United States Securities and Exchange Commission EDGAR Filing

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LfkpEVIQA0Yk9ZbWQXDI/DydBmF5+DzbC9zVivfYVAcsY847Ss3vsmWoDfwbpRFM uAjwOfGVgagMNfRJCZ0ywQ== 0001116502-08-000091.txt : 20080122 0001116502-08-000091.hdr.sgml : 20080121 20080122172153 ACCESSION NUMBER: 0001116502-08-000091 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 20080122 DATE AS OF CHANGE: 20080122 GROUP MEMBERS: B. RILEY AND CO., LLC GROUP MEMBERS: BRYANT R. RILEY GROUP MEMBERS: RILEY INVESTMENT MANAGEMENT LLC GROUP MEMBERS: RILEY INVESTMENT PARTNERS MASTER FUND, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ZILOG INC CENTRAL INDEX KEY: 0000319450 STANDARD INDUSTRIAL CLASSIFICATION: SEMICONDUCTORS & RELATED DEVICES [3674] IRS NUMBER: 133092996 STATE OF INCORPORATION: CA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-44777 FILM NUMBER: 08542733 BUSINESS ADDRESS: STREET 1: 6800 SANTA TERESA BLVD CITY: SAN JOSE STATE: CA ZIP: 95119 BUSINESS PHONE: 4085131533 MAIL ADDRESS: STREET 1: 6800 SANTA TERESA BLVD CITY: SAN JOSE STATE: CA ZIP: 95119 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Riley Investment Partners Master Fund, L.P. CENTRAL INDEX KEY: 0001385084 IRS NUMBER: 000000000 STATE OF INCORPORATION: E9 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 11100 SANTA MONICA BOULEVARD STREET 2: SUITE 810 CITY: LOS ANGELES STATE: CA ZIP: 90025 BUSINESS PHONE: (310) 966-1445 MAIL ADDRESS: STREET 1: 11100 SANTA MONICA BOULEVARD STREET 2: SUITE 810 CITY: LOS ANGELES STATE: CA ZIP: 90025 SC 13D/A 1 zilgsc13d.htm SC 13D/A United States Securities and Exchange Commission EDGAR Filing

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-2-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)

(Amendment No. 1)¹

ZiLOG, Inc.

(Name of Issuer)

Common Stock

(Title of Class of Securities)

989524301

(CUSIP Number)

Riley Investment Management LLC

Attn: Bryant R. Riley

11100 Santa Monica Blvd.

Suite 810

Los Angeles, CA 90025

(310) 966-1445

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

January 11, 2008

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for other parties to whom copies are to be sent.

(Continued on following pages)

———————

¹The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No. 989524301	13D	Page 2


1	NAME OF REPORTING PERSON S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON Riley Investment Partners Master Fund, L.P.
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X]
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands
NUMBER OF SHARES		7	SOLE VOTING POWER 281,854
BENEFICIALLY OWNED BY		8	SHARED VOTING POWER -0-
EACH REPORTING		9	SOLE DISPOSITIVE POWER 281,854
PERSON WITH		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 281,854
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES* [ ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.7%¹
14	TYPE OF REPORTING PERSON* PN

———————

Based on 16,860,428 shares of common stock of ZiLOG, Inc. (the “Issuer”) outstanding at September 29, 2007, as reported in the Issuer’s Quarterly Report on Form 10-Q for the quarter ended September 29, 2007 filed with the Securities and Exchange Commission on November 11, 2007.


CUSIP No. 989524301	13D	Page 3


1	NAME OF REPORTING PERSON S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON Riley Investment Management LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X]
3	SEC USE ONLY
4	SOURCE OF FUNDS* AF
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES		7	SOLE VOTING POWER 281,854¹
BENEFICIALLY OWNED BY		8	SHARED VOTING POWER 767,634²
EACH REPORTING		9	SOLE DISPOSITIVE POWER 281,854¹
PERSON WITH		10	SHARED DISPOSITIVE POWER 767,634²
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,049,388²
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES* [ ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.2%³
14	TYPE OF REPORTING PERSON* IA

———————

Because Riley Investment Management LLC has sole investment and voting power over 281,854 shares of Common Stock held by Riley Investment Partners Master Fund, L.P., Riley Investment Management LLC may be deemed to have beneficial ownership of these shares.


CUSIP No. 989524301	13D	Page 4


1	NAME OF REPORTING PERSON S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON B. Riley & Co., LLC
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X]
3	SEC USE ONLY
4	SOURCE OF FUNDS* WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES		7	SOLE VOTING POWER 84,300
BENEFICIALLY OWNED BY		8	SHARED VOTING POWER -0-
EACH REPORTING		9	SOLE DISPOSITIVE POWER 84,300
PERSON WITH		10	SHARED DISPOSITIVE POWER -0-
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 84,300
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES* [ ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) .5%¹
14	TYPE OF REPORTING PERSON* BD

———————


CUSIP No. 989524301	13D	Page 5


1	NAME OF REPORTING PERSON S.S. OR IRS. IDENTIFICATION NO. OF ABOVE PERSON Bryant R. Riley
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X]
3	SEC USE ONLY
4	SOURCE OF FUNDS* AF, WC
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES		7	SOLE VOTING POWER 281,854¹
BENEFICIALLY OWNED BY		8	SHARED VOTING POWER 851,934²
EACH REPORTING		9	SOLE DISPOSITIVE POWER 281,854¹
PERSON WITH		10	SHARED DISPOSITIVE POWER 851,934²
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,133,788²
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES SHARES* [ ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.7%³
14	TYPE OF REPORTING PERSON* IN

———————

Because Riley Investment Management LLC has sole voting and investment power over Riley Investment Partners Master Fund, L.P.’s security holdings and Mr. Riley, in his role as the sole manager of Riley Investment Management LLC, controls its voting and investment decisions, each of Riley Investment Partners Master Fund, L.P., Riley Investment Management LLC, and Mr. Riley may be deemed to have beneficial ownership of the 281,854 shares of Common Stock held by Riley Investment Partners Master Fund, L.P.

Riley Investment Management LLC has shared voting and dispositive power over 767,634 shares of Common Stock held by its investment advisory clients, which are held by investment advisory accounts indirectly affiliated with Mr. Riley or Riley Investment Partners Master Fund, L.P. B. Riley & Co., LLC has sole voting and dispositive power over 84,300 shares of Common Stock. Mr. Riley is the Chairman and sole indirect equity owner of B. Riley & Co., LLC.


CUSIP No. 989524301	13D	Page 6


CUSIP No. 989524301	13D	Page 7

Item 4.

Purpose of the Transaction

Item 4 is hereby amended to add the following:

Upon the Issuer’s request, UEIC agreed to extend the expiration of its acquisition proposal to January 29, 2008.

The agreement that UEIC and RIP entered into on January 11, 2008 with respect to the proposed acquisition and related matters (the “Coordination Agreement”) is attached as Exhibit A. The following description of the Coordination Agreement is qualified in its entirety by reference to the agreement attached as Exhibit A. Under the Coordination Agreement, UEIC agreed to propose to the Issuer a merger with or an acquisition of all of the issued and outstanding shares of the Issuer’s capital stock at a price per share not to exceed $4.50 pursuant to an agreed upon form letter, a “UEI Initiated Transaction”. The entering into any definitive agreements with respect to a UEI Initiated Transaction, other Change in Control Transaction or the definitive acquisition agreements with respect to the sale of the Issuer’s assets is subject to each party’s reasonable satisfaction with due diligence and reasona ble mutual agreement as to the terms and conditions of the definitive agreements. In addition, these agreements may not be amended or modified, or any condition set forth in such agreements may not be waived, without the consent of the other party.

Under the Coordination Agreement, subject to the above described conditions, upon the consummation of a UEI Initiated Transaction by a party or a joint acquisition vehicle, the acquirer is obligated to sell UEIC the remote-control related assets of the Issuer and to sell to RIP the remaining assets, as applicable, and the respective parties are obligated to purchase such assets. In each case the purchase price for such assets is 50% of the aggregate purchase price of the UEI Initiated Transaction. The purchase price is equal to (i) the sum of (x) the price per share paid multiplied by the number of shares purchased, in connection with such a transaction and (y) the debt of the Issuer that is assumed in connection with such a transaction, minus (ii) the Issuer’s cash on hand as at the consummation of such transaction, plus (iii) the Issuer’s transaction expenses and change in control payments triggered by the transaction. In additio n, subject to the above described conditions, upon a Change in Control Transaction, the acquirer and the parties have similar obligations; except that in the case of a Change in Control Transaction where RIP is an acquiror, such obligation does not arise unless RIP acquires 50% of the outstanding equity of the Issuer. A “Change in Control Transaction” is defined under the Coordination Agreement as any merger, acquisition (whether for stock or for assets), tender or exchange offer or other business combination resulting in RIP, UEIC or a joint acquisition vehicle as owning, directly or indirectly, more than fifty percent of the voting securities of the Issuer, or having the right to elect the majority of the Issuer’s board of directors.

Under the Coordination Agreement, the parties entered into a standstill that lasts until the shorter of two years after the date of a Change in Control Transaction or UEI Initiated Transaction or four years after the date of the Coordination Agreement. Generally, under the standstill, a party may not, and may not authorize or permit its affiliates, directors, employees and other enumerated representatives or the Issuer to, sell to any person other than the other party the remote-control assets (with respect to UEIC) or the other assets (with respect to RIP); solicit, initiate, encourage or facilitate, or furnish or otherwise disclose information in furtherance of any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead to a sale of such assets (or any portion thereof) to another party; negotiate or otherwise engage or participate in discussions with another party with respect to such a proposal; or e nter into any letter of intent, agreement-in-principle, acquisition agreement or other similar agreement with any other party with respect to a sale of such assets. However, the standstill will not be breached where RIP or its representatives recuse themselves from any consideration or decision making process with respect to any transaction involving a sale of the remote control assets and do not have any material involvement in such consideration or decision making.

Otherwise, the Coordination Agreement generally terminates after 2 years unless definitive agreements with respect to a UEI Initiated Transaction are entered into prior to such time.


CUSIP No. 989524301	13D	Page 8

Item 5.

Interest in Securities of the Issuer

Item 5(c) is hereby amended to add the following:

(c)

In the ordinary course of business, BRC may effect transactions in connection with its market making activities, as well as for customer transactions. On January 18, 2008, RIP purchased 100 shares of common stock at a per share price of $3.00.

Item 6.

Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

Item 6 is hereby amended to add the following:

The Coordination Agreement entered into by UEIC and RIP is described above under Item 4.

Item 7.

Material to be filed as Exhibits

Exhibit A Coordination Agreement, dated January 11, 2008, between Universal Electronics Inc. and Riley Investment Partners Master Fund, L.P. Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.


CUSIP No. 989524301	13D	Page 9

SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: January 22, 2008


		Riley Investment Partners Master Fund, L.P.
			By: Riley Investment Management LLC, its General
			Partner
		By:	/s/ Bryant R. Riley
			Bryant R. Riley, Managing Member


		Riley Investment Management LLC


		By:	/s/ Bryant R. Riley
			Bryant R. Riley, Managing Member
		B. Riley & Co, LLC


		By:	/s/ Bryant R. Riley
			Bryant R. Riley, Chairman



		By:	/s/ Bryant R. Riley
			Bryant R. Riley

EX-99.A 2 exhibita.htm EXHIBIT A United States Securities and Exchange Commission EDGAR Filing

EXHIBIT A

COORDINATION AGREEMENT

THIS COORDINATION AGREEMENT (this “Agreement”), dated as of January 11, 2008, is entered into by and between Riley Investment Partners Master Fund, L.P., a Cayman Islands limited partnership (“Riley”) and Universal Electronics Inc., a Delaware corporation (“UEI”). Riley and UEI are each individually referred to herein as a “Party” and collectively as the “Parties”.

WHEREAS, in the event of a Change in Control Transaction resulting in Riley or Acquisition Co. being in Control of ZiLOG, Inc., a Delaware corporation (“ZiLOG”) or the ZiLOG Remote Control Business, the Parties desire to cause the ZiLOG Remote Control Business Assets to be sold to UEI immediately upon a consummation of any such transaction and, in connection therewith, for UEI to employ certain of the personnel situated in the United States and Asia (including India) employed by ZiLOG in connection with the ZiLOG Remote Control Business (“ZiLOG Remote Control Business Personnel”); and

WHEREAS, in the event of a Change in Control Transaction resulting in UEI being in Control of ZiLOG, UEI desires to cause the ZiLOG Other Assets to be sold to Riley immediately upon a consummation of any such transaction;

NOW, THEREFORE, in consideration of the Parties’ mutual covenants and agreements set forth herein, and for other good, valuable and adequate consideration received, the Parties agree as follows:

ARTICLE I

CHANGE IN CONTROL TRANSACTION;
SUBSEQUENT SALE OF ZILOG REMOTE CONTROL BUSINESS ASSETS TO UEI
OR SUBSEQUENT SALE OF ZILOG OTHER ASSETS TO RILEY

1.1

Obligations In Connection with Any Change in Control Transaction.

(a)

Obligation of Parties in Connection with UEI Initiated Transaction. The Parties contemplate and acknowledge that immediately upon execution of this Agreement by each Party, UEI will propose to ZiLOG a merger with, or an acquisition of all of the issued and outstanding shares of the capital stock of, ZiLOG, at a price per share not to exceed Four Dollars and Fifty Cents ($4.50) (the “Offer Price”) via letter, the form of which is attached as Exhibit A (a “UEI Initiated Transaction”). UEI shall provide written confirmation to Riley of either (i) receipt of an acceptance by the Chief Executive Officer and/or Board of Directors of ZiLOG of such proposal, (ii) receipt by UEI of a r ejection by the Chief Executive Officer and the Board of Directors of ZiLOG of such proposal or (iii) the failure of ZiLOG to respond to such proposal within the time required by UEI to do so.

(b)

Cooperation. As applicable, each Party shall keep the other Party informed as to their respective expectations as to the timing and occurrence of the consummation of either

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the UEI Initiated Transaction or another Change in Control Transaction and shall promptly and accurately respond to any inquiries from the other Party in respect thereof. The entering into any definitive agreements in respect of a UEI Initiated Transaction, other Change in Control Transaction, or definitive acquisition agreements pursuant to Section 1.1(c)(i) is subject to each party’s reasonable satisfaction with due diligence and reasonable mutual agreement as to the terms and conditions of the definitive agreements. No definitive agreement in respect of any such UEI Initiated Transaction, other Change in Control Transaction, or definitive acquisition agreements pursuant to Section 1.1(c)(i) may be amended or modified, nor any condition set forth therein waived, without the prior consent of such other Party. [**]

(c)

Obligation to Sell ZiLOG Remote Control Business Assets or ZiLOG Other Assets.

(i)

Subject to Section 1.1(b), as applicable:

(A)

Immediately upon the consummation of a UEI Initiated Transaction where Acquisition Co. is the acquirer, the Parties shall cause Acquisition Co. to cause ZiLOG (and its Affiliates, as applicable) to sell to UEI, and UEI shall purchase, the ZiLOG Remote Control Business Assets and UEI shall assume the related Liabilities for 50% of the Purchase Price of the UEI Initiated Transaction; or

(B)

Immediately upon the consummation of a UEI Initiated Transaction where Riley or its designee is the acquirer, Riley shall (or shall cause its designee to) cause ZiLOG (and its Affiliates, as applicable) to sell to UEI, and UEI shall purchase, the ZiLOG Remote Control Business Assets and UEI shall assume the related Liabilities for 50% of the Purchase Price of the UEI Initiated Transactions; or

(C)

Immediately upon the consummation of a UEI Initiated Transaction where UEI is the acquirer, UEI shall cause ZiLOG (and its Affiliates, as applicable) to sell to Riley or its designee, and Riley shall (or shall cause its designee to) purchase, the ZiLOG Other Assets and Riley shall assume the related Liabilities for 50% of the Purchase Price of the UEI Initiated Transactions; or

(D)

Immediately upon the consummation of a Change in Control Transaction (other than a UEI Initiated Transaction) where Acquisition Co. is the acquirer, the Parties shall cause Acquisition Co. to cause ZiLOG (and its Affiliates, as applicable) to sell to UEI, and UEI shall purchase, the ZiLOG Remote Control Business Assets and UEI shall assume the related Liabilities for 50% of the Purchase Price of the Change in Control Transaction (with the Purchase Price to be determined as if 100% of the outstanding stock of ZiLOG had been acquired, but in any case for a per share purchase price of no less than the Offer Price); or

(E)

Immediately upon the consummation of a Change in Control Transaction (other than a UEI Initiated Transaction) where UEI is the acquirer, UEI shall cause ZiLOG (and its Affiliates, as applicable) to offer to Riley, and if Riley so agrees, to, sell to Riley or its designee the ZiLOG Other Assets and the related Liabilities for 50% of the Purchase Price of the Change in Control Transaction (with the Purchase

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Price to be determined as if 100% of the outstanding stock of ZiLOG had been acquired, but in any case for a per share purchase price of no less than the Offer Price); or

(F)

Immediately upon the consummation of a Change in Control Transaction (other than a UEI Initiated Transaction) where Riley (or its designee) is the acquirer of 50% of the outstanding equity of ZiLOG, Riley shall (or shall cause its designee to) cause ZiLOG (and its Affiliates, as applicable) to sell to UEI, and UEI shall purchase, the ZiLOG Remote Control Business Assets and UEI shall assume the related Liabilities for 50% of the Purchase Price of the Change in Control Transaction (with the Purchase Price to be determined as if 100% of the outstanding stock of ZiLOG had been acquired, but in any case for a per share purchase price of no less than the Offer Price).

(ii)

From the date hereof through the shorter of (A) two (2) years following the consummation of any Change in Control Transaction (including a UEI Initiated Transaction) where Riley (or an Affiliate or designee of Riley) is the acquirer or (B) four (4) years from the date hereof (the “Riley Exclusivity Period”), Riley shall not, directly or indirectly, and shall not authorize or permit ZiLOG (or its Affiliates), any of Riley’s Affiliates or designees , or any directors, officers, employees, investment bankers, lawyers, accountants, agents or representatives of it or its Affiliates or its designees (the fore going persons, collectively “Representatives”), directly or indirectly, to: (a) sell to any Person other than UEI the ZiLOG Remote Control Assets (or any portion thereof), (b) solicit, initiate, encourage or facilitate, or furnish or otherwise disclose information in furtherance of any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead a sale of the ZiLOG Remote Control Business Assets (or any portion thereof) to a Person other than UEI, (c) negotiate or otherwise engage or participate in discussions with any Person other than UEI with respect to any proposal that constitutes or may reasonably be expected to lead to a sale of the ZiLOG Remote Control Business Assets (or any portion thereof) or (d) enter into any letter of intent, agreement-in-principle, acquisition agreement or other similar agreement with any Person other than UEI with respect to a sale of the ZiLOG Remote Control Business Assets; provided that foregoing provisions shall not be breached where Riley or its Representatives recuse themselves from any consideration or decision making process with respect to any transaction involving a sale of the ZiLOG Remote Control Assets and do not have any material involvement in such consideration or decision making. During the Riley Exclusivity Period, Riley shall promptly advise UEI in writing of the receipt, directly or indirectly, of any written inquiries or proposals that constitute or may reasonably be expected to lead to a sale to a Person other than UEI of the ZiLOG Remote Control Business Assets (or any portion thereof) and promptly furnish to UEI a copy of any such written inquiry or proposal or, if it is not in writing, provide UEI a detailed written description of the terms and substance of any discussion relating to such inquiry or proposal. Riley represents and warrants to UEI that neither Riley nor any Affiliate of Riley is a party to or otherwise bound by any agreement with respect to selling to a Person other than UEI the ZiLOG Remote Control Business Assets (or any portion thereof).

(iii)

From the date hereof through the shorter of (A) two (2) years following the consummation of any Change in Control Transaction (including a UEI Initiated Transaction) where UEI is the acquirer or (B) four (4) years from the date hereof (the “UEI Exclusivity Period”), UEI shall not, directly or indirectly, and shall not authorize or permit ZiLOG (or its Affiliates), any

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of UEI’s Representatives, directly or indirectly, to: (a) sell to any Person other than Riley the ZiLOG Other Assets (or any portion thereof), (b) solicit, initiate, encourage or facilitate, or furnish or otherwise disclose information in furtherance of any inquiries or the making of any proposal that constitutes or may reasonably be expected to lead a sale of the ZiLOG Other Assets (or any portion thereof) to a Person other than Riley, (c) negotiate or otherwise engage or participate in discussions with any Person other than Riley with respect to any proposal that constitutes or may reasonably be expected to lead to a sale of the ZiLOG Other Assets (or any portion thereof) or (d) enter into any letter of intent, agreement-in-principle, acquisition agreement or other similar agreement with any Person other than Riley with respect to a sale of the ZiLOG Other Assets; provided that the foreg oing provisions shall not be breached where UEI or its Representatives recuse themselves from any consideration or decision making process with respect to any transaction involving a sale of the ZiLOG Other Assets and do not have any material involvement in such consideration or decision making. During the UEI Exclusivity Period, UEI shall immediately advise Riley in writing of the receipt, directly or indirectly, of any written inquiries or proposals that constitute or may reasonably be expected to lead to a sale to a Person other than Riley of the ZiLOG Other Assets (or any portion thereof) and promptly furnish to Riley a copy of any such written inquiry or proposal or, if it is not in writing, provide Riley a detailed written description of the terms and substance of any discussion relating to such inquiry or proposal. UEI represents and warrants to Riley that neither UEI nor any Affiliate of UEI is a party to or otherwise bound by any agreement with respect to selling to a Person other than Riley the ZiLOG Other Assets (or any portion thereof).

1.2

Contribution of the Parties; Purchase Price for ZiLOG Remote Control Business Assets.

(a)

Contributions. Subject to Section 1.1, as applicable:

(i)

If the UEI Transaction is structured as a purchase by the Acquisition Co., each Party shall effect capital contributions into Acquisition Co. immediately prior to the consummation of the UEI Initiated Transaction in an amount equal to fifty percent (50%) of the Purchase Price paid in the UEI Initiated Transaction. The “Purchase Price” is equal to (i) the sum of (x) the price per share paid multiplied by the number of shares of ZiLOG purchased, in connection with such a transaction and (y) the debt of ZiLOG that is assumed in connection with such a transaction (for purposes of clarification, such assumed debt shall be the amount of the debt of ZiLOG that is not paid off as at the consummation of such transaction or in connection with the consummation of such closing out of the aggregate purchase price), minus (ii) ZiLOG’s cash on hand as at the consummation of such transaction, plus (iii) to the extent not reflected in clause (ii), ZiLOG’s transaction expenses and change in control payments triggered by the transaction. Prior to such contribution, the parties must mutually agree on the organizational documents and structure of the Acquisition Co.

(ii)

At the written request of Riley, UEI shall, or shall cause an Affiliate of UEI to, pay an amount equal to fifty percent (50%) of the Purchase Price to be paid in connection with a consummation of a UEI Initiated Transaction where Riley is the acquirer or a Change in Control Transaction other than a UEI Initiated Transaction (UEI’s contributed amount in accordance with Section 1.2(a)(i) and UEI’s contributed amount in accordance with this Section 1.2(a)(ii) each the “UEI Contribution”) immediately prior to the consummation of the transaction.

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(iii)

At the written request of UEI, Riley shall, or shall cause an Affiliate of Riley or a designee to, pay an amount equal to fifty percent (50%) of the Purchase Price to be paid in connection with a consummation of a UEI Initiated Transaction where UEI is the acquirer (Riley’s contributed amount in accordance with this Section 1.2(a)(iii) the “Riley Contribution”) immediately prior to the consummation of the UEI Initiated Transaction.

(b)

Purchase Price for ZiLOG Remote Control Business Assets. In all cases, the Purchase Price to be paid by UEI for the purchase of the ZiLOG Remote Control Business Assets, as applicable, shall be deemed and considered to be paid in full if UEI shall have previously made the UEI Contribution at the request of Riley, subject to a standard working capital purchase price adjustment, and no further consideration whatsoever, cash or otherwise, but subject to the terms of the acquisition agreements, shall be required to consummate such purchase.

(c)

Purchase Price for ZiLOG Other Assets. The Purchase Price to be paid by Riley for the purchase of the ZiLOG Other Assets, as applicable, shall be deemed and considered to be paid in full if Riley shall have previously made the Riley Contribution at the request of UEI, subject to a standard working capital purchase price adjustment, and no further consideration whatsoever, cash or otherwise, but subject to the terms of the acquisition agreements, shall be required to consummate such purchase.

1.3

Definitive Purchase Agreement. The sale and purchase of either (as applicable) (i) the ZiLOG Remote Control Business Assets to UEI or (ii) the ZiLOG Other Assets to Riley shall be documented in certain definitive agreements mutually agreed by the parties, including without limitation (and as applicable), a purchase agreement, a transition services agreement, an indemnity agreement, licenses, a non competition agreement (for a [**] year term commencing immediately upon the consummation of such sale and purchase and which agreement shall, in the case of a sale of the ZiLOG Remote Control Business Assets to UEI, among other things, prohibit (a) the re-creation, directly or indirectly, of a database of infra red codes that is similar to the database of infra red codes included in the ZiLOG Remote Control Business Assets and (b) the re-entering, d irectly or indirectly, into a business that is competitive with the ZiLOG Remote Control Business and which agreement shall, with respect to the ZiLOG Other Assets to Riley or its designee, among other things, prohibit the entering or re-entering, directly or indirectly, into a business that is competitive with a business related to the ZiLOG Other Assets) and such other agreements, documents and legal opinions necessary to effectuate such sale and purchase. In the case of a UEI Initiated Transaction or any other Change in Control Transaction, the foregoing described definitive agreements must be substantially finalized prior to the execution of the definitive agreements with ZiLOG. [**].

1.4

Injunctive Relief. The remedy at law for any breach of this Agreement may be inadequate, and in the event of a breach or threatened breach by a Party of this Agreement, the other Party shall be entitled, in addition to any other rights or remedies that Party may have, in law or equity, to an injunction restraining such allegedly breaching Party from breaching or otherwise violating any provision of this Agreement.

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ARTICLE II

GENERAL

2.1

Certain Definitions. As used herein, the following terms have the following meanings:

(a)

“Acquisition Co.” means an entity formed, owned in equal percentages and controlled equally by Riley and UEI for the purposes of effecting a UEI Initiated Transaction.

(b)

“Affiliate” means any Person that directly, or indirectly through one or more Persons, Controls, is Controlled by, or is under common Control with, the Person specified.

(c)

“Change in Control Transaction” means any merger, acquisition (whether for stock or for assets), tender or exchange offer or other business combination resulting in Riley, UEI or Acquisition Co. being in Control of ZiLOG or the ZiLOG Remote Control Business.

(d)

“Control” means, with respect to any Person, the ownership, directly or indirectly, through one or more intermediaries, of more than fifty percent (50%) of the voting securities of a Person, or the right to elect the majority of the board of directors or such other similar governing body .

(e)

“Liability” means any liability or obligation, whether known or unknown, asserted or unasserted, absolute, fixed or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due, regardless of when asserted, including without limitation arising out of litigation, actions, suits, claims or proceedings.

(f)

“Person” means and shall be construed broadly and includes without limitation a or an individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture, unincorporated organization or governmental agency or authority.

(g)

“Riley” means Riley Investment Partners Master Fund, L.P., a Cayman Islands limited partnership or an Affilate of Riley.

(h)

“UEI” means Universal Electronics Inc., a Delaware corporation or an Affilate of UEI.

(i)

“ZiLOG Other Assets” means all of the assets, properties, rights and interests of any kind, whether tangible or intangible, real or personal, owned, used, useful, occupied or held by or for the benefit of ZiLOG or its Affiliates (including subsidiaries) other than the ZiLOG Remote Control Business Assets.

(j)

“ZiLOG Remote Control Business” means the business of ZiLOG and its Affiliates (including subsidiaries) involving the development of infra red technology for use in manufacturing universal remote control devices and the maintaining a database of related infra red codes.

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(k)

“ZiLOG Remote Control Business Assets” means all of the assets, properties, rights and interests of any kind, whether tangible or intangible, real or personal, owned, used, useful, occupied or held by or for the benefit of ZiLOG or its Affiliates (including subsidiaries) in the operation of or related to the ZiLOG Remote Control Business, wherever situated, including without limitation the complete database of infra red codes, all database tools, and the other intellectual property described generally on Schedule 1 hereto.

2.2

Representations and Warranties. Each Party represents and warrants to the other that (a) it has the requisite power and authority to enter into and perform the terms of this Agreement and that no further authority or approval is necessary to do so, (b) that the person executing this Agreement on its behalf has the full right and authority to fully commit and bind it and (c) that this Agreement constitutes the valid and binding obligation of such Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and to general principles of equity.

2.3

Governing Law; Dispute Resolution. This Agreement shall in all respects be governed by and construed in accordance with the laws of the State of California, without regard to its conflicts of law doctrine. The Parties hereby irrevocably submit and agree to the exclusive jurisdiction and venue of the courts of the State of California, located in Orange County. The prevailing Party in any dispute hereunder shall be entitled to all expenses, including attorneys’ fees and costs, incurred in connection with any dispute hereunder.

2.4

Costs and Expenses. Each Party is solely responsible for all of its own costs and expenses (including without limitation attorney and accounting fees) incurred in connection with the transactions contemplated herein, including without limitation the negotiation, execution, delivery and performance of this Agreement; except that the Parties hereto shall share equally all costs and expenses incurred after the date hereof in connection with a UEI Initiated Transaction or other Change in Control Transaction where the other Party is obligated to acquire ZiLOG assets pursuant to Section 1.1(c)(i) up to a maximum of $[**] per Party. Any costs and expenses incurred by a Party in connection with a UEI Initiated Transaction or other Change in Control Transaction in excess of the $[**] maximum shall be borne by the Party incurring such excess costs and expenses.

2.5

Termination. Except and to the extent set forth in Sections 1.1(c), this Agreement shall terminate two (2) years after the date set forth above; provided that if definitive agreements with respect to a UEI Initiated Transaction are entered into prior to two (2) years from the date hereof, the Agreement shall survive until the Parties respective obligations are performed in accordance with the terms of the Agreement.

2.6

Amendments. This Agreement may be amended only by a writing executed by both Parties .

2.7

Entire Agreement. This Agreement sets forth the entire understanding of the Parties with respect to the subject matter hereof, and supersedes all prior contracts, agreements, arrangements, communications, discussions, representations and warranties, whether oral or written, between the Parties.

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2.8

Assignment. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of each Party, but except as otherwise provided in this Agreement, no rights, obligations or liabilities hereunder shall be assignable by either Party without the prior written consent of the other Party, and any purported assignment in violation of this Section2.7 shall be null and void ab initio; provided, however, either Party may elect (upon written notice sent to the other Party) to assign its rights and obligations under this Agreement to any Affiliate of such Party (including a subsidiary formed for such purpose) and to cause such Affiliate to perform the obligations of such Party under this Agreement; provided, further, that no such assignment shall otherwise vary or diminish any of the assigning Party’s obligations und er this Agreement to the extent its Affiliate fails to duly perform the obligations of the assigning Party under this Agreement.

2.9

Interpretation; Severability. No Party, nor its counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions of this Agreement, and all provisions of this Agreement shall be construed in accordance with their fair meaning, and not strictly for or against any Party. Wherever possible, each provision of this Agreement shall be interpreted so as to be effective and valid under applicable law, but if any provision is held to be invalid under applicable law, either in whole or in part, such provision shall be ineffective only to the extent of such invalidity, without invalidating any remaining portion of such provision or the remaining provisions of this Agreement.

[Signatures Contained on the Following Page]

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IN WITNESS WHEREOF, the Parties have caused their duly authorized representatives to execute this Agreement as of the date first above written.


	RILEY INVESTMENT PARTNERS MASTER FUND, L.P.
	By: Riley Investment Management LLC, its General Partner

	By:	/s/ Bryant Riley
		Bryant Riley, Managing Member


	UNIVERSAL ELECTRONICS INC.

	By:	/s/ Paul D. Arling
		Paul D. Arling, Chief Executive Officer

[**] = Portions of this exhibit have been omitted pursuant to a confidential treatment request. An unredacted version of this exhibit has been filed separately with the Commission.

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