Exhibit 10.17

 

October 23, 2001

 

CONFIDENTIAL

 

Mr. Robert V. Dickinson

President and Chief Executive Officer

California Micro Devices Corporation

215 Topaz Street

Milpitas, CA 95035

 

Dear Bob:

 

This letter agreement (this “Agreement”) confirms the understanding and
agreement between Needham & 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;

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California Micro Devices Corporation

October 23, 2001

Page 2

 

Needham & Company, Inc.

 

  (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 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.

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California Micro Devices Corporation

October 23, 2001

Page 3

 

Needham & Company, Inc.

 

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 Needham & Company
with an opinion of counsel relating to the Company and the Offering in form and
substance reasonably satisfactory to Needham & 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 Needham & Company shall request. In addition,
at each closing the Company will provide Needham & 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 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

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California Micro Devices Corporation

October 23, 2001

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Needham & Company, Inc.

 

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.

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California Micro Devices Corporation

October 23, 2001

Page 5

 

Needham & Company, Inc.

 

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 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
Needham & 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 Needham & Company is required to disclose by
applicable law, regulation or legal process, or (iv) that becomes available to
Needham & 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 Needham & 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, Needham
& 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

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California Micro Devices Corporation

October 23, 2001

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Needham & Company, Inc.

 

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 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.

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California Micro Devices Corporation

October 23, 2001

Page 7

 

Needham & Company, Inc.

 

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,

 

NEEDHAM & COMPANY, INC.

By:

 

 

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Chad W. Keck

Managing Director

 

Agreed to and Accepted

as of the date set forth above:

 

CALIFORNIA MICRO DEVICES CORPORATION

By:

 

 

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Name:

 

 

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Title:

 

 

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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 Needham & Company and its
affiliates, the respective directors, officers, employees and agents of Needham
& Company and its affiliates, and each other person, if any, controlling Needham
& Company or any of its affiliates within the meaning of the federal securities
laws (Needham & 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) Needham &
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 Needham &
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 Needham & 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
Needham & 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
Needham & Company in connection with any transaction shall be deemed to be in
the same proportion as the aggregate fee paid or payable to Needham & Company in
connection with the transaction bears to the total value of the transaction. The
relative fault of the Company and Needham & Company shall be determined by
reference to, among other things, whether the statements, actions or omissions
to act were by the Company or Needham & 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
Needham & 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.