1
EXHIBIT 99.1
ESCROW AGREEMENT
AMONG
CYPRESS SEMICONDUCTOR CORPORATION,
IC WORKS, INC.
AND
U.S BANK TRUST, N.A.
AS ESCROW AGENT
DATED
AS OF JANUARY 21, 1999
2
TABLE OF CONTENTS
PAGE
-------
1. Escrow Amount............................................... 1
2. Escrow Period............................................... 1
3. Protection of Escrow Account................................ 2
4. Claims Upon Escrow Account.................................. 2
5. Objections to Claims........................................ 2
6. Resolution of Conflicts; Arbitration........................ 2
7. Escrow Agent's Duties....................................... 3
8. Termination................................................. 5
9. Notices..................................................... 5
10. Interpretation.............................................. 6
11. Counterparts................................................ 6
12. Entire Agreement; Assignment................................ 6
13. Severability................................................ 6
14. Governing Law............................................... 6
15. Rules of Construction....................................... 6
16. No Third Party Beneficiaries................................ 7
17. Amendment................................................... 7
i
3
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement") is made and entered into as of January
21, 1999 (the "Effective Time"), by and among Cypress Semiconductor Corporation,
a Delaware corporation ("Parent"), IC WORKS, Inc., a California corporation (the
"Company"), and U.S. Bank Trust, N.A. as escrow agent (the "Escrow Agent").
Terms not defined herein shall have the meanings ascribed to them in the
Agreement and Plan of Reorganization between Parent, CY Acquisition Corporation,
a California corporation and a wholly owned subsidiary of Parent ("Sub"), and
the Company dated of even date herewith (the "Reorganization Agreement").
WHEREAS, the Company, Sub and Parent have entered into a Reorganization
Agreement which contemplates that the Company and Sub will enter into an
Agreement of Merger, which agreements provide for the merger (the "Merger") of
Sub with and into the Company. Pursuant to the Merger, all outstanding capital
stock of the Company will be converted into the right to receive Common Stock of
Parent.
WHEREAS, Section 8.1 of the Reorganization Agreement provides for termination
thereof by Parent, Sub or the Company under certain circumstances set forth
therein.
WHEREAS, Section 8.3 of the Reorganization Agreement provides for a loan (the
"Loan") by Parent to the Company of a principal amount of $10,000,000 (the "Loan
Amount") in event of termination of the Reorganization Agreement under certain
circumstances set forth therein.
WHEREAS, simultaneously with the execution of the Reorganization Agreement, the
parties hereto shall execute and deliver this Agreement and Parent shall deposit
cash in an amount equal to the Loan Amount and the Company shall deposit an
executed promissory note in the principal amount of $10,000,000 in the form
attached hereto as Exhibit A (the "Note") into a separate, specifically
designated account to be held in escrow to secure the parties' obligations on
the terms and conditions set forth herein and in the Reorganization Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained in the Reorganization Agreement and herein made, the parties hereto
agree as follows:
1. Escrow Amount.
(a) Simultaneously with the execution hereof, (i) Parent shall place $10,000,000
(the "Escrow Amount") into an interest-bearing account to be held in escrow in
accordance with this Agreement (the "Escrow Account"), and (ii) the Company
shall deliver to the Escrow Agent an originally executed Note in the form
attached hereto as Exhibit A, to be held by the Escrow Agent until further
disposition as provided in Section 4 of this Agreement.
(b) All interest (the "Accrued Interest") earned on the Escrow Amount shall be
for the benefit of Parent.
2. Escrow Period. Subject to the following requirements, the Escrow Account
shall be in existence immediately following the date hereof and shall terminate
on the earlier of: (i) the consummation of the Merger, or (ii) at 11:59 p.m.
(California time) on the third business day following the date of termination of
the Reorganization Agreement pursuant to Section 8.1 thereof (the "Escrow
Period"); provided that the Escrow Period shall not
1
4
terminate in the event a Payment Certificate (as defined in Section 4 below) is
delivered to the Escrow Agent before expiration of the Escrow Period, until the
claim in the Payment Certificate has been resolved pursuant to the procedures
set forth in this Agreement. In the event the Escrow Period elapses without
delivery of a Payment Certificate in accordance with Section 4 below, the Escrow
Agent shall return the Escrow Amount and all Accrued Interest to Parent and
return the originally executed Note to the Company.
3. Protection of Escrow Account.
(a) The Escrow Agent shall hold and safeguard the Escrow Account during the
Escrow Period, shall treat such fund as a trust fund in accordance with the
terms of this Agreement and not as the property of Parent or the Company and
shall hold and dispose of the Escrow Account only in accordance with the terms
of this Agreement.
(b) The Escrow Amount shall be invested in U.S. Treasury Bills with maturities
of not more than thirty (30) days (or in a U.S. Bank money market account for
shorter periods of time) and any Accrued Interest shall be reserved for payment
to Parent. Parent shall be liable for any Taxes with respect to Accrued Interest
paid to Parent.
4. Claims Upon Escrow Account. At any time on or before the last day of the
Escrow Period, if a Triggering Event (as defined in Section 8.3 of the
Reorganization Agreement) has occurred, the Company shall deliver to the Escrow
Agent a certificate signed by an officer of the Company (a "Payment
Certificate") stating that a Triggering Event has occurred. Subject to the
provisions of Section 5 hereof, the Escrow Agent shall (i) deliver the Loan
Amount in cash to the Company and (ii) (A) date the Note as of the date of the
Payment Certificate and (B) deliver the originally executed Note and Accrued
Interest to Parent. In no event shall the Escrow Agent release the originally
executed Note to Parent without releasing the Loan Amount in cash to the
Company, or vice versa.
5. Objections to Claims. At the time of delivery of any Payment Certificate to
the Escrow Agent, the Company shall deliver a duplicate copy of such certificate
to Parent, and for a period of two (2) business days after the date of such
delivery to Parent, the Escrow Agent shall make no delivery to the Company of
any cash from the Escrow Account nor any delivery to Parent of the originally
executed Note pursuant to Section 4, unless the Escrow Agent shall have received
a written certification by an executive officer of Parent addressed to the
Escrow Agent and the Chief Executive Officer of the Company certifying that the
Reorganization Agreement remains in full force and effect and has not been
terminated. After the expiration of such two (2) business day period, the Escrow
Agent shall (i) deliver the Loan Amount in cash to the Company and (ii) (A) date
the Note as of the date of the Payment Certificate and (B) deliver the
originally executed Note and Accrued Interest to Parent; provided, however, that
no such payment or delivery may be made if Parent shall object to such delivery
in a written statement to the Escrow Agent (with a copy delivered to the
Company), and such statement shall have been delivered to the Escrow Agent prior
to the expiration of such two (2) business day period.
6. Resolution of Conflicts; Arbitration.
(a) In case Parent shall object in writing to the Payment Certificate in the
manner set forth above within two (2) business days after the date of delivery
of such Payment Certificate to the Escrow Agent and Parent, such dispute will be
submitted to arbitration before a single arbitrator in accordance with the rules
of the American Arbitration Association. The sole issue before such arbitrator
will be whether, as of the date of the
2
5
Payment Certificate, the Reorganization Agreement had terminated. The decision
of the arbitrator as to the validity of the Payment Certificate shall be binding
and conclusive upon the parties to this Agreement, and notwithstanding anything
in Section 5 hereof, the Escrow Agent shall be entitled to act in accordance
with such decision and make or withhold payments out of the Escrow Account in
accordance therewith. Such decision shall be written and shall be supported by
written findings of fact and conclusions which shall set forth the award,
judgment, decree or order awarded by the arbitrator.
(b) Judgment upon any award rendered by the arbitrators may be entered in any
court having jurisdiction. Any such arbitration shall be held in Santa Xxxxx
County, California under the Commercial Arbitration Rules then in effect of the
American Arbitration Association. The arbitrators shall determine how all
expenses relating to the arbitration shall be paid, including without
limitation, the respective expenses (including legal fees) of each party, the
fees of each arbitrator and the administrative fee of the American Arbitration
Association; provided that Parent agrees to pay up to $250,000 of reasonable and
documented legal fees of the Company related to the arbitration.
7. Escrow Agent's Duties.
(a) The Escrow Agent shall be obligated to perform only such duties as are
specifically set forth herein, and as may be set forth in any additional written
escrow instructions which the Escrow Agent may receive after the date of this
Agreement which are signed by an officer of Parent and the Company, and may rely
and shall be protected in relying or refraining from acting on any instrument
reasonably believed to be genuine and to have been signed or presented by the
proper party or parties. The Escrow Agent shall not be liable for any act done
or omitted hereunder as Escrow Agent while acting in good faith and in the
exercise of reasonable judgment, and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith.
(b) The Escrow Agent is hereby expressly authorized to disregard any and all
warnings given by any of the parties hereto or by any other person, excepting
only orders or process of courts of law, and is hereby expressly authorized to
comply with and obey orders, judgments or decrees of any court. In case the
Escrow Agent obeys or complies with any such order, judgment or decree of any
court, the Escrow Agent shall not be liable to any of the parties hereto or to
any other person by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
(c) The Escrow Agent shall not be liable in any respect on account of the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver this Agreement or any documents or papers
deposited or called for hereunder.
(d) The Escrow Agent shall not be liable for the expiration of any rights under
any statute of limitations with respect to this Agreement or any documents
deposited with the Escrow Agent.
(e) In performing any duties under this Agreement, the Escrow Agent shall not be
liable to any party for damages, losses, or expenses, except for negligence or
willful misconduct on the part of the Escrow Agent. The Escrow Agent shall not
incur any such liability for (i) any act or failure to act made or omitted in
good faith, or (ii) any action taken or omitted in reliance upon any instrument,
including any written statement of affidavit provided for in this Agreement that
the Escrow Agent shall in good faith believe to be genuine, nor will the Escrow
Agent be liable or responsible for forgeries, fraud,
3
6
impersonations, or determining the scope of any representative authority. In
addition, the Escrow Agent may consult with legal counsel in connection with
performing the Escrow Agent's duties under this Agreement and shall be fully
protected in any act taken, suffered, or permitted by him/her in good faith in
accordance with the advice of counsel. The Escrow Agent is not responsible for
determining and verifying the authority of any person acting or purporting to
act on behalf of any party to this Agreement.
(f) If any controversy arises between the parties to this Agreement, or with any
other party, concerning the subject matter of this Agreement, its terms or
conditions, the Escrow Agent will not be required to determine the controversy
or to take any action regarding it. The Escrow Agent may hold all documents and
Escrow Amounts and may wait for settlement of any such controversy by final
appropriate legal proceedings or other means as, in the Escrow Agent's
discretion, the Escrow Agent may require, notwithstanding what may be set forth
elsewhere in this Agreement. In such event, the Escrow Agent will not be liable
for damages. Furthermore, the Escrow Agent may at its option file an action of
interpleader requiring the parties to this Agreement to answer and litigate any
claims and rights among themselves. The Escrow Agent is authorized to deposit
with the clerk of the court all documents, except all cost, expenses, charges
and reasonable attorney fees incurred by the Escrow Agent due to the
interpleader action and which the parties hereto severally agree to pay from the
Escrow Account. Upon initiating such action, the Escrow Agent shall be fully
released and discharged of and from all obligations and liability imposed by the
terms of this Agreement.
(g) The parties hereto and their respective successors and assigns agree jointly
to indemnify and hold Escrow Agent harmless against any and all losses, claims,
damages, liabilities, and expenses, including reasonable costs of investigation,
counsel fees, including allocated costs of in-house counsel and disbursements
that may be imposed on Escrow Agent or incurred by Escrow Agent in connection
with the performance of its duties under this Agreement, including but not
limited to any litigation arising from this Agreement or involving its subject
matter other than arising out of its negligence or willful misconduct.
(h) The Escrow Agent may resign at any time upon giving at least thirty (30)
days written notice to Parent and the Company; provided, however, that no such
resignation shall become effective until the appointment of the successor escrow
agent, which shall be accomplished as follows: the parties shall use their best
efforts to mutually agree on a successor escrow agent within thirty (30) days
after receiving such notice. If the parties fail to agree upon a successor
escrow agent within such time, the Escrow Agent shall have the right to appoint
a successor escrow agent authorized to do business in the State of California.
The successor escrow agent shall execute and deliver an instrument accepting
such appointment and it shall, without further acts, be vested with all the
estates, properties, rights, powers, and duties of the predecessor escrow agent
as if originally named as Escrow Agent. Upon appointment of a successor escrow
agent, the Escrow Agent shall be discharged from any further duties and
liability under this Agreement.
(i) All fees of the Escrow Agent for performance of its duties hereunder shall
be paid by Parent. Such fees and expenses shall be determined in accordance with
the fee schedule attached hereto as Exhibit A. It is understood that the fees
and usual charges agreed upon for services of the Escrow Agent shall be
considered compensation for ordinary services as contemplated by this Agreement.
In the event that the conditions of this Agreement are not promptly fulfilled,
or if the Escrow Agent renders any service not provided for in this Agreement,
or if the parties to this Agreement request a substantial modification of its
terms, or if any controversy arises, or if the Escrow Agent is made a party to,
or intervenes
4
7
in, any litigation pertaining to the Escrow Account or its subject matter, the
Escrow Agent shall be reasonably compensated for such extraordinary services and
reimbursed for all reasonable and documented costs, attorney's fees, including
allocated costs of in-house counsel, and expenses occasioned by such default,
delay, controversy or litigation. Parent promises to pay these sums upon demand
within a reasonable time period following such demand.
8. Termination. This Agreement and the Escrow Account created hereby shall
terminate following the Escrow Agent's delivery of all of the cash in the Escrow
Account and the originally executed Note to either the Company or Parent
pursuant to the terms hereof.
9. Notices. All notices and other communications hereunder shall be in writing
and shall be deemed given if delivered personally or by nationally recognized
commercial messenger or courier service or sent via facsimile (with
acknowledgment of complete transmission) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice) provided, however, that notices will not be deemed given until received:
if to Parent, to:
Cypress Semiconductor Corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: President
Telephone No.: (000) 000-0000
Facsimile No: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Xxxxxx X. Xxxx, Esq.
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
if to the Company, to:
IC WORKS, Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: President
5
8
with a copy to:
Venture Law Group
Professional Corporation
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Telephone No.: (650)
Facsimile No.: (650)
Attention: Tae Xxx Xxxx, Esq.
if to the Escrow Agent, to:
U.S. Bank Trust, N.A.
0 Xxxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Attention: Xxx Xxxxxx
10. Interpretation. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11. Counterparts. This Agreement may be executed in counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other party, it being understood that all parties need not sign the same
counterpart.
12. Entire Agreement; Assignment. This Agreement (together with the
Reorganization Agreement) (a) constitutes the entire agreement among the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings both written and oral, among the parties hereto
with respect to the subject matter hereof, (b) is not intended to confer upon
any other person any rights or remedies hereunder; and (c) shall not be assigned
by operation of law or otherwise, except that Parent may assign its respective
rights and delegate its respective obligations hereunder.
13. Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the extent possible, the economic, business and other
purposes of such void or unenforceable provision.
14. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws.
15. Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefor, waive the application of any law, regulation, holding or rule of
construction providing that
6
9
ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
16. No Third Party Beneficiaries. This Agreement shall not confer any rights or
remedies upon any person other than the parties hereto and their respective
successors and permitted assigns.
17. Amendment. This Agreement may not be amended except by a writing executed by
Parent, Company and the Escrow Agent.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the day
and year first above written.
CYPRESS SEMICONDUCTOR CORPORATION
By:
--------------------------------------
Its:
--------------------------------------
IC WORKS, INC.
By:
--------------------------------------
Its:
--------------------------------------
U.S. BANK TRUST, N.A.
By:
--------------------------------------
Its:
--------------------------------------
[SIGNATURE PAGE TO ESCROW AGREEMENT]
7
