Exhibit 99.4
------------
ESCROW AGREEMENT
This ESCROW AGREEMENT (the "Agreement") is entered into as of this 4th day
of May, 2005 (the "Closing Date"), among SIMTEK CORPORATION, a Colorado
corporation ("Simtek"), CYPRESS SEMICONDUCTOR CORPORATION, a Delaware
corporation ("Cypress"), and U.S. Bank, National Association ("Escrow Agent").
Capitalized terms used herein without definition shall have their respective
meanings as provided in the Share Purchase Agreement, dated as of the Closing
Date, by and between Simtek and Cypress (the "Purchase Agreement").
WHEREAS, Simtek and Cypress are entering into a business transaction
pursuant to the terms of the Production and Development Agreement, dated as of
the Closing Date, by and between Simtek and Cypress (the "Development
Agreement"), the Registration Rights Agreement, dated as of the Closing Date, by
and between Simtek and Cypress (the "Rights Agreement"), and the Purchase
Agreement (collectively, this Agreement, the Development Agreement, the Rights
Agreement and the Purchase Agreement are referred to herein as the "Transaction
Documents"); and
WHEREAS, in consideration of the transactions contemplated in the
Transaction Documents and subject to the terms and conditions provided herein,
Simtek has agreed to deposit $3,000,000 (the "Escrow Deposit") into an escrow
account established by Escrow Agent for the benefit of Cypress and Simtek (the
"Escrow Account").
NOW, THEREFORE, in consideration of the foregoing premises and the
respective covenants and agreements hereinafter contained, the parties hereby
agree as follows:
I. ESTABLISHMENT OF ESCROW DEPOSIT; SECURITY
1.1 Escrow Deposit. Contemporaneously with the execution hereof, Simtek has
transferred the Escrow Deposit by wire of immediately available funds into the
Escrow Account. Escrow Agent will hold and disburse the Escrow Deposit for the
benefit of Cypress and Simtek, as the case may be, in accordance with the terms
and provisions of this Agreement.
1.2 Security Interest. The Escrow Deposit shall not be available to satisfy
the debts or liabilities of either party other than pursuant to the Transaction
Documents. Simtek's obligations to Cypress under the Transaction Documents shall
be secured by a first priority security interest in the Escrow Deposit, which
Simtek hereby grants to Cypress (the "Security Interest"). Simtek represents and
warrants that (i) the Escrow Deposit is free from all liens, encumbrances and
security interests, (ii) that it has full right and power to grant the Security
Interest to Cypress, (iii) it will defend the Escrow Account against claims and
demands of all persons other than Cypress, and (iv) during the term of this
Agreement, Simtek shall not incur or permit to exist any mortgage, pledge, lien,
security interest or other encumbrance on the Escrow Deposit other than the
Security Interest.
1.3 Investments. Escrow Agent shall invest amounts received by Escrow Agent
in Eligible Investments and shall not be responsible or liable for any loss
accruing from any investment made in accordance herewith. "Eligible Investments"
shall mean direct obligations of, or obligations guaranteed as to principal and
interest by, the United States, the remaining maturities of which do not exceed
three months. For any period of time before such securities can be purchased by
the Escrow Agent or after the securities mature, the Escrow Deposit shall be
invested in a U.S. Bank money market account. All earnings and income received
from the investment of the Escrow Deposit shall be credited to an account
established for Simtek (the "Simtek Account"), and shall become a part of, the
Simtek Account (and any losses on such investments shall be debited from the
Simtek Account; provided however, that in no event shall the Simtek Account be
reduced to below zero as a result of such debits). Amounts in the Simtek Account
shall be deemed the property of Simtek, and Simtek shall be entitled to withdraw
from the Simtek Account at any time and from time to time during the term of
this Agreement.
II. THE ESCROW AGENT
2.1 Appointment. Simtek and Cypress hereby designate and appoint the Escrow
Agent as "Escrow Agent" under this Agreement and the Escrow Agent hereby accepts
such designation and appointment, subject to all of the provisions of this
Agreement.
(a) Each party to this Agreement (other than the Escrow Agent)
acknowledges and agrees that the Escrow Agent (i) shall not be responsible
for any of the agreements referred to or described herein, or for
determining or compelling compliance therewith, and shall not otherwise be
bound thereby, (ii) shall be obligated only for the performance of such
duties as are expressly and specifically set forth in this Agreement on its
part to be performed, each of which are ministerial (and shall not be
construed to be fiduciary) in nature, and no implied duties or obligations
of any kind shall be read into this Agreement against or on the part of the
Escrow Agent, (iii) shall not be obligated to take any legal or other
action hereunder which might in its reasonable judgment involve or cause it
to incur any expense or liability unless it shall have been furnished with
acceptable indemnification, (iv) may rely on and shall be protected in
acting or refraining from acting upon any written notice, instruction
(including wire transfer instructions, whether incorporated herein or
provided in a separate written instruction), instrument, statement,
certificate, request or other document furnished to it hereunder and
believed by it to be genuine and to have been signed or presented by the
proper person, and shall have no responsibility for determining the
accuracy thereof, and (v) may consult counsel satisfactory to it, including
in-house counsel, and the opinion or advice of such counsel in any instance
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with the opinion or advice of such counsel. Escrow Agent may act
in reliance upon any instructions signed on signature believed by it to be
genuine, and may assume that any person who gives any written instructions,
notice or receipt, or makes any statements in connection with the
provisions hereof, has been duly authorized to do so. Escrow Agent shall
have no duty to make inquiry as to the genuineness, accuracy or validity of
any statements or instructions or any signatures on statements or
instructions.
2
(b) Escrow Agent shall not be liable to anyone for any action taken or
omitted to be taken by it hereunder except in the case of the Escrow
Agent's gross negligence, bad faith or willful misconduct.
2.2 Successor. Escrow Agent may at any time resign as Escrow Agent
hereunder by giving thirty (30) days' prior written notice of resignation to
Cypress and Simtek or may be removed, with or without cause, by Cypress and
Simtek, acting jointly, at any time by giving of thirty (30) day's prior written
notice to the Escrow Agent. Such resignation or removal shall take effect upon
the appointment of a successor Escrow Agent as provided herein. Prior to the
effective date of the resignation or removal as specified in such notice,
Cypress will issue to the Escrow Agent a written instruction authorizing
redelivery of the Escrow Deposit to a bank or trust company that Cypress selects
as successor to the Escrow Agent hereunder, subject to the consent of Simtek
(which consent shall not be unreasonably withheld or delayed). If, however,
Cypress shall fail to name such a successor escrow agent within twenty (20) days
after the notice of resignation from Escrow Agent or removal, Simtek shall be
entitled to name such successor escrow agent. If no successor escrow agent is
named by Cypress or Simtek, Escrow Agent may apply to a court of competent
jurisdiction for appointment of a successor escrow agent.
2.3 Compensation, Expenses Reimbursement and Indemnification.
(a) Cypress agrees (i) to reimburse Escrow Agent for its reasonable
attorneys' fees and expenses incurred in connection with the preparation
and review of this Agreement and (ii) to pay Escrow Agent's compensation
for its normal services hereunder in accordance with Schedule I hereto.
(b) Cypress and Simtek each agree to reimburse the Escrow Agent for
50% of all reasonable costs and expenses incurred in connection with the
administration of this Agreement or the escrow created hereby or the
performance or observance of its duties hereunder which are in excess of
its compensation for normal services hereunder, including payment of any
reasonable legal fees and out-of-pocket expenses incurred by the Escrow
Agent in connection with the resolution of any claim by any party
hereunder.
(c) Escrow Agent may obtain reimbursement for its fees and expenses
from the Escrow Deposit, including reimbursement from any accrued earnings
resulting from the investment of the Escrow Deposit.
(d) Cypress and Simtek covenant and agree to jointly and severally
indemnify Escrow Agent (and its directors, officers and employees) and hold
it (and such directors, officers and employees) harmless from and against
any loss, liability, damage, cost and expense of any nature incurred by
Escrow Agent arising out of or in connection with this Agreement or with
the administration of its duties hereunder, including, but not limited to,
attorneys' fees and other costs and expenses of defending or preparing to
defend against any claim of liability unless and except to the extent such
loss, liability, damage, cost and expense shall be caused by the Escrow
Agent's gross negligence, bad faith or willful misconduct. The foregoing
3
indemnification and agreement to hold harmless shall survive the
termination of this Agreement and the resignation of the Escrow Agent.
2.4 Dispute Resolution. If, at any time, there shall exist any dispute
between Cypress and Simtek with respect to the holding or disposition of any
portion of the Escrow Deposit or any other obligations of Escrow Agent
hereunder, or if at any time Escrow Agent is unable to determine, to Escrow
Agent's sole satisfaction, the proper disposition of any portion of the Escrow
Deposit or Escrow Agent's proper actions with respect to its obligations
hereunder, or if Cypress and Simtek have not within thirty (30) days of the
furnishing by the Escrow Agent of a notice of resignation pursuant to Section
2.2 hereof, appointed a successor Escrow Agent to act hereunder, then the Escrow
Agent, in its sole discretion, may take either or both of the following actions:
(a) suspend the performance of any of its obligations under this
Agreement until such dispute or uncertainty shall be resolved and the
Escrow Agent has been provided with joint written instructions regarding
such dispute or uncertainty or until a successor Escrow Agent shall have
been appointed (as the case may be); and/or
(b) petition (by means of an interpleader action or any other
appropriate method) any court of competent jurisdiction in the State of
California, for instructions with respect to such dispute or uncertainty,
and pay into or deposit with such court all funds and Escrow Deposit held
by it in the Escrow Account for holding and disposition in accordance with
the instructions of such court.
The Escrow Agent shall have no liability to Cypress, Simtek or any other
person with respect to any such suspension of performance or disbursement to
court, specifically including any liability that may arise, or be alleged to
have arisen, out of or as a result of any delay in the disbursement of funds
held in the Escrow Account or any delay in or with respect to any other action
required or requested of Escrow Agent. III. TERM; DISBURSEMENTS
3.1 Term. This Agreement shall commence on the Closing Date and shall
terminate at such time as the entire Escrow Deposit shall have been distributed
pursuant to the terms of this Agreement.
3.2 Milestone Payments. During the term of this Agreement, Simtek shall
make payments to Cypress upon the achievement of the development milestones set
forth in Exhibit 11 of the Development Agreement (the "Milestone Payments") and
in accordance with the Quarterly PE/TE/Qualification/Failure Analysis schedule
set forth in Section 3 of Exhibit 11 of the Development Agreement (the
"Quarterly Payments"). Such payments shall only be made from the Escrow Deposit
by Escrow Agent upon receipt of a written notice signed by Simtek and Cypress
specifying the amount of the Escrow Deposit to be released as a Milestone
Payment or Quarterly Payment and how such funds are to be disbursed.
4
3.3 Escrow Deposit to Simtek.
(a) If a Simtek Release Event (as defined herein) occurs, Escrow Agent
shall release the Escrow Deposit to Simtek, pursuant to the wire
instructions attached hereto as Schedule II, as soon as practicable after
the date that is thirty (30) days after the date the Simtek Release Event
occurred, unless Escrow Agent has received written notice from Cypress
disputing the occurrence of the Simtek Release Event. In such event, Escrow
Agent shall be entitled, in its discretion, to take any of the actions set
forth in Section 2.4 or Section 2.1(a) hereof.
(b) For purposes of this Section 3.3, a "Simtek Release Event" shall
exist on the date Escrow Agent receives a written certification from Simtek
certifying that: (a) the Development Agreement has been terminated by
Simtek pursuant to Sections 13.2(a) or 13.2(b) thereof; or (b) the
Development Agreement has been terminated by Cypress in accordance with
Section 13.2(c) thereof.
(c) A copy of any notice or certification given by either Cypress or
Simtek to Escrow Agent pursuant to this Section 3.3 shall be simultaneously
delivered to the other party in accordance with the notice provisions set
forth in Section 4.3 of this Agreement.
3.4 Escrow Deposit to Cypress.
(a) If a Cypress Release Event (as defined herein) occurs, Escrow
Agent shall release the Escrow Deposit to Cypress, pursuant to the wire
instructions attached hereto as Schedule III, as soon as practicable after
the date that is thirty (30) days after the date the Cypress Release Event
occurred, unless Escrow Agent has received a written certification from
Simtek disputing the occurrence of the Cypress Release Event. In such
event, Escrow Agent shall be entitled, in its discretion, to take any of
the actions set forth in Section 2.4 or Section 2.1(a) hereof.
(b) For purposes of this Section 3.4, a "Cypress Release Event:" (a)
shall exist on the date Escrow Agent receives a written certification from
Cypress certifying that the Development Agreement has been terminated by
Cypress pursuant to Sections 13.2(a) or 13.2(b) thereof; (b) the
Development Agreement has been terminated by Simtek in accordance with
Section 13.2.(c) thereof; or (c) the milestone Qual (as defined in the
Development Agreement) has been completed.
(c) A copy of any notice or certification given by either Cypress or
Simtek to Escrow Agent pursuant to this Section 3.4 shall be simultaneously
delivered to the other party in accordance with the notice provisions set
forth in Section 4.3 of this Agreement.
IV. MISCELLANEOUS
4.1 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and may not
be effectively amended, changed, modified or altered, except in writing executed
by Simtek, Cypress and Escrow Agent.
5
4.2 Governing Law. The Agreement shall be governed by and construed
pursuant to the laws of the State of California.
4.3 Notices. Until changed by written notice from one party hereto to the
other, all communications under this Agreement shall be in writing and shall be
hand delivered or mailed by registered mail to the parties, and shall be deemed
given when mailed, as follows:
Notices to be given to Cypress will be addressed to:
Cypress Semiconductor Corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attn: Senior Vice President, Memory Products Division
With a copy to:
Cypress Semiconductor Corporation
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx Xxxxxx, Esq.
If given to Simtek, it will be addressed to:
Simtek Corporation
Attention: Xxxxxxx Xxxxxxxx
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
If given to Escrow Agent, it will be addressed to:
U.S. Bank, National Association
Escrow Services
Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxx
4.4 Headings. The captions and headings herein are for convenience only and
in no way define or limit the scope or intent of any provisions or sections of
this Agreement.
6
4.5 Counterparts. This Agreement may be executed in several counterparts
and such counterparts together shall constitute one and the same instrument.
4.6 Severability. If any provision of this Agreement shall be prohibited by
or invalid under applicable law, such provision shall be ineffective to the
extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
4.7 Assignment. Neither party may assign its rights or obligations
hereunder and any assignment in contravention of the terms hereof
shall be void.
[Signature page follows]
7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized corporate officers as of the day and year
first above written.
SIMTEK CORPORATION
By: /S/ XXXXXXX XXXXXXXX
---------------------------
Name: Xxxxxxx Xxxxxxxx
Title: CEO/President
CYPRESS SEMICONDUCTOR CORPORATION
By: /S/ A.R. XXXXXXX
---------------------------
Name: A.R. Xxxxxxx
Title: GM & SR VP Memory Products
ESCROW AGENT:
U.S. BANK, NATIONAL ASSOCIATION
By: /S/ XXXXXX X. XXXXXX
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Schedule I
----------
Escrow Agent Fee Schedule
Schedule II
-----------
Simtek Wire Instructions
Schedule III
------------
Cypress Wire Instructions
