EXHIBIT 10.14

 

CALIFORNIA MICRO DEVICES CORPORATION

 

STOCK AND WARRANT PURCHASE AGREEMENT

 

July 28, 2003

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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

   2     

        2.1

  

Corporate Existence and Power

   2     

        2.2

  

Authorization; No Contravention

   2     

        2.3

  

Governmental Authorization; Third Party Consents

   3     

        2.4

  

Binding Effect

   3     

        2.5

  

Litigation

   3     

        2.6

  

Compliance with Laws

   4     

        2.7

  

Capitalization

   4     

        2.8

  

No Default or Breach; Contractual Obligations

   5     

        2.9

  

Title to Properties

   5     

        2.10

  

Reports; Financial Statements

   5     

        2.11

  

Taxes

   6     

        2.12

  

No Material Adverse Change; Ordinary Course of Business

   6     

        2.13

  

Private Offering

   7     

        2.14

  

Labor Relations

   7     

        2.15

  

Employee Benefit Plans

   7     

        2.16

  

Liabilities

   8     

        2.17

  

Intellectual Property

   8     

        2.18

  

Potential Conflicts of Interest

   10     

        2.19

  

Trade Relations

   10     

        2.20

  

Outstanding Borrowing

   10     

        2.21

  

Broker’s, Finder’s or Similar Fees

   10     

        2.22

  

Disclosure

   10     

        2.23

  

Insurance

   11     

        2.24

  

Form S-3 Eligibility

   11

3.

  

Representations and Warranties of the Investors

   11     

        3.1

  

Authorization

   11     

        3.2

  

Purchase Entirely for Own Account

   11     

        3.3

  

Reliance Upon Investor’s Representations

   11     

        3.4

  

Receipt of Information

   11     

        3.5

  

Investment Experience

   12     

        3.6

  

Accredited Investor

   12     

        3.7

  

Restricted Securities

   12     

        3.8

  

Legends

   12     

        3.9

  

Broker’s, Finder’s or Similar Fees

   13

 

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4.

  

Registration of the Shares; Compliance with the Securities Act

   13     

        4.1

  

Registration Procedures and Expenses

   13     

        4.2

  

Transfer of Shares After Registration; Suspension

   14     

        4.3

  

Indemnification

   15     

        4.4

  

Termination of Conditions and Obligations

   17

5.

  

Conditions of each Investor’s Obligations at Closing

   18     

        5.1

  

Representations and Warranties

   18     

        5.2

  

Performance

   18     

        5.3

  

Compliance Certificate

   18     

        5.4

  

Qualifications

   18     

        5.5

  

Opinion of Counsel

   18

6.

  

Conditions of the Company’s Obligations at Closing

   18     

        6.1

  

Representations and Warranties

   18     

        6.2

  

Qualifications

   18

7.

  

Miscellaneous

   18     

        7.1

  

Entire Agreement

   18     

        7.2

  

Survival

   19     

        7.3

  

Successors and Assigns

   19     

        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

   20     

        7.10

  

Amendments and Waivers

   20     

        7.11

  

Severability

   20     

        7.12

  

Rights of the Investor

   21     

        7.13

  

Conflict of Interest Waiver

   21     

        7.14

  

Press Release/Form 8-K

   21

 

Exhibits

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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
28th day of July, 2003 (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 $2.25 (the “Purchase Price”), up to an aggregate of the lesser of (i)
2,444,444 Shares and (ii) that number of Shares such that the Company does not
require approval of its shareholders for the transactions contemplated by this
Agreement (the “Maximum”)..

 

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 thirty percent (30%) of the number of Shares
purchased by such Investor, substantially in the form attached hereto as Exhibit
A.

 

1.3 Closings The purchase and sale of the Shares and Warrants (the “Closing”)
shall occur in two closings, the first to occur no later than July 30, 2003 (the
“First Closing”), and the second to occur no later than August 1, 2003 (the
“Second Closing”). Any Investor in the Second Closing must have become a party
to this Agreement prior to the end of the day on which the First Closing occurs.
Except when specifically designated as the “First Closing” or the “Second
Closing,” references to the “Closing,” the “Closings” or the “Closing Date” in
this Agreement will refer to the First Closing and/or the Second Closing, as
applicable by their context, and to those parties participating in the
applicable Closing. The Closings will each occur at a place and time to be
specified by the Company and Needham & Company, Inc. and Adams, Harkness & Hill,
Inc. (collectively, the “Placement Agents”). Those Investors participating in
each such Closing will be notified of such place and time not less than one (1)
business day in advance by the Placement Agents.

 

(a) The First Closing. The First Closing shall be for the purchase and sale of
the Company’s Common Stock and Warrants to Investor s affiliated with Special
Situations Funds (“Special Situation Funds”) At the First Closing, after receipt
of payment of $4,000,050, the Company shall arrange delivery to Special
Situations Funds of one or more stock certificates representing 1,777,800
Shares, and one or more Warrants to purchase, in the aggregate, 533,340 shares
of the Company’s Common Stock, each to be registered in the name of Special
Situations Funds.

 

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(b) The Second Closing. The Second Closing shall be for the purchase and sale of
up to the difference between the Maximum less 1,777,800 Shares and Warrants to
purchase 30% of Shares sold in the Second Closing. The Investors who participate
in the Second Closing shall be accredited institutional Investors who must be
pre-approved by Special Situations Funds, except that no pre-approval is
required for the funds affiliated with Columbus Capital, Gruber & McBaine, Kern
Capital, Proximity Capital, Royce Associates, and T. Rowe Price. At the Second
Closing, after receipt of payment for the number of shares listed above such
Investor’s name on the signature pages attached hereto, the Company shall
arrange delivery to such Investor of one or more stock certificates representing
the number of Shares, and one or more Warrants, each to be registered in the
name of the Investor.

 

(c) Preliminary Schedule of Investors. The parties acknowledge that, with the
exception of Special Situations Funds, the schedule of Investors attached hereto
as Schedule A is a preliminary schedule of investors. As soon as practicable
after the Second 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, as of the Effective Date, and 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”) on or after June 30, 2003 and prior to the
Effective Date (collectively, the “SEC Reports”), the Company’s press release
dated July 16, 2003, 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:

 

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

 

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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 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.

 

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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 15,887,606 shares (the “Issued Stock”) were issued and
outstanding as of June 26, 2003, 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 March 31, 2003. As of June 26,
2003, 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 1995 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 March 31, 2003, 1,789,499 shares of Common Stock had been issued and
2,040,881 shares of Common Stock were issuable upon the exercise of stock
options granted under the Company’s 1995 Employee Stock Option Plan, 93,681
shares of Common Stock were available for future grant under the Company’s 1995
Non-Employee Directors’ Stock Option Plan, and, as of June 26, 2003, 920,037
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 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 Dan McCranie relating to a 7,500 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; warrants to purchase 424,417
shares of Common Stock held by the investors in the Company’s Private Placement
of November, 2002; warrants held by the Placment Agents to purchase an aggregate
of 44,766 shares of Common Stock granted in connection with the Company’s 2002
private placement , 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

 

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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.

 

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

 

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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 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 March 31,
2003, 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.

 

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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.

 

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.

 

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(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 incurred since March 31,
2003 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

 

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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 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

 

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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 2003 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 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 March 31, 2003,
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 and Company
warrants issuable 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 SEC Reports, the Company’s press release
dated July 16, 2003, and the documents and certificates furnished to the
Investors 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.

 

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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, as of the Effective Date and 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
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 had an opportunity to ask questions
and receive answers from the Company regarding 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

 

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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 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.

 

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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 First Closing
that the Registration Statement is not filed with the SEC, each Investor shall
be paid an amount in cash equal to one and one-half percent (1.5%) of the
product of the Purchase Price times the number of Shares originally acquired by
such Investor. For each full calendar month after the First Closing, starting
with three (3) months after the First Closing and ending with twenty-four (24)
months after the First Closing, that the Registration Statement is not declared
effective by the SEC, each Investor shall be paid an amount, in cash equal to
one and one-half percent (1.5%) of the product of the Purchase Price times the
number of Shares originally acquired by such Investor. Each such payment shall
be made within fifteen days of when the payment obligation accrued.

 

(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

 

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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 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

 

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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.

 

(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

 

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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 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

 

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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 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.

 

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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 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.

 

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.

 

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.

 

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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.

 

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, No. 100

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 Except as set forth herein, each party will bear its own expenses
related to this Agreement and the transactions contemplated therein. The Company
shall pay the

 

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reasonable fees and expenses of counsel to Special Situations Funds not to
exceed $10,000; provided that if there is no First Closing, then such payment
shall only be made as required by the July 24, 2003, Term Sheet. Such expenses
shall be paid not later than two (2) business days after receipt of an invoice
after the First Closing. The Company shall reimburse the Investors upon demand
for all reasonable out-of-pocket expenses incurred by the Investors, including
without limitation reimbursement of attorneys’ fees and disbursements, in
connection with any amendment, modification or waiver of this Agreement.

 

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

 

-20-

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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
regarding the First Closing no later than the opening of the stock market on
August 1, 2003, and to issue a press release concerning the Second Closing no
later than the opening of the stock market on the first business day after the
Second 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 press release, each describing
the critical features of the sale of the Shares and Warrants under this
Agreement, with the press release issued for the First Closing, if it does not
also cover the Second Closing, to comply with SEC Rule 135c.

 

[REMAINDER OF PAGE INTENTIONALLY BLANK]

 

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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

 

-22-

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SIGNATURE PAGE TO

 

STOCK AND WARRANT PURCHASE AGREEMENT

 

DATED AS OF JULY 28, 2003

 

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

  

 

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

 

 

-23-

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SCHEDULE A

 

INVESTORS

 

FIRST CLOSING

 

Investor Name

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

   Number of Shares
Purchased from
Company

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

   Investment In Dollars

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

Special Situations Fund III, L.P.

   933,400    $ 2,100,150.00

Special Situations Private Equity Fund, L.P.

   533,300      1,199,925.00

Special Situations Cayman Fund, L.P.

   311,100      699,975.00

Jon D. Gruber TTEE FBO Jonathan Wyatt Gruber Trust D+D 12/30/75

   11,111      24,999.75

Jon D. Gruber TTEE FBO Lindsay DeRoy Gruber Trust D+D 12/29/76

   11,111      24,999.75

Jon D. Gruber & Linda W. Gruber

   44,444      99,999.00

Gruber & McBaine International

   111,111      249,999.75

Lagunitas Partners, LP

   266,667      600,000.75

TOTAL

   2,222,244    $ 5,000,049.00 SECOND CLOSING            

Investor Name

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

   Number of Shares
Purchased from
Company

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

   Investment In Dollars

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

The Millrace Fund

   222,000    $ 499,500

TOTAL

   222,000    $ 499,500

GRAND TOTAL

   2,444,244    $ 5,499,549

 

 

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 July     , 2003 (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 three-tenths (0.30)
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 fifth
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 $3.00.

 

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 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.

 

-1-

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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 ten (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 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

 

-2-

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

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.

 

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

 

-3-

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

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 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

 

-4-

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

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
(3rd) 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 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

 

-5-

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

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.

 

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.

 

-6-

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

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. Adjustments. Subject and pursuant to the provisions of this Section 12, the
Warrant Price, but not the number of Warrant Shares subject to this Warrant,
shall be subject to adjustment from time to time as set forth hereinafter.

 

A. For the term of this Warrant, in addition to the provisions contained above,
the Warrant Price shall be subject to adjustment as provided below. An
adjustment to the Warrant Price shall become effective immediately after the
payment date in the case of each dividend or distribution and immediately after
the effective date of each other event which requires an adjustment.

 

B. Except as provided in subsection (C) hereof, if and whenever the Company
shall issue or sell, or is, in accordance with any of subsections (B)(i) through
(B)(vii) hereof, deemed to have issued or sold, any shares of Common Stock for
no consideration or for a consideration per share less than the Warrant Price in
effect immediately prior to the time of such issue or sale, then and in each
such case (a “Trigger Issuance”) the then-existing Warrant Price, shall be
reduced, as of the close of business on the effective date of the Trigger
Issuance, to a price determined as follows:

 

Adjusted Warrant Price =

 

        (A x B) + D

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

   

              A+C

 

where

 

“A” equals the number of shares of Common Stock outstanding, including
Additional Shares of Common Stock (as defined below) deemed to be issued
hereunder, immediately preceding such Trigger Issuance;

 

“B” equals the Warrant Price in effect immediately preceding such Trigger
Issuance;

 

“C” equals the number of Additional Shares of Common Stock issued or deemed
issued hereunder as a result of the Trigger Issuance; and

 

“D” equals the aggregate consideration, if any, received or deemed to be
received by the Company upon such Trigger Issuance provided, however, that in no
event shall the Warrant Price after giving effect to such Trigger Issuance be
greater than the Warrant Price in effect prior to such Trigger Issuance.

 

-7-

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

For purposes of this subsection (B), “Additional Shares of Common Stock” shall
mean all shares of Common Stock deemed to be issued pursuant to this subsection
(B), other than Excluded Issuances (as defined in subsection (C) hereof).

 

For purposes of this subsection (B), the following subsections (B)(i) to
(B)(vii) shall also be applicable:

 

i. Issuance of Rights or Options. In case at any time the Company shall in any
manner grant (directly and not by assumption in a merger or otherwise) any
warrants or other rights to subscribe for or to purchase, or any options for the
purchase of, Common Stock or any stock or security convertible into or
exchangeable for Common Stock (such warrants, rights or options being called
“Options” and such convertible or exchangeable stock or securities being called
“Convertible Securities”) whether or not such Options or the right to convert or
exchange any such Convertible Securities are immediately exercisable, and the
price per share for which Common Stock is issuable upon the exercise of such
Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (a) the sum (which sum shall constitute the applicable
consideration) of (x) the total amount, if any, received or receivable by the
Company as consideration for the granting of such Options, plus (y) the
aggregate amount of additional consideration payable to the Company upon the
exercise of all such Options, plus (z), in the case of such Options which relate
to Convertible Securities, the aggregate amount of additional consideration, if
any, payable upon the issue or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (b) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon the conversion
or exchange of all such Convertible Securities issuable upon the exercise of
such Options) shall be less than the Warrant Price in effect immediately prior
to the time of the granting of such Options, then the total number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total amount of such Convertible Securities issuable upon the
exercise of such Options shall be deemed to have been issued for such price per
share as of the date of granting of such Options or the issuance of such
Convertible Securities and thereafter shall be deemed to be outstanding for
purposes of adjusting the Warrant Price. Except as otherwise provided in
subsection 12 (B)(iii), no adjustment of the Warrant Price shall be made upon
the actual issue of such Common Stock or of such Convertible Securities upon
exercise of such Options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.

 

ii. Issuance of Convertible Securities. In case the Company shall in any manner
issue (directly and not by assumption in a merger or otherwise) or sell any
Convertible Securities, whether or not the rights to exchange or convert any
such Convertible Securities are immediately exercisable, and the price per share
for which Common Stock is issuable upon such conversion or exchange (determined
by dividing (a) the sum (which sum shall constitute the applicable
consideration) of (x) the total amount received or receivable by the Company as
consideration for the issue or sale of such Convertible Securities, plus (y) the
aggregate amount of additional consideration, if any, payable to the Company
upon the conversion or exchange thereof, by (b) the total number of shares of
Common Stock issuable upon the conversion or exchange of all such

 

-8-

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

Convertible Securities) shall be less than the Warrant Price in effect
immediately prior to the time of such issue or sale, then the total maximum
number of shares of Common Stock issuable upon conversion or exchange of all
such Convertible Securities shall be deemed to have been issued for such price
per share as of the date of the issue or sale of such Convertible Securities and
thereafter shall be deemed to be outstanding for purposes of adjusting the
Warrant Price, provided that (a) except as otherwise provided in subsection 12
(B)(iii), no adjustment of the Warrant Price shall be made upon the actual
issuance of such Common Stock upon conversion or exchange of such Convertible
Securities and (b) no further adjustment of the Warrant Price shall be made by
reason of the issue or sale of Convertible Securities upon exercise of any
Options to purchase any such Convertible Securities for which adjustments of the
Warrant Price have been made pursuant to the other provisions of subsection 12
(B).

 

iii. Change in Option Price or Conversion Rate. Upon the happening of any of the
following events, namely, if the purchase price provided for in any Option
referred to in subsection 12 (B)(i) hereof, the additional consideration, if
any, payable upon the conversion or exchange of any Convertible Securities
referred to in subsections 12 (B)(i) or 12 (B)(ii), or the rate at which
Convertible Securities referred to in subsections 12 (B)(i) or 12 (B)(ii) are
convertible into or exchangeable for Common Stock shall change at any time
(including, but not limited to, changes under or by reason of provisions
designed to protect against dilution), the Warrant Price in effect at the time
of such event shall forthwith be readjusted (upwards or downwards) to the
Warrant Price which would have been in effect at such time had such Options or
Convertible Securities still outstanding provided for such changed purchase
price, additional consideration or conversion rate, as the case may be, at the
time initially granted, issued or sold. On the termination of any Option for
which any adjustment was made pursuant to this subsection 12 (B) or any right to
convert or exchange Convertible Securities for which any adjustment was made
pursuant to this subsection 12 (B) (including without limitation upon the
redemption or purchase for consideration of such Convertible Securities by the
Company), the Warrant Price then in effect hereunder shall forthwith be changed
to the Warrant Price which would have been in effect at the time of such
termination had such Option or Convertible Securities, to the extent outstanding
immediately prior to such termination, never been issued.

 

iv. Stock Dividends. Subject to the provisions of this Section 12 (B), in case
the Company shall declare a dividend or make any other distribution upon any
stock of the Company (other than the Common Stock) payable in Common Stock,
Options or Convertible Securities, then any Common Stock, Options or Convertible
Securities, as the case may be, issuable in payment of such dividend or
distribution shall be deemed to have been issued or sold without consideration.

 

v. Consideration for Stock. In case any shares of Common Stock, Options or
Convertible Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the net amount received by the Company
therefor, after deduction therefrom of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in connection
therewith. In case any shares of Common Stock, Options or Convertible Securities
shall be issued or sold for a consideration other

 

-9-

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

than cash, the amount of the consideration other than cash received by the
Company shall be deemed to be the fair value of such consideration as determined
in good faith by the Board of Directors of the Company, after deduction of any
expenses incurred or any underwriting commissions or concessions paid or allowed
by the Company in connection therewith. In case any Options shall be issued in
connection with the issue and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued for such consideration as determined in good faith by the
Board of Directors of the Company. If Common Stock, Options or Convertible
Securities shall be issued or sold by the Company and, in connection therewith,
other Options or Convertible Securities (the “Additional Rights”) are issued,
then the consideration received or deemed to be received by the Company shall be
reduced by the fair market value of the Additional Rights (as determined using
the Black-Scholes option pricing model or another method mutually agreed to by
the Company and the Warrantholder). The Board of Directors of the Company shall
respond promptly, in writing, to an inquiry by the Warrantholder as to the fair
market value of the Additional Rights. In the event that the Board of Directors
of the Company and the Warrantholder are unable to agree upon the fair market
value of the Additional Rights, the Company and the Warrantholder shall jointly
select an appraiser, who is experienced in such matters. The decision of such
appraiser shall be final and conclusive, and the cost of such appraiser shall be
borne evenly by the Company and the Warrantholder.

 

vi. Record Date. In case the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them (a) to receive a dividend or
other distribution payable in Common Stock, Options or Convertible Securities or
(b) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution or the
date of the granting of such right of subscription or purchase, as the case may
be.

 

vii. Treasury Shares. The number of shares of Common Stock outstanding at any
given time shall not include shares owned or held by or for the account of the
Company or any of its wholly-owned subsidiaries, and the disposition of any such
shares (other than the cancellation or retirement thereof) shall be considered
an issue or sale of Common Stock for the purpose of this subsection 12 (B).

 

C. Anything herein to the contrary notwithstanding, the Company shall not be
required to make any adjustment of the Warrant Price in the case of the issuance
of (a) capital stock, Options or Convertible Securities issued to directors,
officers, employees or consultants of the Company in connection with their
service as directors of the Company, their employment by the Company or their
retention as consultants by the Company pursuant to an equity compensation
program approved by the Board of Directors of the Company or the compensation
committee of the Board of Directors of the Company, (b) shares of Common Stock
issued upon the conversion or exercise of Options or Convertible Securities
issued prior to the date hereof, (c) securities issued pursuant to the Stock and
Warrant Purchase Agreements dated as of July 28, 2003, among the Company and the
Investors named therein and securities issued upon the

 

-10-

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

exercise or conversion of those securities, (d) shares of Common Stock issued,
deemed issued, or issuable by reason of a dividend, stock split or other
distribution on shares of Common Stock (but only to the extent that such a
dividend, split or distribution results in an adjustment in the Warrant Price
pursuant to the other provisions of this Warrant), (e) Common Stock issued or
deemed issued to banks or leasing companies in connection with working capital
or equipment lines of credit/financing, and (f) Common Stock issued or deemed
issued as the payment of the purchase price of an acquisition of another entity
(collectively, “Excluded Issuances”).

 

13. 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.

 

14. Call Provision. Notwithstanding any other provision contained herein to the
contrary, in the event that the closing price of a share of Common Stock as
traded on the Nasdaq (or such other exchange or stock market on which the Common
Stock may then be listed or quoted) equals or exceeds $5.00 (as appropriately
adjusted for any stock split, reverse stock split, stock dividend or other
reclassification or combination of the Common Stock occurring after the date
hereof) for twenty (20) consecutive trading days and all of the Warrant Shares
have been registered for resale by Holder pursuant to a Registration Statement
(as defined in Section 4.1 of the Purchase Agreement) which has been declared
effective by the SEC and which is available for sales of the Warrant Shares by
Holder during the “Notice Period” as defined below, the Company, upon thirty
(30) days prior written notice (such thirty (30) days comprising the “Notice
Period”) given to the Holder during the one-month period immediately following
such twenty (20) trading day period, may demand that the Holder exercise this
Warrant and purchase all of the Warrant Shares prior to the expiration of the
Notice Period, and the Holder will be obligated to do so. To the extent such
exercise is not effected, the Company may, but is not required to, elect to have
this Warrant expire and terminate effective at the expiration of the Notice
Period.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

-11-

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

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

 

Dated: July     , 2003

 

COMPANY

CALIFORNIA MICRO DEVICES CORPORATION

By

 

 

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

   

Robert V. Dickinson, President

 

-12-

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

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)

 

-13-

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

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

 

-14-

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

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
                            , 2003 (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

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

Pillsbury Winthrop LLP

 

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

 

July 31, 2003

 

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 July 31, 2003 (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, 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.

 

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

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

To the Investors Named on Schedule A

of the Stock and Warrant Purchase Agreement

July 31, 2003

Page 2

 

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

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

To the Investors Named on Schedule A

of the Stock and Warrant Purchase Agreement

July 31, 2003

Page 3

 

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 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

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

To the Investors Named on Schedule A

of the Stock and Warrant Purchase Agreement

July 31, 2003

Page 4

 

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

 

None.

 

D-1