shall be payable in connection with the sale
of equity securities to any investor who was not brought to
the initial attention of the Company by the Placement Agent.
In these regards, within thirty (30) days of the expiration or
termination of this Agreement, the Placement Agent shall
notify the Company of those persons (A) the Placement Agent so
identified, advised the Company, or had discussions with prior
to expiration or termination of this Agreement and (B) if
there were no securities sold in the Offering, the Placement
Agent brought to the initial attention of the Company.
7. In addition to any fees that may be payable to the Placement Agent
under this Agreement, whether or not there is a closing of the Offering, the
Company agrees to reimburse the Placement Agent, upon request made from time to
time, for all its reasonable out-of-pocket expenses incurred in connection with
this engagement that exceed a total of $50,000 and are less than a total of
$100,000, including the reasonable fees and disbursements of its legal counsel.
The foregoing costs, expenses and charges will be paid by the Company to the
Placement Agent promptly upon receipt by the Company of an invoice(s) from the
Placement Agent.
8. (a) The Company will furnish or cause to be furnished to the
Placement Agent such information as the Placement Agent believes appropriate to
its assignment and to satisfy its due diligence requirements (the
"Information"). The Company recognizes and confirms that the Placement Agent (i)
will use and rely primarily on the Information and on information available from
generally recognized public sources in
Exhibit 10.12
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California Micro Devices Corporation
October 23, 2001
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Xxxxxxx & Company, Inc.
performing the services contemplated by this Agreement without having
independently verified the same, (ii) does not assume responsibility for the
accuracy or completeness of the Information and such other information, and
(iii) will not make an appraisal of the Company or its business or assets. To
the best of the Company's knowledge, the Information to be furnished by the
Company, when delivered, will be true and correct in all material respects and
will not contain any material misstatement of fact or omit to state any material
fact necessary to make the statements contained therein not misleading. The
Company will promptly notify the Placement Agent if it learns of any material
inaccuracy or misstatement in, or material omission from, any Information
theretofore delivered to the Placement Agent.
(b) All such Information, whether oral or written, will be kept
confidential by Xxxxxxx & Company except for Information (i) that is already or
becomes public through no breach of this provision, (ii) that is in the
Memorandum or in materials delivered by the Company to prospective investors, or
that the Company agrees may be disclosed, (iii) that Xxxxxxx & Company is
required to disclose by applicable law, regulation or legal process, or (iv)
that becomes available to Xxxxxxx & Company on a non-confidential basis from a
third party who is not bound by a confidentiality obligation to the Company; and
provided, further, that the Information may be disclosed to Xxxxxxx & Company's
directors, officers, employees, agents, advisors and representatives in
connection with its engagement hereunder with a need to know such Information,
who shall be informed of the confidential nature of the Information and that
such Information is subject to a confidentiality agreement or if, on the advice
of counsel, Xxxxxxx & Company is compelled to disclose such Information.
9. The Company agrees to indemnify the Placement Agent as set forth in
the Placement Agent's standard indemnity provisions attached hereto as Addendum
A; provided, however, that if a third party asserts a claim against the
Placement Agent related to the Offering, the Company shall not be liable for
fees or expenses of counsel or investigators of the Placement Agent which are
incurred prior to the Placement Agent giving notice to the Company of such
claim.
10. The Placement Agent's engagement hereunder may be terminated by
either the Company or the Placement Agent at any time upon written notice to
that effect to the other party, it being understood that the provisions of
paragraphs 6, 7, 8(b), 9, 11 and 12 of this Agreement shall survive any such
termination. The Company may in its discretion postpone, modify or abandon the
Offering prior to closing. The Placement Agent may decline to participate in the
Offering if the Placement Agent reasonably determines that the Offering has
become impractical or undesirable.
11. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
12. This Agreement constitutes the entire agreement and understanding
of the parties concerning its subject matter, superseding all prior oral or
written agreements and understandings concerning its subject matter. This
Agreement may not be amended or modified except in writing signed by each of the
parties. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York without giving effect to
principles of conflicts of law. The Company and the Placement Agent hereby
irrevocably and unconditionally consent to submit to the exclusive jurisdiction
of the courts of the State of New York and of the United States District Courts
located in the City of New York for any lawsuits, claims or other proceedings
arising out of or relating to this Agreement and agree not to commence any such
lawsuit, claim or other proceeding except in such courts. The Company and the
Placement Agent hereby irrevocably and unconditionally waive any objection to
the laying of venue of any lawsuit, claim, or other proceeding arising out of or
relating to this Agreement in the courts of the State of New York or the United
States District Courts located in the City of New York, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court
Exhibit 10.12
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California Micro Devices Corporation
October 23, 2001
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Xxxxxxx & Company, Inc.
that any such lawsuit, claim or other proceeding brought in any such court has
been brought in an inconvenient forum. Any right to trial by jury with respect
to any lawsuit, claim or other proceeding arising out of or relating to this
Agreement or the services to be rendered by the Placement Agent hereunder is
expressly and irrevocably waived.
Please confirm that the foregoing is in accordance with our
understanding by signing and returning to us the enclosed duplicate of this
letter.
Sincerely yours,
XXXXXXX & COMPANY, INC.
By: /s/ Xxxx X. Xxxx
Managing Director
Agreed to and Accepted
as of the date set forth above:
CALIFORNIA MICRO DEVICES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
President and Chief Executive Officer
Exhibit 10.12
Addendum A
This Addendum A is attached to and incorporated by reference into the
foregoing letter agreement (the "Agreement"). Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to such terms in
the Agreement.
The Company agrees to indemnify and hold harmless Xxxxxxx & Company and its
affiliates, the respective directors, officers, employees and agents of Xxxxxxx
& Company and its affiliates, and each other person, if any, controlling Xxxxxxx
& Company or any of its affiliates within the meaning of the federal securities
laws (Xxxxxxx & Company and each such other person or entity are hereinafter
referred to as an "Indemnified Person") from and against any and all losses,
claims, damages, expenses (including fees and disbursements of counsel) and
liabilities (or actions or proceedings in respect thereof) (collectively
"Losses") caused by, relating to, based upon or arising out of (i) Xxxxxxx &
Company's engagement under the Agreement, any transaction contemplated by such
engagement or any Indemnified Person's role in connection therewith (all of the
foregoing are collectively hereafter referred to as the "Engagement") or (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any offering materials, including but not limited to private placement memoranda
used to offer securities of the Company in a transaction subject to Xxxxxxx &
Company's engagement under the Agreement, as such materials may be amended or
supplemented (and including but not limited to any documents deemed to be
incorporated therein by reference), or caused by any omission or alleged
omission to state therein a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that with respect to clause (i) above,
such indemnification obligation shall not apply to any such Loss to the extent
it is found in a final judgment by a court of competent jurisdiction (not
subject to further appeal) to have resulted primarily and directly from the
gross negligence or willful misconduct of the Indemnified Person seeking
indemnification. The Company agrees to reimburse each Indemnified Person for all
expenses (including fees and disbursements of counsel) as they are incurred by
such Indemnified Person in connection with investigating, preparing, defending,
paying, settling or compromising any claim, action, suit, proceeding or Loss,
whether or not in connection with an action in which any Indemnified Person is a
named party. The Company also agrees that an Indemnified Person shall not have
any liability (whether direct or indirect, in contract or otherwise) to the
Company or its affiliates, directors, officers, employees, agents or
shareholders, directly or indirectly for or in connection with the Engagement,
except for any Losses that are found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily and
directly from such Indemnified Person's gross negligence or willful misconduct.
In no event, regardless of the legal theory advanced, shall any Indemnified
Person be liable for any consequential, indirect, incidental or special damages
of any nature.
If any action, suit, proceeding, or investigation is commenced, as to which
such Indemnified Person proposes to demand such indemnification, such
Indemnified Person shall notify the Company with reasonable promptness;
provided, however that any failure by such Indemnified Person to notify the
Company shall not relieve the Company from its obligations hereunder, except as
and to the extent the failure of such timely notice materially prejudices the
Company. If the Company so elects or at the request of an Indemnified Person,
the Company will assume the defense of such action, suit, proceeding or
investigation, including the employment of counsel reasonably satisfactory to
such Indemnified Person and the payment of all fees and expenses of such
counsel. In the event, however, that such Indemnified Person reasonably
determines in its judgment that representation by common counsel would be
inappropriate due to actual or potential differing interests or if the Company
fails to assume the defense of the action, suit, proceeding or investigation in
a timely manner, then such Indemnified Person may employ separate counsel to
represent or defend it in any such action, suit, proceeding or investigation and
the Company will pay the fees and disbursements of such counsel; provided,
however, that the Company will not be required to pay the fees and disbursements
of more than one separate counsel for all Indemnified Persons in any
jurisdiction in any single action or proceeding. In any action or proceeding the
defense of which the Company assumes, an Indemnified Person will have the right
to participate in such litigation and to retain its own counsel at such
Indemnified Person's own expense. The Company shall not be liable for any
settlement of any action or proceeding effected without its written consent, but
if settled with such consent the Company agrees to indemnify the Indemnified
Party from and against any Loss by reason of such settlement. The Company shall
not settle any claim, action, suit or proceeding related to the Engagement or
the Agreement unless the settlement also includes an unconditional release of
all Indemnified Persons from all liabilities arising out of such claim, action,
suit or proceeding.
If the indemnification sought by an Indemnified Person hereunder is found
in a final judgment by a court of competent jurisdiction (not subject to further
appeal) to be unenforceable, even though the express provisions hereof provide
for indemnification in such case, then the Company shall contribute to the
Losses for which such indemnification is held unavailable in such proportion as
is appropriate to reflect the relative benefits received by the Company, on the
one hand, and Xxxxxxx & Company, on the other hand, in connection with the
Engagement reflected in the Agreement, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but the relative fault of the Company on the one hand and
Xxxxxxx & Company on the other hand, in connection with the statements, acts or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations. The respective relative benefits received by the Company and
Xxxxxxx & Company in connection with any transaction shall be deemed to be in
the same proportion as the aggregate fee paid or payable to Xxxxxxx & Company in
connection with the transaction bears to the total value of the transaction. The
relative fault of the Company and Xxxxxxx & Company shall be determined by
reference to, among other things, whether the statements, actions or omissions
to act were by the Company or Xxxxxxx & Company and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action or omission to act. Notwithstanding the foregoing, in no event shall
the aggregate contribution of all Indemnified Persons for all Losses in
connection with any transaction exceed the amount of fees actually received by
Xxxxxxx & Company pursuant to the Agreement.
If multiple claims are brought against an Indemnified Person in an
arbitration, with respect to at least one of which indemnification is permitted
under applicable law and provided for under the Agreement, the Company agrees
that any arbitration award shall be conclusively deemed to be based on claims as
to which indemnification is permitted and provided for,
except to the extent the arbitration award expressly states that the award, or
any portion thereof, is based solely on a claim as to which indemnification is
not available.
The obligations of the Company referred to above shall be in addition to
any liability which the Company may otherwise have and shall be binding upon and
inure to the benefit of any successors, assigns, heirs and personal
representatives of any Indemnified Person and the Company. Neither termination
of the Agreement nor completion of the Engagement shall affect these
indemnification provisions which shall then continue in full force and effect.
