Exhibit 10.13


 


[O’Melveny & Myers LLP Letterhead]


 


September 22, 2003


 


VIA EMAIL JOHN@IMTMEMS.COMs


 


Innovative Micro Technology

75 Robin Hill Road

Goleta, CA 93117

Attn: Dr. John S. Foster


 


Re:                               Professional Notes Executed by Innovative
Micro Technology

(formerly Applied Magnetics Corporation, “IMT”)


 


Gentlemen:


 


Reference is made to (i) that certain Secured
Promissory Note, dated as of November 16, 2001, in the original principal
amount of $1,383,777.00 (the “Houlihan Note”), executed by IMT for the benefit
Houlihan Lokey Howard & Zukin (“Houlihan”); (ii) that certain Secured
Promissory Note, dated as of November 16, 2001, in the original principal
amount of $850,000.00 (the “O’Melveny Note”), executed by IMT for the benefit O’Melveny
& Myers, LLP, (“O’Melveny”); (iii) that certain Secured Promissory Note,
dated as of November 16, 2001, in the original principal amount of
$699,580.77 (the “Sheppard Note “), executed by IMT for the benefit Sheppard
Mullin Richter & Hampton LLP (“Sheppard”); and (iv) that certain Secured
Promissory Note, dated as of November 16, 2001, in the original principal
amount of $1,203,560.76 (the “Stutman Note,” and together with the Houlihan
Note, the O’Melveny Note and the Sheppard Note, the “Notes”), executed for the
benefit Stutman, Treister & Glatt Professional Corporation (“Stutman,” and
together with Houlihan, O’Melveny and Sheppard, the “Firms”). The Notes are
secured by, among other things, that certain Deed of Trust, Assignment of Rents
and Fixture Filing (Robin Hill Road), dated as November 16, 2001, and
recorded on March 18, 2002, as document number 2002-0025765 in the
Official Records of the County of Santa Barbara, California (the “Deed of Trust”)
encumbering the real property commonly known as75 Robin Hill Road, Goleta, California.


 


IMT’s liability for the amounts to be paid under the
Notes arose and is to be repaid pursuant to that certain “Debtor’s Third
Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy Code Dated as
of September 24, 2001, as Modified” in Case No. ND 00-10066- RR, as
confirmed pursuant to an order dated November 5, 2001, (the “Plan”). No
reference herein to the Plan and no provision of the Notes, this letter
agreement or the Plan shall alter or impair the obligations of IMT under the
Notes, which are absolute and unconditional, unless and until all obligations
of this letter agreement are irrevocably and unconditionally satisfied in full
by IMT.


 


IMT acknowledges and
agrees that notwithstanding the terms of the Notes, as of the date hereof no
amounts due under any of the Notes have been paid to any of the Firms. IMT
agrees that on or before September 30, 2003, IMT shall deliver to O’Melveny,
as Agent under and as defined in that certain Intercreditor Agreement, dated as
of November 16, 2001, among the Firms (the “IC Agreement”) (i) an amount
in immediately available good funds equal to $2,388,372.41 (the


 





















 


“Cash”); (ii) original
stock certificates for 276,287 shares of unrestricted New Common Stock (as
defined in the Plan) (the “Stock”); (iii) original stock certificates
containing a restrictive le gend in the form of Exhibit C attached to this
letter agreement for 91,826 of restricted New Common Stock (the “Restricted
Stock”); and (iv) IMT’s original signature to the Warrant Agreement in the form
of Exhibit A to this letter agreement (the “Warrant Agreement”).


 


Each of the Firms acknowledges, agrees and consents to
the following:


 


1. The distribution of the Cash by O’Melveny, as
Agent, as follows: (a) $860,536 to Houlihan, (b) $528,594 to O’Melveny, (c)
$435,052 to Sheppard; and (d) $564,190.41 to Stutman.


 


2. The distribution of the Stock by O’Melveny, as
Agent, as follows: (a) 104,943 shares to Houlihan, (b) 64,463 shares to O’Melveny,
(c) 53,055 shares to Sheppard; and (d) 53,826 shares to Stutman.


 


3. The distribution of the Restricted Stock by O’Melveny,
as Agent, to Stutman.


 


4. The delivery of IMT’s original signature to the
Warrant Agreement by O’Melveny, as Agent, to Stutman.


 


5. Upon completion of the actions described in
paragraphs 1, 2 and 3, above, the cancellation by O’Melveny, as Agent, of each
of the Notes and delivery of the original of each such canceled note to IMT
with a copy to the applicable Firm.


 


6. Upon completion of the actions described in
paragraphs 1, 2 and 3, above, the execution by O’Melveny, as Agent, of the
request for full reconveyance of the Deed of Trust in the form of Exhibit B to
this letter agreement (“Reconveyance”) and the full and final release of the
Deed of Trust by the recordation such Reconveyance in the Official Records of
the County of Santa Barbara, California.


 


7. Upon completion of the actions described in
paragraphs 1, 2 and 3, above, the execution and filing by O’Melveny, as Agent,
of a UCC-3 terminating the UCC Financing Statement filed with the Delaware
Department of State on March 19, 2002 as Filing Number 2070075.


 


Effective immediately upon completion of the actions
described in paragraphs 1, 2, 3 and 4, above, each of the Firms on behalf of
itself and anyone claiming by, through or under such Firm (collectively, “Releasors
“), fully and irrevocably releases each of the other Firms from any and all
claims that Releasors may now have or hereafter acquire against such other
Firms for any action, cause of action, claim, cost, damage, demand, expense
(including, without limitation, attorneys’ fees and expenses), fine, judgment,
liability, lien, loss, or penalty, whether foreseen or unforeseen or direct or
indirect, arising from or related to the IC Agreement. Each Firm further
acknowledges and agrees that this release shall be given full force and effect
according to each of its expressed terms and provisions, including, but not
limited to, those relating to unknown and suspected claims, damages and causes
of action.


 


Each of the Firms hereby consents and agrees to O’Melveny,
as Agent, withholding from such Firm’s distribution of Cash an amount equal to
such Firm’s Pro Rata Share of the costs, fees


 





















 


and expenses incurred by O’Melveny, as Agent, on
behalf of the Firms related to the preparation of this letter agreement and the
completion of the actions described in paragraphs 5 and 6, above (the “Agent’s
Costs”). The Firms obligation to reimburse the Agent’s Costs is pursuant to Section 1(j)
of the IC Agreement. The Agent’s Costs are $14,000.


 


Please indicate your agreement to the terms of this
letter agreement by countersigningbelow and then return an executed original of
this letter agreement to my attention.


 


	
   

  	
  Cordially,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Lynn Anne Shapiro

  	
   

  
	
   

  	
  for O’Melveny & Myers LLP

  	
   

  
	
   

  	
   

  	
   

  
	
  cc:

  	
  The Parties on the attached Distribution List (via
  email)

  	
   

  
	
   

  	
  Evan M. Jones, Esq.

  	
   

  
	
   

  	
   

  	
   

  
	
  Acknowledged and Agreed

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Innovative Micro Technology, a Delaware corporation

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ John S. Foster

  	
   

  	
   

  	
   

  
	
   

  	
  Dr.
  John S. Foster, Chief Executive Officer

  	
  Dated: September 22,
  2003

  	
   

  
	
   

  	
   

  	
   

  
						



 


Countersignature blocks continue on following page


 





















 


	
  Acknowledged and Agreed and Consent Granted

  	
   

  
	
   

  	
   

  	
   

  
	
  Houlihan Lokey Howard & Zukin

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/

  	
  Andrew Miller

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Andrew Miller

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Dated: September 22, 2003

  	
   

  
	
   

  	
   

  	
   

  
	
  O’Melveny & Myers LLP

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By: 

  	
  /s/

  	
  Evan M. Jones

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Evan M. Jones, Partner

  	
  Dated: September 22, 2003

  	
   

  
	
   

  	
   

  	
   

  
	
  Sheppard Mullin Richter & Hamilton LLP

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  Prentice O’Leary, Professional Corporation,

  	
   

  
	
   

  	
  Partner

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Prentice O’Leary

  	
   

  	
   

  	
   

  
	
   

  	
  Prentice O’Leary, President

  	
  Dated: September 22, 2003

  	
   

  
	
   

  	
   

  	
   

  
	
  Stutman, Treister & Glatt Professional
  Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Dated: September 22, 2003

  	
   

  
															



 





















 


Distribution List


 


	
  Houlihan Lokey Howard & Zukin

  	
   

  	
   

  
	
  1930 Century Park West

  	
   

  	
   

  
	
  |Los Angeles, CA 90067-6802

  	
   

  	
   

  
	
  Facsimile:(310) 553-4024

  	
   

  	
   

  
	
  Attention: 

  	
  Mr. Andrew Miller

  	
  amiller@hlhz.com

  	
   

  	
   

  
	
   

  	
  Mr. Andrew Morrow

  	
  amorrow@hlhz.com

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Sheppard Mullin Richter & Hamilton LLP

  	
   

  	
   

  
	
  333 South Hope Street, 48th Floor

  	
   

  	
   

  
	
  Los Angeles, CA 90071

  	
   

  	
   

  
	
  Facsimile:(213) 620-1398

  	
   

  	
   

  
	
  Attention: Prentice L. O’Leary, Esq. po’leary@sheppardmullin.com

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Stutman, Treister & Glatt Professional
  Corporation

  	
   

  	
   

  
	
  1901 Avenue of the Stars, 12th Floor

  	
   

  	
   

  
	
  Los Angeles, CA 90067

  	
   

  	
   

  
	
  Facsimile:(310) 228-5788

  	
   

  	
   

  
	
  Attention: Theodore B. Stolman,
  Esq.               tstolman@stutman.com

  	
   

  	
   

  



 





















 


Exhibit A


 


Form of Warrant Agreement


 


[omitted]