Exhibit 10.16

 

CALIFORNIA MICRO DEVICES CORPORATION

 

STOCK AND WARRANT PURCHASE AGREEMENT

 

November 22, 2002

 

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TABLE OF CONTENTS

 

        

Page

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1.    Purchase and Sale of Stock and Warrants

  

1

                1.1

 

Sale and Issuance of Common Stock

  

1

                1.2

 

Sale and Issuance of Warrants

  

1

                1.3

 

Closing

  

1

2.    Representations and Warranties of the Company

  

1

                2.1

 

Corporate Existence and Power

  

2

                2.2

 

Authorization; No Contravention

  

2

                2.3

 

Governmental Authorization; Third Party Consents

  

2

                2.4

 

Binding Effect

  

2

                2.5

 

Litigation

  

3

                2.6

 

Compliance with Laws

  

3

                2.7

 

Capitalization

  

3

                2.8

 

No Default or Breach; Contractual Obligations

  

4

                2.9

 

Title to Properties

  

4

                2.10

 

Reports; Financial Statements

  

5

                2.11

 

Taxes

  

5

                2.12

 

No Material Adverse Change; Ordinary Course of Business

  

6

                2.13

 

Private Offering

  

6

                2.14

 

Labor Relations

  

6

                2.15

 

Employee Benefit Plans

  

7

                2.16

 

Liabilities

  

7

                2.17

 

Intellectual Property

  

8

                2.18

 

Potential Conflicts of Interest

  

9

                2.19

 

Trade Relations

  

9

                2.20

 

Outstanding Borrowing

  

10

                2.21

 

Broker’s, Finder’s or Similar Fees

  

10

                2.22

 

Disclosure

  

10

                2.23

 

Insurance

  

10

                2.24

 

Form S-3 Eligibility

  

10

3.    Representations and Warranties of the Investors

  

10

                3.1

 

Authorization

  

10

                3.2

 

Purchase Entirely for Own Account

  

10

                3.3

 

Reliance Upon Investor’s Representations

  

11

                3.4

 

Receipt of Information

  

11

                3.5

 

Investment Experience

  

11

                3.6

 

Accredited Investor

  

11

                3.7

 

Restricted Securities

  

11

                3.8

 

Legends

  

11

                3.9

 

Broker’s, Finder’s or Similar Fees

  

12

 

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4.    Registration of the Shares; Compliance with the Securities Act

  

12

                4.1

 

Registration Procedures and Expenses

  

12

                4.2

 

Transfer of Shares After Registration; Suspension

  

13

                4.3

 

Indemnification

  

15

                4.4

 

Termination of Conditions and Obligations

  

17

5.    Conditions of each Investor’s Obligations at Closing

  

17

                5.1

 

Representations and Warranties

  

17

                5.2

 

Performance

  

17

                5.3

 

Compliance Certificate

  

17

                5.4

 

Qualifications

  

17

                5.5

 

Opinion of Counsel

  

18

                5.6

 

Minimum Amount Sold

  

18

6.    Conditions of the Company’s Obligations at Closing

  

18

                6.1

 

Representations and Warranties

  

18

                6.2

 

Qualifications

  

18

                6.3

 

Minimum Amount Sold

  

18

7.    Miscellaneous

  

18

                7.1

 

Entire Agreement

  

18

                7.2

 

Survival

  

18

                7.3

 

Successors and Assigns

  

18

                7.4

 

Governing Law

  

19

                7.5

 

Counterparts

  

19

                7.6

 

Titles and Subtitles

  

19

                7.7

 

Notices

  

19

                7.8

 

Expenses

  

19

                7.9

 

Attorneys’ Fees

  

19

                7.10

 

Amendments and Waivers

  

19

                7.11

 

Severability

  

19

                7.12

 

Rights of the Investor

  

20

                7.13

 

Conflict of Interest Waiver

  

20

                7.14

 

Press Release/Form 8-K

  

20

 

Exhibits

 

Exhibit A – Form of Warrant

Exhibit B – Certificate of Subsequent Sale

Exhibit C – Form of Opinion of Company’s counsel

Exhibit D – Schedule of Exceptions

 

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CALIFORNIA MICRO DEVICES CORPORATION

 

STOCK AND WARRANT PURCHASE AGREEMENT

 

This Stock and Warrant Purchase Agreement (this “Agreement”) is made as of the
22nd day of November, 2002 (the “Effective Date”), by and among California Micro
Devices Corporation, a California corporation (the “Company”), and each of the
persons listed on the signature pages hereto (each of whom is herein referred to
individually as an “Investor” and collectively as the “Investors”). The parties
hereto agree as follows:

 

1. Purchase and Sale of Stock and Warrants.

 

1.1 Sale and Issuance of Common Stock. Subject to the terms and conditions of
this Agreement, each Investor severally (and not jointly and severally) agrees
to purchase at the Closing (as defined below), and the Company agrees to issue
and sell to each Investor at the Closing, that number of shares (the “Shares”)
of common stock, no par value, of the Company (the “Common Stock”) set forth
above such Investor’s name on the signature pages hereto at a price per Share
equal to $3.40 (the “Purchase Price”), up to an aggregate of 2,800,000 shares of
Common Stock.

 

1.2 Sale and Issuance of Warrants. Subject to the terms and conditions of this
Agreement, each Investor severally (and not jointly and severally) agrees to
purchase at the Closing, and the Company agrees to issue and sell to each
Investor at the Closing, a warrant to purchase that number of shares of Common
Stock (the “Warrant”), equal to twenty-five percent (25%) of the number of
Shares purchased by such Investor, substantially in the form attached hereto as
Exhibit A.

 

1.3 Closing. The purchase and sale of the Shares and Warrants (the “Closing”)
shall occur no later than November 29, 2002, at a place and time to be specified
by the Company and Needham & Company, Inc. and Adams, Harkness & Hill, Inc.
(collectively, the “Placement Agents”), and of which the Investors will be
notified in not less than one (1) business days in advance by the Placement
Agents. At the Closing, after receipt of payment therefor, the Company shall
arrange delivery to each Investor of one or more stock certificates representing
the number of Shares set forth above such Investor’s name on the signature pages
hereto, and one or more Warrants, each to be registered in the name of the
Investor. The parties acknowledge that the schedule of Investors attached hereto
as Schedule A is a preliminary schedule of investors. As soon as practicable
after the Closing, the Company shall deliver to each Investor a completed
Schedule A, listing each Investor and the amount of Shares and Warrants
purchased by such Investor hereunder.

 

2. Representations and Warranties of the Company. The Company hereby represents
and warrants to each Investor that, except as disclosed in all reports,
registration statements and other filings, together with any amendments thereto,
filed by the Company with the Securities and Exchange Commission (the “SEC”)
since June 25, 2002 (collectively, the “SEC Reports”), the Company’s press
release dated October 24, 2002, and the Schedule of Exceptions attached hereto
as Exhibit D, specifically identifying the relevant subparagraph, which
exceptions shall be deemed to be representations and warranties as if made
hereunder:

 

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2.1 Corporate Existence and Power. The Company, and each of the corporations or
other entities of which the Company holds a majority of the voting power of the
outstanding voting equity securities or a majority of the economic equity
interest of such corporation or entity (collectively, the “Subsidiaries”) (a) is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; (b) has all requisite corporate
power and authority to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged;
(c) is duly qualified as a foreign corporation, licensed and in good standing
under the laws of each jurisdiction in which its ownership, lease or operation
of property or the conduct of its business requires such qualification, except
where the failure to be so qualified could not reasonably be expected to have a
material adverse effect on the Condition of the Company and (d) has the
corporate power and authority to execute, deliver and perform its obligations
under this Agreement.

 

2.2 Authorization; No Contravention. The execution, delivery and performance by
the Company of this Agreement and the transactions contemplated hereby and
thereby (a) have been duly authorized by all necessary corporate action of the
Company; (b) do not contravene the terms of the Articles of Incorporation or the
By-laws; (c) do not violate, conflict with or result in any breach, default or
contravention of (or with due notice or lapse of time or both would result in
any breach, default or contravention of), or the creation of any mortgage, deed
of trust, pledge, hypothecation, assignment, encumbrance, lien (statutory or
otherwise) or preference, priority, right or other security interest or
preferential arrangement (a “Lien”) under, any provision of any agreement,
undertaking, contract, indenture, mortgage, deed of trust, or other instrument
to which the Company is a party or by which its property is bound (a
“Contractual Obligation”) of the Company or any law, statute, treaty, rule,
regulation, right, privilege, qualification, license or franchise (a
“Requirement of Law”) applicable to the Company except such violations or
conflicts that would not reasonably be expected to have a material adverse
effect on the Condition of the Company; and (d) do not violate any judgment,
injunction, writ, award, decree or order of any nature (collectively, “Orders”)
of the government of any nation, state, city, locality or other political
subdivision thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, (a
“Governmental Authority”) against, or binding upon, the Company or any of its
Subsidiaries.

 

2.3 Governmental Authorization; Third Party Consents. No approval, consent,
compliance, exemption, authorization or other action by, or notice to, or filing
with, any Governmental Authority or any other individual, firm, corporation,
partnership, trust, association, joint venture, limited liability company, or
other entity of any kind (a “Person”), and no lapse of a waiting period under a
Requirement of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the sale, issuance and
delivery of the Shares and Warrants) by, or enforcement against, the Company of
this Agreement and the transactions contemplated hereby and thereby.

 

2.4 Binding Effect. This Agreement has been duly executed and delivered by the
Company, and this Agreement constitutes the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance or transfer, moratorium or similar laws
affecting the enforcement of creditors’ rights

 

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generally and by general principles of equity relating to enforceability
(regardless of whether considered in a proceeding at law or in equity).

 

2.5 Litigation. There are no actions, suits, proceedings, claims, complaints,
disputes, arbitrations or investigations (collectively, “Claims”) pending or, to
the Knowledge of the Company’s executive officers (the “Knowledge”) of the
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company or any of its Subsidiaries that seeks
damages in an amount which is material to the Company’s operations, other than
ordinary routine litigation incidental to the business of the Company nor is the
Company aware that there is any basis for any of the foregoing. The foregoing
includes, without limitation, Claims pending or, to the Knowledge of the
Company, threatened or any basis therefor known by the Company involving the
prior employment of any employee of the Company or any of its Subsidiaries,
their use in connection with the business of the Company or any of its
Subsidiaries of any information or techniques allegedly proprietary to any of
their former employers or their obligations under any agreements with prior
employers. No Order has been issued by any court or other Governmental Authority
against the Company or any of its Subsidiaries purporting to enjoin or restrain
the execution, delivery or performance of this Agreement or any of the other
Transaction Documents.

 

2.6 Compliance with Laws. The Company and each of its Subsidiaries is in
compliance in all material respects with all Requirements of Law and all Orders
issued by any court or Governmental Authority against the Company in all
respects. To the Company’s Knowledge, there are no Requirements of Law which
could reasonably be expected to prohibit or restrict the Company or any of its
Subsidiaries from, or otherwise materially adversely effect the Company or any
of its Subsidiaries in, conducting its business in any jurisdiction in which it
now conducts its business.

 

2.7 Capitalization.

 

(a) The authorized capital stock of the Company consists of 25,000,000 shares of
Common Stock, of which 14,249,270 shares (the “Issued Stock”) were issued and
outstanding as of September 30, 2002, and 10,000,000 shares of preferred stock,
of which 400,000 have been designated as “Series A Participating Preferred
Stock”, none of which was issued or outstanding as of September 30, 2002. As of
September 30, 2002, 4,115,000 shares of Common Stock were reserved for issuance
under the Company’s 1995 Employee Stock Option Plan, as amended, 450,000 shares
of Common Stock were reserved for issuance under the Company’s Non-Employee
Directors’ Stock Option Plan, as amended, and 1,130,000 shares of Common Stock
were reserved for issuance under the Company’s 1995 Employee Stock Purchase
Plan. As of September 30, 2002, 1,736,610 shares of Common Stock had been issued
and 2,061,541 shares of Common Stock were issuable upon the exercise of stock
options granted under the Company’s 1995 Employee Stock Option Plan, 105,255
shares of Common Stock had been issued and 251,064 shares of Common Stock were
issuable upon the exercise of stock options granted under the Company’s 1995
Non-Employee Directors’ Stock Option Plan, and 853,175 shares of Common Stock
had been issued under the Company’s 1995 Employee Stock Purchase Plan. The
Issued Stock represents all of the issued and outstanding shares of capital
stock of the Company and all shares of Issued Stock have been duly authorized
and validly issued and are fully paid and nonassessable. All of the shares of
Issued Stock and other securities of the Company have

 

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been offered, issued and sold by the Company in compliance in all material
respects with the Securities Act of 1933, as amended (“the Securities Act”) and
applicable state securities laws. There are no contracts or other agreements
relating to the issuance, sale or transfer of Issued Stock or any equity or
other securities of the Company other than pursuant to the 1995 Employee Stock
Option Plan, as amended; the 1995 Non-Employee Directors’ Stock Option Plan, as
amended; the 1995 Employee Stock Purchase Plan, as amended; an unsigned
Investment Letter proposed to Jeff Kalb relating to a 10,000 share bonus offered
to him and included as Issued Stock; a warrant for 59,750 shares of Common Stock
held by Needham & Company, Inc.; the warrants issuable to the Placement Agents
in connection with this Agreement; and the Shares and Warrants issuable pursuant
to this Agreement.

 

(b) The Shares and Warrants are duly authorized, and the Shares and shares of
Common Stock issuable upon exercise of the Warrants (the “Warrant Shares”)when
issued and delivered to the Purchasers after payment therefor, will be validly
issued, fully paid and non-assessable, and assuming the accuracy of the
representations and warranties of the Purchasers set forth in Section 3 of this
Agreement, will be issued in compliance with the registration and qualification
requirements of all applicable federal, state and foreign securities laws and
will be free and clear of all other Liens. None of the issued and outstanding
shares of Common Stock were issued in violation of any preemptive rights.

 

2.8 No Default or Breach; Contractual Obligations. All of the Contractual
Obligations to which the Company or any of its Subsidiaries is a party, whether
written or oral, which are required by the Exchange Act to be disclosed in the
SEC Reports (collectively, “Material Contractual Obligations”) are valid,
subsisting, in full force and effect and binding upon the Company or its
Subsidiary, as the case may be, and, to the Knowledge of the Company, the other
parties thereto, and the Company or its Subsidiary, as the case may be, has paid
in full or accrued all amounts due thereunder and has satisfied in full or
provided for all of its liabilities and obligations thereunder, except for such
amounts as are being contested by the Company in good faith. Neither the Company
nor any of its Subsidiaries has received notice of a default and is not in
default under, or with respect to, any Material Contractual Obligation nor, to
the Knowledge of the Company, does any condition exist that with notice or lapse
of time or both would constitute a default thereunder. To the Knowledge of the
Company, no other party to any such Contractual Obligation is in default
thereunder, nor does any condition exist that with notice or lapse of time or
both would constitute a default by such other party thereunder.

 

2.9 Title to Properties. The Company and each of its Subsidiaries has good,
record and marketable title in fee simple to, or holds interests as lessee under
leases in full force and effect in, all real property used in connection with
its business or otherwise owned or leased by it, in each case free and clear of
all Liens, except for Liens that would required to be described in the notes to
the Financial Statements. The Company and each of its Subsidiaries owns and has
good, valid and marketable title to all of its properties and assets used in its
business or reflected as owned on the Financial Statements, in each case free
and clear of all Liens, except for Liens that would required to be described in
the notes to the Financial Statements.

 

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2.10 Reports; Financial Statements.

 

(a) As of the respective dates of their filing with the Commission, the SEC
Reports, complied in all material respects with the applicable requirements of
the Securities Act, the Exchange Act, and the rules and regulations of the
Commission promulgated thereunder, except as disclosed in the SEC Reports.
Except as disclosed in the SEC Reports, the SEC Reports did not at the time they
were filed with the Commission, or will not at the time they are filed with the
Commission, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. The Company is not aware of any issues raised by the Commission
with respect to any of the SEC Reports, other than those disclosed in the SEC
Reports.

 

(b) Except as disclosed in the SEC Reports, the consolidated financial
statements (including, in each case, any related schedules or notes thereto)
contained in or incorporated by reference in the SEC Reports and any such
reports, registration statements and other filings to be filed by the Company
with the Commission prior to the Closing Date (the “Financial Statements”) (i)
have been or will be prepared in accordance with the published rules and
regulations of the Commission and GAAP consistently applied during the periods
involved (except as may be indicated in the notes thereto) and (ii) fairly
present or will fairly present in all material respects the consolidated
financial position of the Company and its Subsidiaries as of the respective
dates thereof and the consolidated results of operations, statements of
stockholders’ equity and cash flows for the periods indicated, except that any
unaudited interim financial statements were or will be subject to normal and
recurring year-end adjustments and may omit footnote disclosure as permitted by
regulations of the Commission.

 

2.11 Taxes.

 

(a) The Company and each of its Subsidiaries has paid all federal, state,
provincial, county, local, foreign and other taxes (the “Taxes”) which have come
due and are required to be paid by it through the date hereof, and all
deficiencies or other additions to Tax, interest and penalties owed by it in
connection with any such Taxes, other than Taxes being disputed by the Company
in good faith for which adequate reserves have been made in accordance with
GAAP;

 

(b) The Company and each of its Subsidiaries has timely filed or caused to be
filed all returns for Taxes that it is required to file on and through the date
hereof (including all applicable extensions), and all such Tax returns are
accurate and complete in all material respects;

 

(c) With respect to all Tax returns of the Company and each of its Subsidiaries,
(i) there is no unassessed Tax deficiency proposed or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries and (ii) no
audit is in progress with respect to any return for Taxes, no extension of time
is in force with respect to any date on which any return for Taxes was or is to
be filed and no waiver or agreement is in force for the extension of time for
the assessment or payment of any Tax;

 

(d) All provisions for Tax liabilities of the Company and each of its
Subsidiaries have been disclosed in the Financial Statements and made in
accordance with GAAP consistently

 

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applied, and all liabilities for Taxes of the Company and each of its
Subsidiaries attributable to periods prior to or ending on the Closing Date have
been adequately disclosed in the Financial Statements; and

 

(e) There are no Liens for Taxes on the assets of the Company or any of its
Subsidiaries.

 

2.12 No Material Adverse Change; Ordinary Course of Business. Since September
30, 2002, except as disclosed in or incorporated by reference in the SEC
Reports, (a) there has not been any material adverse change, in the Condition of
the Company, (b) neither the Company nor any of its Subsidiaries has
participated in any transaction material to the Condition of the Company,
including, without limitation, declaring or paying any dividend or declaring or
making any distribution to its stockholders except out of the earnings of the
Company or its Subsidiary, as the case may be, (c) neither the Company nor any
of its subsidiaries has entered into any Material Contractual Obligation, other
than in the ordinary course of business, (d) there has not occurred a material
change in the accounting principles or practice of the Company or any of its
Subsidiaries except as required by reason of a change in GAAP, and (e) there has
not been any issuance of Company capital stock, or warrants, options or other
rights to purchase Company capital stock, except for (a) options granted and
shares issued under the Company stock option and purchase plans, (2) warrants
promised to the Placement Agents in connection with the offering of the Shares
and Warrants, and (3) the Shares and Warrants.

 

2.13 Private Offering. Neither the Company nor any authorized Person acting on
its behalf has, in connection with the offer, sale, exchange or issuance of the
Shares or Warrants, engaged in (i) any form of general solicitation or general
advertising (as those terms are used within the meaning of Rule 502(c) under the
Securities Act), (ii) any action involving a public offering within the meaning
of Section 4(2) of the Securities Act, or (iii) any action that would require
the registration under the Securities Act of the offering, sale, exchange or
issuance of the Shares or Warrants pursuant to this Agreement or that would
violate applicable state securities or “blue sky” laws. The Company has not made
and will not prior to the Closing Date make, directly or indirectly, any offer
or sale of the Shares, Warrants, or of securities of the same or similar class
as the Shares or Warrants, if, as a result, the offer and sale contemplated
hereby would fail to be entitled to exemption from the registration requirements
of the Securities Act. As used herein, the terms “offer” and “sale” have the
meanings specified in Section 2(3) of the Securities Act.

 

2.14 Labor Relations. Except as could not reasonably be expected to have a
material adverse effect on the Condition of the Company: (a) neither the Company
nor any of its Subsidiaries is engaged in any unfair labor practice; (b) there
is no strike, labor dispute, slowdown or stoppage pending or, to the Knowledge
of the Company, threatened against the Company or any of its Subsidiaries ; (c)
neither the Company nor any of its Subsidiaries is a party to any collective
bargaining agreement or contract; and (d) no union organizing activities are
taking place. To the Knowledge of the Company, each of the officers and key
employees of the Company and each of its Subsidiaries spends all, or
substantially all, of his business time on the business of the Company or its
Subsidiary, as the case may be. To the Knowledge of the Company, none of the
employees of the Company or any of its Subsidiaries is resident in the United
States in violation of any Requirement of Law.

 

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2.15 Employee Benefit Plans.

 

(a) The SEC Reports list or describe each Plan that the Company or any of its
Subsidiaries maintains or to which the Company or any of its Subsidiaries
contributes (the “Company Plans”). Neither the Company nor any of its
Subsidiaries has any liability under any Plans other than the Company Plans.
Except as described in or incorporated by reference in the SEC Reports, neither
the Company nor any Commonly Controlled Entity maintains or contributes to, or
has within the preceding six years maintained or contributed to, or may have any
liability with respect to any Plan subject to Title IV of ERISA or Section 412
of the Code or any “multiple employer plan” within the meaning of the Code or
ERISA. Each Company Plan (and related trust, insurance contract or fund) has
been established and administered in accordance with its terms, and complies in
form and in operation with the applicable requirements of ERISA and the Code and
other applicable Requirements of Law. All contributions (including all employer
contributions and employee salary reduction contributions) which are due have
been paid to each Company Plan.

 

(b) No Claim with respect to the administration or the investment of the assets
of any Company Plan (other than routine claims for benefits) is pending.

 

(c) Except as could not reasonably be expected to have a material adverse effect
on the Condition of the Company, each Company Plan that is intended to be
qualified under Section 401(a) of the Code is so qualified and has been so
qualified during the period since its adoption; each trust created under any
such Plan is exempt from tax under Section 501(a) of the Code and has been so
exempt since its creation.

 

(d) No Company Plan is a welfare plan (as defined in Section (3)(l) of ERISA)
that provides benefits to current or former employees beyond their retirement or
other termination of service (other than coverage mandated by Section 4980A of
the Code, commonly referred to as “COBRA”, the cost of which is fully paid by
the current or former employee or his or her dependents).

 

(e) Neither the consummation of the transactions contemplated by this Agreement
nor any termination of employment following such transactions will accelerate
the time of the payment or vesting of, or increase the amount of, compensation
due to any employee or former employee whether or not such payment would
constitute an “excess parachute payment” under Section 280G of the Code.

 

(f) There are no unfunded obligations under any Company Plan which are not fully
reflected in the Financial Statements.

 

(g) Except as could not reasonably be expected to have a material adverse effect
on the Condition of the Company, the Company has no liability, whether absolute
or contingent, including any obligations under any Company Plan, with respect to
any misclassification of any person as an independent contractor rather than as
an employee.

 

2.16 Liabilities. Neither the Company nor any of its Subsidiaries has any direct
or indirect obligation or liability (the “Liabilities”) which are not fully
reflected or reserved against in the Financial Statements, other than
Liabilities not exceeding $250,000 in the aggregate

 

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incurred since September 30, 2002 in the ordinary course of business. The
Company has no Knowledge of any circumstance, condition, event or arrangement
that could reasonably be expected to give rise hereafter to any Liabilities of
the Company or any of its Subsidiaries that, individually or in the aggregate,
could have a material adverse effect on the Condition of the Company.

 

2.17 Intellectual Property.

 

(a) (i) The Company and each of its Subsidiaries is the owner of all, or has the
license or right to use all, of the copyrights, patents, trade secrets,
trademarks, internet assets, software and other proprietary rights
(collectively, “Intellectual Property”) that are used in connection with its
business as presently conducted, free and clear of all Liens except for a
limited security interest of and a negative pledge agreement with Silicon Valley
Bank.

 

(ii) None of the Intellectual Property is subject to any outstanding Order, and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand is pending or, to the Knowledge of the Company, threatened, which
challenges the validity, enforceability, use or ownership of the item.

 

(iii) The Company and each of its Subsidiaries has substantially performed all
obligations imposed upon it under all Intellectual Property licenses,
sublicenses, distributor agreements and other agreements under which the Company
or any of its Subsidiaries is either a licensor, licensee or distributor, except
such licenses, sublicenses and other agreements relating to off-the-shelf
software which is commercially available on a retail basis and used solely on
the computers of the Company or its Subsidiaries (collectively, the “IP
Agreements”). The Company and each of its Subsidiaries is not, nor to the
Knowledge of the Company is any other party thereto, in breach of or default
thereunder in any respect, nor is there any event which with notice or lapse of
time or both would constitute a default thereunder. All of the IP Agreements are
valid, enforceable and in full force and effect, and will continue to be so on
identical terms immediately following the Closing except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance or transfer, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general principles of equity relating to
enforceability (regardless of whether considered in a proceeding at law or in
equity).

 

(iv) To the Knowledge of the Company, none of the Intellectual Property
currently sold or licensed by the Company or any of its Subsidiaries to any
Person or used by or licensed to the Company or any of its Subsidiaries by any
Person infringes upon or otherwise violates any Intellectual Property rights of
others, except as could not reasonably be expected to have a material adverse
effect on the Condition of the Company.

 

(b) No litigation is pending and no Claim has been made against the Company or
any of its Subsidiaries or, to the Knowledge of the Company, is threatened,
contesting the right of the Company or any of its Subsidiaries to sell or
license to any Person or use the Intellectual

 

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Property presently sold or licensed to such Person or used by the Company or any
of its Subsidiaries. To the Knowledge of the Company, no Person is infringing
upon or otherwise violating the Intellectual Property rights of the Company or
any of its Subsidiaries.

 

(c) No former employer of any employee of the Company or any of its Subsidiaries
has made a claim against the Company or any of its Subsidiaries or, to the
Knowledge of the Company, against any other Person, that such employee or such
consultant is utilizing Intellectual Property of such former employer.

 

(d) To the Knowledge of the Company, none of the trade secrets, wherever
located, the value of which is contingent upon maintenance of confidentiality
thereof, has been disclosed to any Person other than employees, representatives
and agents of the Company or any of its Subsidiaries, except as required
pursuant to the filing of a patent application by the Company or any of its
Subsidiaries.

 

(e) It is not necessary for the business of the Company or any of its
Subsidiaries to use any Intellectual Property owned by any director, officer,
employee or consultant of the Company or any of its Subsidiaries (or persons the
Company or any of its Subsidiaries presently intends to hire). To the Company’s
Knowledge, at no time during the conception or reduction to practice of any of
the Intellectual Property of the Company or any of its Subsidiaries was any
developer, inventor or other contributor to such Intellectual Property operating
under any grants from any Governmental Authority or subject to any employment
agreement, invention assignment, nondisclosure agreement or other Contractual
Obligation with any Person that could materially adversely affect the rights of
the Company or any of its Subsidiaries to its Intellectual Property.

 

2.18 Potential Conflicts of Interest. To the Knowledge of the Company based upon
the officers and directors questionnaires distributed and completed in
connection with the Company’s 2002 Proxy Statement, no officer, director or
stockholder beneficially owning more than 5% of the outstanding shares of Common
Stock of the Company, no spouse of any such officer, director or stockholder,
and no affiliate (as defined in Rule 12b-2 of the Exchange Act) of any of the
foregoing (a) owns, directly or indirectly, any interest in (excepting less than
one percent (1%) stock holdings for investment purposes in securities of
publicly held and traded companies), or is an officer, director, employee or
consultant of, any Person which is, or is engaged in business as, a competitor,
lessor, lessee, supplier, distributor, or customer of, or lender to or borrower
from, the Company or any of its Subsidiaries; (b) owns, directly or indirectly,
in whole or in part, any tangible or intangible property that the Company or any
of its Subsidiaries use, in the conduct of business; or (c) has any cause of
action or other claim whatsoever against, or owes or has advanced any amount to,
the Company, except for claims in the ordinary course of business such as for
accrued vacation pay, accrued benefits under employee benefit plans, and similar
matters and agreements existing on the date hereof.

 

2.19 Trade Relations. There exists no actual or, to the Knowledge of the
Company, threatened termination, cancellation or limitation of, or any material
adverse modification or change in, the business relationship of the Company or
any of its subsidiaries, or the business of the Company or any of its
subsidiaries, with any customer or supplier or any group of customers

 

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or suppliers whose purchases or inventories provided to the business of the
Company or any of its subsidiaries are individually or in the aggregate material
to the Condition of the Company.

 

2.20 Outstanding Borrowing. The SEC Reports set forth the amount of all
indebtedness of the Company and each of its Subsidiaries as of September 30,
2002, which, except for accounts payable incurred in the ordinary course of
business has not changed materially through the Effective Date. No indebtedness
is entitled to any voting rights in any matters voted upon by the holders of the
Common Stock.

 

2.21 Broker’s, Finder’s or Similar Fees. Except for fees payable to the
Placement Agents, there are no brokerage commissions, finder’s fees or similar
fees or commissions payable by the Company or any of its Subsidiaries in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Company or any of its Subsidiaries or any
action taken by any such Person.

 

2.22 Disclosure. This Agreement, the Private Placement Memorandum dated October
14, 2002 (the “PPM”), the SEC Reports, and the documents and certificates
furnished to the Purchasers by the Company do not contain any untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements contained herein or therein, in the light of the circumstances
under which they were made, not misleading.

 

2.23 Insurance. The Company maintains insurance of the types, against such
losses and in amounts and with such insurers as are customary in the Company’s
industry and otherwise reasonably prudent, including, but not limited to,
insurance covering all real property owned and leased by the Company against
theft, damage, destruction, and other risks customarily insured by similarly
situated companies.

 

2.24 Form S-3 Eligibility. As of the date hereof, the Company meets the
requirements for the use of Form S-3 for registration of resale of the Shares
and Warrant Shares as contemplated herein.

 

3. Representations and Warranties of the Investors. Each Investor hereby
represents and warrants to the Company that, solely as to such Investor:

 

3.1 Authorization. The Investor has all requisite corporate power and authority
to enter into this Agreement and that this Agreement constitutes a valid and
legally binding obligation of the Investor, except (a) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the enforcement of creditors’ rights generally, (b) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies, and (c) to the extent the indemnification
provisions contained in this Agreement may be limited by applicable federal or
state securities laws.

 

3.2 Purchase Entirely for Own Account. The Shares and Warrants to be purchased
by the Investor, and the Warrant Shares which the Investor may purchase upon
exercise of the Warrant (collectively the “Securities”), will be acquired for
investment for the Investor’s own account, and not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and the
Investor has no present intention of selling, granting any participation in, or

 

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otherwise distributing the same. The Investor is not a party to any contract,
undertaking, agreement or arrangement with any person to sell, transfer or
otherwise dispose of any of the Securities.

 

3.3 Reliance Upon Investor’s Representations. The Investor understands that the
issuance and sale of the Securities to it will not be registered under the
Securities Act on the ground that such issuance and sale will be exempt from
registration under the Securities Act pursuant to section 4(2) thereof, and that
the Company’s reliance on such exemption is based on each Investor’s
representations set forth herein. The Investor realizes that the basis for the
exemption may not be present if, notwithstanding such representations, any
Investor has in mind merely acquiring the Securities for a fixed or determinable
period in the future, or for a market rise, or for sale if the market does not
rise. Such Investor has no such present intention.

 

3.4 Receipt of Information. The Investor has received the PPM and has had an
opportunity to ask questions and receive answers from the Company regarding the
PPM and the terms and conditions of the issuance and sale of the Shares and
Warrant and the business, properties, prospects and financial condition of the
Company and to obtain additional information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information furnished to it or
to which it had access. The foregoing, however, does not limit or modify the
representations and warranties of the Company in Section 2 of this Agreement or
the right of the Investor to rely thereon. No person other than the Company has
been authorized to give any information other than the PPM or to give any
representation not contained in this Agreement in connection with the Offering
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company.

 

3.5 Investment Experience. The Investor is experienced in evaluating and
investing in securities of companies and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of the investment in the Securities.

 

3.6 Accredited Investor. The Investor is an “accredited investor” as such term
is defined in Rule 501 of Regulation D promulgated under the Securities Act, for
the reason indicated on the signature page of this Agreement.

 

3.7 Restricted Securities. The Investor understands that the Securities may not
be sold, transferred or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Securities or an available
exemption from registration under the Securities Act, the Securities must be
held indefinitely. In particular, the Investor is aware that the Securities may
not be sold pursuant to Rule 144 promulgated under the Securities Act unless all
of the conditions of that Rule are met. Among the conditions for use of Rule 144
is the availability of current information to the public about the Company.

 

3.8 Legends. To the extent applicable, each certificate or other document
evidencing any of the Securities shall be endorsed with the legends set forth
below, and the Investor

 

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covenants that, except to the extent such restrictions are waived by the
Company, the Investor shall not transfer the shares represented by any such
certificate without complying with the restrictions on transfer described in the
legends endorsed on such certificate:

 

(a) The following legend under the Act:

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS
OF ANY STATE, AND MAY NOT BE SOLD, OFFERED FOR SALE, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR ELSE UPON AN OPINION
OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO CALIFORNIA MICRO DEVICES
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO
RULE 144 OF SUCH ACT OR ANOTHER APPLICABLE EXEMPTION.”

 

(b) Such other legends as may be required under state securities laws.

 

3.9 Broker’s, Finder’s or Similar Fees. There are no brokerage commissions,
finder’s fees or similar fees or commissions payable by the Investor in
connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Investor or any action taken by any such
Person.

 

4. Registration of the Shares; Compliance with the Securities Act.

 

4.1 Registration Procedures and Expenses. The Company hereby agrees that it
shall:

 

(a) subject to receipt of necessary information from the Investors, prepare and
file with the SEC on or before the date one month after the Closing Date a
registration statement on Form S-3 (the “Registration Statement”) to enable the
resale of the Shares and the Warrant Shares by the Investors and use reasonable
best efforts to respond to comments from the SEC promptly and cause such
Registration Statement to be declared effective as promptly as practicable after
filing and to remain continuously effective until the earlier of (i) the second
anniversary of the Closing, or (ii) such time as all Shares purchased by the
Investors pursuant to this Agreement have been sold thereunder (the
“Registration Period”). For each full calendar month after the Closing that the
Registration Statement is not be declared effective by the SEC starting with
three (3) months after the Closing and ending with twenty-four (24) months after
the Closing, each Investor shall be issued two percent of the number of Shares
originally issued to the Investor (the “Penalty Shares”) within fifteen days.
Thus, for example, if an Investor purchased 100,000 Shares, and the Registration
Statement was not declared effective until four months and five days after the
Closing, then on or before each of the dates (a) four months and fifteen days
after the Closing and (b) five months and fifteen days after the Closing, such
Investor would be issued 2,000 Penalty Shares. All such Penalty Shares shall be
considered as Shares for purposes of this Agreement, except Section 1.

 

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(b) prepare and file with the SEC such amendments and supplements to the
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep the Registration Statement effective until the end of the
Registration Period;

 

(c) notify Investors promptly upon the effectiveness of the Registration
Statement and furnish to the Investors with respect to the shares of Common
Stock registered under the Registration Statement such reasonable number of
copies of the Registration Statement, prospectuses and preliminary prospectuses
in conformity with the requirements of the Securities Act and such other
documents as the Investor may reasonably request, in order to facilitate the
public sale or other disposition of all or any of the Shares or Warrant Shares
by the Investor;

 

(d) file documents required of the Company for normal blue sky clearance in
states specified in writing by the Investor, provided, however, that the Company
shall not be required to qualify to do business or consent to service of process
in any jurisdiction in which it is not now so qualified or has not so consented;

 

(e) use its reasonable best efforts to cause the Shares and Warrant Shares to be
listed on Nasdaq in connection with the filing of the Registration Statement
under Section 4.1(a);

 

(f) bear all expenses in connection with the procedures in paragraph (a) through
(e) of this Section 4.1 and the registration of the Shares and the Warrant
Shares pursuant to the Registration Statement other than fees and expenses, if
any, of counsel or other advisers to the Investors or underwriting discounts,
brokerage fees and commissions incurred by the Investors, if any.

 

(g) provide that all Shares and Warrant Shares covered by the Registration
Statement will be listed on the Nasdaq National Market or other securities
market on which the Company’s Common Stock is then listed or traded.

 

It shall be a condition precedent to the obligations of the Company to take any
action pursuant to this Section 4.1 that the Investor shall furnish to the
Company such information regarding itself, the shares of Common Stock to be sold
by the Investor, and the intended method of disposition of such securities as
shall be required to effect the registration of the Shares and the Warrant
Shares.

 

4.2 Transfer of Shares After Registration; Suspension.

 

(a) Subject to Section 4.4, the Investors agree that they will not offer to
sell, solicit offers to buy, dispose of, loan, pledge or grant any right (each,
a “Disposition”) with respect to the Securities that would constitute a sale
within the meaning of the Securities Act except pursuant to the Registration
Statement referred to in Section 4.1, and that they will promptly notify the
Company of any changes in the information set forth in the Registration
Statement after it is prepared regarding the Investor or its plan of
distribution.

 

(b) In addition to any suspension rights under paragraph (c) below, the Company
may, upon the happening of any event, that, in the good faith judgment of
Company’s board of directors upon the opinion of counsel, renders it advisable
to suspend use of the prospectus for

 

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no more than sixty (60) days in the aggregate in any twelve (12) month period of
time due to pending corporate developments, public filings with the SEC or
similar events, suspend use of the prospectus on written notice to each
Investor, in which case each Investor shall discontinue disposition of Shares or
the Warrant Shares covered by the Registration Statement or prospectus until
copies of a supplemented or amended prospectus are distributed to the Investors
or until the Investors are advised in writing by the Company that the use of the
applicable prospectus may be resumed.

 

(c) Subject to paragraph (d) below, in the event of: (i) any request by the SEC
or any other federal or state governmental authority during the period of
effectiveness of the Registration Statement for amendments or supplements to a
Registration Statement or related prospectus or for additional information, (ii)
the issuance by the SEC or any other federal or state governmental authority of
any stop order suspending the effectiveness of a Registration Statement or the
initiation of any proceedings for that purpose, (iii) the receipt by the Company
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Shares or the Warrant Shares for sale
in any jurisdiction or the initiation of any proceeding for such purpose, (iv)
any event or circumstance which necessitates the making of any changes in the
Registration Statement or prospectus, or any document incorporated or deemed to
be incorporated therein by reference, so that, in the case of the Registration
Statement, it will not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the case of the
prospectus, it will not contain any untrue statement of a material fact or any
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, then the Company shall deliver a certificate in
writing to the Investors (the “Suspension Notice”) to the effect of the
foregoing and, upon receipt of such Suspension Notice, the Investors will
refrain from selling any Shares or Warrant Shares pursuant to the Registration
Statement (a “Suspension”) until the Investors’ receipt of copies of a
supplemented or amended prospectus prepared and filed by the Company, or until
it is advised in writing by the Company that the current prospectus may be used,
and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such prospectus. In the
event of any Suspension, the Company will use its reasonable best efforts to
cause the use of the prospectus so suspended to be resumed as soon as possible
within twenty (20) business days after delivery of a Suspension Notice to the
Investors. In addition to and without limiting any other remedies (including
without limitation at law or equity), available to the Investors, the Investors
shall be entitled to specific performance in the event the Company fails to
comply with the provisions of this Section 4.2(c).

 

(d) Provided that a Suspension is not then in effect, the Investors may sell
Shares or Warrant Shares under the Registration Statement, provided that the
selling Investor arranges for delivery of a current prospectus to the transferee
of such Shares or Warrant Shares.

 

(e) In the event of a sale of Shares or Warrant Shares by an Investor, such
Investor must also deliver to the Company’s transfer agent, with a copy to the
Company, a Certificate of Subsequent Sale substantially in the form attached
hereto as Exhibit B, so that ownership of the Shares or Warrant Shares may be
properly transferred.

 

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(f) For so long as the Company will have a class of securities registered under
Section 12(b) or Section 12(g) of the Exchange Act, the Company covenants that
it will file, on a timely basis, any reports required to be filed by it under
the Exchange Act and the rules and regulations adopted by the SEC thereunder and
keep all such reports and public information current to the extent required by
Rule 144 under the Securities Act for a period of two (2) years after the
Closing.

 

4.3 Indemnification. For the purpose of this Section 4.3 only, (i) the term
“Registration Statement” shall include any final prospectus, exhibit, supplement
or amendment included in or relating to the Registration Statement referred to
in Section 4.1(a); and (ii) the term “untrue statement” shall include any untrue
statement or any omission to state in the Registration Statement a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

 

(a) The Company agrees to indemnify and hold harmless each Investor (and each
person, if any, who controls such Investor within the meaning of section 15 of
the Securities Act) from and against any losses, claims, damages or liabilities
to which such Investor (or such person, if any, who controls such Investor
within the meaning of section 15 of the Securities Act) may become subject
(under the Securities Act or otherwise) insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of, or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, or (ii) any failure by
the Company to fulfill any undertaking included in the Registration Statement,
and the Company will reimburse such Investor (and each person, if any, who
controls such Investor within the meaning of section 15 of the Securities Act)
for any reasonable legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim; provided,
however, that the Company shall not be liable in any such case to the extent
that such loss, claim, damage or liability arises out of, or is based upon, an
untrue statement made in such Registration Statement in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Investor specifically for use in preparation of the Registration Statement
or the failure of such Investor to comply with its covenants and agreements
contained in Section 3 or 4.2 hereof or any statement or omission in any
prospectus that is corrected in any subsequent prospectus that was delivered to
the Investor prior to the pertinent sale or sales by the Investor.

 

(b) Each Investor agrees to indemnify and hold harmless the Company (and each
person, if any, who controls the Company within the meaning of section 15 of the
Securities Act, each officer of the Company who signs the Registration Statement
and each director of the Company) and each other Investor from and against any
losses, claims, damages or liabilities to which the Company (or any such
officer, director or controlling person) or other Investor may become subject
(under the Securities Act or otherwise), insofar as such losses, claims, damages
or liabilities (or actions or proceedings in respect thereof) arise out of, or
are based upon a breach of its covenants and agreements contained in Section 3
or 4.2 hereof or any statement or omission in any prospectus that is corrected
in any subsequent prospectus that was delivered to the Investor prior to the
pertinent sale or sales by the Investor or any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement if
such untrue statement was made in reliance upon and in conformity with
information furnished by or on

 

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behalf of the indemnifying Investor in writing specifically for use in
preparation of the Registration Statement, and the indemnifying Investor will
reimburse the Company (or such officer, director or controlling person) or other
Investor, as the case may be, for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; providing further that, the Investor’s obligations to
indemnify under this subsection (b) shall be limited to the amount received by
the Investor from the sale of the Investor’s Shares hereunder.

 

(c) Promptly after receipt by any indemnified person of a notice of a claim or
the beginning of any action in respect of which indemnity is to be sought
against an indemnifying person pursuant to this Section 4.3, such indemnified
person shall notify the indemnifying person in writing of such claim or of the
commencement of such action, but the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any
indemnified party under this Section 4.3 (except to the extent that such
omission materially and adversely affects the indemnifying party’s ability to
defend such action) or from any liability otherwise than under this Section 4.3.
Subject to the provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall be entitled
to participate therein, and, to the extent that it shall elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, shall be entitled to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its election to
assume the defense thereof, such indemnifying person shall not be liable to such
indemnified person for any legal expenses subsequently incurred by such
indemnified person in connection with the defense thereof. In no event shall any
indemnifying person be liable in respect of any amounts paid in settlement of
any action unless the indemnifying person shall have approved the terms of such
settlement; provided that such consent shall not be unreasonably withheld. No
indemnifying person shall, without the prior written consent of the indemnified
person, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified person is or could have been a party and
indemnification could have been sought hereunder by such indemnified person,
unless such settlement includes an unconditional release of such indemnified
person from all liability on claims that are the subject matter of such
proceeding.

 

(d) If the indemnification provided for in this Section 4.3 is unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above in respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then each indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the Company on the one hand and the Investors on the other in
connection with the statements or omissions or other matters which resulted in
such losses, claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative fault shall be
determined by reference to, among other things, in the case of an untrue
statement, whether the untrue statement relates to information supplied by the
Company on the one hand or an Investor on the other and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement. The Company and the Investors agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata

 

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allocation (even if the Investors were treated as one entity for such purpose)
or by any other method of allocation which does not take into account the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (d),
no Investor shall be required to contribute any amount in excess of the amount
by which the gross amount received by the Investor from the sale of the Shares
to which such loss relates exceeds the amount of any damages which such Investor
has otherwise been required to pay by reason of such untrue statement. No person
guilty of fraudulent misrepresentation (within the meaning of section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Investors’ obligations in
this subsection to contribute are several in proportion to their sales of Shares
to which such loss relates and not joint.

 

4.4 Termination of Conditions and Obligations. The conditions precedent imposed
by Section 4 upon the transferability of the Shares and the shares of Common
Stock underlying the Warrants shall cease and terminate as to any particular
number of the shares of Common Stock when such shares shall have been
effectively registered under the Securities Act and sold or otherwise disposed
of in accordance with the intended method of disposition set forth in the
Registration Statement covering such shares or at such time as an opinion of
counsel or other evidence reasonably satisfactory to the Company shall have been
rendered to the effect that such conditions are not necessary in order to comply
with the Securities Act.

 

5. Conditions of each Investor’s Obligations at Closing. The obligations of each
Investor under subparagraph 1.1 of this Agreement are subject to the fulfillment
on or before the Closing of each of the following conditions, the waiver of
which shall not be effective against any Investor who does not consent in
writing thereto:

 

5.1 Representations and Warranties. The representations and warranties of the
Company contained in Section 2 shall be true and correct on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.

 

5.2 Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with on or before the Closing.

 

5.3 Compliance Certificate. The Chief Executive Officer of the Company shall
have delivered to the Investor at the Closing a certificate certifying that the
conditions specified in Sections 5.1, 5.2 and 5.4 have been fulfilled.

 

5.4 Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing. The Company shall have obtained all necessary

 

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blue sky permits and qualifications, or have the availability of exemptions
therefrom, required by any state for the offer and sale of the Shares and the
Warrants.

 

5.5 Opinion of Counsel. Investors shall have received the opinion of Pillsbury
Winthrop LLP, counsel to the Company, in substantially the form of Exhibit C,
attached hereto.

 

5.6 Minimum Amount Sold. The Company shall have sold at least such number of
Shares hereunder at the Purchase Price to raise three million nine hundred
twenty-five thousand dollars ($3,925,000).

 

6. Conditions of the Company’s Obligations at Closing. The obligations of the
Company to each Investor under this Agreement are subject to the fulfillment (or
waiver) on or before the Closing of each of the following conditions by the
Investor:

 

6.1 Representations and Warranties. The representations and warranties of such
Investor contained in Section 3 shall be true on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the Closing.

 

6.2 Qualifications. All authorizations, approvals or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required in connection with the lawful issuance and sale of the
Securities pursuant to this Agreement shall be duly obtained and effective as of
the Closing.

 

6.3 Minimum Amount Sold. The Company shall have sold at least such number of
Shares hereunder at the Purchase Price to raise three million nine hundred
twenty-five thousand dollars ($3,925,000).

 

7. Miscellaneous.

 

7.1 Entire Agreement. This Agreement and the documents referred to herein and
all Schedules and Exhibits thereto constitute the entire agreement among the
parties and no party shall be liable or bound to any other party in any manner
by any warranties, representations or covenants except as specifically set forth
herein or therein.

 

7.2 Survival . The parties agree that, regardless of any investigation made by
the parties, the warranties, representations and covenants of the Company and
the Investors contained in or made pursuant to this Agreement (including,
without limitation, the provisions of Section 4) shall survive the execution and
delivery of this Agreement and the Closing.

 

7.3 Successors and Assigns. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties (including permitted
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

 

-18-

--------------------------------------------------------------------------------

 

7.4 Governing Law. This Agreement shall be governed by and construed under the
laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.

 

7.5 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

 

7.6 Titles and Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.

 

7.7 Notices. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed given and effective
when delivered personally, by telex or telecopier, or by overnight express at
the following addresses or to such other address as such party may designate by
written notice to the other party in accordance with the provisions of this
Section:

 

If to the Company:

  

California Micro Devices Corporation

430 N. McCarthy Blvd

Milpitas, CA 95035-5112

Attention: Robert V. Dickinson

Fax: (408) 934-2990

With a copy to:

  

Pillsbury Winthrop LLP

2550 Hanover Street

Palo Alto, CA 94304

Attention: Stephen M. Wurzburg

Fax: (650) 233-4545

If to an Investor:

  

See the signature pages hereto

 

7.8 Expenses. Each party will bear its own expenses related to this Agreement
and the transactions contemplated therein.

 

7.9 Attorneys’ Fees. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys’ fees, costs and disbursements in addition to any other
relief to which such party may be entitled.

 

7.10 Amendments and Waivers. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of more than a majority of the
Shares sold hereunder and the shares, if any, sold under similar agreements
proximate in time to the Closing, provided that this Agreement and all
agreements under which such other shares were sold under shall be amended
identically or the observance of an identical term waived identically, as the
case may be.

 

7.11 Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and

 

-19-

--------------------------------------------------------------------------------

the balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

 

7.12 Rights of the Investor. Each Investor shall have the absolute right to
exercise or refrain from exercising any right or rights that such holder may
have by reason of this Agreement or any Shares or Warrants, including without
limitation the right to consent to the waiver of any obligation of the Company
under this Agreement and to enter into an agreement with the Company for the
purpose of modifying this Agreement or any agreement effecting any such
modification, and such Investor shall not incur any liability to any other
Investor with respect to exercising or refraining from exercising any such right
or rights.

 

7.13 Conflict of Interest Waiver. Each party to this Agreement acknowledges that
Pillsbury Winthrop LLP (“PW”), counsel for the Company, may have in the past and
may continue in the future to perform legal services for certain of the
Investors in matters unrelated to the transactions described in this Agreement,
including the representation of such Investors in formation of other companies,
venture capital financings, and other matters. Accordingly, each party to this
Agreement hereby (a) acknowledges that they have had an opportunity to ask for
information relevant to this disclosure; (b) acknowledges that PW represented
the Company in the transaction contemplated by this Agreement and has not
represented any individual Investor or any individual stockholder or employee of
the Company in connection with such transaction, and (c) gives its informed
consent to PW’s representation of certain of the Investors in such unrelated
matters and to PW’s representation of the Company in connection with this
Agreement and the transactions contemplated hereby and in other matters.

 

7.14 Press Release/Form 8-K. The Company agrees to issue a press release prior
to the opening of the stock market on the first business day after the Closing
and to file a Form 8-K with the SEC prior to the closing of the stock market on
the first business day after the Closing, each describing the critical features
of the sale of the Shares and Warrants under this Agreement.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

-20-

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

CALIFORNIA MICRO DEVICES CORPORATION

By

 

 

--------------------------------------------------------------------------------

   

Robert V. Dickinson

President and Chief Executive Officer

 

 

INVESTOR SIGNATURE PAGES TO FOLLOW

 

-21-

--------------------------------------------------------------------------------

 

SIGNATURE PAGE TO

 

STOCK AND WARRANT PURCHASE AGREEMENT

 

DATED AS OF NOVEMBER 22, 2002

 

BY AND AMONG

 

CALIFORNIA MICRO DEVICES CORPORATION

 

AND EACH INVESTOR NAMED THEREIN

 

The undersigned hereby executes and delivers the California Micro Devices
Corporation Stock and Warrant Purchase Agreement (the “Agreement”) to which this
Signature Page is attached effective as of the date of the Agreement, which
Agreement and Signature Page, together with all counterparts of such signature
pages of the other Investors named in such Agreement, shall constitute one and
the same document in accordance with the terms of such Agreement.

 

Number of Shares:________________________

 

_________________________________________________

Print Name of Investor

 

By ______________________________________________

Signature

 

Address: _________________________________________

 

                _________________________________________

 

                _________________________________________

 

Taxpayer Identification Number: _______________________

 

Investor is an “accredited investor” by reason of (check one):

 

Investor is an entity with gross assets in excess of $5,000,000.

  

_________

Investor is an individual with a net worth in excess of $1,000,000

  

_________

Investor is an individual and an Officer or Director of the Company

  

_________

 

-22-

--------------------------------------------------------------------------------

 

SCHEDULE A

 

INVESTORS

 

Investor Name

--------------------------------------------------------------------------------

  

Number of Shares

Purchased from Company

--------------------------------------------------------------------------------

  

Investment

In Dollars

--------------------------------------------------------------------------------

T. Rowe Price (Oceanor & Co.)

  

  150,000

  

$

510,000.00

Columbus Capital Partners, LP

  

  300,000

  

$

1,020,000.00

Columbus Capital Offshore Fund Ltd

  

    70,000

  

$

238,000.00

Lagunitas Partners LP

  

  294,117

  

$

999,997.80

Gruber & McBaine International

  

    73,529

  

$

249,998.60

Jon D. Gruber & Linda W. Gruber

  

    73,529

  

$

249,998.60

The Tail Wind Fund Ltd

  

  117,647

  

$

399,999.80

Proximity Partners, L.P.

  

    30,882

  

$

104,998.80

Proximity Fund, L.P.

  

    72,058

  

$

244,997.20

Capital Ventures International (Heights Capital)

  

    73,529

  

$

249,998.60

Chad W. Keck

  

    10,000

  

$

34,000.00

Edward C. Ross

  

      5,000

  

$

17,000.00

Dan McCranie

  

      7,500

  

$

25,500.00

Don Waite

  

      7,500

  

$

25,500.00

Wade Meyercord

  

      5,000

  

$

17,000.00

Stephen Wurzburg

  

    12,000

  

$

40,800.00

Jeffrey Li

  

      2,000

  

$

6,800.00

Anne Young and Kevin Low

  

      4,000

  

$

13,600.00

TOTAL

  

1,308,291

  

$

4,448,189.40

 

Additionally, the following investors have executed an identical Stock and
Warrant Purchase Agreement, also dated November 22, 2002, with the only
difference that the Closing under such Agreement is anticipated to occur on
November 26, 2002:

 

Investor Name

--------------------------------------------------------------------------------

  

Number of Shares

Purchased from

Company

--------------------------------------------------------------------------------

  

Investment In

Dollars

--------------------------------------------------------------------------------

Cranshire Capital, L.P.

  

100,000

  

$

340,000.00

Vertical Ventures Investments, LLC

  

110,294

  

$

374,999.60

TOTAL

  

210,294

  

$

714,999.60

TOTAL UNDER BOTH AGREEMENTS

  

1,518,585

  

$

5,163,189.00

 

SA-1

--------------------------------------------------------------------------------

SCHEDULE A

 

INVESTORS

 

Investor Name

--------------------------------------------------------------------------------

    

Number of Shares Purchased from Company

--------------------------------------------------------------------------------

  

Investment In

Dollars

--------------------------------------------------------------------------------

Cranshire Capital, L.P.

    

100,000

  

$

340,000.00

Vertical Ventures Investments, LLC

    

110,294

  

$

374,999.60

TOTAL

    

210,294

  

$

714,999.60

 

Additionally, the following investors have executed an identical Stock and
Warrant Purchase Agreement, also dated November 22, 2002, with the only
difference that the Closing under such Agreement occurred on November 25, 2002

 

Investor Name

--------------------------------------------------------------------------------

  

Number of Shares Purchased from Company

--------------------------------------------------------------------------------

  

Investment In

Dollars

--------------------------------------------------------------------------------

T. Rowe Price (Oceanor & Co.)

  

150,000

  

$

510,000.00

Columbus Capital Partners, LP

  

300,000

  

$

1,020,000.00

Columbus Capital Offshore Fund Ltd

  

70,000

  

$

238,000.00

Lagunitas Partners LP

  

294,117

  

$

999,997.80

Gruber & McBaine International

  

73,529

  

$

249,998.60

Jon D. Gruber & Linda W. Gruber

  

73,529

  

$

249,998.60

The Tail Wind Fund Ltd

  

117,647

  

$

399,999.80

Proximity Partners, L.P.

  

30,882

  

$

104,998.80

Proximity Fund, L.P.

  

72,058

  

$

244,997.20

Capital Ventures International (Heights Capital)

  

73,529

  

$

249,998.60

Chad W. Keck

  

10,000

  

$

34,000.00

Edward C. Ross

  

5,000

  

$

17,000.00

Dan McCranie

  

7,500

  

$

25,500.00

Don Waite

  

7,500

  

$

25,500.00

Wade Meyercord

  

5,000

  

$

17,000.00

Stephen Wurzburg

  

12,000

  

$

40,800.00

Jeffrey Li

  

2,000

  

$

6,800.00

Anne Young and Kevin Low

  

4,000

  

$

13,600.00

TOTAL

  

1,308,291

  

$

4,448,189.40

TOTAL UNDER BOTH AGREEMENTS

  

1,518,585

  

$

5,163,189.00

 

SA-1

--------------------------------------------------------------------------------

EXHIBIT A

 

FORM OF WARRANT

 

A-1

--------------------------------------------------------------------------------

THIS WARRANT AND THE SHARES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.

 

No. W-___

 

WARRANT TO PURCHASE COMMON STOCK

OF

CALIFORNIA MICRO DEVICES CORPORATION

 

This certifies that, for value received as provided under a Stock and Warrant
Purchase Agreement dated November 22, 2002 (the “Purchase Agreement”),
______________________ (“Holder”) is entitled, subject to the terms and
conditions set forth below, to purchase from California Micro Devices
Corporation, a California corporation (the “Company”), in whole or in part, such
number of fully paid and nonassessable shares (the “Warrant Shares”) of no par
value common stock of the Company (“Common Stock”) equal to twenty-five percent
(25%) of the number of shares of Common Stock purchased by Holder pursuant to
the Purchase Agreement (the “Warrant Shares”) at the Exercise Price (as defined
in Section 2). The number, character and Exercise Price of such shares of Common
Stock are subject to adjustment as provided below and all references to “Warrant
Shares” and “Exercise Price” herein shall be deemed to include any such
adjustment or series of adjustments. The term “Warrant” as used herein shall
mean this Warrant, and any warrants delivered in substitution or exchange
therefor as provided herein.

 

1. Term of Warrant. Subject to the terms and conditions set forth herein, this
Warrant shall be exercisable, in whole or in part, during the term commencing on
the date hereof and ending at 5:00 p.m., Pacific standard time, on the third
anniversary of issue, and shall be void thereafter (the “Exercise Period”). This
Warrant shall expire prior to the end of Exercise Period if and when it has been
exercised in full.

 

2. Exercise Price. The Exercise Price shall be one hundred fifteen percent
(115%) of the closing price of the Company’s common stock on the Nasdaq National
Market on the trading day two days prior to the Closing under the Purchase
Agreement. As so determined, the Exercise Price is $4.36.

 

3. Exercise of Warrant. This Warrant may be exercised by the Holder only by the
surrender of this Warrant to the Company, with the Notice of Exercise annexed
hereto duly completed and executed on behalf of the Holder, at the office of the
Company (or such other office or agency of the Company as it may designate by
notice in writing to the Holder appearing

 

-1-

--------------------------------------------------------------------------------

on the books of the Company) during the Exercise Period, and the delivery of
payment to the Company, for the account of the Company, by cash, wire transfer
of immediately available funds to a bank account specified by the Company, or by
certified or bank cashier's check, of the Exercise Price for the number of
Warrant Shares specified in the Exercise Notice in lawful money of the United
States of America.

 

Notwithstanding any provisions herein to the contrary, if, Holder desires to
exercise this Warrant on or after the date three (3) months following the
Closing under the Purchase Agreement, and on such date of desired exercise (1) a
registration statement covering the Warrant Shares is not then effective with
the SEC and (2) the fair market value of one share of the Common Stock (as
determined below) is greater than the Exercise Price, then in lieu of exercising
this Warrant for cash, the Holder on such date may elect to receive shares of
Common Stock equal to the value (as determined below) of this Warrant (or the
portion thereof being exercised) by surrender of this Warrant at the principal
office of the Company together with the properly endorsed Notice of Exercise and
notice of such election in which event the Company shall issue to the Holder a
number of shares of Common Stock computed using the following formula:

X = Y (A-B)

         A

Where  X  =  the number of shares of Common Stock to be issued to the Holder

 

  Y =   the number of shares of Common Stock purchasable under the Warrant or,
if only a portion of the Warrant is being exercised, the portion of the Warrant
being exercised (at the date of such calculation)

 

  A =   the fair market value of one share of Common Stock (at the date of such
calculation)

 

  B =   the per share Exercise Price (as adjusted to the date of such
calculation)

 

For purposes of the above calculation, fair market value of one share of Common
Stock shall be determined by the Company's Board of Directors in good faith;
provided, however, that in the event of that the Company’s Common Stock is
listed or admitted to trading on a national or regional stock exchange or is
included in any quotation service such as the Nasdaq National Market, Nasdaq
SmallCap Market or similar quotation service maintained by the National
Quotation Bureau or any successor thereto, the fair market value shall be equal
to the average of the closing price of the Company’s Common Stock in the
principal market where such Common Stock is traded on the five trading days
immediately preceding the date on which the Warrant is exercised.

 

-2-

--------------------------------------------------------------------------------

The Company agrees that such Warrant Shares shall be deemed to be issued to the
Holder as the record holder of such Warrant Shares as of the close of business
on the date on which this Warrant shall have been surrendered and payment made
for the Warrant Shares as aforesaid. A stock certificate or certificates for the
Warrant Shares specified in the Exercise Form shall be delivered to the Holder
as promptly as practicable, and in any event within 10 days, thereafter. If this
Warrant shall have been exercised only in part, the Company shall, at the time
of delivery of the stock certificate or certificates, deliver to the Holder a
new Warrant evidencing the rights to purchase the remaining Warrant Shares,
which new Warrant shall in all other respects be identical with this Warrant. No
adjustments shall be made on Warrant Shares issuable on the exercise of this
Warrant for any cash dividends paid or payable to holders of record of Common
Stock prior to the date as of which the Holder shall be deemed to be the record
holder of such Warrant Shares. The Company shall pay all expenses, taxes, and
other charges payable in connection with the preparation, execution, and
delivery of stock certificates pursuant to this Section 3.

 

4. No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. In lieu of
any fractional share to which the Holder would otherwise be entitled, the
Company shall make a cash payment equal to the Exercise Price multiplied by such
fraction.

 

5. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of loss, theft or destruction, on delivery of an indemnity agreement
reasonably satisfactory in form and substance to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense shall execute and deliver, in lieu of this Warrant, a new warrant of
like tenor and amount.

 

6. Rights of Shareholder. Subject to Sections 9 and 11 of this Warrant, the
Holder shall not be entitled to vote or receive dividends or be deemed the
holder of Common Stock or any other securities of the Company that may at any
time be issuable on the exercise hereof for any purpose, nor shall anything
contained herein be construed to confer upon the Holder, as such, any of the
rights of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, or change of stock to no par value, consolidation, merger, conveyance of
assets, or otherwise) or to receive notice of meetings, or to receive dividends
or subscription rights or otherwise until the Warrant shall have been exercised
as provided herein.

 

7. Transfer of Warrant.

 

A. Warrant Register. The Company will maintain a register (the "Warrant
Register") containing the names and addresses of the Holder or Holders. Any
Holder of this Warrant or any portion thereof may change his address as shown on
the Warrant Register by written notice to the

 

-3-

--------------------------------------------------------------------------------

Company requesting such change. Any notice or written communication required or
permitted to be given to the Holder may be delivered or given by mail to such
Holder as shown on the Warrant Register and at the address shown on the Warrant
Register. Until this Warrant is transferred on the Warrant Register of the
Company, the Company may treat the Holder as shown on the Warrant Register as
the absolute owner of this Warrant for all purposes, notwithstanding any notice
to the contrary.

 

B. Warrant Agent. The Company may, by written notice to the Holder, appoint an
agent for the purpose of maintaining the Warrant Register referred to in Section
7(A) above, issuing the Warrant Shares or other securities then issuable upon
the exercise of this Warrant, exchanging this Warrant, replacing this Warrant,
or any or all of the foregoing. Thereafter, any such registration, issuance,
exchange, or replacement, as the case may be, shall be made at the office of
such agent.

 

C. Transferability and Nonnegotiability of Warrant. This Warrant may be
transferred to “affiliates” of the Holder, as defined in Rule 405, as
promulgated by the Securities and Exchange Commission (the “SEC”) and, with the
prior written consent of the Company, to other persons, provided that such
transferee agrees to be bound by the other restrictions on transfer applicable
to the Warrant Shares. Notwithstanding the foregoing, this Warrant may not be
transferred or assigned in whole or in part without compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters and
legal opinions reasonably satisfactory to the Company, if such are requested by
the Company). However, no investment representation letter or opinion of counsel
shall be required for any transfer of this Warrant (or any portion thereof) or
any shares of Common Stock issued upon exercise hereof in compliance with Rule
144(k) and no opinion of counsel shall be required for any transfer of this
Warrant (or any portion thereof) in compliance with Rule 144A; provided that in
each of the foregoing cases the transferee agrees in writing to be subject to
the terms of this Section 7(C). Subject to the provisions of this Warrant with
respect to compliance with the Securities Act of 1933, as amended (the "Act"),
title to this Warrant may be transferred by endorsement (by the Holder executing
the Assign­ment Form annexed hereto) and delivery in the same manner as a
negotiable instrument transferable by endorsement and delivery.

 

D. Exchange of Warrant Upon a Transfer. On surrender of this Warrant for
transfer, properly endorsed on the Assignment Form and subject to the provisions
of this Warrant with respect to compliance with the Act and with the limitations
on assign­ments and transfers and contained in this Section 7, the Company at
its expense shall issue to or on the order of the Holder a new warrant or
warrants of like tenor, in the name of the Holder or as the Holder (on payment
by the Holder of any applicable transfer taxes) may direct, for the number of
shares issuable upon exercise hereof.

 

E. Compliance with Securities Laws.

 

i. The Holder of this Warrant, by acceptance hereof, represents that it is an
“accredited investor” within the meaning of Rule 501 of Regulation D of the
Securities Act of 1933, as amended, as presently in effect.

 

-4-

--------------------------------------------------------------------------------

ii. The Holder acknowledges that this Warrant is being, and the Warrant Shares
would be, acquired solely for the Holder's own account and not as a nominee for
any other party, and for investment, and that the Holder will not offer, sell or
otherwise dispose of this Warrant or any Warrant Shares except under
circumstances that will not result in a violation of the Act or any applicable
state securities laws. Upon exercise of this Warrant, the Holder shall, if
requested by the Company, confirm in writing, in a form satisfactory to the
Company, that the Warrant Shares are being acquired solely for the Holder's own
account and not as a nominee for any other party, for investment, and not with a
view toward distribution or resale.

 

iii. This Warrant and Warrant Shares shall be stamped or imprinted with a legend
in substantially the following form (in addition to any legend required by state
securities laws):

 

THIS WARRANT AND THE SHARES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM UNDER SAID ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE
SECURITIES AND RESTRICTING THEIR TRANSFER OR SALE MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD HEREOF TO THE SECRETARY OF THE
COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.

 

The Company agrees to remove promptly, upon the request of the holder of this
Warrant or the Warrant Shares, the legend set forth in Section 7(E)(iii) above
from the documents/certificates for such securities upon full compliance with
this Agreement and either Rule 144(k) or after a sale in the public market in
compliance with Rule 144.

 

8. Reservation of Stock. The Company covenants that during the term this Warrant
is exercisable, the Company will reserve from its authorized and unissued Common
Stock a sufficient number of shares to provide for the issuance of the Warrant
Shares and, from time to time, will take all steps necessary to amend its
Articles of Incorporation to provide sufficient reserves of shares of Common
Stock for the issuance of the Warrant Shares. The Company further covenants that
all Warrant Shares, upon exercise of this Warrant and payment of the Exercise
Price, all as set forth herein, will be free from all taxes, liens and charges
in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously or otherwise specified herein).

 

9. Notices.

 

A. In case:

 

i. the Company shall take a record of the holders of its Common Stock for

 

-5-

--------------------------------------------------------------------------------

the purpose of entitling them to receive any dividend or other distribution, or
any right to subscribe for or purchase any shares of stock of any class or any
other securities, or to receive any other right;

 

ii. of any capital reorganization of the Company, any reclassification of the
capital stock of the Company, any consolidation or merger of the Company with or
into another corporation, or any conveyance of all or substantially all of the
assets of the Company to another corporation; or

 

iii. of any voluntary dissolution, liquidation or winding-up of the Company;

 

then, and in each such case, the Company will mail or cause to be mailed to the
Holder or Holders a notice specifying, as the case may be, (A) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(B) the date on which such reorganization, reclassifi­cation, consolidation,
merger, conveyance, dissolution, liquida­tion, or winding-up is to take place,
and the time, if any is to be fixed, as of which the holders of record of Common
Stock shall be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reorganization, reclassification,
consolidation, merger, conveyance, dissolu­tion, liquidation or winding-up. Such
notice shall be mailed no later than the time similar notice is mailed to the
holders of Company Common Stock.

 

B. All such notices, advices and communications as required by the terms of this
Warrant shall be made and be deemed to have been received (i) in the case of
personal delivery, on the date of such delivery, (ii) in the case of next day
courier service such as Federal Express, one business day after it is delivered
to the courier service for US addresses and two business days for foreign
addresses, and (iii) in the case of mailing by certified mail, on the third
business day following the date of such mailing if sent to a U.S. address and on
the tenth (10th) business day following the date of such mailing if sent to an
address outside the U.S.

 

10. Amendments. This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the Company
or the Holder of the Warrant against which enforcement of such change, waiver,
discharge or termination is sought. An amendment of rights, preferences, or
privileges of the Common Stock, including a change in the par value of the
Common Stock; an event described in Section 9A or 11A of this Warrant; or any
other like action shall not be treated as an amendment of this Warrant.

 

11. Adjustments. The Exercise Price and the number of shares purchasable
hereunder are subject to adjustment from time to time as follows:

 

A. Reclassification, etc. If the Company, at any time while this Warrant, or any
portion thereof, remains outstanding and unexpired, by reorganization or
reclassification of securities or otherwise, shall change any of the securities
as to which purchase rights under this Warrant exist into the same or a
different number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities that were

 

-6-

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subject to the purchase rights under this Warrant immediately prior to such
reorganization or reclassification or other change and the Exercise Price
therefor shall be appropriately adjusted, all subject to further adjustment as
provided in this Section 11.

 

B. Split, Subdivision or Combination of Shares. If the Company at any time while
this Warrant, or any portion thereof, remains outstanding and unexpired shall
split, subdivide or combine the securities as to which purchase rights under
this Warrant exist, into a different number of securities of the same class,
then (i) in the case of a split or subdivision, the Exercise Price for such
securities shall be proportionately decreased and the securities issuable upon
exercise of this Warrant shall be proportionately increased, and (ii) in the
case of a combination, the Exercise Price for such securities shall be
proportionately increased and the securities issuable upon exercise of this
Warrant shall be proportionately decreased.

 

C. Adjustments for Distributions in Stock or Other Securities or Property. If
while this Warrant, or any portion hereof, remains outstanding and unexpired the
holders of the securities as to which purchase rights under this Warrant exist
at the time shall have received, or, on or after the record date fixed for the
determination of eligible Shareholders, shall have become entitled to receive,
without payment therefor, other or additional stock or other securities or
property (other than cash) of the Company by way of dividend or otherwise, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the number of shares of the security receivable upon exercise of this
Warrant, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of the Company that such holder would hold on the date of such
exercise had it been the holder of record of the security receivable upon
exercise of this Warrant on the date hereof and had thereafter, during the
period from the date hereof to and including the date of such exercise, retained
such shares and/or all other additional stock available by it as aforesaid
during such period, giving effect to all adjustments called for during such
period by the provisions of this Section 11.

 

D. Mergers, Consolidation, or Asset Sale. If any merger or consolidation of the
Company with or into another corporation, or the sale of substantially all of
its assets to another corporation, shall be effected in such a way that holders
of shares of Common Stock shall be entitled to receive common stock, other
securities, or assets with respect to or in exchange for shares of Common Stock,
then, as a condition to such merger, consolidation, or asset sale, adequate
provision shall be made whereby the Holder of Warrants shall thereafter have the
right to receive such shares of common stock, other securities, or assets upon
the exercise of the Warrant as though the Holder had exercised the Warrant in
full immediately prior to such merger, consolidation, or asset sale and received
Shares which were thereafter effected by the merger, consolidation, or asset
sale and the resulting shares of common stock, other securities, or assets were
thereafter held and effected by any subsequent events. Notwithstanding the
foregoing, if only cash, assets, and/or promissory notes not convertible into
equity are issued in such merger, consolidation, or asset sale, then the Company
may cause the Warrants to terminate upon the consummation of such merger,
consolidation, or asset sale, provided that the Company has provided the Holder
with at least fifteen (15) business days notice of such merger, consolidation,
or asset sale.

 

-7-

--------------------------------------------------------------------------------

 

E. Certificate as to Adjustments. Upon the occurrence of each adjustment or
readjustment pursuant to this Section 11, the Company at its expense shall
promptly compute such adjustment or readjustment in accordance with the terms
hereof and furnish to each Holder of this Warrant a certificate setting forth
such adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Company shall, upon the written
request, at any time, of any such Holder, furnish or cause to be furnished to
such Holder a like certificate setting forth: (i) such adjustments and
readjustments; (ii) the Exercise Price at the time in effect; and (iii) the
number of shares and the amount, if any, of other property that at the time
would be received upon the exercise of the Warrant.

 

F. No Impairment. The Company will not, by any voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist
in the carrying out of all the provisions of this Warrant and in the taking of
all such action as may be necessary or appropriate in order to protect the
rights of the Holder against impairment. An event described above in this
subsections A, B, C, and D of this Section 11 for which appropriate adjustment
is made or an event described in Section 9A of which the Holder is given timely
notice pursuant to Section 9, shall not be deemed under any circumstance to be
an impairment of this Warrant.

 

12. Miscellaneous.

 

A. This Warrant shall be governed by the internal laws of the State of
California as applied to agreements entered into in the State of California by
and among residents of the State of California, without reference to the
conflicts of laws provisions therein.

 

B. In the event of a dispute with regard to the interpretation of this Warrant,
the prevailing party may collect the cost of attorney's fees, litigation
expenses or such other expenses as may be incurred in the enforcement of the
prevailing party's rights hereunder.

 

C. This Warrant shall be exercisable as provided for herein, except that in the
event that the expiration date of this Warrant shall fall on a Saturday, Sunday
and or United States federally recognized Holiday, the expiration date for this
Warrant shall be extended to 5:00 p.m. Pacific standard time on the business day
following such Saturday, Sunday or recognized Holiday.

 

D. This Warrant and any document or agreements executed by the parties pursuant
to this Warrant constitute the full and complete understanding of the parties
hereto with respect to the subject matter hereof and supersede all previous
agreements or understandings, written or oral, between the parties with respect
thereto.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

-8-

--------------------------------------------------------------------------------

In witness whereof, California Micro Devices Corporation has caused this Warrant
to be executed by its officer thereunto duly authorized.

 

Dated: November __, 2002

 

Company:

 

California Micro Devices Corporation

By

 

 

--------------------------------------------------------------------------------

Robert V. Dickinson, President

 

-9-

--------------------------------------------------------------------------------

 

NOTICE OF EXERCISE

 

To: California Micro Devices Corporation

 

The undersigned hereby elects to purchase __________ shares of Common Stock of
California Micro Devices Corporation pursuant to the terms of the attached
Warrant, and tenders herewith payment of the purchase price for such shares in
full.

 

In exercising this Warrant, the undersigned hereby confirms and acknowledges
that the shares of Common Stock to be issued upon conversion thereof are being
acquired solely for the account of the undersigned and not as a nominee for any
other party, or for investment, and that the undersigned will not offer, sell or
otherwise dispose of any such shares of Common Stock except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any applicable state securities laws.

 

Please issue a certificate or certificates representing said shares of Common
Stock in the name of the undersigned or in such other name as is specified
below:

 

___________________________________________

(Name)

 

___________________________________________

(Name)

 

Please issue a new Warrant for the unexercised portion of the attached Warrant
in the name of the undersigned or in such other name as is specified below:

 

___________________________________________

(Name)

 

__________________

 

________________________________________

(Date)

 

(Signature)

 

-10-

--------------------------------------------------------------------------------

ASSIGNMENT FORM

 

FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby
sells, assigns and transfers unto the Assignee named below all of the rights of
the under­signed under the within Warrant, with respect to the number of shares
of Common Stock set forth below:

 

Name of Assignee

--------------------------------------------------------------------------------

  

Address

--------------------------------------------------------------------------------

  

Number of Shares

--------------------------------------------------------------------------------

 

and does hereby irrevocably constitute and appoint Attorney
______________________ to make such transfer on the books of California Micro
Devices Corporation, maintained for the purpose, with full power of substitution
in the premises.

 

If the Assignee is an “affiliate”, as defined in Rule 405, promulgated by the
SEC, please explain the basis for such determination:
________________________________________________________________________________________.

 

The undersigned also represents that, by assignment hereof, the Assignee
acknowledges that this Warrant and the shares of stock to be issued upon
exercise hereof are being acquired for investment and that the Assignee will not
offer, sell or otherwise dispose of this Warrant or any shares of stock to be
issued upon exercise hereof except under circumstances which will not result in
a violation of the Securities Act of 1933, as amended, or any applicable state
securities laws. Further, the Assignee has acknowledged that upon exercise of
this Warrant, the Assignee shall, if requested by the Company, confirm in
writing, in a form satisfactory to the Company, that the shares of stock so
purchased are being acquired for investment and not with a view toward
distribution or resale.

 

Dated: _______________.

 

_____________________________________

                            Signature of Holder

 

-11-

--------------------------------------------------------------------------------

 

EXHIBIT B

 

CALIFORNIA MICRO DEVICES CORPORATION

CERTIFICATE OF SUBSEQUENT SALE

 

  RE:   Sale of Shares of Common Stock of California Micro Devices Corporation
(the “Company”) pursuant to the Company’s Prospectus dated             , 2002
(the “Prospectus”)

 

Dear Sir/Madam:

 

The undersigned hereby certifies, in connection with the sale of shares of
Common Stock of the Company included in the table of Selling Stockholders in the
Prospectus, that the undersigned has sold the Shares pursuant to the Prospectus
and in a manner described under the caption “Plan of Distribution” in the
Prospectus and that such sale complies with all applicable securities laws,
including, without limitation, the Prospectus delivery requirements of the
Securities Act of 1933, as amended.

 

Selling Stockholder (the beneficial owner):
                                                                                
                                                    

 

Record Holder (e.g., if held in name of nominee):
                                                                                
                                      

 

Restricted Stock Certificate No.(s):                                       
                                        
                                                                    

 

Number of Shares Sold:                                       
                                        
                                        
                                                 

 

Date of Sale:                                
                                        
                                        
                                                                             

 

In the event that you receive a stock certificate(s) representing more shares of
Common Stock than have been sold by the undersigned, then you should return to
the undersigned a newly issued certificate for such excess shares in the name of
the Record Holder and BEARING A RESTRICTIVE LEGEND. Further, you should place a
stop transfer on your records with regard to such certificate.

 

Very truly yours,

By

 

 

--------------------------------------------------------------------------------

Print Name

 

 

--------------------------------------------------------------------------------

Title

 

 

--------------------------------------------------------------------------------

 

 

Dated:_____________________

 

cc:   Pillsbury Winthrop LLP

2550 Hanover Street

Palo Alto, California 94304

Attn: Stephen M. Wurzburg

 

 

B-1

--------------------------------------------------------------------------------

 

EXHIBIT C

 

OPINIONS OF COMPANY COUNSEL

 

 

C-1

--------------------------------------------------------------------------------

2550 HANOVER STREET PALO ALTO,
CA    94304-1115    650.233.4500    F:650.233.4545

 

November 25, 2002

 

To the Investors Named

on Schedule A to the

Stock and Warrant Purchase Agreement

Referred to Below:

 

  Re:   California Micro Devices Stock and Warrant Purchase Agreement

 

Ladies and Gentlemen:

 

We have acted as counsel for California Micro Devices Corporation, a California
corporation (the “Company”), in connection with the Stock and Warrant Purchase
Agreement dated as of November 22, 2002 (the “Agreement”), by and between the
Company and each of you. This letter is provided to you in satisfaction of the
requirements set forth in Section 5.5 of the Agreement. The Agreement provides,
among other things, for the sale and purchase of shares (the “Shares”) of the
Company’s no par value Common Stock (the “Common Stock”) and warrants (the
“Warrants”) to purchase shares of Common Stock (the “Warrant Shares”). Terms not
otherwise defined herein have the meanings given them in the Agreement.

 

In connection with the foregoing, we have examined the Agreement and its
exhibits, including the form of Warrant, the Private Placement Memorandum dated
October 14, 2002, records of proceedings of the directors and shareholders of
the Company, the Amended and Restated Articles of Incorporation, the Bylaws of
the Company, certificates of officers of the Company and public officials, and
such other documentation as we have deemed necessary or advisable in order to
render the opinions expressed herein.

 

Based upon the foregoing and subject to the assumptions, qualifications,
limitations and exceptions set forth below, it is our opinion that:

 

1. The Company has been duly incorporated and is a validly existing corporation
in good standing under the laws of the State of California and has the requisite
corporate power to own its property and assets and to conduct its business as it
is currently being conducted.

--------------------------------------------------------------------------------

 

To the Investors Named on Schedule A

of the Stock and Warrant Purchase Agreement

November 25, 2002

Page 2

 

2. The Company has all requisite corporate power and authority to execute and
deliver the Agreement and to perform its obligations under the terms of such
Agreement. The Agreement has been duly and validly authorized, executed and
delivered by the Company and constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its respective
terms, except insofar as indemnification and contribution provisions contained
therein may be limited by applicable law or the application of principles of
public policy.

 

3. The execution and delivery by the Company of the Agreement and the
performance by the Company of its obligations thereunder and the issuance of the
Shares and Warrants pursuant to the Agreement do not violate the Company’s
Amended and Restated Articles of Incorporation or Bylaws, and do not (i) violate
or contravene any governmental statute, rule or regulation applicable to the
Company that in our experience is generally applicable to transactions of the
type contemplated by the Agreement (without our having made any investigation
concerning the applicability of any other statue, rule or regulation) or (ii)
violate or contravene any order, writ, judgment, injunction, decree,
determination or award known to us that has been entered against the Company.

 

4. We are not aware of any action, suit, proceeding or investigation pending
against the Company before any court or administrative agency, or that the
Company has received any written threat thereof, that questions the validity of
the Agreement.

 

5. No approval, authorization or other action by any federal or state
governmental authority or filing (other than filings solely for information
purposes or to obtain action that is not the subject of governmental discretion)
with any such authority that has not been obtained or accomplished is required
in connection with the execution, delivery and performance by the Company of the
Agreement.

 

6. The Shares and Warrants have been duly authorized and, the Shares and Warrant
Shares, upon issuance and delivery against payment therefor in accordance with
the terms of the Agreement, will be validly issued, fully paid and
nonassessable.

 

7. Based in part upon your representations in Section 3 of the Agreement, the
offer and sale of the Shares and Warrants pursuant to the terms of the Agreement
are exempt from the registration requirements of Section 5 of the Securities Act
of 1933, as amended, and the offer and sale of the Shares, Warrants, and Warrant
Shares pursuant to

--------------------------------------------------------------------------------

To the Investors Named on Schedule A

of the Stock and Warrant Purchase Agreement

November 25, 2002

Page 3

 

the terms of the Agreement are exempt from the qualification requirements of the
California Corporate Securities Law of 1968, as amended.

 

The foregoing opinion is subject to such matters as are set forth in the
Agreement and the following assumptions, qualifications, limitations and
exceptions:

 

(a) We have assumed the genuineness of all signatures, the authenticity and
completeness of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as photostatic or telecopied
originals, the legal capacity of all natural persons, and as to documents
executed by entities other than the Company, that each such entity has complied
with any applicable requirement to file tax returns and pay taxes under
California Franchise Tax law and had the power to enter into and perform its
obligations under such documents, and that such documents have been duly
authorized, executed and delivered by, and are binding upon and enforceable
against such entities. We have also assumed that the representations and
warranties made by the Company in the Agreement are true and correct as to
matters of fact and that the representations and warranties made by each of you
in the Agreement are true and correct.

 

(b) This opinion is limited in all respects to matters governed by the laws of
the State of California and the federal laws of the United States, and we
express no opinion concerning the laws or regulations of any other jurisdiction
or jurisdictions. We express no opinion as to federal or state antifraud or
antitrust laws or regulations or, except as expressly provided in paragraph 7
above, to the securities or blue sky law of any jurisdiction. We express no
opinion in clause (i) of Paragraph 3 as to ordinances and regulations of
counties and political subdivisions thereof.

 

(c) We assume that you know of no agreements, understandings or negotiations
between the parties not set forth in the Agreement that would modify the terms
or rights and obligations of the parties thereunder.

 

(d) Our opinion in paragraph 2 above is subject to and limited by (i) the effect
of applicable bankruptcy, insolvency, reorganization, receivership,
conservatorship, arrangement, moratorium or other laws affecting or relating to
the rights of creditors generally, (ii) the rules governing the availability of
specific performance, injunctive relief or other equitable remedies and general
principles

--------------------------------------------------------------------------------

To the Investors Named on Schedule A

of the Stock and Warrant Purchase Agreement

November 25, 2002

Page 4

 

of equity, whether considered in a proceeding in equity or at law, (iii) the
effect of applicable court decisions, invoking statutes or principles of equity,
which have held that certain covenants and provisions of agreements are
unenforceable where the breach of such covenants or provisions imposes
restrictions or burdens upon a party thereto, and it cannot be demonstrated that
the enforcement of such restrictions or burdens is reasonably necessary for the
protection of the other party, or the enforcement of such covenants or
provisions under the circumstances would violate the covenant of good faith and
fair dealing implied under applicable law, and (iv) the effect of California
Civil Code Section 1698 and of statutes and rules of law that cannot be waived
prospectively by an obligor.

 

(e) Whenever a statement herein is qualified by “to our knowledge,” “known to
us,” “we are not aware,” or similar phrase, it indicates that in the course of
our representation of the Company no information that would give us current
actual knowledge of the inaccuracy of such statement has come to the attention
of the attorneys in this firm who have rendered legal services in connection
with this transaction. We have not made any independent investigation to
determine the accuracy of such statement, except as expressly described herein.
No inference as to our knowledge of any matters bearing on the accuracy of such
statement should be drawn from the fact of our representation of the Company in
other matters in which such attorneys are not involved.

 

This opinion is rendered solely for your information in connection with the
transaction described above and may not be delivered to or relied upon by any
other person for any purpose without our prior written consent.

 

Very truly yours,

--------------------------------------------------------------------------------

 

EXHIBIT D

 

SCHEDULE OF EXCEPTIONS

 

Section 2.15 Employee Benefit Plans

 

The Company maintains a deferred compensation plan for its officers whereby such
officers may defer a portion of their salary and such salary deferrals, plus a
matching contribution by the Company, are placed in a Rabbi Trust.

 

D-1