EXHIBIT 2.5
EXHIBIT A
---------
PROMISSORY NOTE
(EXHIBIT A TO THE ASSET PURCHASE AGREEMENT FILED HEREWITH AS EXHIBIT 2.4)
PROMISSORY NOTE
$3,931,151.67 Irvine, California
August 15, 2001
FOR VALUE RECEIVED, the undersigned, Microsemi Corporation, a Delaware
corporation ("Maker"), promises to pay to Compensated Devices, Inc., a
Massachusetts corporation ("Payee"), or its assignee, at the office of Payee or
such other address as Payee shall designate in writing to Maker from time to
time, Three Million Nine Hundred Thirty-One Thousand One Hundred Fifty-One
Dollars and Sixty-Seven Cents ($3,931,151.67), plus interest, as follows:
(a) This Promissory Note ("Note") shall be payable on or within ten (10)
days following the first anniversary of the date of this Note and shall be
payable either (or in any combination), at the sole and absolute discretion of
Maker, in (a) cash or (b) shares of common stock, par value $.20 ("Common
Stock") of Maker, in an aggregate amount equal to the sum of the unpaid
principal and all interest accrued to the date of payment as described
hereinbelow. Any shares of Common Stock issued in payment of this Note shall be
deliverable on the date of payment of this Note to a custodian pursuant to an
arrangement with a custodian of the shares for the Payee mutually acceptable to
Maker and Payee and liquidated by the custodian on behalf of the Payee within
the sixty (60) days following the first anniversary of the date of this Note, at
a rate of not more than 10,000 shares sold per trading day, except with Maker's
prior written consent or direction. Payee shall receive from the custodian cash
proceeds net of stock brokerage commissions under this arrangement that will
extinguish and satisfy the amount due under this Note on a dollar for dollar
basis. Maker shall also pay Payee in cash any deficiency between (A) the amount
of principal plus accrued interest under this Note paid by delivery of Common
Stock and (B) the net proceeds to Payee, after sales commissions, on
dispositions of such Shares by the custodian as described hereinabove. When the
net proceeds to Payee of such shares of Common Stock equal or exceed one
hundred percent (100%) of the portion of the principal plus accrued interest as
of the date of this Note paid in shares of Common Stock, the excess shares of
Common Stock shall not be sold and the excess shares shall be paid over to Maker
by the custodian and canceled, or disposed of otherwise for Maker's sole
account.
(b) This Note shall bear simple interest at a rate of six percent (6%) per
annum.
(c) Maker shall not issue shares of Common Stock in payment of this Note
except to the extent the resale thereof by Payee (and its shareholders provided
that this Note is distributed pro rata to Payee's shareholders) would be (i)
registered or exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act") and (ii) qualified and registered or exempt from
qualification and registration under applicable state securities laws. This
Note and the shares of Common Stock issuable hereunder have not been registered
under the Securities Act.
(d) If, for any reason prior to the time this Note is to be paid, Maker
(i) pays a dividend or makes a distribution on its Common Stock in shares of its
Common Stock; (ii) subdivides its outstanding shares of Common Stock into a
greater number of shares; (iii) combines its outstanding shares of Common Stock
into a smaller number of shares; (iv) pays a dividend or makes a distribution on
its Common Stock in shares of its capital stock (other than Common Stock) or
rights, warrants, or options for its capital stock); or (v) issues by
reclassification of its Common Stock any shares of its capital stock (or rights,
warrants, or options for its capital stock), the term Common Stock as used
herein shall include such securities of Maker outstanding as of the first
anniversary of the Closing Date.
(e) If, for any reason, the shares of Common Stock of Maker cease to be
traded on a national securities exchange or quotation system prior to the time
this Note is to be paid, whether because of a merger or exchange of stock or
other disposition of Maker, this Note will be payable in cash only within the
ten (10) days following the first anniversary of the Closing Date.
(f) Subject to express limitations in this paragraph (f), this Note is
subject to set-off as a source of indemnification to Maker for and against any
breach or violation of any of Payee's representations, warranties or agreements
in the transaction pursuant to the Asset Purchase Agreement dated as of August
15, 2001 ("Purchase Agreement") among the Payee, Payee's shareholders (therein
called the Owners) and Micro CDI Acquisition Corp. Accordingly, Maker shall be
entitled to (i) offset and retain from any payment or delivery of shares
otherwise due hereunder the full amount of any and all indemnifications due from
Payee or its shareholders to Maker under the terms of the Purchase Agreement not
previously paid by the party from which the indemnification is due, in which
event Maker shall remit the payment amounts remaining, if any, after such offset
and retention, to Payee or its assigns, and (ii) withhold from such amounts
otherwise due to Payee the full amount of any pending indemnification claim of
Maker not previously paid by Payee or its shareholders by offset against any
amounts due under this Note, in which event Payee
2
and its shareholders shall mutually establish an interest-bearing escrow account
to be held by an independent financial institution into which Maker shall
promptly cause to be deposited an amount equal to the amount withheld from the
Payee or its shareholders. The amount set-off against this Note shall not exceed
the sum of $200,000. Promptly after the resolution pursuant to Article 10 of
each indemnity claim in respect of which funds are being held in the Escrow
Account, the parties shall cause to be disbursed from such account to Maker, the
amounts, if any, to which Maker is entitled, together with any accrued interest
thereon, and to the Payee or its shareholders, the amounts, if any, to which the
Payee and its shareholders are entitled, together with any accrued interest
thereon. The parties agree to cooperate with each other in good faith to
establish the escrow account and, in that connection, to execute all documents
and instruments reasonably necessary or appropriate to establish such account.
The costs and expenses of establishing and maintaining the escrow account shall
be borne equally by Maker, on the one hand, and the Payee or its shareholders,
on the other hand. The interest rate applicable to the escrow does not refer or
relate whatsoever to any rate of interest described elsewhere in this Note.
(g) No failure, delay or omission by the Payee in exercising any right,
remedy or power hereunder shall operate as a waiver of such right, remedy or
power or of any other right, remedy, or power. No waiver of any right, remedy
or power on one occasion shall be construed as a waiver of, or a bar to, the
exercise of such right, remedy or power on any other occasion. All such rights,
remedies and powers of the Payee hereunder, under other agreements of the Maker
with the Payee, and under applicable law are cumulative and not alternative or
exclusive and may be exercised by the Payee at such time or times and in such
order of preference as the Payee may deem advisable. Maker hereby waives
presentment, demand for payment, notice of default, dishonor, protest and notice
of protest and all other demands or notices required for payment of this Note.
(h) This Note shall take effect as an instrument under seal and shall be
construed in accordance with and governed by the law of the Commonwealth of
Massachusetts applicable to agreements performed wholly within such
jurisdiction.
(i) Notwithstanding any other term or provision in this Note or the
documents pursuant to which this Note is issued, payment of interest shall not
exceed any amount which would cause a violation of any usury law applicable to
this Note; and the terms of this Note shall automatically be adjusted to permit
payment of the maximum amount allowed under law, subject to the maximum provided
for in this Note.
3
In the event that any action or proceeding is brought to enforce the terms
of this Note, the prevailing party shall be entitled to its reasonable costs and
expenses, including attorneys' fees.
IN WITNESS WHEREOF, the Maker has caused this Note to be executed in its
name by its duly authorized officer.
MICROSEMI CORPORATION
By:__________________________________________
James R. Shiring,
Vice President, East Coast Operations
WITNESS:
__________________________
Print Name:____________________
4