Filed Pursuant to Rule 424(b)(3)
Registration No. 333-123639
Prospectus Supplement No. 1 dated May 13, 2005
(to Prospectus dated May 12, 2005)
This Prospectus Supplement No. 1 supplements and amends the Prospectus
dated May 12, 2005 (the "Prospectus"), relating to the resale of 8,126,936
shares of common stock, par value $.01 per share, of Simtek Corporation. You
should read this Prospectus Supplement No. 1 in conjunction with the Prospectus.
Prospectus Supplement No. 1 is not complete without, and may not be delivered or
utilized except in connection with, the Prospectus, including any amendments or
supplements thereto.
Attached hereto and incorporated by reference herein is Simtek's (i)
Quarterly Report on Form 10-Q for the three months ended March 31, 2005, filed
with the Securities and Exchange Commission on May 13, 2005, (b) Current Report
on Form 8-K filed with the Securities Exchange Commission on May 12, 2005 (with
respect to certain management changes at Simtek), (c) Current Report on Form 8-K
filed with the Securities Exchange Commission on May 12, 2005 (with respect to
the acceleration of vesting of stock options); and (d) the Current Report on
Form 8-K filed with the Securities Exchange Commission on May 10, 2005. This
Prospectus Supplement No. 1 should be read in conjunction with, and delivered
with, the Prospectus and is qualified by reference to the Prospectus except to
the extent that the information in this Prospectus Supplement No. 1 supersedes
the information contained in the Prospectus.
The Prospectus, together with this Prospectus Supplement No.1, constitutes
the prospectus required to be delivered by Section 5(b) of the Securities Act of
1933, as amended, with respect to the offers and sales of the Simtek common
stock offered hereby.
See the section of the Prospectus titled "Risk Factors", beginning on
page 4 of the Prospectus, for certain factors relating to an investment in the
shares of Simtek common stock offered hereby.
Neither the Securities and Exchange Commission nor any other state
securities commission has approved or disapproved of the Simtek common stock
offered hereby or passed upon the adequacy or accuracy of the Prospectus or this
Prospectus Supplement No. 1. Any representation to the contrary is a criminal
offense.
The date of this Prospectus Supplement No. 1 is May 13, 2005.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
----------------------------------
(Mark One)
[X] Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange
Act of 1934 for the quarterly period ended March 31, 2005
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act
Commission file number 0-19027
SIMTEK CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Colorado 84-1057605
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4250 Buckingham Dr. #100; Colorado Springs, CO 80907
-----------------------------------------------------
(Address of principal executive offices)(Zip Code)
(719) 531-9444
-------------------------------
(Registrant's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
----- -----
The total number of shares of Common Stock issued and outstanding as of May 12,
2005 was 69,868,168.
SIMTEK CORPORATION
INDEX
For the Quarter Ended March 31, 2005
PART 1. FINANCIAL INFORMATION
ITEM 1 Page
----
Condensed Consolidated Balance Sheets as of
March 31, 2005 and December 31, 2004 3
Condensed Consolidated Statements of Operations for
the three months ended March 31, 2005 and 2004 4
Condensed Consolidated Statements of Cash Flows for
the three months ended March 31, 2005 and 2004 5
Notes to Condensed Consolidated Financial Statements 6-10
ITEM 2
Managements Discussion and Analysis of Financial Condition and
Results of Operations 11
ITEM 3
Quantitative and Qualitative Disclosures about Market Risk 18
ITEM 4
Controls and Procedures 19
PART 2. OTHER INFORMATION
ITEM 1 Legal Proceedings 20
ITEM 2 Unregistered Sales of Equity Securities and
Use of Proceeds 20
ITEM 3 Defaults Upon Senior Securities 20
ITEM 4 Submission of Matters to a Vote of Security Holders 20
ITEM 5 Other Information 20
ITEM 6 Exhibits and Reports on Form 8-K 20
SIGNATURES 21
2
SIMTEK CORPORATION
CONSDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
------
March 31, 2005 December 31, 2004
-------------- -----------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 1,456,201 $ 2,146,790
Accounts receivable - trade, net 1,661,737 2,777,164
Inventory, net 2,351,381 1,869,842
Prepaid expenses and other current assets 108,696 131,099
------------ ------------
Total current assets 5,578,015 6,924,895
EQUIPMENT AND FURNITURE, net 1,025,901 942,790
DEFERRED FINANCING COSTS 70,535 74,684
OTHER ASSETS 27,180 33,450
------------ ------------
TOTAL ASSETS $ 6,701,631 $ 7,975,819
============ ============
LIABILITES AND SHAREHOLDERS' EQUITY
-----------------------------------
CURRENT LIABILITIES:
Accounts payable $ 1,839,206 $ 2,122,923
Accrued expenses 479,544 582,615
Accrued vacation payable 225,856 189,815
Accrued wages 71,373 31,205
Obligation under capital leases 50,951 47,310
Debentures, current 286,854 --
------------ ------------
Total current liabilities 2,953,784 2,973,868
DEBENTURES, NET OF CURRENT 2,713,146 3,000,000
OBLIGATIONS UNDER CAPITAL LEASES, NET OF CURRENT PORTION -- 13,024
------------ ------------
Total liabilities 5,666,930 5,986,892
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1.00 par value; 2,000,000 shares authorized,
none issued -- --
Common stock, $.01 par value; 300,000,000 shares authorized,
63,057,936 and 62,881,679 shares issued and outstanding
at March 31, 2005 and December 31, 2005, respectively 630,579 628,817
Additional paid-in capital 41,834,812 41,778,120
Treasury stock, at cost; 10,000 shares (12,504) (12,504)
Accumulated deficit (41,418,186) (40,405,506)
------------ ------------
Total shareholders' equity 1,034,701 1,988,927
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,701,631 $ 7,975,819
============ ============
The accompanying notes are an integral part of these financial statements.
3
SIMTEK CORPORATION
CONDENDSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the three months ended March 31,
------------------------------------
2005 2004
---- ----
NET SALES $ 3,473,990 $ 3,498,835
Cost of sales 2,334,689 2,429,917
------------ ------------
GROSS MARGIN 1,139,301 1,068,918
OPERATING EXPENSES:
Research and development costs 1,294,400 1,313,260
Sales and marketing 468,066 456,694
General and administrative 335,890 277,954
------------ ------------
Total operating expenses 2,098,356 2,047,908
------------ ------------
LOSS FROM OPERATIONS (959,055) (978,990)
OTHER INCOME (EXPENSE):
Interest income 5,207 7,804
Interest expense (58,032) (61,125)
Other expense (800) (4,810)
------------ ------------
Total other income (expense) (53,625) (58,131)
------------ ------------
LOSS BEFORE PROVISION FOR INCOME TAXES $ (1,012,680) $ (1,037,121)
Provision for income taxes -- --
------------ ------------
NET LOSS $ (1,012,680) $ (1,037,121)
============ ============
NET LOSS PER COMMON SHARE:
Basic and diluted EPS $ (.02) $ (.02)
============ ============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted 62,934,158 57,023,653
============ ============
The accompanying notes are an integral part of these financial statements.
4
SIMTEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended March 31,
----------------------------
2005 2004
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,012,680) $(1,037,121)
Adjustments to reconcile net loss to net cash used in operating
Activities:
Depreciation and amortization 132,031 116,936
Loss on disposal of assets -- 13,165
Net change in allowance accounts 49,425 2,084
Deferred financing fees 4,149 4,149
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable 1,133,846 (55,625)
Inventory (500,366) (963,716)
Prepaid expenses and other 22,403 1,133
Increase (decrease) in:
Accounts payable (283,717) 982,479
Accrued expenses (72,994) (69,400)
----------- -----------
Net cash used in operating activities (527,903) (1,005,916)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and furniture, net (208,872) (59,359)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable and line of credit -- (150,000)
Payments on capital lease obligation (12,269) (35,856)
Exercise of stock options 58,455 187,713
----------- -----------
Net cash provided by financing activities 46,186 1,857
----------- -----------
NET DECREASE IN CASH AND CASH EQUIVALENTS (690,589) (1,063,418)
CASH AND CASH EQUIVALENTS, beginning of period 2,146,790 3,431,679
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,456,201 $ 2,368,261
=========== ===========
Cash paid for interest $ 56,908 $ 62,050
=========== ===========
The accompanying notes are an integral part of these financial statements.
5
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The financial statements included herein are presented in accordance with
the requirements of Form 10-Q and consequently do not include all of the
disclosures normally made in the registrant's annual Form 10-K or 10-KSB filing.
These financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Annual Report and Form
10-KSB and Annual Report and Form 10-KSB/A for Simtek Corporation ("Simtek" or
the "Company") filed on March 17, 2005 and May 11, 2005, respectively for fiscal
year 2004.
In the opinion of management, the unaudited financial statements reflect
all adjustments of a normal recurring nature necessary to present a fair
statement of the results of operations for the respective interim periods. The
year-end balance sheet data was derived from audited financial statements, but
does not include all disclosures required by accounting principles generally
accepted in the United States of America. Results of operations for the interim
periods are not necessarily indicative of the results of operations for the full
fiscal year.
Stock-Based Compensation
------------------------
As permitted under the SFAS No. 123, Accounting for Stock-Based
Compensation, the Company accounts for its stock-based compensation in
accordance with the provisions of Accounting Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees. As such, compensation expense is
recorded on the date of grant if the current market price of the underlying
stock exceeds the exercise price. Certain pro forma net loss and EPS disclosures
for employee stock option grants are included below as if the fair value method
as defined in SFAS No. 123 had been applied. Transactions in equity instruments
with non-employees for goods or services are accounted for by the fair value
method.
Had compensation cost been determined based on the fair value at the grant
dates for awards under employee stock based compensation plans consistent with
the fair value method, the Company's net loss and EPS would have been increased
to the pro forma amounts indicated below.
Three Months Ended March 31,
----------------------------
2005 2004
---- ----
Net loss as reported $ (1,012,680) $ (1,037,121)
Add: Stock based compensation included in reported
Net loss - -
Deduct: Fair value of stock based compensation (140,853) (177,186)
------------ ------------
Proforma net loss $ (1,153,533) $ (1,214,307)
============ ============
Net loss as reported - basic and diluted $ (.02) $ (.02)
Proforma net loss - basic and diluted $ (.02) $ (.02)
The fair value of each option granted in three months ending March 31,
2005 and 2004 were estimated on the date of grant using the
Black-Scholes option-pricing model with the following:
Three Months Ended March 31,
----------------------------
2005 2004
---- ----
Expected volatility 82.93% 122.2%
Risk-free interest rate 3.39% 2.0%
Expected dividends - -
Expected terms (in years) 4.0 4.0
6
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. LIQUIDITY
During the three months ended March 31, 2005 and the twelve months ended
December 31, 2004, the Company incurred a net loss of approximately $1,013,000
and $3,670,000, respectively and has an accumulated deficit of $41,418,000 as of
March 31, 2005. The Company was also not in compliance with its debentures
throughout 2004 and the first three months of 2005, but was successful in
obtaining waivers through April 1, 2006 from the debenture holders. The Company
has working capital of approximately $2,624,000 as of March 31, 2005.
The Company operates in a volatile industry, whereby its average selling
prices and product costs are influenced by competitive factors. Furthermore, the
Company continues to incur significant research and development costs for
product development. These factors create pressures on sales, costs, earnings
and cash flows, which will impact liquidity.
If the Company is unable to achieve profitable operations in 2005 it may
result in increased liquidity pressure on the Company, whereby it might be
required to enter into debt or equity arrangements that may not be as otherwise
favorable to the Company.
3. RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the FASB issued SFAS No. 123(R), "Share-Based Payment,"
which is a revision of SFAS No. 123, Accounting for Stock-Based Compensation.
SFAS No. 123(R) is effective for public companies for annual periods beginning
after June 15, 2005, supersedes APB Opinion No. 25, Accounting for Stock Issued
to Employees, and amends SFAS No. 95, Statement of Cash Flows.
SFAS No. 123(R) requires all share-based payments to employees, including
grants of employee stock options, to be recognized in the income statement based
on their fair values. Pro-forma disclosure is no longer an alternative. The new
standard will be effective for us beginning January 1, 2006. We have not yet
completed our evaluation but expect the adoption to have an effect on the
financial statements similar to the pro-forma effects reported above.
4. REVENUE RECOGNITION
Revenue Recognition, Semiconductor Products - Product sales revenue is
recognized when a valid purchase order has been received with a fixed price and
the products are shipped to customers FOB origin (Colorado Springs, Colorado),
including distributors. Based on historic business with the majority of the
Company's customers and, in the case of new customers, the Company is reasonably
assured that collectibility on our shipments will occur. Customers receive a
one-year product warranty and sales to distributors are subject to a limited
product exchange program and a price protection in the event of changes in the
Company's product price. The Company provides a reserve for possible product
returns, product price protection and warranty costs at the time the sale is
recognized. The Company has a detailed procedure to ensure that its estimates
for reserves are reasonable and reliable. The reserve for product returns is
based on the actual inventory value of the Company's semiconductor products held
by its distributors. The Company's distributors are permitted to rotate up to 5%
of their stock every six months with the stipulation that they must submit a
replacement order of equal dollar value to the stock that they are returning.
The reserve for price protection is used when the Company authorizes special
pricing to one of its distributors for a specific customer. To date, the
estimates have not been materially different from the credits we have issued
under these reserves.
7
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Revenue Recognition, Government Contracts - Revenues from cost-plus-fee
contracts are recognized on the basis of costs incurred during the period plus
the fee earned. Revenues from fixed-price contracts are recognized on the
percentage-of-completion method. The percentage-of-completion is measured by the
total costs incurred to date to estimate total costs for each contract. This
method is used because management considers costs incurred to be the best
available measure of progress on these contracts. Because of inherent
uncertainties in estimating costs, it is reasonably possible that the estimates
used will change within the near term.
5. Inventories
The Company records inventory using the lower of cost (first-in,
first-out) or market. Inventory at March 31, 2005 and December 31, 2004
included:
March 31, 2005 December 31, 2004
Raw Materials $ 70,211 $ 68,955
Work in progress 1,831,113 1,765,044
Finished Goods 637,464 204,423
-------------- ---------------
2,538,788 2,038,422
Less reserves for excess inventory (187,407) (168,580)
--------------- ----------------
$ 2,351,381 $ 1,869,842
============== ===============
6. CONVERTIBLE DEBENTURES
On July 1, 2002, the Company received funding of $3,000,000 in a financing
transaction with Renaissance Capital Growth and Income Fund III, Inc.,
Renaissance US Growth & Investment Trust PLC and BFSUS Special Opportunities
Trust PLC. RENN Capital Group, Inc. is the agent for these investment funds. One
of the Company's directors holds the position of Senior Vice President of RENN
Capital Group. The $3,000,000 funding consists of convertible debentures with a
7-year term at a 7.5% per annum interest rate. Each fund equally invested
$1,000,000. The holder of the debenture shall have the right, at any time, to
convert all, or in multiples of $100,000, any part of the debenture into fully
paid and nonassessable shares of Simtek common stock. The debentures are
convertible into Simtek common stock at $0.312 per share, which was in excess of
the market price per share on July 1, 2002. Based on the conversion rate of
$0.312 per share, it would entitle each fund to 3,205,128 shares of Simtek
common stock. From March 1, 2003 through March 31, 2005, the Company was not in
compliance with two of the covenants set forth in the loan agreement. These
covenants relate to the interest coverage ratio and debt to equity ratio. On May
10, 2005, the Company received a waiver for the two covenants through April 1,
2006. However, significant variances in future actual operations from the
Company's current estimates could result in the reclassification of this note to
current liabilities. If the Company is in default of the covenants for a period
of 30 days it is considered a default under the debenture agreement and the
lender may declare the unpaid principal amount and all accrued interest thereon
due and payable. In addition, if the Company defaults under the debenture
agreement the lender may, among other things, foreclose on our collateral on
which it has a security interest. The lender has a security interest in
substantially all of our assets.
If the debentures are not redeemed prior to June 28, 2005, the Company is
required to begin making principal installment payments on a monthly basis. The
amount of each installment will be $10 per $1,000 of the remaining principal
amount. We have classified the total amount of the expected payments to be made
over the next twelve months as a current liability.
8
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. GEOGRAPHIC CONCENTRATION
Sales of the Company's semiconductor products by location for the three
months ended March 31, 2005 and 2004 were as follows (as a percentage of
semiconductor product sales only):
Three Months Ended
March 31,
---------
2005 2004
---- ----
United States 28% 41%
Europe 17% 10%
Far East 44% 43%
All Others 11% 6%
------ -------
100% 100%
====== =======
8. BUSINESS SEGMENTS
The Company has two reportable segments. One segment designs and produces
semiconductor devices for sale into the semiconductor market. The second
segment, Q-DOT Group, Inc., which is operated as a wholly-owned subsidiary,
specializes in advanced technology research and development for data
acquisition, signal processing, imaging and data communications that is
supported by government and commercial contracts. Although both segments are
managed as part of an integrated enterprise, they are reported herein in a
manner consistent with the internal reports prepared for management.
Transactions between reportable segments are recorded at cost.
Substantially all operating expenses are identified by segment. Substantially
all of the Company's assets are located in the United States of America.
Description Three Months Ended
------------------
March 31,
---------
2005 2004
---- ----
Net Sales:
Semiconductor Devices $ 2,975,895 $ 2,935,669
Government Contracts 498,095 563,166
------------- -------------
Total $ 3,473,990 $ 3,498,835
============= =============
Net Profit (Loss):
Semiconductor Devices $ (986,385) $ (1,066,984)
Government Contracts (26,295) 29,863
------------- -------------
Total $ (1,012,680) $ (1,037,121)
============= =============
9. SUBSEQUENT EVENTS
On May 5, 2005, the Company closed a Production and Development Agreement
with Cypress Semiconductor Corporation, or Cypress, to jointly develop a
0.13-micron Silicon-Oxide-Nitride-Oxide-Silicon (SONOS) nonvolatile memory
process. The Company and Cypress will work together to add the SONOS nonvolatile
capability to Cypress's baseline CMOS process, which is in production at its
9
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Minnesota wafer fabrication plant. The Company will use the technology to
produce a family of 4-megabit nvSRAM and Value-Added-Memory products. In
connection with the Production and Development Agreement, the Company and
Cypress closed a Share Purchase Agreement on May 5, 2005, pursuant to which
Cypress purchased 6,740,816 shares of the Company's common stock for $4,000,000
and acquired a warrant to purchase 5,055,612 shares of the Company's common
stock at an exercise price of $0.7772. The warrant has a ten-year term. The
Company and Cypress also entered into an Escrow Agreement pursuant to which the
Company deposited $3 million into an escrow account in order to support and make
certain payments for the 0.13-micron SONOS process and product developments.
10
SIMTEK CORPORATION
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis in this quarterly report on Form 10-Q
is intended to provide greater details of the results of operations and
financial condition of our Company. The following discussion should be read in
conjunction with our condensed consolidated financial statements and notes
thereto and other financial data included elsewhere herein. Certain statements
under this caption constitute forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The reader should not place undue reliance on these forward looking
statements for many reasons including those risks discussed in this document. In
addition, when used in this quarterly report, the words "believes,"
"anticipates," "expects," "plans," "intends" and similar expressions are
intended to identify forward-looking statements. Forward-looking statements and
statements of expectations, plans and intent are subject to a number of risks
and uncertainties. Actual results in the future could differ materially from
those described in the forward-looking statements, as a result, among other
things, of changes in technology, customer requirements and needs, among other
factors. We undertake no obligation to release publicly the results of any
revisions to these forward-looking statements that may be made to reflect any
future events or circumstances.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America, which
require us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and the related disclosures. Our
accounting policies are discussed in Note 1 of the Notes to Consolidated
Financial Statements included in our 2004 Form 10-KSB. The estimates used by us
are based upon our historical experiences combined with our understanding of
current facts and circumstances. Certain of our accounting polices are
considered critical as they are both important to the portrayal of our financial
condition and the results of our operations and require significant or complex
judgments on our part. We believe that the following represent the critical
accounting policies of Simtek as described in Financial Reporting Release No.
60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies,
which was issued by the Securities and Exchange Commission: inventories;
deferred income taxes; allowance for doubtful accounts; and, allowance for sales
returns.
The valuation of inventories involves complex judgments on our part. Excess
finished goods inventories are a natural component of market demand of
semiconductor devices. We continually evaluate and balance the levels of
inventories based on sales projections, current orders scheduled for future
delivery and historical product demand. While certain finished goods items will
sell out, quantities of other finished goods items will remain. These finished
goods are reserved as excess inventory. We believe we have adequate controls
with respect to the amount of finished goods inventories that are anticipated to
become excess. While we believe this process produces a fair valuation of
inventories, changes in general economic conditions of the semiconductor
industry could materially affect valuation of our inventories.
The allowance for doubtful accounts reflects a reserve that reduces
customer accounts receivable to the net amount estimated to be collectible.
Estimating the credit worthiness of customers and the recoverability of customer
accounts requires us to exercise considerable judgment. In estimating
uncollectible amounts, we consider factors such as industry specific economic
conditions, historical customer performance and anticipated customer
performance. While we believe our processes to be adequate to effectively
quantify our exposure to doubtful accounts, changes in industry or specific
customer conditions may require us to adjust our allowance for doubtful
accounts.
11
SIMTEK CORPORATION
The allowance for sales returns consists of two separate segments,
distributor stock rotation and distributor price reductions. When we record the
allowance, the net method reduces customer accounts receivables and gross sales.
Generally, we calculate the stock rotation portion of the allowance based upon
distributor inventory levels. The contracts we have with our distributors allow
them to return to us up to 5% of their inventory in exchange for inventory that
better meets their demands. We believe that our processes to adequately predict
our allowance for sales returns are effective in quantifying our exposures due
to industry or specific customer conditions. At times, we are required to allow
our distributors to lower the selling price of a specific device in order to
meet competition. When this occurs, we record an allowance for potential credit
that our distributors will be requesting. This allowance is based on approved
pricing changes, inventory affected and historical data. We believe that our
processes to adequately predict our allowance for distributor price reductions
are effective in quantifying our exposures due to industry or specific customer
conditions.
We record an allowance that directly relates to the warranty of our
products for one year. The allowance for warranty return reduces our gross
sales. This allowance is calculated by looking at annual revenues and historical
rates of our products returned due to warranty issues. While we believe this
process adequately predicts our allowance for warranty returns, changes in the
manufacturing or design of our product could materially affect valuation of our
warranties.
We have various government contracts that are subject to audit by the
United States Government. However, audits for the periods ending December 31,
2003 and December 31, 2004 have not been completed. In addition, certain of
these contracts are based on our estimate as to their percentage of completion
as of the balance sheet date. Our historical experience has not resulted in a
material adjustment to prior recorded revenue amounts.
We have recorded a valuation allowance on deferred tax assets. Future
operations may change our estimate in connection with potential utilization of
these assets.
Overview
Total unit shipments of our semiconductor memory products were essentially
the same for the three months ended March 31, 2005 as compared to the three
months ended March 31, 2004. Our net revenue was $3,474,000 for the three months
ended March 31, 2005 down from the $3,499,000 for the comparable period of 2004.
This decrease was due primarily to a decrease in revenue from the research and
development contracts portion of our business.
Increased operating expenses had an impact on our profitability for the
three months ended March 31, 2005 compared to the three months ended March 31,
2004 which were offset by higher gross profit margins.
Results of Operations:
Revenues - Semiconductor Devices.
The following table sets forth our net revenues for semiconductor devices
by product markets for the three months ended March 31, 2005 and 2004 (in
thousands):
12
SIMTEK CORPORATION
Three Months Ended
------------------
March 31,
---------
2005 2004 Variance
---- ---- --------
Commercial $ 2,407 $ 2,500 $ (93)
High-end industrial and military 569 436 $ 133
-------- --------- --------
Total Semiconductor Revenue $ 2,976 $ 2,936 $ 40
======== ========= ========
Commercial revenues include revenue generated from our legacy products
(products built on silicon wafers received from Chartered) and from our 25
micron products (products built on silicon wafers received from DongbuAnam).
Commercial revenues decreased by $93,000 for the three months ended March 31,
2005 as compared to the three months ended March 31, 2004. The decrease was
primarily due to a decrease in average selling prices, which was primarily due
to increased price competition at our largest, high-volume customers and their
subcontractors.
High-end industrial and military product revenues accounted for an increase
of approximately $133,000 for the three months ended March 31, 2005 as compared
to the same period in 2004. The increase was due primarily to completing
shipments of our nonvolatile semiconductor memory products against on-going
military contracts.
Three distributors accounted for approximately 52% of our semiconductor
devices product sales for the quarter ended March 31, 2005. Products sold to
distributors are sold without material recourse. Distributors sell our products
to various end customers. If one of these distributors was to terminate its
relationship with us, we believe that there would not be a material impact on
our product sales.
Cost of Sales and Gross Margin - Semiconductor devices
We recorded cost of sales for semiconductor devices of $2,071,000 and
$2,113,000 for the three months ended March 31, 2005 and 2004, respectively.
These costs reflect an approximate 5% increase in gross margin percentages for
the three months ended March 31, 2005 as compared to the same period in 2004.
Actual gross margin percentages for the three months ended March 31, 2005 and
March 31, 2004 were 33% and 28% respectively. This increase was due primarily to
increased sales of high-end industrial and military products and decreased
production costs of our commercial products.
During the first three months of 2005, we purchased all of our silicon
wafers to produce 0.8 micron nonvolatile static random access memory products
from a single supplier, Chartered, to support sales of our nonvolatile
semiconductor memory products. Sales of products built on these wafers accounted
for approximately 92% of our semiconductor product revenue for the first three
months of 2005. We purchased silicon wafers to produce our family of 1-megabit
nonvolatile static random access memory products built on 0.25 micron technology
from DongbuAnam. Sales of the 1-megabit semiconductor products built on these
wafers accounted for approximately 8% of our semiconductor product revenue for
the first three months of 2005.
Research and Development - Semiconductor devices
We believe that continued investments into new product development are
required for us to remain competitive in the markets we serve. Beginning in the
fourth quarter 2001, our research and development department has been focusing
its efforts on developing a 3-volt 256-kilobit nonvolatile semiconductor memory
13
SIMTEK CORPORATION
and the installation of our process at DongbuAnam for the development of a
1-megabit 3-volt nonvolatile semiconductor memory. Currently, our research and
development department has been focusing on yield improvement and qualification
of our 1-megabit 3-volt nonvolatile semiconductor memory product family. We are
currently shipping our family of 1-megabit nonvolatile semiconductor memory
products tested to production requirements on a provisional qualification and
plan to have qualification complete in mid-2005.
Total research and development expenses related to the semiconductor
portion of our business were $1,145,000 for the three months ended March 31,
2005 as compared to $1,204,000 for the same period in 2004.
The $59,000 decrease for the three month period was related to increases in
payroll and payroll overhead costs of $52,000 and a $28,000 increase in
equipment leases and maintenance agreements for software and depreciation. These
increases were offset by decreases in product development costs of $137,000 and
miscellaneous other expenses of $2,000. The $52,000 increase in payroll and
payroll overhead costs and $28,000 increase in equipment leases and maintenance
agreements was a direct result of increased headcount. The $137,000 decrease in
product development costs was primarily due to the 1-megabit product family
becoming suitable for production purposes and a decrease in product development
costs related to our data-communication products
Administration - Semiconductor Devices
Total administration expenses related to the semiconductor portion of our
business were $293,000 for the three months ended March 31, 2005 as compared to
$247,000 for the same period in 2004.
The $46,000 increase was due primarily to an increase in professional
services, director's compensation, and an increase in payroll costs. During this
period an extensive market study was performed by our Chairman, Harold
Blomquist, under contract to validate our nonvolatile memory market opportunity
and product development direction
Marketing - Semiconductor Devices
Total marketing expenses related to the semiconductor portion of our
business were $401,000 for the three months ended March 31, 2005 as compared to
$385,000 for the same period in 2004.
The $16,000 increase was due primarily to an increase in payroll and
payroll overhead costs of $52,000 and a decrease of $36,000 in sales commissions
and miscellaneous other expenses. The increase in payroll was a direct result of
headcount additions.
Net Loss - Semiconductor Devices
We recorded a net loss of approximately $1,013,000 and $1,037,000 for the
three months ended March 31, 2005 and 2004, respectively, for semiconductor
devices. The decrease of $24,000 was due primarily to the net effect of
increased gross margins more than offsetting an increase in operating expenses.
Revenues - Government Contracts
The following table sets forth our net revenue from our government
contracts portion of our business for the three months ended March 31, 2005 and
2004 (in thousands):
14
Three Months Ended
------------------
March 31,
---------
2005 2004 Variance
---- ---- --------
Government Contracts $ 498 $ 563 $ (65)
The decrease of revenue for the three-month period ending March 31, 2005
was the result of a decrease in allowable billable hours and a decrease in
materials and services that were invoiced against development contracts.
Costs of Sales and Gross Margin - Government Contracts
The costs of sales for the government contracts portion of our business
were $263,000 and $317,000 for the three months ended March 31, 2005 and March
31, 2004, respectively. These were equivalent to gross margin percentages of
approximately 47 % and 43%, respectively. The increase in gross margin
percentage was primarily due to a decrease in actual materials and services
consumed that are related to certain contracts. Materials and services have a
minimal profit margin.
Research and Development - Government Contracts
Total research and development expenses related to the government contracts
portion of our business were $149,000 and $109,000 for the three months ended
March 31, 2005 and 2004, respectively.
The $40,000 increase for the three-month period as compared to the same
period in 2004 was related to increases in employee related expenses of $30,000
and $10,000 for maintenance agreements for software. The $30,000 increase in
employee related expenses was due to training expense for new employees and less
overhead that was transferred to the semiconductor portion of the business in
the first three months of 2005 as compared to the first three months in 2004.
Administration - Government Contracts
Total administration expenses related to the government contracts portion
of our business were $43,000 and $31,000 for the three months ended March 31,
2005 and 2004, respectively.
The $12,000 increase in administration costs related to the government
contracts portion was primarily due to increased payroll and payroll related
expenses. In the first three months of 2004, personnel from the government
contract subsidiary performed more work for the semiconductor portion of the
business, thus reducing its administration expenses in the three month period
ending March 31, 2004.
Marketing - Government Contracts
Total marketing expenses related to the government contracts portion of our
business were $67,000 and $72,000 for the three months ended March 31, 2005 and
2004, respectively. The $5,000 decrease was due to reduced labor being charged
to marketing activities.
Net Income (Loss) - Government Contracts
We recorded a net loss of $27,000 for the three months ended March 31, 2005
as compared to a net income of $30,000 for the three months ended March 31, 2004
15
SIMTEK CORPORATION
for the government contracts portion of our business. The increase in net loss
was due primarily to decreased revenue and an increase in research and
development costs.
Liquidity and Capital Resources
As of March 31, 2005, we had a net working capital of $2,624,231 as
compared to a net working capital of $4,319,543 as of March 31, 2004.
On May 5, 2005, we closed a Production and Development Agreement with
Cypress Semiconductor Corporation, or Cypress, to jointly develop a 0.13-micron
Silicon-Oxide-Nitride-Oxide-Silicon (SONOS) nonvolatile memory process. We will
work with Cypress to add the SONOS nonvolatile capability to Cypress's baseline
CMOS process, which is in production at its Minnesota wafer fabrication plant.
We will use the technology to produce a family of 4-megabit nvSRAM and
Value-Added-Memory products. In connection with the Production and Development
Agreement, we closed a Share Purchase Agreement with Cypress on May 5, 2005,
pursuant to which Cypress purchased 6,740,816 shares of our common stock for
$4,000,000 and acquired a warrant to purchase 5,055,612 shares of our common
stock at an exercise price of $0.7772. The warrant has a ten-year term. We also
entered into an Escrow Agreement with Cypress pursuant to which we deposited $3
million into an escrow account in order to support and make certain payments for
the 0.13-micron SONOS process and product developments.
On October 12, 2004, we closed a $2,500,000 equity financing with three
separate investment funds, SF Capital Partners, Ltd., Bluegrass Growth Fund LP
and Bluegrass Growth Fund LTD. In exchange for the $2,500,000, we issued
4,127,967 shares of our common stock to SF Capital Partners, Ltd, 515,996 shares
of our common stock to Bluegrass Growth Fund LP and 515,996 shares of our common
stock to Bluegrass Growth Fund LTD. The purchase price was based on a 15%
discount to the closing price of our common stock as reported on the
Over-the-Counter Bulletin Board on October 11, 2004, resulting in a price of
$0.4845 per share. In addition to the shares of common stock, SF Capital
Partners Ltd., Bluegrass Growth Fund LP, and Bluegrass Growth Fund LTD received
warrants to acquire 2,063,984, 257,998, and 257,998 shares of our common stock,
respectively. The warrants have a 5-year term with an exercise price of $0.627
per share. Merriman Curhan Ford & Co., the placement agent for the $2,500,000
equity financing received a cash payment of $187,500 and warrants to acquire
386,997 shares of our common stock.
On November 7, 2003, we closed a $1,500,000 equity financing with RENN
Capital. In exchange for the $1,500,000, we issued 550,661 shares of our common
stock to each of the three investment funds for a total of 1,651,982 shares of
our common stock. The purchase price was based on the average closing price of
our common stock as reported on the Over-the-Counter Bulletin Board over the
five trading days before closing, which average closing price was $0.908 per
share. In addition to the shares of common stock, each fund received warrants to
acquire 250,000 shares of our common stock. The warrants have a 5-year term with
125,000 shares being exercisable at $1.25 per share and 125,000 shares being
exercisable at $1.50 per share.
On July 1, 2002, we received $3,000,000 in a financing transaction with
RENN Capital pursuant to a Convertible Loan Agreement. One of our directors
holds the position of Senior Vice President of RENN Capital Group. From April 1,
2003 through March 31, 2005, we were not in compliance with two of the covenants
set forth in the loan agreement, which covenants relate to the interest coverage
ratio and debt to equity ratio. On May 10, 2005, we received a waiver for the
two covenants through April 1, 2006. However, significant variances in future
actual operations from our current estimates could result in the
reclassification of this note to current liabilities.
Cash flows used in operating activities for the three months ended March
31, 2005 decreased approximately $475,000 as compared to the same period in
2004. The decrease was due primarily to inventory increases of $500,000 and
16
SIMTEK CORPORATION
decreases in accounts payable and accrued expenses of $360,000 since the end of
2004. This compares to increases of $960,000 in inventory and $910,000 in
accounts payable and accrued expenses for the same period in 2004. The increase
in inventory for the three months ended March 31, 2005 was due primarily to
increased purchases of raw materials to ramp production of our 1-megabit family
of nonvolatile semiconductor memory products. Over the next six months, we
expect to continue our effort to lower the inventory levels of our 0.8-micron
family of nonvolatile semiconductor memory products. The increase in accounts
payable and accrued expenses for the three months ended March 31, 2005 was a
direct result of the increase in inventory levels.
Accounts receivable and prepaid expenses decreased approximately $1,155,000
since the end of 2004. This compares to decreases of $55,000 in accounts
receivable and prepaid expenses for the same period in 2004. The decrease in
accounts receivable was primarily the result of decreased revenue in the first
three months of 2005 as compared to the last three months of 2004.
Cash flows used in investing activities increased by approximately $150,000
as compared to the same period in 2004. The increase was due to the purchase of
equipment related to the testing of our nonvolatile semiconductor memory
products.
Cash flows provided by financing activities increased approximately $45,000
as compared to the same period in 2004. The increase was due primarily to the
completion of payments on a line of credit that occurred in the three-month
period ending 2004 as compared to the three months ending 2005. Cash received
from the exercise of employee stock options decreased $130,000 in the first
three months of 2005 as compared to the same period in 2004.
Short-term liquidity.
Our cash balance at March 31, 2005 was $1,456,201.
Our future liquidity will depend on our revenue growth and our ability to
sell our products at positive gross margins and control of our operating
expenses. Through December 31, 2005, we expect to spend approximately $6,000,000
for operating expenses assuming revenue growth. We expect to meet these capital
needs from sales revenues and, to the extent we do not have sufficient revenues,
from our existing cash reserves.
Long-term liquidity.
The Company continues to evaluate its long term liquidity. The Company's
growth plans may require additional funding from outside sources. The Company is
in ongoing discussions with investment banking organizations to ensure access to
funds as required.
17
SIMTEK CORPORATION
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact our financial
position, results of operations or cash flows due to adverse changes in
financial and commodity market prices and rates. We are exposed to market risk
in the areas of changes in United States interest rates and changes in foreign
currency exchange rates as measured against the United States dollar. These
exposures are directly related to our normal operating activities. We currently
have no derivative financial instruments.
Interest payable on our convertible debentures is fixed at 7% over the term
of the debentures. As such, changes in interest rates will not affect future
expenses or cash flows.
We manage interest income by investing our excess cash in cash equivalents
bearing variable interest rates, which are tied to various market indices. We do
not believe that near-term changes in interest rates will result in a material
effect on future earnings, fair values or cash flows.
We do not speculate in the foreign exchange market and do not manage
exposures that arise in the normal course of business related to fluctuations in
foreign currency exchange rates by entering into offsetting positions through
the use of foreign exchange forward contracts.
Average selling prices of our products have not increased significantly as
a result of inflation during the past several years, primarily due to intense
competition within the semiconductor industry. The effect of inflation on our
costs of production has been minimized through improvements in production
efficiencies. We anticipate that these factors will continue to minimize the
effects of any foreseeable inflation and other price pressures within the
industry and markets in which we participate.
18
SIMTEK CORPORATION
ITEM 4 CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Harold Blomquist, who serves as the Company's chief executive officer and chief
financial officer (acting), after evaluating the effectiveness of the Company's
disclosure controls and procedures as of the end of the period covered by this
quarterly report (the "Evaluation Date") concluded that as of the Evaluation
Date, the Company's disclosure controls and procedures were effective to ensure
that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported as specified in the SEC's rules and forms and to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is accumulated and communicated to our management
to allow timely decisions regarding required disclosure.
(b) Changes in internal control over financial reporting.
There were no changes in the Company's internal control over financial reporting
during the three months ended March 31, 2005, that have materially affected, or
are reasonably likely to materially affect, internal control over financial
reporting.
19
SIMTEK CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 31 Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32 Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
Form 8-K filed March 17, 2005 - Item 7.01: Other information:
Press Release of Simtek Corporation, dated March 17, 2005,
Simtek Reports 2004 Fourth Quarter and Year End Financial Results.
20
SIMTEK CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SIMTEK CORPORATION
(Registrant)
May 13, 2005 By: /s/ Harold Blomquist
------------------------------------
HAROLD BLOMQUIST
Chief Executive Officer, President
and Chief Financial Officer (Acting)
21
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 9, 2005
Simtek Corporation
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Colorado 0-19027 84-1057605
----------------- ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification #)
of incorporation)
4250 Buckingham Dr. #100
Colorado Springs, CO 80907
---------------------------------------
(Address of Principal Executive Office)
(719) 531-9444
----------------------------------------------------
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On May 10, 2005, Simtek Corporation (the "Company") announced that Mr.
Harold A. Blomquist has been appointed President and Chief Executive Officer of
the Company and that Mr. Douglas Mitchell has resigned as an officer and
director of the Company.
Incident to Mr. Mitchell's resignation as director, Chief Executive
Officer, President and Chief Financial Officer (acting) of the Company, and as
Chairman of the Board of the Company's subsidiary, Q-DOT, Inc., the Company
entered into a Separation Agreement, dated May 9, 2005 (the "Separation
Agreement") with Mr. Mitchell. The Separation Agreement provides that for six
months following the date of the Separation Agreement, Mr. Mitchell will receive
a base salary of $225,000, and for an additional 12 months following the six
months mentioned above, he will receive $1,875 per month in exchange for
providing consulting services to the Company. Mr. Mitchell's stock options will
continue to vest and his vested stock options will remain exercisable during the
period that he continues to receive his base salary and during the period that
he provides consulting services to the Company. Promptly following the date of
the Separation Agreement, the Company will grant to Mr. Mitchell 100,000 shares
of common stock. The Company has also agreed to grant Mr. Mitchell, subject to
the terms of the Separation Agreement, certain stock bonuses in connection with
certain strategic transactions. The Separation Agreement also contains a mutual
release. A copy of the Company's press release announcing Mr. Mitchell's
resignation is included herewith and attached as Exhibit 99.1. A copy of the
Separation Agreement is included herewith and attached as Exhibit 99.2.
Item 1.02 Termination of a Material Definitive Agreement.
The Employment Agreement, effective as of June 1, 1998, between the Company
and Douglas Mitchell (the "1998 Employment Agreement"), was terminated on May 9,
2005, pursuant to the Separation Agreement referenced in Item 1.01 above. On May
9, 2005, Mr. Mitchell resigned as director, Chief Executive Officer, President
and Chief Financial Officer (acting) of the Company and as Chairman of the Board
of the Company's subsidiary, Q-DOT, Inc. Pursuant to the 1998 Employment
Agreement, Mr. Mitchell received an annual salary and such additional benefits
that are generally provided other employees. The 1998 Employment Agreement
expired June 1, 2001 but was automatically renewed for successive one-year terms
unless otherwise terminated or not renewed. The 1998 Employment Agreement
provided that if the Company terminated Mr. Mitchell without cause, Mr. Mitchell
would be entitled to continuation of his base salary and benefits, mitigated by
income Mr. Mitchell may earn, for the remainder of the term of the agreement.
The 1998 Employment Agreement provided that Mr. Mitchell would be subject to a
noncompetition covenant for a period of one year from the date of termination.
The Separation Agreement referenced in Item 1.01 above effectively supersedes
the 1998 Employment Agreement.
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
(b) On May 9, 2005, Douglas Mitchell resigned as director, Chief Executive
Officer, President and Chief Financial Officer (acting) of the Company and as
Chairman of the Board of the Company's subsidiary, Q-DOT, Inc.
2
(c) On May 9, 2005, Harold A. Blomquist, 53, was appointed President and Chief
Executive Officer of the Company. Mr. Blomquist has served as the Company's
Chairman of the Board since October 2003 and has served on the Company's board
of directors from 1998 to 2001 and again from 2002 through the current period.
Mr. Blomquist's current term of office as a director expires in 2005. Mr.
Blomquist has served as a director on the Board of Microsemi, Inc. since
February 2003 and as a consultant to investors and technology companies in the
semiconductor and electronic components areas. In the past, he was employed as
President and Chief Executive Officer of Morpho Technologies, Inc. and Chief
Executive Officer of Tower Semiconductor, USA, Inc. Mr. Blomquist served as a
member of the Board of Directors of AMIS Holding Co. and as Senior Vice
President of AMI Semiconductors. Prior to joining AMI in April 1990, Mr.
Blomquist held positions in engineering, sales, and marketing for several
semiconductor firms, including Texas Instruments, Inmos Corporation and General
Semiconductor. Mr. Blomquist was granted a BSEE degree from the University of
Utah and also attended the University of Houston, where he pursued a joint Juris
Doctor/MBA course of study.
The material terms of Mr. Blomquist's employment are as set forth below.
Mr. Blomquist will be employed for one year with automatic extensions for
additional one-year periods unless otherwise terminated. Mr. Blomquist's base
salary will be $325,000 per year and he will be eligible to receive a yearly
cash bonus, based on performance, of up to 100% of his salary. In addition, Mr.
Blomquist will receive a yearly bonus of options to purchase between 100,000 and
400,000 shares of the Company's common stock; the exact amount will be based on
performance. Upon beginning employment, Mr. Blomquist will receive options to
purchase 2.5 million shares of the Company's common stock and a $50,000 bonus.
Within four months of beginning employment, Mr. Blomquist will be required to
purchase 200,000 shares of common stock from the Company. For each share of
common stock Mr. Blomquist purchases from the Company within six months of
beginning employment, including the 200,000 shares he is required to purchase,
the Company will grant him an additional share, up to a maximum of 500,000
matching shares. Upon termination, Mr. Blomquist will be restricted from
competing against the Company for a period of 18 months. If Mr. Blomquist is
terminated by the Company without cause, all of Mr. Blomquist's unvested stock
options will immediately vest and he will continue to receive his base salary,
benefits, and cash and stock bonuses for 18 months. If Mr. Blomquist terminates
employment due to good cause or as a result of constructive termination relating
to a change of control of the Company, all of Mr. Blomquist's unvested stock
options will immediately vest and he will continue to receive his base salary,
benefits and cash and stock bonuses for 18 months. A copy of the Company's press
release announcing Mr. Blomquists's hiring is included herewith and attached as
Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number Description
-------------- -----------
99.1 Press release of the Company, dated May 10, 2005,
titled "Simtek Chairman Harold Blomquist Named
President and CEO".
99.2 Separation Agreement, dated May 9, 2005, by and
between the Company and Douglas Mitchell (a portion
of the text has been omitted pursuant to a request
for confidential treatment).
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIMTEK CORPORATION
By: /s/ Harold Blomquist
Harold Blomquist, President and Chief
Executive Officer
May 12, 2005
4
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
99.1 Press release of the Company, dated May 10, 2005, titled
"Simtek Chairman Harold Blomquist Named President and CEO".
99.2 Separation Agreement, dated May 9, 2005, by and between the
Company and Douglas Mitchell (a portion of the text has
been omitted pursuant to a request for confidential
treatment).
5
Exhibit 99.1
SIMTEK CHAIRMAN HAROLD BLOMQUIST NAMED PRESIDENT AND CEO
COLORADO SPRINGS, Colorado, May 10, 2005 -- Simtek Corporation (OTCBB: SRAM), a
global provider of advanced nonvolatile semiconductor memory products, today
announced the appointment of Harold A. Blomquist as its new president and chief
executive officer. Blomquist, who also serves as chairman of the board, succeeds
Douglas Mitchell, who resigned effective May 9, 2005, as chief executive
officer, president and acting chief financial officer after more than seven
years of service with Simtek.
"In my new role, I am excited about the opportunities that lie ahead," said
Blomquist. "I believe Simtek is poised on the verge of growth potential unlike
at any time in its past."
Blomquist has been chairman of the board of Simtek since 2003 and served on
Simtek's board of directors from 1998 to 2001 and again from 2002 to the present
time. Blomquist has served as a director on the board of Microsemi, Inc. since
February 2003 and as a consultant to investors and technology companies in the
semiconductor and electronic components areas. Other prior assignments include
president and chief executive officer of Morpho Technologies, Inc. and chief
executive officer of Tower Semiconductor, USA, Inc. Blomquist served as a member
of the board of directors of AMIS Holding Co. and as senior vice president of
AMI Semiconductors. Prior to joining AMI in April 1990, Blomquist held positions
in engineering, sales, and marketing for several semiconductor firms, including
Texas Instruments, Inmos Corporation and General Semiconductor. Blomquist was
granted a BSEE degree from the University of Utah and also attended the
University of Houston, where he pursued a joint Juris Doctor/MBA course of
study.
Mitchell, who will remain as a consultant to Simtek for a certain period and
receive certain benefits and payments, has served in executive positions with
Simtek since 1997. Blomquist said, "I would like to thank Doug for his many
contributions to Simtek over the years. Under his leadership the Company
weathered a difficult period when fab capacity and lack of access to advanced
processes limited Simtek's growth. He was also instrumental in engaging with
Cypress Semiconductor in advanced product and process development as announced
last week," Blomquist said.
About Simtek Corporation
Simtek Corporation produces fast, re-programmable, nonvolatile semiconductor
memory products. Information on Simtek products can be obtained from its web
site: www.simtek.com; email: information@simtek.com; by calling (719) 531-9444;
or fax (719) 531-9481. The company is headquartered in Colorado Springs,
Colorado, with international sales and marketing channels. Simtek is listed
under the symbol SRAM on the OTC Electronic Bulletin Board.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements predicting
Simtek's future growth. These forward-looking statements are inherently
difficult to predict and involve risks and uncertainties that could cause actual
results to differ materially, including, but not limited to, projections of
future performance including predictions of future profitability; expectations
of the business environment in which Simtek operates; current and anticipated
increased demand for our products; the level and timing of orders that we
receive and that we can deliver in a specified period; levels of inventories at
our distributors and other customers; inventory mix and timing of customer
orders; the success of cost-reduction efforts; our timely introduction and the
market acceptance of new technologies and products; maintaining or improving our
level of product shipments; our ability to obtain any required financing in a
timely manner; and factors not directly related to Simtek, such as competitive
pressures on pricing, market conditions in general, competition, technological
progression, product obsolescence, and the changing needs of potential customers
and the semiconductor industry in general; and current political conditions and
negative trends in the global economy.
For a detailed discussion of these and other risk factors, please refer to
Simtek's filings with the Securities and Exchange Commission (SEC), including
its Annual Report on Form 10-KSB and subsequent Form 10-Q and Form 8-K filings.
SOURCE: Simtek Corporation
Contact: Kim Stankey
Simtek Corporation
719-531-9444
information@simtek.com
Exhibit 99.2
SEPARATION AGREEMENT
This Separation Agreement is made and entered into as of May 9, 2005,
between Douglas Mitchell ("Executive") and Simtek Corporation (the "Company"),
referred to collectively as the "Parties."
WHEREAS, Executive formally resigned from his employment with the Company,
and from his position as director and officer with the Company, effective May 9,
2005 (the "Separation Date").
WHEREAS, the Parties desire fully and completely to resolve all disputes
that may exist between them, including without limitation any claims arising out
of or relating to his employment with the Company or his separation from that
employment.
In furtherance of this objective, the Executive and Company agree as
follows:
1. Termination.
Executive and Company agree that Executive voluntarily resigned from
his employment with the Company (including Executive's position as officer and
director of the Company), and his position as Chairman of the Company's
subsidiary, Q-DOT, Inc., effective May 9, 2005. The Parties agree that that
certain Employment Agreement, effective as of June 1, 1998, by and between the
Company and Executive, is hereby terminated.
2. Payments and Benefits for Executive.
Following the effective date of his resignation, in exchange for the
mutual releases and other promises herein, the Executive will receive the
following, subject to all applicable payroll taxes and deductions:
a. Salary Continuation.
For a period of 180 days following the Separation Date, the
Company shall continue to pay Executive an amount equal to his base salary
(prorated from an annualized base salary of $225,000) on the same schedule and
in the same manner as Executive's salary has heretofore been paid (the "Salary
Continuation Period");
b. Consulting Retainer.
In exchange for Executive's agreement to provide the consulting
services described in paragraph 4 below, the Company agrees to pay Executive the
amount of $1,875.00 each month for twelve months following the expiration of the
Salary Continuation Period. This additional twelve-month period shall be
referred to herein as the "Consulting Retainer Period."
c. Medical Benefits.
During the Salary Continuation Period and the Consulting Retainer
Period, the Company agrees that Executive (and any dependents of the Executive
to the extent currently covered and eligible for coverage under the Company's
plans) shall continue to receive health and medical benefits, at no cost to
Executive, under the Company's health and medical benefit plan as it may be
modified from time to time. If, under the Company's policies of insurance, such
continuation is not possible, Executive will receive a monthly payment equal to
the amount the Company currently pays for any such benefits.
d. Contingent Additional Compensation.
The Company shall pay Executive additional compensation based upon
the occurrence of future contingent events as follows:
(i) The Company shall pay Executive 50,000 shares of common
stock within thirty days after final execution of the Share Purchase Agreement
with Cypress Semiconductor Corporation ("Cypress") and the receipt by the
Company of the funds from Cypress pursuant to that agreement. This promise to
pay as herein described is also made as consideration for Executive's signing
the additional release attached hereto as Attachment A.
(ii) The Company shall pay Executive 50,000 shares of common
stock upon *****1.
3. Stock Options and Stock Grants.
a. With respect to that certain Stock Option Agreement, dated March 3,
2003, by and between the Company and Executive, that certain Stock Option
Agreement, dated January 2, 2001, by and between the Company and Executive, that
certain Stock Option Agreement, dated January 14, 2000, by and between the
Company and Executive, that certain Stock Option Agreement, dated April 27,
1999, by and between the Company and Executive and that certain Stock Option
Agreement, dated June 5, 1998, by and between the Company and Executive
(collectively, the "Stock Option Agreements"), Executive's continuous service
for purposes of Section 2 of each of the Stock Option Agreements shall be deemed
to continue through the Salary Continuation Period and Consulting Retainer
Period, the Option Period (as defined in each of the Stock Option Agreements)
shall be deemed to expire upon the expiration or termination of the Salary
Continuation Period and the Consulting Retainer Period, and the termination of
Executive's Option (as defined in each of the Stock Option Agreements) for
purposes of Section 7(b) of the Stock Option Agreements shall be deemed to occur
upon the expiration of the Salary Continuation Period and the Consulting
Retainer Period.
b. Promptly following the Separation Date, the Company shall grant
Executive 100,000 shares of common stock. Such 100,000 shares, together with the
shares granted under Section (d)(i) and (d)(ii) (collectively, the "Registrable
Securities"), will be unregistered initially and shall have piggy-back
registration rights in accordance with Attachment B.
4. Consulting Services.
During the Salary Continuation Period and the Consulting Period,
Executive agrees to make himself available, for reasonable periods of time
- -----------
(1) A portion of Section 2(d)(ii) has been omitted pursuant to a
confidential treatment request with the Securities and Exchange Commission (the
"SEC") and has been filed separately with the SEC.
2
convenient for Executive and upon reasonable notice from the Company, to consult
with the Company regarding any issues that may arise. Any reasonable
out-of-pocket expenses incurred and accounted for by Executive as a result of
consulting services requested by the Company shall be reimbursed by the Company.
5. Releases.
a. Executive's Release of the Company. In consideration of the
foregoing, Executive hereby releases and discharges the Company and its
officers, directors, shareholders, executives, agents, subsidiaries and
affiliates from any and all claims, demands or liabilities whatsoever, whether
known or unknown or suspected to exist by him, which he has or may have against
the Company relating to his employment with the Company and the termination of
that employment, including any claim Executive may have under the Age
Discrimination in Employment Act or other federal or state employment statutes.
Executive also agrees not to sue or bring any action before any regulatory body
or agency against any of the released parties with respect to any such claims,
demands or liabilities. Executive waives his right to file any charge, complaint
or other action, nor will he accept any relief or recovery from any charge,
complaint or other action in connection with his employment with the Company or
the termination of that employment with the Company before any federal, state or
local administrative agency or court against the Company, except as such waiver
is prohibited by statutory language. Excepted from the waiver shall be any
claims by Executive for unemployment compensation, workers' compensation, COBRA,
retirement benefits, claims to enforce this Agreement, claims arising after the
date of this Agreement, and claims by Executive to indemnify him against
expenses (including attorneys' fees, judgments, fines, settlements and other
amounts) accruing by reason of the fact that Executive is or was an executive,
officer or agent of the Company to the extent that, as a result of his
employment with the Company, Executive would have been entitled to such
indemnification while he was employed by the Company. This exception shall in no
way be deemed to impair the ability of the Company to contest any such claims;
moreover, upon breach of a material term of this Agreement by Executive, he
shall have no further rights to indemnification from the Company or any policies
of insurance secured by the Company.
b. The Company's Release of Executive. In consideration of the
foregoing, the Company hereby releases and discharges Executive from any and all
claims, demands or liabilities whatsoever, whether civil or criminal, whether
known or unknown or suspected to exist which it has or may have against
Executive relating to his employment with the Company and the termination of
that employment, except claims to enforce this Agreement.
6. Proprietary Information.
a. Trade Secrets.
(i) Executive agrees that all ideas, concepts, and information
imparted to or learned by him in connection with his employment with the
Company, specifically including but not limited to customer lists, product
plans, technology matters, intellectual property, and potential partnerships,
shall be deemed trade secrets ("Trade Secrets") and shall not be used by him and
shall never be disclosed by him without the Company's written authorization
(regardless of whether such ideas, concepts or information is recognized by law
to be trade secrets). These restrictions shall only pertain to Trade Secrets
that are not known or generally known to the public and that give an advantage
to the Company over competitors who do not know of or use such Trade Secrets. In
3
the event that Executive has some question as to whether or not certain Trade
Secrets are covered by this paragraph, he agrees to treat such Trade Secrets as
falling under this paragraph until he is informed otherwise in writing by the
Company. Further, should Executive, at a later date, feel that any Trade Secrets
have become public knowledge through no fault of his and wish to be released
from his obligations of confidentiality hereunder, he understands that the
Company will not unreasonably withhold its written consent provided he produces
sufficient evidence of such public knowledge.
(ii) Executive understands and agrees that Executive will
identify to the Company and turn over to the Company all files, memoranda,
records (and copies thereof), credit cards and other physical or personal
property which are the property of the Company. Executive agrees that he shall
not knowingly, after making every effort to so determine, retain any documents
or items embodying any Trade Secrets or business information involving or in any
way relating to the operations, business, prospective business, customers,
potential customers, or research of the Company.
b. Copyrights and Research Material. Executive agrees that all creative
work including all expressions in any media, whether published or unpublished,
conceived pursuant to his employment duties while employed by the Company or
prepared by Executive within the scope of his employment, whether for the
Company, its clients, or prospective clients, shall be deemed to be made as work
for hire and shall be the property of the Company as employer, free from any and
all claims by Executive of any nature whatsoever relating to such work products,
including the right to copyright the same in the name of the Company as author.
All research material and data of any kind generated by Executive during the
term of his employment within the scope of his employment shall be the sole
property of the Company and Executive covenants to turn over all of said
research material and data to the Company, not to keep any copies whatsoever,
and not to make any use of the contents thereof, to the extent the contents
constitute a trade secret under Colorado law.
7. Covenant Not to Compete. Executive agrees that during the Salary
Continuation Period and the Consulting Retainer Period, he will not either
directly or indirectly, or for his own account or the account of others engage
in competition with the Company. This promise by Executive applies to any
entity, doing business in the United States and in any other country where the
Company does business or proposes to do business. Executive further covenants
that, during the Salary Continuation Period and the Consulting Retainer Period,
he will not hire or cause to be hired any individuals who are employees of the
Company without the prior written permission of the Company.
8. Non-Disparagement and Trade Secrets. Executive agrees not to disparage
the Company or its agents and to hold in confidence and neither reveal or use
the Company's Trade Secrets.
9. Remedies. The Parties agree that the damages resulting to the Company
from a breach of paragraphs 6, 7 and 8 above are difficult or impossible to
calculate, and that irreparable injury for which there is no adequate remedy at
law would result to the Company from any such breach. The Parties agree that the
rights and obligations of the Parties under this Agreement may be enforced by a
decree of specific performance. Specifically, the Company shall be entitled to
injunctive relief in the event of any breach or threatened breach of this
Agreement without proving actual damages, in additional to any other remedy in
law or equity arising therefrom. Any breach of the provisions of paragraphs 6, 7
4
and 8 above shall also entitle the Company to terminate the Salary Continuation
Period and Consulting Retainer Period; in such event, Executive shall not be
entitled to receive any further compensation or benefits (including any
indemnification rights) under this Agreement or otherwise.
10. Governing Law and Arbitration. This Agreement shall be interpreted and
enforced in accordance with the laws of the State of Colorado, without giving
effect to conflict of laws, any controversy or claim under or relating to this
contract, or its breach, shall be settled by arbitration administered by the
American Arbitration Association under its Commercial Arbitration Rules, and
judgment on the award rendered by the arbitrator(s) may be entered in any court
having jurisdiction. However, because a beach of the covenants imposed on
Executive under paragraphs 7 and 8 regarding competition are not capable of
being easily measured by monetary damages, such promises may be enforced by
injunctive relief in any Court having jurisdiction without the need to seek such
injunctive relief through arbitration. In any action, whether in court or in
arbitration, the prevailing party shall be awarded its attorney fees, and other
costs and expenses of prosecuting such action.
11. Entire Agreement and Modification. This Agreement contains all of the
terms and conditions agreed to by the parties and no other agreements, oral or
otherwise, regarding the subject matter of this contract, except as referenced
in paragraph 3 herein, shall be deemed to exist or bind either of the parties
hereto. This Agreement may be modified only by a written instrument executed by
the Parties.
12. Waiver. Any waiver by any party of a breach of any provision of this
Agreement shall not operate as a waiver of any other breach of that provision or
of any other provision of the Agreement. Any waiver must be in writing executed
by a properly authorized party.
13. Separability. If any provision of this Agreement is invalid, illegal,
or unenforceable, the balance of this Agreement shall remain in effect.
14. Notice. Any notice under this Agreement shall be sufficient if
delivered by hand or if sent by certified or registered mail, postage prepaid,
return receipt requested, to the address of each respective party as is set
forth under the signature lines or as such other address a party may designate
from time to time in writing to the other party.
15. Confidentiality. Each party agrees to keep the terms of this Agreement
in confidence and to disclose such only as necessary to such parties' agents or
as may be required by law. Upon request by Executive, the Company shall verify
to third parties the dates of Executive's employment, the position he held, that
Executive voluntarily resigned, and that Executive served the Company well,
honestly, and faithfully.
16. Section 409A. To the extent Executive would be subject to the
additional 20% tax imposed on certain deferred compensation arrangements
pursuant to Section 409A of the Internal Revenue Code of 1986, as amended (the
"Code"), as a result of any provision of this Agreement, such provision shall be
deemed amended to the minimum extent necessary to avoid application of such tax
and the Parties shall execute any amendment reasonably necessary to implement
this Section 16. Whether or not any amendment is executed by the Parties,
Executive agrees that any modification required by this Section 16 shall not be
considered to be a breach of this Agreement.
5
By signing below, each party acknowledges that he has read and understands
the terms of this Agreement, and that he signs this Agreement voluntarily with
full knowledge of its significance and consequences.
/s/Douglas Mitchell SIMTEK CORPORATION
- ----------------------------
Douglas Mitchell
By: /s/Harold Blomquist
-------------------------
Its: Chairman
Date: May 9, 2005 Date: May 9, 2005
----------- -----------
Address for Notice: Address for Notice:
205 Ridge Drive 4250 Buckingham Dr. Suite 100
------------------------ -----------------------------
Woodland Park, CO 80863 Colorado Springs, CO 80907
------------------------ -----------------------------
6
ATTACHMENT A
RELEASE
Douglas Mitchell ("Executive"), in consideration of the mutual promises and
obligations contained in the Agreement dated May 9, 2005 (the "Separation
Agreement") between Executive and Simtek Corporation (the "Company"), and
specifically the consideration described in Section 2(d)(i) of the Separation
Agreement, hereby agrees as follows:
1. Executive hereby releases and discharges the Company and its officers,
directors, shareholders, executives, agents, subsidiaries and affiliates from
any claims, demands or liabilities, whether known or unknown or suspected to
exist by Executive, which he has or may have against the Company under the Age
Discrimination in Employment Act, as amended by the Older Worker's Benefit
Protection Act.
2. To comply with the Older Worker's Benefit Protection Act of 1990, this
Release has advised Executive of the legal requirements of this Act and fully
incorporates the legal requirements by reference into this Release as follows:
a. This Release is written in layman's terms, and Executive understands
and comprehends its terms;
b. Executive has been advised of his right to consult an attorney to
review the Release;
c. Executive does not waive any rights or claims that may arise after
the date the Release is executed;
d. Executive is receiving consideration beyond anything of value to
which he already is entitled;
e. Executive has been given twenty-one (21) days to consider this
Release; and
f. Executive has seven (7) days following his execution of this Release
to revoke his signature, and this Release will not become effective or
enforceable until after the revocation period has expired.
EXECUTIVE ACKNOWLEDGES THAT EXECUTIVE HAS READ THIS RELEASE, THAT EXECUTIVE
HAS BEEN ADVISED THAT EXECUTIVE SHOULD CONSULT WITH AN ATTORNEY BEFORE EXECUTIVE
EXECUTES THIS RELEASE, AND THAT EXECUTIVE UNDERSTANDS ALL OF THE RELEASE'S TERMS
AND EXECUTES IT VOLUNTARILY WITH FULL KNOWLEDGE OF ITS SIGNIFICANCE AND THE
CONSEQUENCES THEREOF.
/s/Douglas Mitchell Date: May 9, 2005
- ---------------------- -----------
Douglas Mitchell
ATTACHMENT B
REGISTRATION AGREEMENT
If, prior to such time as the Registrable Securities could be sold without
restriction under Rule 144 promulgated by the Securities and Exchange Commission
(the "Commission"), the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of 1933, as amended (the
"Securities Act") of any of its equity securities (other than on Form S-4 or
Form S-8 (each as promulgated under the Securities Act) or their then
equivalents relating to equity securities to be issued solely in connection with
any acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, or as contemplated
by that certain Registration Rights Agreement, dated October 12, 2004, by and
among the Company and the investors who are signatories thereto), then the
Company shall give to Executive written notice of such determination and, if
Executive shall so request in writing within fifteen days after receipt of such
notice, the Company shall include in such registration statement all or any part
of such Registrable Securities that Executive requests to be registered, subject
to customary underwriter cutbacks applicable to all holders of registration
rights.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 4, 2005
Simtek Corporation
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Colorado 0-19027 84-1057605
----------------- ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification #)
of incorporation)
4250 Buckingham Dr. #100
Colorado Springs, CO 80907
---------------------------------------
(Address of Principal Executive Office)
(719) 531-9444
----------------------------------------------------
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On May 4, 2005, Simtek Corporation (the "Company") accelerated the vesting of
certain unvested and out-of-the money non-qualified stock options with an
exercise price per share greater than $0.62. Options to purchase approximately
1.7 million shares of the Company's common stock are now exercisable. All other
terms and conditions applicable to outstanding stock option grants, including
the exercise prices and number of shares subject to the accelerated options,
were unchanged. The stock option agreements with respect to the accelerated
options will be amended accordingly. Options held by non-employee directors were
excluded from the vesting acceleration. A copy of the Company's press release
announcing the acceleration of certain stock options is included herewith and
attached as Exhibit 99.1.
Under the recently revised Financial Accounting Standards Board Statement No.
123, "Share-Based Payment," the Company will apply the expense recognition
provisions relating to stock options beginning in the first quarter of 2006. As
a result of the acceleration, the Company expects to reduce the stock option
expense it otherwise would be required to record by approximately $506,000 in
2006, $215,000 in 2007, and $14,000 in 2008 on a pre-tax basis.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
Exhibit Number Description
-------------- -----------
99.1 Press release of the Company dated May 10, 2005, titled
"Simtek Corporation Accelerates Vesting
for Stock Options"
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS. This current report
on Form 8-K and the press release attached as an exhibit hereto contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks,
trends, and uncertainties. In particular, statements made in this report and the
press release that are not historical facts (including but not limited to
expectations, estimates, assumptions and projections regarding financial and tax
issues) may be forward-looking statements. Actual results could differ
materially from the results projected, expressed or implied by these
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed from time to time
in the Company's filings with the Securities and Exchange Commission. Many of
these risk factors are outside of the Company's control, and as such, they
involve risks which are not currently known to the Company that could cause
actual results to differ materially from those discussed or implied herein. The
forward-looking statements in this document are made as of the date hereof and
the Company does not undertake to update its forward-looking statements.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIMTEK CORPORATION
By: /s/Harold Blomquist
-----------------------------------------------
Harold Blomquist, President and Chief Executive
Officer
May 12, 2005
3
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
99.1 Press release of the Company dated May 10, 2005, titled
"Simtek Corporation Accelerates Vesting for Stock Options"
4
Exhibit 99.1
SIMTEK CORPORATION ACCELERATES VESTING FOR STOCK OPTIONS
Move Will Reduce Company's Reported Compensation Expense Over Next Three Years
COLORADO SPRINGS, Colorado - May 10, 2005 - Simtek Corporation (OTCBB-SRAM), a
global provider of advanced nonvolatile semiconductor memory products, today
announced that on May 3, 2005, the Company accelerated vesting of certain
unvested and out-of-the-money stock options previously awarded to employees and
officers. Because the price of Simtek's common stock was $0.57 on May 3, 2005,
the options, which are exercisable at $0.62 and above, had no economic value on
the date of acceleration. As a result of the acceleration, options to purchase
approximately 1.7 million shares of Simtek common stock are now exercisable.
Options held by non-employee directors were excluded from the vesting
acceleration.
Under the recently revised Financial Accounting Standards Board Statement No.
123, "Share-Based Payment," Simtek will apply the expense recognition provisions
relating to stock options beginning in the first quarter of 2006. As a result of
the acceleration, the Company expects to reduce the stock option expense it
otherwise would be required to record by approximately $506,000 in 2006,
$215,000 in 2007, and $14,000 in 2008 on a pre-tax basis.
About Simtek
Simtek Corporation produces fast, re-programmable, nonvolatile semiconductor
memory products. Information on Simtek products can be obtained from its web
site: www.simtek.com; email: information@simtek.com; by calling (719) 531-9444;
or fax (719) 531-9481. The company is headquartered in Colorado Springs,
Colorado, with international sales and marketing channels. Simtek is listed
under the symbol SRAM on the OTC Electronic Bulletin Board.
Contact:
Simtek Corporation
719-531-9444
information@simtek.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 5, 2005
Simtek Corporation
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Colorado 0-19027 84-1057605
----------------- ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction File Number) Identification #)
of incorporation)
4250 Buckingham Dr. #100
Colorado Springs, CO 80907
---------------------------------------
(Address of Principal Executive Office)
(719) 531-9444
----------------------------------------------------
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On May 5, 2005, Simtek Corporation (the "Company") closed a Share Purchase
Agreement for a $4 million private placement of 6,740,816 shares of the
Company's common stock with Cypress Semiconductor Corporation ("Cypress") and a
Development and Production Agreement with Cypress to jointly develop a
0.13-micron Silicon-Oxide-Nitride-Oxide-Silicon (SONOS) nonvolatile memory
process. The Company and Cypress also entered into an Escrow Agreement pursuant
to which the Company deposited $3 million into an escrow account in order to
support and make certain payments for the 0.13-micron process and product
developments. Cypress also received a warrant to purchase 5,055,612 shares of
the Company's common stock at $0.7772 per share with a term of 10 years. The
Company has granted to Cypress certain registration rights with respect to the
shares issued under the Share Purchase Agreement and the shares issuable upon
exercise of the warrant. A copy of the press release announcing the transaction
is included herewith and attached as Exhibit 99.1. A copy of the Share Purchase
Agreement, the Development and Production Agreement, the Escrow Agreement, the
Stock Purchase Warrant and the Registration Rights Agreement entered into in
connection with the transaction are included herewith and attached as Exhibit
99.2, Exhibit 99.3, Exhibit 99.4, Exhibit 99.5 and Exhibit 99.6, respectively.
Item 3.02 Unregistered Sales of Equity Securities.
On May 5, 2005, the Company sold 6,740,816 shares of the Company's common
stock to Cypress and issued a warrant to Cypress to purchase 5,055,612 shares of
the Company's common stock at $0.7772 per share with a term of 10 years. The
aggregate offering price for the common stock and the warrant in the transaction
was $4 million. The issuance of the common stock and the warrant are exempt from
registration pursuant to Rule 506 promulgated under, and Section 4(2) of, the
Securities Act of 1933, as amended, as Cypress is an accredited investor, there
was no general solicitation and Cypress had access to material information of
the Company.
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits.
Exhibit
Number Description
------- -----------
99.1 Press release of the Company, dated May 6, 2005, titled
"Simtek Announces $4.0 Million Common Stock Investment by
Cypress to Co-Develop Advanced Nonvolatile Memory
Technology".
99.2 Share Purchase Agreement, dated May 4, 2005, by and between
the Company and Cypress.
99.3 Development and Production Agreement, dated May 4, 2005, by
and between the Company and Cypress.
99.4 Escrow Agreement, dated May 4, 2005, by and among the
Company, Cypress and U.S. Bank, National Association.
99.5 Stock Purchase Warrant, dated May 4, 2005, from the Company
to Cypress.
99.6 Registration Rights Agreement, dated May 4, 2005, by and
between the Company and Cypress.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIMTEK CORPORATION
By: /s/ HAROLD BLOMQUIST
---------------------------------------
Harold Blomquist, Chairman of the Board
May 9, 2005
3
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
99.1 Press release of the Company, dated May 6, 2005, titled
"Simtek Announces $4.0 Million Common Stock Investment by
Cypress to Co-Develop Advanced Nonvolatile Memory
Technology".
99.2 Share Purchase Agreement, dated May 4, 2005, by and between
the Company and Cypress.
99.3 Development and Production Agreement, dated May 4, 2005, by
and between the Company and Cypress.
99.4 Escrow Agreement, dated May 4, 2005, by and among the
Company, Cypress and U.S. Bank, National Association.
99.5 Stock Purchase Warrant, dated May 4, 2005, from the Company
to Cypress.
99.6 Registration Rights Agreement, dated May 4, 2005, by and
between the Company and Cypress.
4
Exhibit 99.1
------------
SIMTEK ANNOUNCES $4.0 MILLION COMMON STOCK INVESTMENT BY CYPRESS
TO CO-DEVELOP ADVANCED NONVOLATILE MEMORY TECHNOLOGY
Companies Will Share Costs to Create Next-Generation SONOS Process
For 0.13-Micron Embedded Applications
COLORADO SPRINGS, Colorado - May 06, 2005 - Simtek Corporation (OTCBB: SRAM), a
global provider of advanced nonvolatile semiconductor memory products, and
Cypress Semiconductor Corporation (NYSE: CY) today announced a comprehensive
agreement to jointly develop a 0.13-micron Silicon-Oxide-Nitride-Oxide-Silicon
(SONOS) nonvolatile memory process. Simtek will use the technology to produce a
family of 4 Mbit nvSRAM and Value-Added-Memory (VAM) products while Cypress
plans to use it in a wide variety of devices including its next-generation
PSoC(TM) programmable mixed signal arrays. Initial products are scheduled for
2006.
Under the agreement Cypress will invest $4.0 million in 6,740,816 shares of
Simtek common stock. Simtek will use the proceeds primarily to support the
0.13-micron process and product developments. Simtek and Cypress will work
together to add the SONOS nonvolatile capability to Cypress's baseline CMOS
process, which is in production at its Minnesota wafer fabrication plant. Both
Simtek and Cypress will develop independent, non-competing products to be
manufactured on the process, with each company benefiting from manufacturing
efficiencies driven by their combined volumes.
"We are highly motivated to add SONOS to our 0.13-micron line," said T.J.
Rodgers, Cypress's president and CEO. "Over several years of development at
Cypress, the SONOS process has proven to be robust, manufacturable and
cost-effective. This new relationship with Simtek enables both companies to
share experience, intellectual property and development costs to bring a wide
range of products to market more quickly while improving production
efficiencies."
"Simtek is very excited to engage with a company of Cypress's stature and
capabilities," stated Douglas Mitchell, Simtek's president and CEO. "We have
excellent engineering and production relationships with our other manufacturing
partners, including, Chartered Semiconductor and DongbuAnam Semiconductor. This
new relationship with Cypress achieves the "next-step" in Simtek's ability to
deliver a wide range of high performance products to the marketplace. With
Cypress's support and endorsement of SONOS technology, we believe that the broad
market will grow larger and more rapidly."
Mitchell added that the relationship with Cypress is expected to lead to an
extended range of products beyond the 0.8- and 0.25-micron products already in
production. "By increasing the range of densities and performance options, we'll
continue to grow our ability to serve broader and larger markets," he said.
"Revenues are expected to grow with our existing processes in the foreseeable
future, while the addition of 0.13-micron technology supports 4 Mbit nvSRAMs, a
family of Value-Added-Memory variants and the potential for innovative new
architectures. It's too early to make specific revenue projections, but we
consider the Cypress relationship and the capability to offer a complete family
of products to be major milestones in Simtek's ability to develop markets."
Cypress is a leading developer of SONOS and has used the technology in its PSoC
Programmable System on Chip(TM) devices for several years. The technology is
noted for low-cost, non-volatile elements that integrate well with advanced CMOS
technologies, enabling low-cost, high-performance reprogrammable products.
Cypress's PSoC devices are configurable mixed signal arrays that integrate a
fast 8-bit microcontroller with many peripheral functions typically found in an
embedded design. PSoC devices provide the advantages of an ASIC without the ASIC
NRE or turnaround time. A single PSoC device can integrate as many as 100
peripheral functions with a microcontroller, saving customers design time, board
space and power consumption. Customers can save from five cents to as much as
$10 in system costs.
Simtek's Value-Added-Memory architecture leverages its core nvSRAM architecture
by adding an on-chip microcontroller, programmable logic gates, low-power
oscillator and internal communication bus, supporting quick-turn, low-cost
implementations of additional features such as a real-time clock and serial
input/output. These features dramatically add to the range of supported
applications with little incremental cost.
ABOUT SIMTEK CORPORATION
Simtek Corporation produces fast, re-programmable, nonvolatile semiconductor
memory products. Information on Simtek products can be obtained from its web
site: www.simtek.com; email: information@simtek.com; by calling (719) 531-9444;
or fax (719) 531-9481. The company is headquartered in Colorado Springs,
Colorado, with international sales and marketing channels. Simtek is listed
under the symbol SRAM on the OTC Electronic Bulletin Board.
ABOUT CYPRESS SEMICONDUCTOR CORPORATION
Cypress solutions are at the heart of any system that is built to perform:
consumer, computation, data communications, automotive, industrial, and solar
power. Leveraging a strong commitment to customer service and performance-based
process and manufacturing expertise, Cypress's product portfolio includes a
broad selection of wired and wireless USB devices, CMOS image sensors, timing
solutions, network search engines, specialty memories, high-bandwidth
synchronous and micropower memory products, optical solutions, and
reconfigurable mixed-signal arrays. Cypress stock is traded on the New York
Stock Exchange under the ticker symbol CY. More information about the company is
available online at www.cypress.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements predicting the
Company's future growth. These forward-looking statements are inherently
difficult to predict and involve risks and uncertainties that could cause actual
results to differ materially, including, but not limited to, projections of
future performance including predictions of future profitability; expectations
of the business environment in which Simtek operates; current and anticipated
increased demand for our products; the level and timing of orders that we
receive and that we can deliver in a specified period; levels of inventories at
our distributors and other customers; inventory mix and timing of customer
orders; the success of cost-reduction efforts; our timely introduction and the
market acceptance of new technologies and products; maintaining or improving our
level of product shipments; our ability to obtain any required financing in a
timely manner; and factors not directly related to Simtek, such as competitive
pressures on pricing, market conditions in general, competition, technological
progression, product obsolescence, and the changing needs of potential customers
and the semiconductor industry in general; and current political conditions and
negative trends in the global economy.
For a detailed discussion of these and other risk factors, please refer to
Simtek's filings with the Securities and Exchange Commission (SEC), including
its Annual Report on Form 10-KSB and subsequent 10-QSB and 8K filings.
PR Contacts:
Kim Stankey
Simtek Corp
(719) 531-9444
stankey@simtek.com
Ed Rebello
Cypress Semiconductor Corp.
(408) 545-7665
ewr@cypress.com
Exhibit 99.2
------------
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement"), dated as of May 4, 2005,
is by and between SIMTEK CORPORATION, a Colorado corporation ("Simtek"), and
Cypress Semiconductor Corporation, a Delaware corporation ("Cypress").
Recitals
--------
A. Cypress desires to purchase shares of Simtek common stock and Simtek
desires to issue and sell such shares to Cypress on the terms set forth herein.
B. The parties also desire to enter into a joint development project
whereby one or more Simtek memory products will be manufactured by Cypress on
Cypress' 0.13 micron SONOS ("S8") process.
Agreement
---------
In consideration of the premises and the mutual covenants and agreements
set forth herein, the parties hereto agree as follows:
1. Purchase of Stock; Closing.
(a) Stock Purchase. Upon the terms and subject to the conditions of this
Agreement, on the date hereof, Cypress shall purchase from Simtek, and Simtek
shall issue and sell to Cypress, 6,740,816 shares of common stock, $0.01 par
value per share, of Simtek (the "Simtek Shares"), in return for Four Million
Dollars ($4,000,000.00) (the "Purchase Price").
(b) Ancillary Agreements. Upon the terms and conditions of this Agreement,
on the date hereof, Simtek shall issue to Cypress a warrant (the "Warrant"), in
the form attached hereto as Exhibit A, registered in the name of Cypress,
pursuant to which Cypress shall have the right to acquire 5,055,612 shares of
Simtek common stock (the "Warrant Shares" and, together with the Simtek Shares
and the Warrant, the "Securities"), and the parties shall enter into the
Registration Rights Agreement in the form attached hereto as Exhibit B (the
"Registration Rights Agreement"), the Production and Development Agreement in
the form attached hereto as Exhibit C (the "Development Agreement"), the Escrow
Agreement in the form attached hereto as Exhibit D (the "Escrow Agreement") and
the Subordination Agreement in the form attached hereto as Exhibit E (the
"Subordination Agreement").
(c) Simtek Deliveries. Upon execution and delivery of this Agreement,
Simtek shall deliver or cause to be delivered to Cypress the following:
(i) certificates evidencing the Simtek Shares, registered in the name
of Cypress;
(ii) the Warrant, duly executed by Simtek;
(iii) the Registration Rights Agreement, duly executed by Simtek;
(iv) the Development Agreement, duly executed by Simtek;
(v) the Escrow Agreement, duly executed by Simtek;
(vi) the Subordination Agreement, duly executed by Simtek; and
(vii) a certificate of the Secretary of the Company, in form and
substance reasonably satisfactory to counsel for Cypress, certifying that
attached to such certificate is a true and correct copy of resolutions duly and
validly adopted by the Board of Directors of Simtek authorizing the execution
and delivery of this Agreement, the transactions contemplated hereunder, the
Warrant and the issuance of the Securities to Cypress.
(d) Cypress Deliveries. Upon execution and delivery of this Agreement,
Cypress shall deliver or cause to be delivered to Simtek the following:
(i) the Purchase Price via wire transfer of immediately available
funds;
(ii) the Registration Rights Agreement, duly executed by Cypress;
(iii) the Development Agreement, duly executed by Cypress;
(iv) the Escrow Agreement, duly executed by Cypress; and
(v) the Subordination Agreement, duly executed by Cypress.
(e) Escrow Account. Immediately after the closing, Simtek shall transfer
three million dollars ($3,000,000) (the "Escrow Amount") in immediately
available funds to an escrow account in accordance with the terms of the Escrow
Agreement.
2. Simtek Representations and Warranties. Except as set forth in the Schedule of
Exceptions attached hereto as Schedule 2 (the "Simtek Schedule of Exceptions"),
Simtek represents and warrants to Cypress as follows:
(a) Organization; Existence; Good Standing. Simtek is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado. Simtek is not in violation of any of the provisions of its Articles of
Incorporation or Bylaws. Simtek is duly qualified to conduct its business and is
in good standing as a foreign corporation or other entity in each jurisdiction
in which the nature of the business conducted or property owned by it makes such
qualification necessary, except where the failure to be so qualified or in good
standing, as the case may be, would not, individually or in the aggregate, have
or reasonably be expected to result in any material adverse change, either
individually or in the aggregate, in the business, operations, properties,
assets or condition (financial or other) (a "Material Adverse Effect") on
Simtek.
(b) Due Authorization. Simtek has the full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated hereby
and thereby. Each of the Agreement, Warrant, Registration Rights Agreement,
Development Agreement, Subordination Agreement and Escrow Agreement has been
2
duly executed and delivered by Simtek and constitutes the valid and binding
obligation of Simtek enforceable against Simtek in accordance with its terms. No
further corporate action is required by Simtek in connection therewith. The
issuance of the Simtek Shares has been duly authorized, and upon issuance to
Cypress pursuant to the terms hereof, will be validly issued, fully paid and
nonassessable and are and will be free and clear of any lien or encumbrances
except as set forth in this Agreement and under applicable securities laws. When
the Warrant is exercised and the exercise price paid in accordance with the
terms thereof, the Warrant Shares will be validly issued, fully paid and
non-assessable. Even upon the distribution of the Escrow Amount to Cypress in
accordance with the Escrow Agreement, (i) the Simtek Shares will be validly
issued, fully paid and nonassessable, and (ii) the Warrant Shares will be
validly issued, fully paid and non-assessable when the Warrant is exercised and
the exercise price paid in accordance with the terms of the Warrant.
Notwithstanding anything else herein to the contrary, the preceding sentence
shall survive indefinitely. Simtek has reserved from its duly authorized capital
stock the shares of its common stock issuable pursuant to this Agreement and the
Warrant in order to issue the Securities to Cypress.
(c) No Brokers. Simtek has not incurred, and will not incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or investment bankers' fees or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
(d) No Conflicts. Except as set forth on Section 2(d) of the Simtek
Schedule of Exceptions, the execution, delivery and performance by Simtek of
each of the Agreement, Warrant, Registration Rights Agreement, Development
Agreement, Subordination Agreement and Escrow Agreement and the consummation by
Simtek of the transactions contemplated thereunder do not and will not (a)
violate or conflict with any provision of each of Simtek's Articles of
Incorporation or Bylaws, (b) breach any provision of, or be an event that is (or
with the passage of time will result in) a default of, or result in the
cancellation or acceleration of (whether after the giving of notice or lapse of
time or both) any obligation under, or result in the imposition or creation of
any encumbrances upon any of the assets of Simtek pursuant to, any material
contract, mortgage, lien, lease, agreement or instrument to which Simtek is a
party or by which Simtek is bound, (c) violate any legal requirement applicable
to Simtek, including the legal requirements of the National Association of
Securities Dealers, or any of its properties or assets, or (d) require any
authorization, consent, order, permit or approval of, or notice to, or filing,
registration or qualification with, any government authority except as will not
singly or in the aggregate have a Material Adverse Effect on Simtek and except
for filings required by state securities laws and the filing of a Notice of Sale
of Securities on Form D with the Securities and Exchange Commission (the "SEC")
under Regulation D of the Securities Act of 1933, as amended (the "Securities
Act").
(e) No Litigation. There is no litigation, proceeding or investigation
pending or, to the best knowledge of Simtek, threatened against Simtek in any
federal, state or local court, or before any administrative agency, that seeks
to enjoin or prohibit, or otherwise questions the validity of, any action taken
or to be taken pursuant to or in connection with this Agreement.
(f) Exchange Act Filings; Financial Statements. Simtek has filed all
reports, forms or other information required to be filed by it under the
Securities Act and the Securities Exchange Act of 1934, as amended (the
3
"Exchange Act"), including pursuant to Section 13(a) or 15(d) thereof, for the
twelve months preceding the date hereof (or such shorter period as Simtek was
required by law to file such reports, forms or other information) (the foregoing
materials being collectively referred to herein as the "SEC Reports") on a
timely basis or has timely filed a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension. As
of their respective dates, the SEC Reports complied in all material respects
with the requirements of the Securities Act and the Exchange Act and the rules
and regulations of the SEC promulgated thereunder, and none of the SEC Reports,
when filed, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Simtek included in the SEC
Reports comply, in all material respects, with applicable accounting
requirements and the rules and regulations of the SEC with respect thereto as in
effect at the time of filing. Such financial statements have been prepared in
accordance with GAAP applied on a consistent basis during the periods involved,
except as may be otherwise specified in such financial statements or the notes
thereto, and fairly present in all material respects the financial position of
Simtek and its consolidated subsidiaries as of and for the dates thereof and the
results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments.
For purposes of this Agreement, any reports, forms or other information provided
to the SEC, whether by filing, furnishing or otherwise providing, is included in
the term "filed" (or any derivations thereof).
(g) Capitalization. The Form 10-KSB filed by Simtek for the year ended
December 31, 2004, as supplemented by Section 2(g) of the Simtek Schedule of
Exceptions, contains a true and correct statement of the authorized, issued and
outstanding equity ownership of Simtek as of the date hereof. Other than as set
forth therein, there are no other outstanding shares of capital stock or other
securities of Simtek and no outstanding subscriptions, options, warrants, puts,
calls, rights, exchangeable or convertible securities, or other commitments or
agreements of any nature relating to the capital stock or other securities of
Simtek, or otherwise obligating Simtek to issue, transfer, sell, purchase,
redeem or otherwise acquire such stock or securities. All outstanding shares of
Simtek's common stock are duly authorized and validly issued and are fully paid
and non-assessable.
(h) Press Releases. The press releases disseminated by Simtek during the
twelve months preceding the date of this Agreement do not, individually or taken
as a whole with the SEC Reports, contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made and when made, not misleading.
(i) Material Changes. Since the date of the latest audited financial
statements included within the SEC Reports, except as specifically disclosed in
the SEC Reports or as set forth on Section 2(i) of the Simtek Schedule of
Exceptions, (i) there has been no event, occurrence or development that has had
or that could reasonably be expected to result in a Material Adverse Effect on
Simtek, (ii) to the knowledge of Simtek, Simtek has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables, accrued expenses and
other liabilities incurred in the ordinary course of business consistent with
past practice and (B) liabilities (not to exceed $450,000) not required to be
disclosed in filings made with the SEC, (iii) Simtek has not altered its method
of accounting or the identity of its auditors, (iv) Simtek has not declared or
4
made any dividend or distribution of cash or other property to its shareholders
or purchased, redeemed or made any agreements to purchase or redeem any shares
of its capital stock, and (v) Simtek has not issued any equity securities,
except pursuant to existing Simtek stock option plans and consistent with past
practice. Simtek does not have pending before the SEC any request for
confidential treatment of information.
(j) Labor Relations. No material labor dispute exists or, to the knowledge
of Simtek, is imminent with respect to any of the employees of Simtek.
(k) Compliance. Except as set forth in the SEC Reports, Simtek (i) is not
in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by
Simtek), nor has Simtek received notice of a claim that it is in default under
or that it is in violation of, any indenture, loan or credit agreement or any
other agreement or instrument to which it is a party or by which it or any of
its properties is bound (whether or not such default or violation has been
waived), (ii) is not in violation of any order of any court, arbitrator or
governmental body, and (iii) is not and has not been in violation of any
statute, rule or regulation of any governmental authority, including all
foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect on Simtek. Simtek is in compliance with all effective requirements of the
Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations
thereunder, that are applicable to it, except where such noncompliance could not
have or reasonably be expected to result in a Material Adverse Effect on Simtek.
(l) Regulatory Permits. Simtek possesses all certificates, authorizations
and permits issued by the appropriate federal, state, local or foreign
regulatory authorities necessary to conduct its business as described in the SEC
Reports, except where the failure to possess such permits could not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect on Simtek, and Simtek has not received any notice of
proceedings relating to the revocation or modification of any such permits
except as would not in the aggregate result in a Material Adverse Effect on
Simtek.
(m) Title to Assets. Except as set forth on Section 2(m) of the Simtek
Schedule of Exceptions, Simtek has good and marketable title in fee simple to
all real property owned by it that is material to its business and good and
marketable title in all personal property owned by it that is material to its
business, in each case free and clear of all liens, except for liens as do not
materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by Simtek. Any real
property and facilities held under lease by Simtek are held by it under valid,
subsisting and enforceable leases of which Simtek is in compliance, except as
could not, individually or in the aggregate, have or reasonably be expected to
result in a Material Adverse Effect on Simtek.
(n) Patents and Trademarks. Simtek has, or has rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade
names, copyrights, licenses and other similar intellectual property rights that
are necessary or material for use in connection with its business as described
5
in the SEC Reports and which the failure to so have could, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse
Effect on Simtek (collectively, the "Intellectual Property Rights"). Except as
disclosed in the SEC Reports, Simtek has not received a written notice that the
Intellectual Property Rights used by it violate or infringe upon the rights of
any Person. Except as set forth in the SEC Reports, all such Intellectual
Property Rights are enforceable and, to the knowledge of Simtek, there is no
existing infringement by another person of any of the Intellectual Property
Rights.
(o) Insurance. Simtek maintains such insurance relating to its business,
operations, assets, key employees and officers and directors as is specifically
described in Section 2(o) to the Simtek Schedule of Exceptions.
(p) Transactions with Affiliates and Employees. Except as set forth in the
SEC Reports, none of the officers or directors of Simtek, and, to the knowledge
of Simtek, none of the employees of Simtek is presently a party to any
transaction with Simtek (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of Simtek, any entity in which
any officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
(q) Internal Accounting Controls. Simtek maintains a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
Simtek has established disclosure controls and procedures (as defined in the
Exchange Act rules 13a-15(e) and 15(d)-15(e)) for Simtek and designed such
disclosure controls and procedures to ensure that material information relating
to Simtek, including its subsidiaries, is made known to the certifying officers
by others within those entities, particularly during the period in which
Simtek's Form 10-KSB or 10-QSB, as the case may be, is being prepared. Simtek's
certifying officers have evaluated the effectiveness of Simtek's controls and
procedures as of the last day of the period covered by the Form 10-KSB for
Simtek's most recently ended fiscal year (such date, the "Evaluation Date").
Simtek presented in its most recently filed Form 10-KSB or Form 10-QSB the
conclusions of the certifying officers about the effectiveness of the disclosure
controls and procedures based on their evaluations as of the Evaluation Date.
Simtek has disclosed in its most recently filed Form 10-KSB or Form 10-QSB any
change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the registrant's
internal control over financial reporting.
(r) Solvency. Based on the financial condition of Simtek as of the date
hereof (i) Simtek's fair saleable value of its assets exceeds the amount that
will be required to be paid on or in respect of Simtek's existing debts and
other liabilities (including known contingent liabilities) as they mature; (ii)
Simtek's assets do not constitute unreasonably small capital to carry on its
6
business for the current fiscal year as now conducted and as proposed to be
conducted including its capital needs taking into account the particular capital
requirements of the business conducted by Simtek, and projected capital
requirements and capital availability thereof; and (iii) the current cash flow
of Simtek, together with the proceeds Simtek would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash,
would be sufficient to pay all amounts on or in respect of its debt when such
amounts are required to be paid. Simtek does not intend to incur debts beyond
its ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).
(s) Certain Registration Matters. Assuming the accuracy of Cypress's
representations and warranties set forth in Section 3, no registration under the
Securities Act is required for the offer and sale of the Securities by Simtek to
Cypress under this Agreement. Simtek is eligible to register the resale of its
Securities by Cypress on Form S-2 promulgated under the Securities Act. Except
as set forth on Section 2(s) of the Simtek Schedule of Exceptions, Simtek has
not granted or agreed to grant to any person any rights (including "piggy back"
registration rights) to have any securities of Simtek registered with the SEC or
any other governmental authority that have not been satisfied or exercised.
(t) Listing and Maintenance Requirements. Except as specified in the SEC
Reports, Simtek has not, in the two years preceding the date hereof, received
notice from the OTC Bulletin Board (the "OTCBB") to the effect that Simtek is
not in compliance with the listing or maintenance requirements thereof. Simtek
is, and has no reasonable grounds to believe that it will not in the foreseeable
future continue to be, in compliance with the listing and maintenance
requirements for continued listing of its common stock on the OTCBB on which its
common stock is currently listed or quoted. The issuance and sale of the
Securities under this Agreement does not contravene the rules and regulations of
the OTCBB, and no approval of the shareholders of Simtek is required for Simtek
to issue and deliver to Cypress the Securities contemplated by this Agreement.
(u) Investment Company. Simtek is not, and is not an affiliate of, and
immediately following the transactions contemplated hereunder will not have
become, an "investment company" within the meaning of the Investment Company Act
of 1940, as amended.
(v) Application of Takeover Provisions. Simtek has taken all necessary
action, if any, in order to render inapplicable any control share acquisition,
business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under Simtek's Articles of
Incorporation or Bylaws (or similar charter documents) or the laws of its state
of incorporation that is or would become applicable to Cypress or shareholders
of Simtek prior to the date hereof as a result of Cypress and Simtek fulfilling
their obligations or exercising their rights under this Agreement, including
Simtek's issuance of the Securities and Cypress's ownership of the Securities.
3. Cypress Representations and Warranties. Cypress hereby represents and
warrants to Simtek as follows:
(a) Organization; Existence; Good Standing. Cypress is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
7
(b) Due Authorization. Cypress has the full corporate power and authority
to enter into this Agreement, the Development Agreement, the Registration Rights
Agreement, the Subordination Agreement and the Escrow Agreement and to
consummate the transactions contemplated hereby and thereby. Each of the
Agreement, Registration Rights Agreement, Development Agreement, Subordination
Agreement and Escrow Agreement have been duly executed and delivered by Cypress
and constitutes the valid and binding obligation of Cypress enforceable against
Cypress in accordance with its terms.
(c) No Brokers. Cypress has not incurred, and will not incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or investment bankers' fees or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
(d) No Conflicts. The execution, delivery and performance by Cypress of
this Agreement, the Development Agreement, the Registration Rights Agreement,
the Subordination Agreement and the Escrow Agreement, and the consummation of
the transactions contemplated hereby and thereby do not and will not (a) violate
or conflict with any provision of each of Cypress' Certificate of Incorporation
or Bylaws, (b) breach any provision of, or be an event that is (or with the
passage of time will result in) a default, or result in the cancellation or
acceleration of (whether after the giving of notice or lapse of time or both)
any obligation under, or result in the imposition or creation of any
encumbrances upon any of the assets of Cypress pursuant to, any material
contract, mortgage, lien, lease, agreement or instrument to which Cypress is a
party or by which Cypress is bound, (c) violate any legal requirement applicable
to Cypress, including the legal requirements of the National Association of
Securities Dealers, or any of its properties or assets, or (d) require any
authorization, consent, order, permit or approval of, or notice to, or filing,
registration or qualification with, any government authority except as will not
singly or in the aggregate have a Material Adverse Effect on Cypress.
(e) Investment Intent. Cypress is acquiring the Securities as principal for
its own account for investment purposes only and not with a view to or for
distributing or reselling such Securities or any part thereof, without
prejudice, however, to Cypress's right at all times to sell or otherwise dispose
of all or any part of such Securities in compliance with applicable federal and
state securities laws. Cypress does not have any agreement or understanding,
directly or indirectly, with any person to distribute any of the Securities.
(f) Investor Status. At the time Cypress was offered the Securities, it
was, and at the date hereof it is, an "accredited investor" as defined in Rule
501(a) under the Securities Act. Cypress is not a registered broker-dealer under
Section 15 of the Exchange Act.
(g) General Solicitation. Cypress is not purchasing the Securities as a
result of any advertisement, article, notice or other communication regarding
the Securities published in any newspaper, magazine or similar media or
broadcast over television or radio or presented at any seminar or any other
general solicitation or general advertisement.
(h) Access to Information. Cypress acknowledges that it has been afforded
(i) the opportunity to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of Simtek concerning the terms and
conditions of the offering of the Securities and the merits and risks of
8
investing in the Securities; (ii) access to information about Simtek and its
subsidiary and their respective financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to
evaluate its investment; and (iii) the opportunity to obtain such additional
information that Simtek possesses or can acquire without unreasonable effort or
expense that is necessary to make an informed investment decision with respect
to the investment.
(i) Independent Investment Decision. Cypress has independently evaluated
the merits of its decision to purchase Securities pursuant to this Agreement,
and Cypress confirms that it has not relied on the advice of any person's
business and/or legal counsel in making such decision.
4. Certain Covenants.
(a) Securities may only be disposed of in compliance with state and federal
securities laws. In connection with any transfer of the Securities other than
pursuant to an effective registration statement, Simtek may require the
transferor thereof to provide to Simtek an opinion of counsel selected by the
transferor, the form and substance of which opinion shall be reasonably
satisfactory to Simtek, to the effect that such transfer does not require
registration of such transferred Securities under the Securities Act.
(b) Certificates evidencing the Securities will contain the following
legend, until such time as they are not required under the Registration Rights
Agreement:
[NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED]
WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY
STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION
OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY.
(c) Furnishing of Information. As long as Cypress owns the Securities,
Simtek covenants to timely file (or obtain extensions in respect thereof and
file within the applicable grace period) all reports required to be filed by
Simtek after the date hereof pursuant to the Exchange Act. As long as Cypress
owns Securities, if Simtek is not required to file reports pursuant to such
laws, it will prepare and furnish to Cypress and make publicly available in
accordance with Rule 144(c) such information as is required for Cypress to sell
the Simtek Shares and Warrant Shares under Rule 144. Simtek further covenants
that it will take such further action as any holder of Securities may reasonably
request, all to the extent required from time to time to enable such person to
9
sell the Simtek Shares and Warrant Shares without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.
(d) Allocation of Purchase Price. The parties agree that the allocation of
the purchase price with respect to this Agreement shall be as set forth in
Schedule 4(d) hereto.
5. Indemnification.
(a) Subject to the limitations set forth in Section 5(d), Cypress covenants
and agrees that it shall indemnify, defend, protect and hold harmless Simtek,
its directors, officers, employees and agents (the "Simtek Indemnified
Parties"), at all times from and after the date of this Agreement (subject to
any limitation on the survival of representations and warranties set forth in
Section 5(d)), against all losses, claims, damages, actions, suits, proceedings,
demands, assessments, adjustments, costs and expenses (including specifically,
but without limitation, reasonable attorneys' fees and expenses of
investigation) ("Simtek Losses") incurred or suffered by any of the Simtek
Indemnified Parties based upon, resulting from or arising out of any inaccuracy
or breach of any representation or warranty of Cypress in this Agreement.
(b) Simtek covenants and agrees that it will indemnify, defend, protect and
hold harmless Cypress, its directors, officers, employees and agents (the
"Cypress Indemnified Parties") at all times from and after the date of this
Agreement (subject to any limitation on the survival of representations and
warranties set forth in Section 5(d)) against all losses, claims, damages,
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including specifically, but without limitation, reasonable attorneys'
fees and expenses of investigation) ("Cypress Losses") incurred or suffered by
any of the Cypress Indemnified Parties based upon, resulting from or arising out
of any inaccuracy or breach of any representation or warranty of Simtek
contained in this Agreement.
(c) Promptly after receipt by any person entitled to indemnification (an
"indemnified party") of notice of the commencement of any action, suit or
proceeding by a person not a party to this Agreement in respect of which the
indemnified party will seek indemnification hereunder (a "Third Party Action"),
the indemnified party shall notify the person that is obligated to provide such
indemnification (the "indemnifying party") thereof in writing, specifying in
reasonable detail the action, suit or proceeding (including, without limitation,
the name and location of the claimant or the parties to the action, suit or
proceeding), an estimate of the amount of Simtek Losses or Cypress Losses, as
applicable, attributable to the action, suit or proceeding, if reasonably
possible, and the basis for indemnification, and transmitting a copy of all
papers served with respect to such action, suit or proceeding (if any);
provided, however that any failure to so notify the indemnifying party shall not
relieve it from any liability that it may have to the indemnified party, except
to the extent that the indemnifying party is prejudiced by the failure to give
such notice. The indemnifying party shall be entitled to participate in the
defense of such Third Party Action and to assume control of such defense
(including settlement of such Third Party Action) with counsel reasonably
satisfactory to such indemnified party.
(d) Each of the representations and warranties made by Cypress or Simtek in
this Agreement shall survive for a period of 18 months from the date hereof. No
10
claim for indemnification under this Agreement shall be asserted by any
indemnified party after the expiration and termination of the representations
and warranties.
6. Miscellaneous.
(a) Status of Parties. Nothing contained in this Agreement will be deemed
or construed as creating a joint venture or partnership between the parties.
Neither party will have the power to control the activities and operations of
the other and their status is, and at all times will continue to be, that of
independent contractors with respect to each other. Neither party will hold
itself out as having any authority or relationship with the other in
contravention of this Section 6(a), and neither party will act on behalf of the
other party or enter into any contracts, warranty, or representation as to any
other matter on the behalf of the other party.
(b) Effect of Waiver. No waiver whether express or implied, of any breach
of any term, condition, or obligation of this Agreement will be construed as a
waiver of any subsequent breach of that term, condition, or obligation, or any
other term, condition, or obligation of this Agreement of the same or different
nature.
(c) Notices. Any notice or other communication required or permitted under
this Agreement will be given in writing and will be sent by facsimile or
commercially recognized express courier to the address specified below or to any
other address that may be designated by prior notice. Any notice or other
communication delivered by facsimile will be deemed to have been received the
day it is sent and must be confirmed by a copy sent by express courier. Any
notice or other communication sent by commercially recognized courier will be
deemed to have been received on the 3rd business day after delivery to the
courier.
Notices to be given to Cypress will be addressed to:
Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attn: Senior Vice President, Memory Products Division
With a copy to:
Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attn: Laura Norris, Esq.
If given to Simtek, it will be addressed to:
Simtek Corporation
Attention: Douglas Mitchell
4250 Buckingham Drive, Suite 100
Colorado Springs, CO 80907
Facsimile: (719) 531-9765
11
Either Party hereto may at any time, by 30 days written notice to the
other, designate any other person or address in place of those provided in this
Section.
(d) Severability. If any provision of this Agreement becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement will continue in full force and effect without said provision;
provided that no such severability will be effective if it materially changes
the economic benefit of this Agreement to any party.
(e) Governing Law. This Agreement will be governed and construed in all
respects in accordance with the laws of the State of California as applied to
agreements made and performed in California by residents of the State of
California.
(f) Facsimile and E-Mail Signatures. Any signature page delivered by a fax
machine or by e-mail will be binding to the same extent as an original signature
page, with regard to any agreement subject to the terms hereof or any amendment
thereto. Any party who delivers such a facsimile signature page or scanned
signature page agrees to later deliver an original counterpart to any party
which requests it.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the parties,
each of which will be enforceable against the parties actually executing such
counterparts, and all of which together will constitute one instrument.
(h) Interpretation. When a reference is made in this Agreement to Exhibits,
Schedules or Sections, such reference shall be to an Exhibit, Schedules or
Section to this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party hereto to whom such information is to be made available.
The Section headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Agreement.
In this Agreement, any reference to a party's "knowledge" means such party's
actual knowledge after reasonable inquiry of executive officers of such party.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms.
(i) Entire Agreement; Nonassignability; Parties in Interest. This Agreement
and the documents and instruments and other agreements specifically referred to
herein or delivered pursuant hereto, including the Exhibits and the attached
Schedule (a) constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties hereto with respect to
the subject matter hereof; (b) are 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 as otherwise specifically provided.
(j) Remedies Cumulative; No Waiver. Except as otherwise provided herein,
any and all remedies herein expressly conferred upon a party will be deemed
12
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy. No failure or delay on the
part of any party hereto in the exercise of any right hereunder shall impair
such right or be construed to be a waiver of, or acquiescence in, any breach of
any representation, warranty or agreement herein, nor shall any single or
partial exercise of any such right preclude other or further exercise thereof or
of any other right.
(k) Further Assurances. In case at any time after the execution and
delivery of this Agreement any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers of Simtek and Cypress
shall take all such necessary action.
(l) Amendment. The parties hereto may cause this Agreement to be amended at
any time by execution of an instrument in writing signed by Simtek and Cypress.
[Remainder of Page Left Intentionally Blank]
13
IN WITNESS WHEREOF, the parties hereto have caused this Share Purchase
Agreement to be executed and delivered by their respective officers thereunto
duly authorized, all as of the date first written above.
SIMTEK CORPORATION
By: /S/ DOUGLAS MITCHELL
------------------------------------------------
Name: Douglas Mitchell
Title: President
CYPRESS SEMICONDUCTOR CORPORATION
By: /S/ A.R. ALVAREZ
------------------------------------------------
Name: A.R. Alvarez
Title: GM & SR VP
Memory Products
Exhibit A
---------
Form of Warrant
Exhibit B
---------
Form of Registration Rights Agreement
Exhibit C
---------
Form of Production and Development Agreement
Exhibit D
---------
Form of Escrow Agreement
Exhibit E
---------
Form of Subordination Agreement
Schedule 2
----------
Simtek Schedule of Exceptions
Schedule 4(d)
-------------
Allocation of Purchase Price
$4,000,000 to Simtek Common Stock.
Exhibit 99.3
------------
PRODUCTION AND DEVELOPMENT AGREEMENT
THIS PRODUCTION AND DEVELOPMENT AGREEMENT ("Agreement") is entered into and made
effective May 4, 2005 ("Effective Date") by and between Simtek Corporation, a
Colorado corporation, having a place of business at 4250 Buckingham Drive, Suite
100, Colorado Springs, CO 80907 ("Simtek"), and Cypress Semiconductor
Corporation, a Delaware corporation, having a place of business at 3901 North
First Street, San Jose, CA 95134 ("Cypress"). Simtek and Cypress, collectively
and interchangeably, a "Party" or the "Parties".
RECITALS
Simtek and Cypress desire to enter into a relationship under which Cypress will
produce and deliver to Simtek one or more Simtek products as designated by
Simtek (as further defined below, "Simtek Products") using the Cypress S8
0.13-micron SONOS technology (as further defined below, the "S8 Process"). This
Agreement sets forth the terms and conditions under which the Parties will enter
into such relationship and the obligations that each Party will undertake with
respect thereto.
AGREEMENT
In consideration of the promises herein, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties agree to be bound by the following terms and conditions:
1. DEFINITIONS; CONSTRUCTION; AND INTERPRETATION.
1.1 Definitions. As used in this Agreement, the terms defined in Exhibit
1.1 will have the meanings given to those terms therein. Other capitalized terms
used in this Agreement are defined in the context in which they are used and
will have the meanings given to them below.
1.2 Construction. This Agreement together with the Exhibits hereto and any
Statements of Work issued hereunder (all of which are hereby incorporated herein
and made a part hereof), constitute the entire agreement between the Parties
regarding the subject matter hereof and supersedes all prior or contemporaneous
agreements, understandings, and communication, whether written or oral,
including the Mutual Nondisclosure Agreement, dated Sept 31, 2004 [sic], between
the Parties. Except as expressly provided in this Agreement, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the Party against whom enforcement
of any such amendment, waiver, discharge or termination is sought. The terms on
any purchase order or similar document submitted by either Party to the other,
and the terms on the web site of either Party, will have no effect on the terms
of this Agreement.
1.3 Interpretation. The following rules will apply in interpreting this
Agreement: (a) terms other than those defined in this Agreement will be given
their plain English meaning, and those terms, acronyms and phrases known in the
semiconductor products and services industries will be interpreted in accordance
with their generally known meanings; (b) unless the context otherwise requires,
words importing the singular include the plural and vice-versa; (c) references
to an "Article," "Section" and "Subsection" will be references to an article,
section, or subsection of this Agreement, unless otherwise specifically stated;
(d) references to this Agreement and the words "herein," "hereof," "hereto," and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular Article, Section or Subsection; (e) the Article,
Section and Subsection headings in this Agreement are intended to be for
reference purposes only and will in no way be construed to modify or restrict
any of the terms or provisions of this Agreement; (f) the word "including" and
words of similar import (such as "include" and "includes") mean "including, but
not limited to"; (g) a reference to "days" means calendar days, unless otherwise
specifically stated in a reference. A reference to a monthly "date" is the last
day of the month unless another day is specified.
2. S8 PROCESS DEVELOPMENT.
2.1 Development. Cypress will perform all obligations necessary to complete
the milestones in the development of the S8 Process as set forth in Exhibit 2.1
("Milestones") in accordance with terms of this Agreement. Without limiting
Cypress' obligations, Simtek will commit such resources as are set forth in
Exhibit 2.1 to assist Cypress in the development of the S8 Process. The
Milestones are further described in Cypress specifications 01-00177, 42-00005
and 42-00011, as such specifications may be updated from time to time, current
copies of which have been provided to Simtek. Any dispute as to the substance of
the Milestones (as a result of changes to the above-listed specifications or
otherwise) shall be resolved by the Council.
2.2 Development Program Council. During the term of this Agreement, Cypress
and Simtek shall jointly form a Development Program Council to review and
coordinate the development of the Milestones in accordance with this Agreement
(the "Council"). The Council shall be comprised of a minimum of each Party's
Project Manager. Each Party will identify its other participant(s) for the
Council within 1 month after the Effective Date of this Agreement. The Council
shall meet every month at a mutually agreeable location. While the Council will
be used as a forum for coordinating development activities to complete the
Milestones, the decisions of the Council shall not be legally binding on either
Party unless the Council's decision is memorialized in writing and executed by
an authorized officer of each respective Party.
2.3 Failure to Meet Milestone. Cypress agrees to complete each Milestone to
the reasonable satisfaction and approval of both Parties pursuant to the
development schedule agreed to by the Parties. The Parties agree that Estimated
Completion Dates provided in Exhibit 2.1 are estimates for the completion of the
Milestones and such dates are subject to change upon the mutual agreement of the
Parties. Failure to meet an Estimated Completion Date for a Milestone shall not
be deemed to be a breach of this Agreement. If a Milestone is not met on its
Estimated Completion Date as set forth in Exhibit 2.1, the Council shall meet
with senior management from Cypress and Simtek no later than 15 days after such
Milestone Estimated Completion Date is missed. The Council shall provide senior
management with the Milestone status, and a proposed Action Plan to complete the
Milestone. Upon review of the facts presented by the Council, the Parties'
senior management and Council shall adopt an Action Plan to complete the
Milestone, schedule a new Milestone date and amend Exhibit 2.1, if necessary.
2.4 Milestone Completion. Within 15 days of successfully achieving each
Milestone to the reasonable satisfaction and approval of both Parties, the
Council shall meet to develop and approve an Action Plan that is mutually agreed
to by both Parties for the succesful achievement of the remaining Milestones.
2.5 Modifications to the S8 Process. If Simtek desires that Cypress modify
the S8 Process used to produce any Simtek Product (for example, by including
additional process modules), Simtek will give Cypress notice thereof. Within a
reasonable amount of time after receipt of any such notice, Cypress will provide
a proposal to Simtek describing any additional costs, adjustments in price,
production, delivery schedule, and any other terms and conditions of this
Agreement that are necessary to make such modifications. Upon mutual agreement
to the proposal, the Parties will enter in to a written Statement of Work
describing in detail the obligations of each Party with respect to such
modifications. If the Parties are unable to agree upon the proposal or Statement
of Work, Cypress will continue to produce Simtek Products using the unmodified
S8 Process.
3. SIMTEK PRODUCTS.
Simtek has designated the lead Simtek Product for production by Cypress
under this Agreement to be the 4 Mbit nvSRAM. At any time during the term of
this Agreement, Simtek may designate additional Simtek Products for production
2
by Cypress under the terms of this Agreement subject to Cypress' agreement to
produce such additional Simtek Products. Any additional production costs
incurred by Cypress to produce such additional Simtek Products shall be mutually
agreed upon by the Parties prior to the commencement of production, and
accordingly the Fee Schedule shall be revised pursuant to Section 11.1. For
purposes of clarification, "additional production costs" include the costs
incurred by Cypress for new masks or additional tooling, process or CAD
development necessary to produce the additional Simtek Products.
4. ORDERING AND FORECASTING.
4.1 Order Process. At any time after Qual, and thereafter during the term
of this Agreement, Simtek will issue purchase orders to Cypress ordering
quantities of Simtek Products from Cypress ("Orders"), and Cypress will accept
Orders in accordance with Section 4.2 and will produce and deliver the Simtek
Products designated in such Orders accepted by Cypress. Each Order will include
purchase order number, quantity, applicable price, shipping method and
instructions, and statement that the Order is being placed under this Agreement.
4.2 Order Acknowledgment. Each Order issued by Simtek to Cypress under this
Agreement will be deemed acknowledged and accepted by Cypress, and Cypress will
fulfill the terms of the Order and produce and deliver the Simtek Products
ordered under the Order in accordance with the terms of the Order and the terms
and conditions of this Agreement, unless Cypress provides notice to Simtek
within 10 days of receipt of such Order indicating that such Order: (a) causes
the number of Weekly Starts to exceed the maximum number of Weekly Starts set
forth in Exhibit 4.2; or (b) includes a delivery date for the applicable Simtek
Product that is less than 90 days from the date of the Order. Any such notice by
Cypress will be accompanied by an amendment revising such Order so that the
Order is in compliance with (a) and (b) above. Upon receipt of such notice from
Cypress, Simtek may either: (i) accept such the amendment to the Order, in which
case Cypress will fulfill the terms of the amended Order and produce and deliver
the Simtek Products ordered under the amended Order in accordance with the terms
of the amended Order and the terms and conditions of this Agreement; or (ii)
cancel such amended Order without penalty to Simtek. If Simtek does not provide
an acceptance or rejection of an amendment to an Order within 10 business days
of Simtek's receipt of notice of such amended Order from Cypress, the amended
Order will be deemed accepted by Simtek. Changes to Orders accepted by Cypress
that decrease or increase the quantity of Simtek Products may be made only with
written consent of Cypress. Cypress will meet the agreed delivery date(s) as set
forth in Orders accepted by Cypress. If Cypress cannot meet the agreed upon
delivery date, Cypress will immediately notify Simtek.
4.3 Shipment and Risk of Loss. Cypress will package, or cause the packaging
of, all Simtek Products for secure shipment according to good production
practices in consideration of the method of shipment chosen. All shipments will
be F.O.B. point of shipment. Title and risk of loss or damage will transfer to
Simtek upon pick-up from the point of shipment by Simtek or the carrier
designated by Simtek in the applicable Order.
4.4 Delivery Rescheduling. Simtek may reschedule the delivery date(s) for
the Simtek Products ordered hereunder on the condition that Simtek gives Cypress
90 days written notice of its desire to reschedule prior to the scheduled
delivery date. Within 10 days after Cypress' receipt of such notice, Simtek must
state in writing its desired final disposition of the rescheduled Simtek
Products. All requests to reschedule the delivery dates of the Simtek Products
that are less than 90 days prior to the scheduled delivery date are subject to
Cypress' written acceptance, which acceptance shall not be unreasonably
withheld.
4.5 Forecasts. Commencing with Qual and within 10 days of the end of each
month thereafter, Simtek will provide Cypress with a rolling 13 week Order
forecast for Orders of Simtek Products (each, a "Forecast"). Forecasts are
provided solely for Cypress' convenience and only become a binding commitment
for Simtek to purchase the Simtek Products through the Order process described
in Section 4.1 above; provided, however, that, at Simtek's request, Simtek will
3
be permitted to provide Cypress with an Order forecast prior to the initial
Qual. Notwithstanding the foregoing, upon receipt of any Forecast, if Cypress
has information that shortages, supplier quality issues or other factors would
preclude Cypress' ability to meet any Forecast amount in any week included in
the Forecast, Cypress will submit a proposal to revise the Forecast to Simtek
within 10 days of receipt of the Forecast. The proposal will include Cypress'
Action Plan to minimize the impact on the Forecast. Upon Simtek's approval of
the Action Plan, which will not be unreasonably withheld the Forecast will be
revised accordingly. Simtek may modify Forecasts submitted to Cypress either in
a subsequent Forecast, or by providing written notice to Cypress thereof.
5. PRODUCTION PLANNING AND PRODUCTION.
5.1 Production. Cypress will perform all obligations necessary for the
production and delivery of all Simtek Products subject to Orders by Simtek in
accordance with terms of this Agreement.
5.2 Acceptance Testing. Simtek may perform acceptance testing on any Simtek
Products in any shipment of Simtek Products received from Cypress in accordance
with Simtek's then-current testing procedures and specifications for the Simtek
Products.
5.3 Defects. If acceptance testing identifies any failure of a Simtek
Product in any shipment of Simtek Products received from Cypress to operate in
conformance with Simtek's applicable specifications for such Simtek Product (a
"Defect"), Simtek will notify Cypress of the Defect and indicate to Cypress that
Simtek is either rejecting in whole or in part the shipment of Simtek Products
or waiving the Defect. If Simtek does not issue either a notice of rejection or
waiver of any Simtek Product in any shipment of Simtek Products within 10
business days of receipt of the shipment of Simtek Products from Cypress, the
Simtek Products in such shipment will be deemed accepted by Simtek.
5.4 Corrective Action. Following notice of any Defect, unless Simtek has
waived the Defect, the Council shall meet with senior management from Cypress
and Simtek no later than 15 days after notice of such Defect to agree upon an
Action Plan covering the affected Simtek Products.
6. QUALITY CONTROL AND CERTIFICATION.
6.1 Quality Standards. Cypress will produce and deliver all Simtek Products
in accordance with the quality standards used on similar products made and
distributed by Cypress (including products not using the S8 Process).
6.2 Testing. As part of its quality assurance obligations, Cypress will
conduct testing of Simtek Products after Acceptance of such Simtek Products in
accordance with reasonable industry practices. If testing of Simtek Products
indicates a problem with the quality of the Simtek Products generally based on
evidence of failure of the Simtek Products, then the Council shall meet with
senior management from Cypress and Simtek no later than 15 days after notice of
such failure of the Simtek Products to create an Action Plan to correct the
problem.
6.3 Qualification Reports. Within 1 month of Qual, Cypress will provide to
Simtek copies of Cypress' qualification reports regarding the S8 Process.
Cypress will provide standard "Rel Monitor" updates to such qualification
reports from time to time on its website during the term of this Agreement.
6.4 Action by Simtek. Simtek reserves the right to request changes in the
Simtek Products at Cypress' expense (or to take such action as it may deem
reasonable to protect its rights) based on a material breach of the terms of
this Section 6 by Cypress.
7. PROGRAM MANAGEMENT. Each Party will designate one employee with
decision-making authority to serve as the principal technical contact for such
Party during the term (each a "Project Manager"). The Project Managers will work
together to ensure that the development and delivery efforts hereunder proceed
in a timely manner. Either Party may change its Project Manager at any time and
from time to time by giving the other Party written notice. Each Party will bear
its own costs and expenses incurred in connection with participation in such
meetings.
5
8. LOYALTY.
8.1 By Cypress. During the term of this Agreement, Cypress and any
Affiliate will not use the S8 Process (or allow the S8 Process to be used) to
develop or produce (or have developed or produced) any Competing Product. For
purposes of this Section 8, a "Competing Product" is defined as a product that:
(a) has the same form, fit and function as any product listed in Exhibit 8.1
(the "Simtek Catalog"); (b) competes with a product in the Simtek Catalog; and
(c) is primarily a memory product. For the avoidance of doubt, the foregoing
will not restrict Cypress from: (i) developing or producing a Competing Product
using any other process other than the S8 Process; or (ii) developing or
producing a product using the S8 Process wherein the product: (1) is not
primarily a memory device; and (2) contains embedded within the same piece of
silicon a block which is the same form, fit and, function as a product in the
Simtek Catalog.
8.2 By Simtek. During the term of this Agreement, Simtek and any Affiliate
will not engage any third party to develop or produce (or have developed or have
produced) any product in the Simtek Catalog using technologies from 0.11 - 0.17
microns. Following the successful completion of the ES10 FAB4 Milestone set
forth in Exhibit 2.1, for the remainder of the term of this Agreement (if any),
Simtek will not engage any third party in the development or production of a
product with the same form, fit, and function as an S8 Product using
technologies from 0.11 - 0.21 microns. For purposes of this Section 8, an "S8
Product" means any product designed, developed, produced, and sold (or offered
for sale) by or for Simtek which is reasonably capable of being developed or
produced using the S8 Process.
8.3 Right of First Refusal. During the term of this Agreement, Simtek will
offer Cypress the first right of refusal to develop and produce any Simtek
Product on a technology of 100nm or below ("Offer"). Notwithstanding the
foregoing, in addition to the other rights and remedies available to Simtek
under this Agreement, and without excusing Cypress from any commitment or
obligation under this Agreement, Simtek will be excused from its obligations
under this Section 8.3, and the provisions of this Section 8.3 will be of no
force and effect on Simtek, if Cypress fails to: (a) provide Simtek with a
written proposal for the development and production of such Simtek Products to
Simtek within 90 days of Simtek's Offer to Cypress; or (b) the Parties fail
after negotiating in good faith to complete a definitive written agreement (or
amendment to this Agreement) regarding the development and production of such
Simtek Products within 180 days of Simtek's Offer to Cypress.
8.4 Exceptions. In addition to the other rights and remedies available to
the Parties under this Agreement, and without excusing the Parties from any
commitment or obligation under this Agreement, the Parties will be excused from
their obligations under this Section 8, and the provisions of Sections 8.1, 8.2
and 8.3 will be of no force and effect on the Parties, if: (a) either Party
issues a notice of non-renewal under Section 13.1; or (b) either Party issues a
notice of termination under Section 13.2(c). If at any time during the term of
this Agreement, Simtek reasonably believes that Cypress has not performed its
manufacturing obligations under this Agreement pursuant to reasonable
manufacturing standards (e.g., Cypress cannot or does not accept any 3
consecutive Orders issued by Simtek or any 2 consecutive Orders in any 3 month
period, for any reason other than those stated in Section 4.2(a) or (b), or
Cypress cannot or does not fulfill any 3 consecutive Orders issued by Simtek or
any 2 consecutive Orders in any 3 month period, for any reason), at the
reasonable request of Simtek, the Council will meet with senior management from
Cypress and Simtek to determine whether Cypress has failed to meet reasonable
manufacturing standards and to excuse Simtek from its obligations under this
Section 8.
9 GRANT OF RIGHTS.
9.1 License to Cypress.
(a) Grant of License. Subject to the terms and conditions of this
Agreement, Simtek hereby grants to Cypress and its Affiliates a nonexclusive,
nontransferable (except as set forth herein), non-sublicensable, limited license
to the Simtek Technology solely to the extent necessary for Cypress to produce
Simtek Products subject to Orders placed by Simtek under this Agreement and to
deliver those Simtek Products to Simtek under the terms of this Agreement.
5
(b) Restrictions. Cypress acknowledges that the Simtek Products and
their structure, organization, and design constitute valuable trade secrets of
Simtek. Except as expressly permitted herein, Cypress will not, and will not
permit any third party, to: (a) modify, adapt, alter, translate, or create
derivative works of or from the Simtek Products or Simtek Technology; (b) merge
the Simtek Products or Simtek Technology with other technology; (c) sublicense,
distribute, sell, allow access to, lease, rent, loan, or otherwise transfer the
Simtek Products or Simtek Technology to any third party; (d) reverse engineer,
decompile, disassemble, or otherwise attempt to derive the method of operation
or design for or other proprietary information or trade secrets from the Simtek
Products or Simtek Technology; or (e) otherwise utilize the Simtek Products or
Simtek Technology.
10. OWNERSHIP.
10.1 Simtek Property. Simtek owns all right, title and interest in and to
the Simtek Products, (including without limitation, all circuits within the
Simtek Products and the specific circuit architectures), the Simtek Technology,
and any Developments related thereto, including without limitation, all
Intellectual Property Rights therein and related thereto (the "Simtek
Property").
10.2 S8 Process and S8 Technology. Cypress owns all right, title and
interest in and to the S8 Process and the related S8 Technology, and any
Developments related thereto, including without limitation, all Intellectual
Property Rights therein and related thereto (the "Cypress Property"). Except for
Simtek's rights in and to the Simtek Property, Simtek agrees to assign and does
hereby assign to Cypress its right, title and interest in and to the Cypress
Property. For the avoidance of doubt, nothing in this Section 10.2 will entitle
Cypress to any right in or to any Simtek Property or Simtek Intellectual
Property.
10.3 No Further Rights to Cypress. Simtek retains exclusive ownership in
and to the Simtek Property. Except for the limited license granted in Section
9.1: (a) all right, title, and interest in and to the Simtek Property and Simtek
Intellectual Property are reserved by Simtek; (b) no license, right, or interest
in or to any Simtek Property or Simtek Intellectual Property Right is granted
under this Agreement; and (c) Cypress will not use any Simtek Property or Simtek
Intellectual Property Rights unless Cypress and Simtek may agree to that use in
a separate written agreement between the parties relating to the use of the
Simtek Property or Simtek Intellectual Property Rights in exchange for value.
10.4 No Further Rights to Simtek. Cypress retains exclusive ownership in
and to the Cypress Property. All right, title, and interest in and to the
Cypress Property and Cypress Intellectual Property are reserved by Cypress. No
license, right, or interest in or to any Cypress Property or Cypress
Intellectual Property Right is granted under this Agreement. Simtek will not use
any Cypress Property or Cypress Intellectual Property Rights unless Cypress and
Simtek may agree to that use in a separate written agreement between the parties
relating to the use of the Cypress Property or Cypress Intellectual Property
Rights in exchange for value.
11. FEES, EXPENSES AND TAXES.
11.1 Fees. In consideration of the obligations undertaken by each Party
under this Agreement, each Party will pay to the other Party the fees ("Fees")
set forth in Exhibit 11. The Fee Schedule set forth in Exhibit 11 may be revised
from time to time during the term of this Agreement by mutual written agreement
of the Parties. The Fees shall be paid first from the Deposit (as defined in
section 21) and then from Simtek's assets and cash flows.
11.2 Expenses. Except as set forth in Exhibit 11, all costs and expenses
relating to the obligations of either Party will be borne by the Party incurring
such expenses.
11.3 Payment. Cypress will invoice Simtek for all Fees due under this
Agreement. Unless otherwise stated herein, Simtek will pay all undisputed Fees
within 30 days of receipt of the invoice for such Fees. No Fees will be invoiced
by Cypress unless and until the event giving rise to such Fees set forth in
Exhibit 11 takes place. Each invoice will include information sufficient for
Simtek to determine the nature of the Fee and amount due. All payments shall be
made in U.S. dollars. In addition to the other rights and remedies available to
Cypress if Simtek fails to pay any undisputed fees under this Agreement, Cypress
6
may charge interest at a rate of 18% per year or the maximum rate permitted by
applicable law, whichever is less, on any such outstanding undisputed fees.
11.4 Disputed Payments. If Simtek has a good faith dispute regarding any
Fee invoiced by Cypress, Simtek may withhold payment of the particular disputed
Fees. Simtek will notify Cypress if it disputes any Fees hereunder within 30
days after receipt of the invoice for such disputed Fees, and will set forth its
reasons for such dispute in reasonable detail. All disputes under this Section
11.4 will be resolved under the terms of this Agreement.
11.5 Fee Adjustment. If during the term of the Agreement the Fees set forth
in Exhibit 11 for any Simtek Product being produced under (or subject to the
terms of) this Agreement become commercially unreasonable when compared with
available prices for the production of products having a similar form, fit and
function at similar quantities, Cypress and Simtek will mutually adjust the
applicable Fees so that the Fees are commercially reasonable in comparison to
products having a similar form, fit and function at similar quantities.
11.6 Taxes. Unless otherwise agreed to by the Parties in an Order, the
Parties' respective responsibilities for taxes arising under or in connection
with this Agreement will be as follows:
(a) Each Party will be responsible for any personal property taxes on
property it owns or leases, for franchise and privilege taxes on its business,
and for taxes based on its net income or gross receipts.
(b) Cypress will be responsible for any sales, use, excise,
value-added, services, consumption, and other taxes, customs and duties assessed
or otherwise payable by Cypress on any goods or services that are used or
consumed by Cypress in producing and delivering the Simtek Products where the
tax is imposed on Cypress' acquisition or use of such goods or services and the
amount of tax is measured by Cypress' costs in acquiring such goods or services.
(c) Simtek will be responsible for any sales, use, excise, value-added,
services, consumption, or other tax, customs and duties assessed on any
particular Simtek Product purchased by Simtek hereunder.
The Parties agree to cooperate with each other to enable each to more accurately
determine its own tax liability and to minimize such liability to the extent
legally permissible. Cypress' invoices issued to Simtek will separately state
the amounts of any taxes paid by Cypress.
12. RECORDS, INSPECTION.
12.1 Records. For at least 2
years after the year to which they pertain, but for not less than 1 year
following the termination or expiration of this Agreement, each Party will
maintain at its principal place of business complete and accurate records with
respect to its activities pursuant to this Agreement, including all data
reasonably required for verification of such Party's compliance with the terms
of this Agreement and payment of Fees owed by Simtek under this Agreement.
12.2 Inspections. Simtek shall have the right to have an inspection and
audit of all relevant accounting and sales books and records of Cypress by an
independent auditor at Simtek's cost and expense. Unless otherwise agreed to in
writing, such inspection and audit shall be conducted during Cypress' regular
business hours at Cypress' regular business offices and in such a manner as not
to interfere with Cypress' normal business activities. Such independent auditor
shall sign a customary non-disclosure agreement in form and substance
satisfactory to Cypress and shall disclose to Simtek only that information that
is necessary to verify that Cypress is in compliance with this Agreement. Such
inspection and audit shall require at least 30 days advance written notice and
shall be held no more frequently than once per calendar year. If such inspection
and audit reveals that Cypress has materially breached the terms of this
Agreement in a manner that would give rise to a right of termination hereunder
had such material breach been detected and reported, or that Cypress has
overbilled Simtek for the amounts actually owed hereunder by 5% or more for the
period audited, Cypress shall have the right to cure such breach or
"overbilling" within 60 days after being provided with written notice thereof.
7
If the inspection and audit reveals a material breach or "overbilling" as stated
above, Cypress will reimburse Simtek for all reasonable costs and expenses
incurred by Simtek in connection with such inspection and audit. In addition,
Cypress will promptly pay to Simtek any amounts shown by any such inspection and
audit to be owing plus interest at a rate of 18% per year or the maximum rate
permitted by applicable law, whichever is less.
13. TERM AND TERMINATION.
13.1 Term. The term of this Agreement will begin upon the Effective Date
and, unless earlier terminated as provided in this Agreement, will expire 7
years thereafter. This Agreement will automatically renew for successive 2 year
terms unless either Party provides written notice to the other Party of its
intent not to renew at least 2 years prior to the expiration of the then-current
term.
13.2 Termination.
(a) By Either Party For Cause. Either Party may terminate this
Agreement if the other Party breaches any material provision of this Agreement
and does not cure such breach within 60 days after being provided with written
notice thereof, or, in the event that such breach is not reasonably capable of
cure with 60 days, does not provide the other Party with a written Action Plan
for curing such breach, including a reasonable deadline for curing such breach,
and take reasonable steps to implement such Action Plan within such reasonable
deadline.
(b) By Either Party For Financial Reasons. Either Party may terminate
this Agreement by notice to the other Party if the other Party: (i) becomes
insolvent; (ii) fails to pay its debts or perform its obligations in the
ordinary course of business as they mature; (iii) admits in writing its
insolvency or inability to pay its debts or perform its obligations as they
mature; or (iv) makes an assignment for the benefit of creditors.
(c) By Either Party at Will. At any time after the 5 year anniversary
of the Effective Date of this Agreement, either Party may, for any reason or no
reason, terminate this Agreement by providing the other Party with written
notice 2 years in advance of such termination.
13.3 Effect of Termination. Upon termination or expiration of this
Agreement for any reason: (a) any amounts owed by either Party to the other
Party under this Agreement before such termination or expiration will be
immediately due and payable; (b) all license rights granted in this Agreement
will immediately cease to exist; (c) each Party agrees to return to the other
Party all physical embodiments (including, but not limited to, drafts, notes,
sketches, documents, drawings, and samples) of the Confidential Information of
the other Party; and (d) Sections 1, 10, 11, 12, 13.3, 14.3, 15.3, 16, 17, 18,
21, 23 and 24 will survive such expiration or termination of this Agreement for
any reason. Upon termination of this Agreement for any reason, the Deposit shall
be distributed in accordance with the Security Agreement as provided in Section
21. If Simtek terminates this Agreement pursuant to Section 13.2(a), 13.2(b) or
24.5, the Warrant (as defined in that certain Share Purchase Agreement, of even
date herewith, by and between Cypress and Simtek (the "Share Purchase
Agreement")) shall be immediately terminated, become null and void and be of no
further force or effect.
4. REPRESENTATIONS AND WARRANTIES.
14.1 Warranties by Both Parties. Each Party represents and warrants that:
(a) it has full power and authority to enter into and perform this
Agreement, and the person signing this Agreement on such Party's behalf has been
duly authorized and empowered to enter into this Agreement; and
(b) it will at all times comply with all applicable laws and regulation
and refrain from any unethical conduct or any other conduct that tends to damage
the reputation of the other Party or its products or services in producing and
distributing Simtek Products.
14.2 Warranties by Cypress. Cypress warrants that:
(a) it is the owner or has the right to license all of its Intellectual
Property Rights necessary that relate to the S8 Process; and
8
all Simtek Products delivered under this Agreement will comply with Simtek's
applicable specifications for such Simtek Product and Cypress' standard warranty
as set forth in Exhibit 14.2 attached hereto.
14.3 DISCLAIMER OF OTHER WARRANTIES. THE EXPRESS WARRANTIES IN THIS SECTION
14 ARE IN LIEU OF ALL OTHER WARRANTIES, WHETHER EXPRESS, IMPLIED, OR STATUTORY,
REGARDING THIS AGREEMENT, AND EACH PARTY SPECIFICALLY DISCLAIMS ANY WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE, AND
NON-INFRINGEMENT OF THIRD-PARTY RIGHTS.
15. INDEMNIFICATION.
15.1 Indemnification by Cypress. Cypress will indemnify, defend and hold
harmless Simtek and its Affiliates, and Simtek's and its Affiliates' respective
officers, directors, employees, agents, contractors, successors and assigns (the
"Simtek Indemnified Parties"), from any and all Losses arising from, in
connection with, or based on allegations, claims, suits, or proceedings of any
of the following:
(a) third party claims arising out of Cypress' performance under this
Agreement, including breach of this Agreement;
(b) third party claims arising out of Cypress' failure to observe or
perform any duties or obligations to third parties, including its
subcontractors;
(c) Cypress' breach of its obligations with respect to Simtek
Confidential Information; or
(d) as provided in Section 16.4.
15.2 Indemnification by Simtek. Simtek will indemnify, defend and hold
harmless Cypress, its Affiliates, its customers and Cypress', its Affiliates'
respective officers, directors, employees, agents, successors and assigns (the
"Cypress Indemnified Parties"), from any and all Losses arising from, in
connection with, or based on allegations, claims, suits, or proceedings of any
of the following:
(a) third party claims arising out of Simtek's performance under this
Agreement, including breach of this Agreement;
(b) third party claims arising out of Simtek's failure to observe or
perform any duties or obligations to third parties, including its
subcontractors;
(c) Simtek's breach of its obligations with respect to Cypress
Confidential Information; or
(d) as provided in Section 16.2.
15.3 Intellectual Property Infringement.
(a) Cypress will indemnify, defend and hold harmless the Simtek
Indemnified Parties from any and all Losses arising from, in connection with, or
based on allegations, claims, suits, or proceedings brought against Simtek that
the S8 Process or S8 Technology infringes or misappropriates any Intellectual
Property Right of any third party. If the respective S8 Process or S8 Technology
becomes, or in Cypress' opinion is likely to become, the subject of an
infringement claim, then Cypress may, at its option and expense, either: (a)
procure for Simtek the right to continue exercising the rights in question; or
(b) replace or modify the allegedly or potentially infringing S8 Process or S8
Technology so that such S8 Process or S8 Technology becomes non-infringing.
(b) Simtek will indemnify, defend and hold harmless the Cypress
Indemnified Parties from any and all Losses arising from, in connection with, or
based on allegations, claims, suits, or proceedings brought against Cypress that
the Simtek Technology infringes or misappropriates any Intellectual Property
Right of any third party. If the respective Simtek Technology becomes, or in
Simtek's opinion is likely to become, the subject of an infringement claim, then
Simtek may, at its option and expense, either: (a) procure for Cypress the right
to continue exercising the rights in question; (b) replace or modify the
allegedly or potentially infringing Simtek Technology so that such Simtek
9
Technology becomes non-infringing; or (c) cancel all orders for Simtek Products
where the affected Simtek Technology would be used by Cypress to produce such
Simtek Products.
15.4 Indemnification Procedures. The indemnity obligation of the Parties
under Sections 15, 16.2 and 16.4 are contingent upon the following conditions:
(a) the party seeking indemnification must promptly notify the other party in
writing of the claim giving rise to indemnification; (b) the indemnifying party
will have sole control over the defense and settlement of the indemnified claim
(provided that the indemnified party will have the right to participate in such
action, at its own expense, using counsel of its choice and that the
indemnifying party may not enter into any settlement that would impose any
non-monetary obligation on the indemnified party without first obtaining the
consent of the indemnified party); and (c) the indemnified party will provide
the indemnifying party with reasonable assistance in the defense of the
indemnified claim at the expense of the indemnifying party.
16. PERSONNEL.
16.1 Simtek Personnel. Simtek acknowledges that all of the responsibilities
and duties of the employer of all employees, contractors and agents
("Personnel") of Simtek visiting or otherwise working at Cypress' facilities
with respect to such persons' compliance with Simtek's obligations under this
Agreement are those of Simtek, and covenants and agrees that Simtek itself will
assume responsibility for such persons' compliance as stated in this Agreement.
Without limiting the generality of the foregoing, Simtek shall itself impose on
each of the Simtek Personnel all of such persons' obligations hereunder, by
contract or otherwise, and otherwise ensure that the principal duty of each of
the Simtek Personnel shall be to Simtek, notwithstanding the location of such
employee's place of work and the constraints imposed there.
16.2 Indemnification by Simtek. Simtek will indemnify, defend and hold
harmless the Cypress Indemnified Parties from any and all Losses arising from,
in connection with, or based on allegations, claims, suits, or proceedings of
any of the following: (i) that any such Simtek Personnel is an employee of
Cypress (such Losses including without limitation any employee benefit that any
such person shall be so claimed or determined to be entitled to from Cypress
after such a claim or determination that such person is an employee of Cypress),
(ii) based upon any grossly negligent or intentionally wrongful act or grossly
negligent or intentionally wrongful omission of any Simtek Personnel, or (iii)
based upon any breach by any Simtek Personnel of any obligation of that person
to Simtek imposed by this Agreement.
16.3 Cypress Personnel. Cypress acknowledges that all of the
responsibilities and duties of the employer of all of the Cypress Personnel
visiting or otherwise working at Cypress' or Simtek's facilities with respect to
such persons' compliance with Cypress' obligations under this Agreement are
those of Cypress, and covenants and agrees that Cypress itself will assume
responsibility for such persons' compliance as stated above. Without limiting
the generality of the foregoing, Cypress shall itself impose on each of the
Cypress Personnel all of such persons' obligations hereunder, by contract or
otherwise, and otherwise ensure that the principal duty of each of the Cypress
Personnel shall be to Cypress, notwithstanding the location of such employee's
place of work and the constraints imposed there.
16.4 Indemnification by Cypress. Cypress will indemnify, defend and hold
harmless the Simtek Indemnified Parties arising from, in connection with, or
based on allegations, claims, suits, or proceedings of any of the following: (i)
that any such Cypress Personnel is an employee of Simtek (such Losses including
without limitation any employee benefit that any such person shall be so claimed
or determined to be entitled to from Simtek after such a claim or determination
that such person is an employee of Simtek), (ii) based upon any grossly
negligent or intentionally wrongful act or grossly negligent or intentionally
wrongful omission of any Cypress Personnel, or (iii) based upon any breach by
any Cypress Personnel of any obligation of that person to Cypress imposed by
this Agreement.
16.5 Non-Solicitation. Each Party agrees not to solicit or hire the other
Party's Personnel during the term of this Agreement except by mutual consent;
10
provided, however, that nothing contained herein shall prevent either Party from
hiring such Personnel in response to a general hiring program conducted in the
ordinary course of business not specifically directed to such Personnel or
Personnel who approach the Party on an unsolicited basis.
17. LIMITATION OF LIABILITY. EXCEPT FOR EACH PARTY'S INDEMNIFICATION OBLIGATIONS
UNDER SECTION 15, 16.2 OR 16.4 OR A BREACH OF SECTIONS 9, 10, AND 18, AND
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT: (1) IN NO EVENT WILL
EITHER PARTY'S TOTAL AGGREGATE LIABILITY TO THE OTHER ARISING FROM OR RELATING
TO THIS AGREEMENT EXCEED THE AMOUNT OF FEES PAID TO CYPRESS BY SIMTEK UNDER THIS
AGREEMENT DURING THE PREVIOUS 12 MONTH PERIOD PRECEDING THE EVENTS GIVING RISE
TO SUCH LIABILITY, REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT
OR OTHERWISE (IT BEING UNDERSTOOD THAT EACH PARTY'S LIABILITY MAY BE FURTHER
LIMITED BY OTHER PROVISIONS OF THIS AGREEMENT); AND (2) NEITHER PARTY WILL BE
LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, PUNITIVE,
EXEMPLARY OR SPECIAL DAMAGES, INCLUDING WITHOUT LIMITATION LOST DATA,
INFORMATION OR MATERIALS, LOST PROFITS OR REVENUE, BUSINESS INTERRUPTION,
DOWNTIME OR UNAVAILABILITY, EVEN IF SUCH PARTY HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE FEES SET FORTH IN
THIS AGREEMENT REFLECT THE ALLOCATION OF RISK SET FORTH IN THIS AGREEMENT AND
THAT THE OTHER PARTY WOULD NOT ENTER INTO THIS AGREEMENT WITHOUT THESE
LIMITATIONS ON ITS LIABILITY, AND EACH PARTY AGREES THAT THESE LIMITATIONS WILL
APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY LIMITED REMEDY.
THE FOREGOING LIMITATIONS OF LIABILITY ARE INDEPENDENT OF ANY EXCLUSIVE REMEDIES
FOR BREACH OF WARRANTY SET FORTH IN THIS AGREEMENT.
18. CONFIDENTIALITY. This Agreement is made subject to, and all Confidential
Information of the other Party obtained by either Party under this Agreement
will be governed by, the terms set forth in Exhibit 18.
19. INSURANCE. Each Party shall maintain and carry throughout the term of this
Agreement liability insurance which includes but is not limited to employer's
liability, workman's compensation, general liability, public liability, property
damage liability, product liability, completed operations liability and
contractual liability in mutually agreed amounts but in no event less than
minimum statutory requirements, if any. Each Party will, if requested by the
other, furnish certificates of insurance indicating the foregoing coverage.
20. EXPORT. Cypress acknowledges that the export, import, and use of certain
hardware, software, and technical data provided hereunder is regulated by the
United States and other governments. Cypress will be responsible for performance
of all duties and obligations of the importer and exporter of record for all
deliveries and transfers hereunder (including by electronic means), and shall
otherwise be responsible for compliance with all applicable laws, regulations,
tariffs, duties, and fees, including the U.S. Export Administration Act, the
regulations implemented thereunder by the U.S. Department of Commerce, and any
other applicable import and export laws or regulations of the U.S. or any other
applicable nation, and obtaining any necessary export licenses and clearances
thereunder. Cypress represents and warrants that it is not subject to any
government order suspending, revoking or denying export or import privileges.
Cypress will not export or re-export any personal computer software, system,
part, technical data or sub-elements under this Agreement, directly or
indirectly, to any destinations prohibited by the U.S. Government, including
without limitation, to any country or other party listed on any list of
prohibited or restricted countries or parties maintained by the U.S. Treasury
Department or other applicable branch of the U.S. Government. The term
"technical data" in this context, means such data as is defined as technical
data by applicable U.S. Government export regulations.
11
21. DEPOSIT. Pursuant to the Escrow Agreement, of even date herewith, by and
between the Parties (the "Security Agreement"), Simtek has deposited $3,000,000
(the "Deposit") to an escrow account to be used for payments by Simtek to
Cypress upon the successful completion of each of the Milestones and in
accordance with the Quarterly PE/TE/Qualification/Failure Analysis schedule set
forth in Section 3 of Exhibit 11 in accordance with the terms of this Agreement.
The terms and conditions of the Deposit are provided in the Security Agreement.
22. FORCE MAJEURE. Neither Party shall be in default under this Agreement nor
any delay or failure to perform hereunder due to causes beyond its control and
without its fault or negligence, including but not limited to acts of God, acts
of any government in its sovereign or contractual capacity, strikes, fires,
floods, riots, terrorist acts or threats, wars or embargoes; provided, however,
that prompt written notice is given to the other Party describing such cause and
the affected Party will resume performance as soon as possible.
23. DISPUTE RESOLUTION. The Parties will in good faith attempt to resolve
amicably all disputes, controversies, or claims arising out of or related to
this Agreement, including without limitation, the breach, termination,
performance, invalidity or interpretation thereof (each, a "Dispute") in
accordance with the procedures in this Section 23.
23.1 Initial Resolution Procedures.
(a) Within 5 business days after either Party provides notice to the
other Party of a Dispute, the Project Manager for each Party will consider the
Dispute in person or by telephone and will attempt in good faith to resolve the
Dispute for a period of 10 business days.
(b) If the Dispute is not resolved, as agreed by the Parties in
writing, within such period, the Parties will escalate the Dispute to the
Council who will consider the Dispute at a mutually agreeable location. The
Council will attempt in good faith to resolve the Dispute for a period of 10
business days.
(c) In the case of Disputes of the Council, or other Disputes not
previously resolved as set forth above, the Parties will escalate the resolution
of the Dispute to a Senior Vice President or similar level executive of each
Party who will consider the Dispute in person at a location agreed to by the
Parties. The parties shall attempt in good faith to resolve the Dispute for a
period of 10 business days.
23.2 Final Resolution Procedures. If the Dispute is not resolved, as agreed
by the Parties in writing, after following the initial resolution procedures set
forth in Section 23.1, either Party may bring suit regarding such Dispute in the
applicable state and federal courts having jurisdiction over such Dispute, as
permitted by law.
23.3 Injunctive Relief. Notwithstanding Sections 23.1 and 23.2 above, each
Party shall be entitled to seek equitable and injunctive relief in such court to
prevent or stop a violation of the terms and conditions contained herein. Either
Party's breach of this Agreement or violation of the other Party's Intellectual
Property Rights may cause irreparable injury to such other Party for which such
other Party may not have an adequate remedy at law. Each Party shall have the
right to seek immediate relief from the court for breach of any obligation of
confidentiality, infringement, misappropriation or misuse of any Intellectual
Property Right, or any other claim where interim relief from the court is sought
to prevent serious and irreparable injury to one of the Parties.
24. ADDITIONAL PROVISIONS.
24.1 Status of Parties. Nothing contained in this Agreement will be deemed
or construed as creating a joint venture or partnership between the Parties.
Neither Party will have the power to control the activities and operations of
the other and their status is, and at all times will continue to be, that of
independent contractors with respect to each other. Neither Party will hold
itself out as having any authority or relationship with the other in
12
contravention of this Section 24.1, and neither Party will act on behalf of the
other Party or enter into any contracts, warranty, or representation as to any
other matter on the behalf of the other Party.
24.2 Effect of Waiver. No waiver whether express or implied, of any breach
of any term, condition, or obligation of this Agreement will be construed as a
waiver of any subsequent breach of that term, condition, or obligation, or any
other term, condition, or obligation of this Agreement of the same or different
nature.
24.3 Notices. Any notice or other communication required or permitted under
this Agreement will be given in writing and will be sent by facsimile or
commercially recognized express courier to the address specified below or to any
other address that may be designated by prior notice. Any notice or other
communication delivered by facsimile will be deemed to have been received the
day it is sent and must be confirmed by a copy sent by express courier. Any
notice or other communication sent by commercially recognized courier will be
deemed to have been received on the 3rd business day after delivery to the
courier.
Notices to be given to Cypress will be addressed to:
Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attention: Senior Vice President, Memory Products Division
With a copy to:
Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attention: Laura Norris, Esq.
If given to Simtek, it will be addressed to:
Simtek Corporation
4250 Buckingham Drive, Suite 100
Colorado Springs, CO 80907
Facsimile: (719) 531-9765
Attention: Douglas Mitchell
Either Party hereto may at any time, by 30 days written notice to the other,
designate any other person or address in place of those provided in this Section
24.3.
24.4 Severability. If any provision of this Agreement becomes or is
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision; provided that no such severability will be effective if it materially
changes the economic benefit of this Agreement to any Party.
24.5 Successors and Assigns. This Agreement will inure to the benefit of
the permitted successors, or assigns of the Parties. The rights and licenses
granted by this Agreement will be binding on any permitted successor to
ownership or control of the Simtek Technology. Neither Party will have any right
to assign its rights under this Agreement without the sole written consent of
the other Party, which consent will not be unreasonably withheld; provided,
however, that if a Change of Control of a Party occurs, such Party will be able
to assign this Agreement as a whole to the purchasing, acquiring or resulting
entity without the prior written consent of the other Party, unless the other
Party reasonably believes such assignment would materially adversely effect the
performance of the obligations owed to it, or such other Party's rights and
licenses, under this Agreement. The Parties agree that such a material adverse
13
effect would occur if the purchasing, acquiring or resulting entity is: (i) a
competitor of the other Party or (ii) a person with whom the other Party has an
actual conflict of interest at the time of such Change of Control.
24.6 Governing Law. This Agreement will be governed and construed in all
respects in accordance with the laws of the State of California as applied to
agreements made and performed in California by residents of the State of
California.
24.7 Facsimile/E-Mail Signatures. Any signature page delivered by a fax
machine or by e-mail will be binding to the same extent as an original signature
page, with regard to any agreement subject to the terms hereof or any amendment
thereto. Any Party who delivers such a facsimile signature page or scanned
signature page agrees to later deliver an original counterpart to any Party
which requests it.
24.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Parties,
each of which will be enforceable against the Parties actually executing such
counterparts, and all of which together will constitute one instrument.
[Signature page follows]
14
The Parties hereto have caused this Agreement to be duly executed as of the
Effective Date.
FOR SIMTEK FOR CYPRESS
Simtek Corporation Cypress Semiconductor Corporation
Signed: /S/ DOUGLAS MITCHELL Signed: /S/ A.R. ALVAREZ
------------------------ ---------------------------
By: Douglas Mitchell By: A.R. Alvarez
Title: CEO/President Title: GM & SR VP, Memory Products
Date: May 4, 2005 Date: May 4, 2005
- Signature Page -
EXHIBIT 1.1
DEFINITIONS
"Action Plan" means a corrective plan developed by the Council in response to a
particular failure, defect or breach that provides a detailed description of the
corrective actions to be implemented to correct the particular failure, defect
or breach.
"Affiliate" means any business entity: (a) which owns or controls, directly or
indirectly, 50% or more of the voting rights with respect to the election of
directors or managers, or which has practical control directly or indirectly, of
the Party; (b) of which 50% or more of the voting rights with respect to the
election of directors or managers is owned or controlled, directly or
indirectly, by, or which is under the practical control directly or indirectly
of, the Party; or (c) of which 50% or more of the total voting rights with
respect to the election of directors or managers is owned or controlled,
directly or indirectly, by, or which is under the practical control directly or
indirectly of, any corporation, limited liability company, partnership or other
business enterprise described by subsections (a) or (b) above.
"Change of Control" means a transaction under which: (a) a Party consolidates or
merges with or into a third party, if the shareholders of the Party's
outstanding capital stock entitled to vote generally in elections of directors
before such transaction do not own, directly or indirectly, immediately
following such transaction, at least 50% of the combined voting power of the
outstanding voting interests of the entity resulting from such transaction; or
(b) an entity purchases or otherwise acquires all, or substantially all, of the
assets of that segment of either Party's business relating to the subject matter
of this Agreement. A "Change of Control" specifically excludes a bona fide
equity financing transaction or series of transactions as long as at least a
majority of the Party's board of directors immediately following the transaction
were directors of such Party immediately prior to such transaction.
"Confidential Information" means any information regarding the business,
finances or technology of either Party, including technical, marketing,
financial, employee, and planning information, and any other information that a
reasonable person should have known, under the circumstances, was confidential
or proprietary. The Simtek Products and Simtek Technology (including
specifications and architecture thereto) is Simtek Confidential Information
whether or not so marked. The S8 Process and S8 Technology (including
specifications and architecture thereto) is Cypress Confidential Information
whether or not so marked.
"Development" means any modification, enhancement, improvement, or derivative,
including, without limitation, any port, correction, addition, extension,
upgrade, compilation, abridgment, or other form in which a work is transformed
or adapted.
"Intellectual Property Rights" means all intellectual property rights as may
exist now or hereafter come into existence regardless of whether such rights
arise under the laws of the United States or any other state, country or
jurisdiction, including, without limitation: (a) all patent rights and all
right, title and interest in and to all letters patent and applications for
letters patent, and all other government-issued or -granted indicia of invention
ownership, including any reissue, division, term extensions, continuation or
continuation-in-part applications; (b) all copyrights and all other literary
property and author (moral) rights, and all right, title and interest in and to
all copyrights, copyright registrations, certificates of copyrights and
copyrighted interests; (c) all trademarks, trade names and service marks, and
all rights, title and interest in and to all applications, certifications and
registrations therefor; (d) all mask work rights, mask work applications, and
mask work registrations; (e) all rights, title and interest in and to all trade
secrets and trade secret rights; (f) all licenses or license rights with respect
to the foregoing; and (g) all other analogous rights, such as database rights.
"Losses" means all losses, costs, expenses, liabilities and damages reasonably
incurred resulting from or relating to under any settlement, litigation or final
judgment, and all related reasonable costs and expenses, including reasonable
legal fees, fines, interest and penalties.
"Qual" means achievement of the QUAL Milestone as set forth in Exhibit 2.1.
"Simtek Product" means a silicon wafer containing integrated circuits having a
design dictated by Simtek and any materials (including masks), information, test
programs, or procedures relating thereto.
"Simtek Technology" means all Intellectual Property Rights, whether present or
future, relating to the Simtek Products.
"Stacked FLASH" means the technology related to nvSRAM with multiple
non-volatile memory cells for each SRAM memory cell as further described in U.S.
Patent No. 6,414,873.
"Statement of Work" means a mutually agreed to written description of the work
to be performed by each Party.
"S8 Process" means the process used to produce (fabricate) Simtek Products under
this Agreement based on the Cypress S8 0.13-micron SONOS technology.
"S8 Technology" means all Intellectual Property Rights, whether present or
future, relating to the S8 Process.
"Weekly Starts" means the maximum number of wafer starts per week set forth in
Exhibit 4.2.
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EXHIBIT 2.1
S8 PROCESS DEVELOPMENT
1. Simtek Resources.
1.1 S8 Development. Simtek will make available 2 engineers for up to 40
hours per week to assist Cypress in the completion of the Milestones.
1.2 Memory Compiler Development. Simtek will make available up to 2
engineers for up to 40 hours per week to assist Cypress in the development of a
memory compiler and will continue to make the engineers available until the
completion of the development of the memory compiler as agreed to by the
Parties.
1.3 Additional Simtek Resources. Any additional engineering resources
required or utilized by Cypress will be made available by Simtek at Simtek's
then-current professional services rates.
2. Milestones and Schedule. Cypress will accomplish the following milestones in
accordance with the schedule set forth below:
MILESTONE DESCRIPTION ESTIMATED COMPLETION DATE
--------- ----------- -------------------------
ETP Technology Plan
PR2:SPECS Project Review 2
TCPR3 Test Chip Tapeout Ready
TC10 Test Chip 10 Samples
PR3:TO Product Tapeout
ES10 FAB4 Engineering Samples
ES100 Full Data Sheet Samples
PR4 Cost / Yield / Conditional Qual
QUAL Full Qual
EXHIBIT 4.2
ORDERING
Wafer Starts Allocated
Calendar Year to Simtek/Week
------------- ----------------------
2006 200
2007 250
2008 300
2009 350
2010 400
EXHIBIT 8.1
SIMTEK CATALOG
Memory Architecture Density Options I/O Options
- -------------------- ------- ------- -----------
nvSRAM 4Mbit Real Time Clock (RTC) X8, x16, serial
1 Mbit RTC X8, x16, serial
256 Kbit RTC X8, x16, serial
64Kbit RTC X8, x16, serial
nvSRAM + Stacked FLASH 1 Mbit + Density TBD RTC X8, x16, serial
256 Kbit + Density TBD RTC X8, x16, serial
64 Kbit + Density TBD RTC X8, x16, serial
EXHIBIT 11
FEE SCHEDULE
1. Simtek Product Development and Set-Up Fees. Following acceptance of the lead
Order of any Simtek Product received under this Agreement, Simtek will reimburse
Cypress for 100% of the out of pocket costs incurred in the production of all
mask sets necessary for the production of Simtek Products under this Agreement
based on actual invoices paid by Cypress for mask sets used in the production of
such Simtek Product.
2. S8 Process Development Fees. Provided that Cypress has completed the
applicable Milestones set forth on Exhibit 2.1, in accordance with the terms and
conditions of this Agreement, Simtek will pay Cypress the Fees set forth below:
MILESTONE SIMTEK PAYMENT ADDITIONAL SIMTEK PAYMENT TOTAL PAYMENT
--------- -------------- ------------------------- -------------
ETP $257,400.00 $0.00 $257,400.00
PR2:SPECS $257,400.00 $0.00 $257,400.00
TCPR3 $257,400.00 $0.00 $257,400.00
TC10 $257,400.00 $0.00 $257,400.00
PR3:TO $257,400.00 $0.00 $257,400.00
ES10 FAB4 $386,100.00 $91,500.00 $477,600.00
ES100 $257,400.00 $91,500.00 $348,900.00
PR4 $257,400.00 $91,500.00 $348,900.00
QUAL $386,100.00 $91,500.00 $477,600.00
TOTAL: $2,574,000.00 $ 366,000.00 $2,940,000.00
3. Quarterly PE/TE/Qualification/Failure Analysis Fees. Subject to the terms and
conditions of this Agreement, Simtek will pay Cypress the Fees set forth below
on or before the end of each calendar quarter set forth below:
QUARTER SIMTEK PAYMENT
------- -------------
Q2 2005 $48,800.00
Q3 2005 $48,800.00
Q4 2005 $48,800.00
Q1 2006 $48,800.00
Q2 2006 $48,800.00
4. Simtek Product Production Fees. Simtek will pay Cypress as follows for Simtek
Products provided by Cypress, for which Simtek issues an Acceptance as set forth
in the Agreement:
Wafer Price
-----------
Calendar Year Price/Wafer*
------------- ------------
2006 $ 2000.00
2007 $ 1950.00
2008 $1900.00
2009 $ 1850.00
2010 $1800.00
* The prices set forth in this table are subject to adjustment as set forth
in Section 11.5 of the Agreement.
After Process Qualification, the Parties will agree on a production yield target
for all wafers produced by Cypress for the Simtek Products, and Simtek will not
accept any wafers not meeting the production yield target mutually agreed upon
by the Parties.
EXHIBIT 14.2
WARRANTY FOR SIMTEK PRODUCTS
STANDARD CYPRESS PRODUCT WARRANTY
---------------------------------
1. LIMITED WARRANTY.
(a) Semiconductor Products: Seller warrants that the Semiconductor products
to be delivered hereunder if properly used and serviced, will conform to
applicable specifications for such Semiconductor products agreed to by the
Council and will be free from defects in material and workmanship for one (1)
year following the date of shipment. (b) Systems or Board Level: Seller warrants
that the systems or board level products to be delivered hereunder if properly
used and serviced, will perform to Seller's published specifications and will be
free from defects in material and workmanship for ninety (90) days following the
date of shipment.
2. EXCLUSIONS OF WARRANTIES. THE WARRANTIES CONTAINED IN THIS AGREEMENT ARE
EXCLUSIVE AND ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY, ANY IMPLIED WARRANTY
OF FITNESS FOR A PARTICULAR PURPOSE, OR ANY IMPLIED WARRANTY ARISING BY STATUTE
OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING OR USAGE OF TRADE. If any
product furnished by Seller fails-to conform to the above warranty, Seller's
sole and exclusive liability shall be, at Seller's option, to repair, replace or
credit Buyer's account with an amount equal to the price paid for any such
product returned by Buyer during the warranty period, provided that; (a) Buyer
promptly notifies Seller in writing that such product failed to conform and
furnishes a detailed explanation of any alleged deficiency; (b) such product is
returned to Seller's plant at Buyer's risk and expense, (c) Seller is satisfied
that claimed deficiencies actually exist and were not caused by accident,
misuse, neglect, alteration, improper installation, repair or improper testing.
If such product fails to conform, Seller will reimburse Buyer for the
transportation charges. Seller shall have a reasonable time to make repairs, to
replace products or to credit Buyer's account.
EXHIBIT 18
CONFIDENTIALITY
1. Protection of Confidential Information. Each Party (the "Disclosing Party")
may from time to time during the term of this Agreement disclose to the other
Party (the "Receiving Party") certain Confidential Information. The Receiving
Party will not use any Confidential Information of the Disclosing Party for any
purpose not expressly permitted by this Agreement, and will disclose the
Confidential Information of the Disclosing Party only to the employees or
contractors of the Receiving Party who have a need to know such Confidential
Information for purposes of this Agreement and who are under a duty of
confidentiality no less restrictive than the Receiving Party's duty hereunder.
The Receiving Party will protect the Disclosing Party's Confidential Information
from unauthorized use, access, or disclosure in the same manner as the Receiving
Party protects its own confidential or proprietary information of a similar
nature and with no less than reasonable care.
2. Exceptions. The Receiving Party's obligations with respect to any
Confidential Information of the Disclosing Party will terminate if such
information: (1) was already lawfully known to the Receiving Party at the time
of disclosure by the Disclosing Party; (2) is disclosed to the Receiving Party
by a third party who had the right to make such disclosure without any
confidentiality restrictions; (3) is, or through no fault of the Receiving Party
has become, generally available to the public; or (4) is proven by the Receiving
Party (who shall bear the burden of proof) to have been independently developed
by the Receiving Party without use of the Disclosing Party's Confidential
Information. In addition, the Receiving Party will be allowed to disclose
Confidential Information of the Disclosing Party to the extent that such
disclosure is: (a) approved in advance in writing by the Disclosing Party; (b)
necessary for the Receiving Party to enforce its rights under this Agreement in
connection with a legal proceeding; or (c) required by law or by the order or a
court of similar judicial or administrative body, provided that the Receiving
Party notifies the Disclosing Party in advance of such required disclosure
promptly and in writing and cooperates with the Disclosing Party, at the
Disclosing Party's reasonable request and expense, in any lawful action to
contest or limit the scope of such required disclosure.
3. Mask Sets. In particular, and without limiting any obligation of Cypress,
Cypress will protect all mask sets relating to the Simtek Products, whether
transferred to Cypress or otherwise obtained by Cypress, as Confidential
Information of Simtek in accordance with this Exhibit 18.
4. Return of Confidential Information. The Receiving Party will return to the
Disclosing Party or destroy all Confidential Information of the Disclosing Party
in the Receiving Party's possession or control and permanently erase all
electronic copies of such Confidential Information promptly upon the request of
the Disclosing Party or at the expiration or termination of this Agreement or
when no longer needed in connection with its performance under this Agreement,
whichever comes first. Without limiting any obligation of Cypress, when any mask
set is no longer usable by Cypress for the purposes of the Agreement, Cypress
will return to Simtek or, at Simtek's request, destroy the mask set, and will
permanently erase all electronic copies of such mask set and the information
relating thereto. At the Disclosing Party's request, the Receiving Party will
certify in writing signed by an officer of the Receiving Party that it has fully
complied with the foregoing obligations.
5. Confidentiality of Agreement. Neither Party will disclose any terms of this
Agreement to anyone other than its attorneys, accountants, and other
professional advisors except: (1) as required by law; or (2) pursuant to a
mutually agreeable press release; or (3) in connection with a proposed merger,
financing, or sale of such Party's business (provided that any third party to
whom the terms of this Agreement are to be disclosed signs a confidentiality
agreement reasonably satisfactory to the other Party to this Agreement).
6. Independent Development. The terms of confidentiality under this Exhibit 18
will not be construed to limit either Party's right to develop independently or
acquire products, concepts, systems, processes or techniques without use of the
other Party's Confidential Information. The Disclosing Party acknowledges that
the Receiving Party may develop information internally, or may receive
information from other parties, that is similar to the Confidential Information
of the Disclosing Party. Accordingly, nothing in this Exhibit 18 or in the
Agreement will prohibit the Receiving Party from developing or having developed
for it products, concepts, systems, processes or techniques that are similar to
or compete with the products, concepts, systems, processes or techniques
contemplated by or embodied in the Confidential Information provided that the
Receiving Party does not violate any of its obligations under this Exhibit 18 in
connection with such development.
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.
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(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
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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.
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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
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attn: Senior Vice President, Memory Products Division
With a copy to:
Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attn: Laura Norris, Esq.
If given to Simtek, it will be addressed to:
Simtek Corporation
Attention: Douglas Mitchell
4250 Buckingham Drive, Suite 100
Colorado Springs, CO 80907
Facsimile: (719) 531-9765
If given to Escrow Agent, it will be addressed to:
U.S. Bank, National Association
Escrow Services
One California Street, Suite 2250
San Francisco, CA 94111
Telephone: (415) 273-4532
Facsimile: (415) 273-4591
Attn: Sheila K. Soares
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/ DOUGLAS MITCHELL
---------------------------
Name: Douglas Mitchell
Title: CEO/President
CYPRESS SEMICONDUCTOR CORPORATION
By: /S/ A.R. ALVAREZ
---------------------------
Name: A.R. Alvarez
Title: GM & SR VP Memory Products
ESCROW AGENT:
U.S. BANK, NATIONAL ASSOCIATION
By: /S/ SHEILA K. SOARES
---------------------------
Name: Sheila K. Soares
Title: Vice President
Schedule I
----------
Escrow Agent Fee Schedule
Schedule II
-----------
Simtek Wire Instructions
Schedule III
------------
Cypress Wire Instructions
Exhibit 99.5
VOID AFTER 5:00 P.M., COLORADO TIME,
ON MAY 4, 2015
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES
ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON
AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), or the securities laws of any state of
the United States. The securities represented hereby may not be offered
or sold in the absence of an effective registration statement for the
securities under applicable securities laws unless offered, sold or
transferred under an available exemption from the registration
requirements of those laws.
Date: May 4, 2005
SIMTEK CORPORATION
STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Cypress Semiconductor Corporation,
a Delaware corporation ("Cypress"), is entitled to purchase from SIMTEK
CORPORATION, a corporation organized under the laws of the State of Colorado
(the "Company"), at any time or from time to time during the Exercise Period (as
defined in Section 2 hereof), 5,055,612 fully paid and nonassessable shares of
the Company's common stock, $0.01 par value (the "Common Stock"), at an exercise
price per share (the "Exercise Price") of $0.7772. The number of shares of
Common Stock purchasable hereunder (the "Warrant Shares") and the Exercise Price
are subject to adjustment as provided in Section 4 hereof. The term "Warrant"
means this Warrant issued pursuant to that certain Share Purchase Agreement,
dated as of May 4, 2005, by and between the Company and Cypress (the "Purchase
Agreement").
This Warrant is subject to the following terms, provisions and conditions:
1. (a) Manner of Exercise; Issuance of Certificates. Subject to the
provisions hereof, this Warrant may be exercised at any time during the Exercise
Period by the holder hereof, in whole or in part, by delivery of a completed
exercise agreement in the form attached hereto (the "Exercise Agreement"), to
the Company by 5 p.m. Colorado time on any Business Day at the Company's
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the holder hereof) and upon payment to the Company as
provided in Section 1(b) below of the applicable Exercise Price for the Warrant
Shares specified in the Exercise Agreement. The Warrant Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee, as
the record owner of such shares, as of the close of business on the date on
which this Warrant shall have been surrendered and the completed Exercise
Agreement shall have been delivered and payment shall have been made for such
shares as set forth above. The Warrant Shares so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the holder hereof within a reasonable time, not exceeding five (5)
Business Days, after this Warrant shall have been so exercised (the "Delivery
Period"). If the Company's transfer agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program, and so long as
the certificates therefor do not require a legend and the holder is not
obligated to return such certificate for the placement of a legend thereon, the
Company shall cause its transfer agent to electronically transmit the Warrant
Shares so purchased to the holder by crediting the account of the holder or its
nominee with DTC through its Deposit Withdrawal Agent Commission system ("DTC
Transfer"). If the aforementioned conditions to a DTC Transfer are not
satisfied, the Company shall deliver to the holder physical certificates
representing the Warrant Shares so purchased. Further, the holder may instruct
the Company to deliver to the holder physical certificates representing the
Warrant Shares so purchased in lieu of delivering such shares by way of DTC
Transfer. Any certificates so delivered shall be in such denominations as may be
requested by the holder hereof, shall be registered in the name of such holder
or such other name as shall be designated by such holder and, following the date
on which the Warrant Shares may be sold by the holder pursuant to Rule 144(k)
promulgated under the Securities Act (or a successor rule), shall not bear any
restrictive legend relating to the Securities Act. If this Warrant shall have
been exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver to
the holder a new Warrant representing the number of shares with respect to which
this Warrant shall not then have been exercised.
(b) Payment of Exercise Price. The holder shall pay the Exercise Price in
immediately available funds. The holder hereof, at its election, may also
satisfy its obligation to pay the Exercise Price through a "cashless exercise,"
in which event the Company shall issue to the holder hereof the number of
Warrant Shares determined as follows:
X = Y [(A-B)/A]
where:
X = the number of Warrant Shares to be issued to
the holder.
Y = the number of Warrant
Shares with respect to which this
Warrant is being exercised.
2
A = the average of the
closing prices on the Principal
Market of Common Stock for the five
trading days immediately prior to
(but not including) the Exercise
Date.
B = the Exercise Price.
2. Period of Exercise. This Warrant may be exercised at any time or from
time to time (an "Exercise Date") during the period (the "Exercise Period")
beginning on (a) the date hereof and ending (b) at 5:00 p.m., Colorado time, on
the tenth anniversary of the date of original issuance hereof.
3. Certain Agreements of the Company. The Company hereby warrants,
covenants and agrees as follows:
(a) Shares to be Fully Paid. All Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid and
nonassessable and free from all taxes, liens, claims and encumbrances (except
for restrictions existing under applicable securities laws).
(b) Reservation of Shares. During the Exercise Period, the Company
shall at all times have authorized, and reserved for the purpose of issuance
upon exercise of this Warrant, a sufficient number of shares of Common Stock to
provide for the exercise in full of this Warrant.
(c) Successors and Assigns. This Warrant shall be binding upon any
entity succeeding to the Company by merger, consolidation, or acquisition of all
or substantially all of the Company's assets.
4. Antidilution Provisions. During the Exercise Period, the Exercise Price
and the number of Warrant Shares issuable upon the exercise of the Warrants
shall be subject to adjustment from time to time as provided in this Section 4.
In the event that any adjustment of the Exercise Price as required herein
results in a fraction of a cent, such Exercise Price shall be rounded up or down
to the nearest cent; provided that, in no event shall the Exercise Price per
share be reduced below $0.01.
(a) Subdivision or Combination of Common Stock. If the Company, at any
time during the Exercise Period, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a greater number of shares, then, after the date of record for
effecting such subdivision, the Exercise Price in effect immediately prior to
such subdivision will be proportionately reduced and the number of shares which
may be purchased hereunder shall be proportionately increased. If the Company,
at any time during the Exercise Period, combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) its shares of
Common Stock into a smaller number of shares, then, after the date of record for
effecting such combination, the Exercise Price in effect immediately prior to
such combination will be proportionately increased and the number of shares
which may be purchased hereunder shall be proportionately reduced.
3
(b) Consolidation, Merger or Sale. In case of any consolidation of the
Company with, or merger of the Company into, any other entity, or in case of any
sale or conveyance of all or substantially all of the assets of the Company
other than in connection with a plan of complete liquidation of the Company at
any time during the Exercise Period, then as a condition of such consolidation,
merger or sale or conveyance, adequate provision will be made whereby the holder
of this Warrant will have the right to acquire and receive upon exercise of this
Warrant in lieu of the shares of Common Stock immediately theretofore acquirable
upon the exercise of this Warrant, such shares of stock, securities, cash or
assets as may be issued or payable with respect to or in exchange for the number
of shares of Common Stock immediately theretofore acquirable and receivable upon
exercise of this Warrant had such consolidation, merger or sale or conveyance
not taken place. In any such case, the Company will make appropriate provision
to cause the provisions of this Section 4 thereafter to be applicable as nearly
as may be in relation to any shares of stock or securities thereafter
deliverable upon the exercise of this Warrant. The Company will not effect any
consolidation, merger, sale, or conveyance unless prior to the consummation
thereof, the successor entity (if other than the Company) assumes by written
instrument the obligations under this Warrant and the obligations to deliver to
the holder of this Warrant such shares of stock, securities or assets as, in
accordance with the foregoing provisions, the holder may be entitled to acquire.
(c) Notice of Adjustment. Upon the occurrence of any event which
requires any adjustment of the Exercise Price, then, and in each such case, the
Company shall give notice thereof to the holder of this Warrant, which notice
shall state the Exercise Price resulting from such adjustment and the increase
or decrease in the number of Warrant Shares issuable upon exercise of this
Warrant, setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Such calculation shall be certified
by the chief financial officer of the Company.
(d) Minimum Adjustment of the Exercise Price. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(e) No Fractional Shares. No fractional shares of Common Stock are to
be issued upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be issuable
in an amount equal to the same fraction of the closing bid price of a share of
Common Stock on the Principal Market on the date of such exercise.
(f) Certain Definitions.
(i) "Business Day" means any day, other than a Saturday or Sunday
or a day on which banking institutions in the State of New York are authorized
or obligated by law, regulation or executive order to close.
(ii) "Principal Market" means the Over-the-Counter Bulletin Board
or, if the Common Stock is not traded on the Over-the-Counter Bulletin Board,
then the principal securities exchange or trading market for the Common Stock.
4
5. No Rights or Liabilities as a Stockholder. This Warrant shall not
entitle the holder hereof to any voting rights or other rights as a stockholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the holder hereof to purchase Warrant Shares, and no mere enumeration
herein of the rights or privileges of the holder hereof, shall give rise to any
liability of such holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
6. Transfer, Exchange, Redemption and Replacement of Warrant.
(a) Restriction on Transfer. Subject to the terms of this Agreement,
this Warrant and the rights granted to the holder hereof are transferable in
whole or in part, at any time, upon surrender of this Warrant, together with a
properly executed assignment in the form attached hereto, at the office or
agency of the Company referred to in Section 6(e) below. Until due presentment
for registration of transfer on the books of the Company, the Company may treat
the registered holder hereof as the owner and holder hereof for all purposes,
and the Company shall not be affected by any notice to the contrary.
(b) Warrant Exchangeable for Different Denominations. This Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 6(e) below, for new Warrants of
like tenor of different denominations representing in the aggregate the right to
purchase the number of shares of Common Stock which may be purchased hereunder,
each of such new Warrant to represent the right to purchase such number of
shares as shall be designated by the holder hereof at the time of such
surrender.
(c) Replacement of Warrant. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant and, in the case of any such loss, theft, or destruction, upon
delivery of an indemnity agreement reasonably satisfactory in form and amount to
the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant of like tenor.
(d) Cancellation. Upon the surrender of this Warrant in connection with
any transfer, exchange, or replacement as provided in this Section 6, this
Warrant shall be promptly canceled by the Company.
(e) Warrant Register. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) Exercise or Transfer Without Registration. If, at the time of the
surrender of this Warrant in connection with any exercise, transfer, or exchange
of this Warrant, this Warrant (or, in the case of any exercise, the Warrant
Shares issuable hereunder), shall not be registered under the Securities Act and
under applicable state securities or blue sky laws, the Company may require, as
5
a condition of allowing such exercise, transfer, or exchange, (i) that the
holder or transferee of this Warrant, as the case may be, furnish to the Company
a written opinion of counsel (which opinion shall be reasonably acceptable to
the Company and shall be in form, substance and scope customary for opinions of
counsel in comparable transactions) to the effect that such exercise, transfer,
or exchange may be made without registration under the Securities Act and under
applicable state securities or blue sky laws, (ii) that the holder or transferee
execute and deliver to the Company an investment letter in form and substance
reasonably acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act.
7. Registration Rights. The initial holder of this Warrant (and certain
assignees thereof) are entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Registration Rights
Agreement, of even date herewith, by and between the Company and Cypress.
8. Notices. Any notices required or permitted to be given under the terms
of this Warrant shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and
shall be effective five (5) days after being placed in the mail, if mailed, or
upon receipt or refusal of receipt, if delivered personally or by courier, or by
confirmed facsimile, in each case addressed to a party. The addresses for such
communications shall be:
If to the Company:
Simtek Corporation
4250 Buckingham Dr., Suite 100
Colorado Springs, CO 80907
Telephone No.: (719) 531-9444
Facsimile No.: (719) 531-9765
Attention: Douglas M. Mitchell, President
With a copy to:
Holme Roberts & Owen LLP
90 S. Cascade Ave., Suite 1300
Colorado Springs, CO 80903
Telephone (719) 473-3800
Facsimile No.: (719) 633-1518
Attention: Hendrik F. Jordaan, Esq.
If to Cypress:
Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attention: Senior Vice President, Memory Products Division
6
With a copy to:
Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attention: Laura Norris, Esq.
Either the Company or the holder may at any time designate any other person
or address in place of that provided in this Section by giving written notice to
the other in accordance with this Section.
9. Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of this warrant shall be governed by and
construed and enforced in accordance with the laws of the state of California.
10. Miscellaneous.
(a) This Warrant and any provision hereof may only be amended by an
instrument in writing signed by the Company and the holder hereof.
(b) The descriptive headings of the several Sections of this Warrant
are inserted for purposes of reference only, and shall not affect the meaning or
construction of any of the provisions hereof.
(c) In case any one or more of the provisions of this Warrant shall be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected
or impaired thereby and the parties will attempt in good faith to agree upon a
valid and enforceable provision which shall be a commercially reasonable
substitute therefor, and upon so agreeing, shall incorporate such substitute
provision in this Warrant.
(d) Subject to the restrictions on transfer set forth herein, this
Warrant may be assigned by the holder. This Warrant may not be assigned by the
Company. This Warrant shall be binding on and inure to the benefit of the
parties hereto and their respective successors and assigns. Subject to the
preceding sentence, nothing in this Warrant shall be construed to give to any
Person other than the Company and the holder any legal or equitable right,
remedy or cause of action under this Warrant. Cypress may assign this Warrant
only to a transferee or assignee that is an Affiliate of Cypress. The term
"Affiliate" shall mean with respect to any individual, corporation, partnership,
association, trust, or any other entity (in each case, a "Person"), any Person
which, directly or indirectly, controls, is controlled by or is under common
control with such Person.
11. Cross-Termination. Notwithstanding any other provision of this Warrant,
if the Company terminates that certain Production and Development Agreement, of
even date herewith, by and between Cypress and the Company, pursuant to Section
13.2(a) or 13.2(b) of such agreement, this Warrant shall be immediately
terminated, become null and void and be of no further force or effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
7
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
SIMTEK CORPORATION
By: /S/ DOUGLAS MITCHELL
------------------------------
Name: Douglas Mitchell
Title: President
Error! Unknown document property name.
#148617 v6
FORM OF EXERCISE AGREEMENT
(To be Executed by the holder in order to Exercise the Warrant)
To: Simtek Corporation
4250 Buckingham Dr., Suite 100
Colorado Springs, CO 80907
Telephone No.: (719) 531-9444
Facsimile No.: (719) 531-9765
Attention: Douglas M. Mitchell
Its: President
The undersigned hereby irrevocably exercises the right to purchase _____________
shares of the Common Stock, $.01 par vale per share, of SIMTEK CORPORATION, a
corporation organized under the laws of the State of Colorado (the "Company"),
and tenders herewith payment of the Exercise Price in full, in the amount of
$_____________, in cash, by certified bank check or by wire transfer of
immediately available funds for the account of the Company or exercises this
Warrant pursuant to the "cashless exercise" provisions thereof; and
The undersigned agrees not to offer, sell, transfer or otherwise dispose of
any Common Stock obtained on exercise of the Warrant, except under circumstances
that will not result in a violation of the Securities Act of 1933, as amended,
or any state securities laws.
[ ] The undersigned requests that the Company cause its transfer agent to
electronically transmit the Common Stock issuable pursuant to this
Exercise Agreement to the account of the undersigned or its nominee
(which is _________________) with DTC through its Deposit Withdrawal
Agent Commission System ("DTC Transfer").
[ ] In lieu of receiving the shares of Common Stock issuable pursuant to
this Exercise Agreement by way of DTC Transfer, the undersigned hereby
requests that the Company cause its transfer agent to issue and deliver
to the undersigned physical certificates representing such shares of
Common Stock.
The undersigned requests that a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant, in the name of the Holder and
delivered to the undersigned at the address set forth below:
Dated:_________________ ___________________________________
Signature of Holder
Name of Holder (Print)
Address:
___________________________________
___________________________________
___________________________________
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all the rights of the undersigned under the attached Warrant, with
respect to the number of shares of Common Stock covered thereby issuable
pursuant to the attached Warrant set forth hereinbelow, to:
Name of Assignee Address No of Shares
---------------- ------- ------------
and hereby irrevocably constitutes and appoints ________________________________
as agent and attorney-in-fact to transfer said Warrant on the books of the
within-named corporation, with full power of substitution in the premises.
Dated: _____________________, ____
In the presence of
_____________________________
Name: ____________________________
Signature: _______________________
Title of Signing Officer or Agent (if any):
Address: ________________________
Note: The above signature should correspond
exactly with the name on the face of
the within Warrant.
Exhibit 99.6
------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of the 4th
day of May, 2005, by and between SIMTEK CORPORATION, a Colorado (the "Simtek"),
and CYPRESS SEMICONDUCTOR CORPORATION, a Delaware corporation ("Cypress").
RECITALS
WHEREAS, Simtek and Cypress are parties to that certain Share Purchase
Agreement, of even date herewith (the "Purchase Agreement"). Pursuant to the
Purchase Agreement, Simtek has issued to Cypress 6,740,816 shares of common
stock, par value $0.01 per share, of Simtek (the "Simtek Shares") and warrants
to purchase up to 5,055,612 shares of common stock, par value $0.01 per share,
of Simtek (the "Warrant Shares" and, together with the Simtek Shares, the
"Registrable Securities"). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to such terms in the Development
Agreement.
WHEREAS, Cypress entered into the Purchase Agreement with the understanding
that it would be granted registration rights with respect to the Registrable
Securities on the terms set forth in this Agreement.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Definitions. For purposes of this Agreement:
1.1. The term "Affiliate" shall mean with respect to any individual,
corporation, partnership, association, trust, or any other entity (in each case,
a "Person"), any Person which, directly or indirectly, controls, is controlled
by or is under common control with such Person.
1.2. The term "Common Stock" shall mean shares of Simtek's common
stock, par value $0.01 per share.
1.3. The term "Development Agreement" shall mean that certain
Production and Development Agreement of even date herewith, by and between
Cypress and Simtek.
1.4. The term "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
1.5. The term "Form S-3" means such form under the Securities Act as in
effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other documents filed
by Simtek with the SEC.
1.6. The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document by the SEC
(which the parties acknowledge is in the SEC's discretion).
1.7. The term "Registrable Securities" means (i) the Simtek Shares and
the Warrant Shares, and (ii) any Common Stock of Simtek issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of the shares referenced in clause (i) above, excluding in all
cases, however, any Registrable Securities sold by a person in a transaction in
which his rights and obligations under this Agreement are not assigned.
1.8. The term "Registrable Securities then outstanding" means the
number of shares determined by adding the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
1.9. The term "SEC" means the Securities and Exchange Commission.
1.10. The term "SEC Rule 144" means Rule 144 promulgated by the SEC
under the Securities Act.
1.11. The term "SEC Rule 144(k)" means Rule 144(k) promulgated by the
SEC under the Securities Act.
1.12. The term "SEC Rule 145" means Rule 145 promulgated by the SEC
under the Securities Act.
1.13. The term "Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
1.14. The term "Violation" means losses, claims, damages, or
liabilities (joint or several) to which a party hereto may become subject under
the Securities Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations: (i) any untrue statement or alleged untrue statement of a material
fact contained in a registration statement filed by Simtek pursuant to Section
2.1 or Section 2.9, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by any party hereto, of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law, in
connection with registration statement filed by Simtek pursuant to Section 2.1
or Section 2.9.
2. Registration Rights. Simtek covenants and agrees as follows:
2.1. Simtek Registration. If Simtek proposes to register (including for
this purpose a registration effected by Simtek for stockholders other than
Cypress) any of its stock or other securities under the Securities Act in
2
connection with the public offering of such securities solely for cash (other
than a registration statement relating either to the sale of securities to
employees of Simtek pursuant to a stock option, stock purchase or similar plan
or an SEC Rule 145 transaction, a registration on any form which does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities, a
registration in which the only Common Stock being registered is Common Stock
issuable upon conversion of debt securities which are also being registered or
as contemplated by that certain Registration Rights Agreement, dated October 12,
2004, by and among Simtek and the investors who are signatories thereto), Simtek
shall, at such time, promptly give Cypress written notice of such registration.
Upon the written request of Cypress given within twenty (20) days after mailing
of such notice by Simtek in accordance with Section 3.5, Simtek shall, subject
to the provisions of Section 2.3 and Section 2.5, use its commercially
reasonable efforts to cause to be registered under the Securities Act all of the
Registrable Securities that Cypress has requested to be registered. Simtek shall
have the right to terminate or withdraw any registration initiated by it under
this Section 2.1 prior to the effectiveness of such registration whether or not
Cypress has elected to include securities in such registration. The expenses of
such withdrawn registration shall be borne by the parties in accordance with
Section 2.4 hereof.
2.2. Obligations of Simtek. Whenever required under this Section 2 to
use its commercially reasonable efforts to effect the registration of any
Registrable Securities, Simtek shall, as expeditiously as reasonably possible,
(a) prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its commercially reasonable
efforts to cause such registration statement to become effective, and, upon the
request of Cypress, use its commercially reasonable efforts to keep such
registration statement effective for a period of up to one hundred twenty (120)
days or, if earlier, until the distribution contemplated in the Registration
Statement has been completed; provided, however, that (i) such 120-day period
shall be extended for a period of time equal to the period Cypress refrains from
selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of Simtek; and (ii) in the
case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, subject to compliance
with applicable SEC rules, such 120-day period shall be extended for up to
ninety (90) days, if necessary, to keep the registration statement effective
until all such Registrable Securities are sold;
(b) prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) furnish to Cypress such numbers of copies (or an electronic
copy) of a prospectus, including a preliminary prospectus, in conformity with
the requirements of the Securities Act, and such other documents as it may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by it;
(d) use its commercially reasonable efforts to register and
qualify the securities covered by such registration statement under such other
3
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by Cypress; provided that Simtek shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
unless Simtek is already subject to service in such jurisdiction;
(e) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Cypress shall also enter
into and perform its obligations under such an agreement;
(f) cause all such Registrable Securities registered pursuant to this
Agreement hereunder to be listed on a national securities exchange or trading
system and each securities exchange and trading system on which similar
securities issued by Simtek are then listed;
(g) provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration;
(i) use its commercially reasonable efforts to furnish, at the request
of Cypress pursuant to this Section 2, on the date on which such Registrable
Securities are sold to the underwriter, (i) an opinion, dated such date, of the
counsel representing Simtek for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and (ii) a "comfort" letter
dated such date, from the independent certified public accountants of Simtek, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any.
2.3. Furnish Information. (a) It shall be a condition precedent to the
obligations of Simtek to take any action pursuant to this Section 2 with respect
to the Registrable Securities of Cypress that Cypress shall furnish to Simtek
such information regarding itself, the Registrable Securities and other Simtek
securities held by it and its Affiliates, and the intended method of disposition
of such securities as shall be reasonably required to effect the registration of
Cypress's Registrable Securities.
2.4. Expenses of Simtek Registration. Simtek shall bear and pay all
expenses incurred by it in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 2.1 hereof (which right may be assigned as provided in
Section 2.10 hereof), including (without limitation) all registration, filing,
and qualification fees, printers and accounting fees relating or apportionable
thereto. Cypress shall bear and pay all expenses incurred by it in connection
with the registrations pursuant to Section 2.1 hereof (which right may be
assigned as provided in Section 2.10 hereof), including (without limitation) all
fees and disbursements of its counsel.
2.5. Underwriting Requirements. In connection with any offering involving
an underwriting of shares of Simtek's capital stock pursuant to Section 2.1,
Simtek shall not be required to include Cypress's securities in such
underwriting unless it accepts the terms of the underwriting as agreed upon
4
between Simtek and its underwriters, and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by Simtek. If the total number of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities to be sold other than by Simtek that
the underwriters determine in their sole and absolute discretion is compatible
with the success of the offering, then Simtek shall be required to include in
the offering only that number of such securities, including Registrable
Securities, which the underwriters and Simtek determine in their sole and
absolute discretion will not jeopardize the success of the offering. In no event
shall any Registrable Securities be excluded from such offering unless all other
stockholders' securities have been first excluded.
2.6. Delay of Registration. Cypress shall have no right to obtain or seek
an injunction restraining or otherwise delaying any registration pursuant to
this Agreement as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
2.7. Indemnification. In the event any Registrable Securities are included
in a registration statement under this Section 2:
(a) To the extent permitted by law, Simtek will indemnify and hold
harmless Cypress and its officers, directors, stockholders, legal counsel and
accountants, any underwriter (as defined in the Securities Act) for Cypress and
each person, if any, who controls Cypress or underwriter within the meaning of
the Securities Act or the Exchange Act, against any Violation and Simtek will
pay to each of Cypress and its underwriter, controlling person or other
aforementioned person, any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability, or action as such expenses are incurred; provided, however, that the
indemnity agreement contained in this subsection 2.7(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability, or action
if such settlement is effected without the consent of Simtek (which consent
shall not be unreasonably withheld), nor shall Simtek be liable in any such case
0for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by Cypress or its underwriter, controlling person or
other aforementioned person.
(b) To the extent permitted by law, Cypress will indemnify and hold
harmless Simtek, each of its directors, each of its officers who has signed the
registration statement, each person, if any, who controls Simtek within the
meaning of the Securities Act, legal counsel and accountants for Simtek, any
underwriter, and any controlling person of any such underwriter, against any
losses, claims, damages, or liabilities to which any of the foregoing persons
may become subject, under the Securities Act, the Exchange Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by Cypress
expressly for use in connection with such registration; and Cypress will pay,
any legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 2.7(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 2.7(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
5
liability or action if such settlement is effected without the consent of
Cypress (which consent shall not be unreasonably withheld); provided, further,
that, in no event shall any indemnity under this subsection 2.7(b) exceed the
net proceeds from the offering received by Cypress, except in the case of fraud
or willful misconduct by Cypress.
(c) Promptly after receipt by an indemnified party under this Section
2.7 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.7, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
2.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.7.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) Cypress or
any controlling person of Cypress makes a claim for indemnification pursuant to
this Section 2.7 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 2.7 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of Cypress or any such
controlling person in circumstances for which indemnification is provided under
this Section 2.7, then, and in each such case, Simtek and Cypress will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission; provided however,
that, in any such case, (I) Cypress will not be required to contribute any
amount in excess of the public offering price of all such Registrable Securities
offered and sold by Cypress pursuant to such registration statement, and (II) no
person or entity guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) will be entitled to contribution from any
person or entity who was not guilty of such fraudulent misrepresentation;
provided further, that in no event shall Cypress's liability pursuant to this
6
Section 2.7(d), when combined with the amounts paid or payable by Cypress
pursuant to Section 2.7(b), exceed the proceeds from the offering (net of any
underwriting discounts or commissions) received by Cypress, except in the case
of willful fraud by Cypress.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) Unless otherwise superceded by an underwriting agreement entered
into in connection with the underwritten public offering, the obligations of
Simtek and Cypress under this Section 2.7 shall survive the completion of any
offering of Registrable Securities in a registration statement under this
Section 2, and otherwise and shall survive the termination of this Agreement.
2.8. Reports Under Exchange Act. With a view to making available to
Cypress the benefits of SEC Rule 144 promulgated under the Securities Act and
any other rule or regulation of the SEC that may at any time permit Cypress to
sell Registrable Securities of Simtek to the public without registration or
pursuant to a registration on Form S-3, Simtek agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after the date hereof so
long as Simtek is subject to the periodic reporting requirements under Sections
13 or 15(d) of the Exchange Act;
(b) file with the SEC in a timely manner all reports and other
documents required of Simtek under the Securities Act and the Exchange Act; and
(c) furnish to Cypress, so long as Cypress owns any Registrable
Securities, forthwith upon reasonable request (i) a written statement by Simtek
that it has complied with the reporting requirements of SEC Rule 144, the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies) or a statement that it has not so complied, (ii) a copy of the most
recent annual or quarterly report of Simtek and such other reports and documents
so filed by Simtek, and (iii) such other information as may be reasonably
requested in availing Cypress of any rule or regulation of the SEC which permits
the selling of any such securities without registration or pursuant to such
form.
2.9. Form S-3 Registration.
(a) In case Simtek shall receive from Cypress a written request or
requests that Simtek use its commercially reasonable efforts to effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by Cypress, Simtek
will as soon as practicable, use its commercially reasonable efforts to effect
such registration and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of Cypress's Registrable Securities as are specified in such
request; provided, however, that Simtek shall not be obligated to effect any
7
such registration, qualification or compliance, pursuant to this Section 2.9:
(1) if Form S-3 is not then available for such offering by Cypress (or Simtek is
not eligible to use such Form S-3 for such offering); (2) if Cypress, together
with the holders of any other securities of Simtek entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (net of any underwriters' discounts
or commissions) of less than $2 million; (3) if Simtek shall furnish to Cypress
a certificate signed by the Chief Executive Officer of Simtek stating that in
the good faith judgment of the Board of Directors of Simtek, it would be
materially detrimental to Simtek and its stockholders for such Form S-3
Registration to be effected at such time, in which event Simtek shall have the
right to defer the filing of the Form S-3 registration statement for a period of
not more than sixty (60) days after receipt of the request of Cypress under this
Section 2.9; provided, however, that Simtek shall not utilize this right more
than once in any twelve month period and provided further that Simtek shall not
register any securities for the account of itself or any other stockholder
during such sixty (60) day period (other than a registration relating solely to
the sale of securities of participants in a Simtek stock plan, a registration
relating to a corporate reorganization or transaction under Rule 145 of the
Securities Act, a registration on any form that does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities, or a registration in
which the only Common Stock being registered is Common Stock issuable upon
conversion of debt securities that are also being registered); (4) if Simtek
has, within the twelve (12) month period preceding the date of such request,
already effected two registrations on Form S-3 for Cypress pursuant to this
Section 2.9; or (5) in any particular jurisdiction in which Simtek would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance; or (6)
during the period ending one hundred eighty (180) days after the effective date
of a registration statement subject to Section 2.1 hereof.
Subject to the foregoing, Simtek shall file a registration statement
covering the Registrable Securities and other securities so requested to be
registered as soon as practicable after receipt of the request of Cypress.
Simtek shall bear and pay all expenses incurred by it in connection with any
registration, filing or qualification of Registrable Securities with respect to
the registrations pursuant to Section 2.9 hereof (which right may be assigned as
provided in Section 2.10 hereof), including (without limitation) all
registration, filing, and qualification fees, printers and accounting fees
relating or apportionable thereto. Cypress shall bear and pay all expenses
incurred by it in connection with the registrations pursuant to Section 2.9
hereof (which right may be assigned as provided in Section 2.10 hereof),
including (without limitation) all fees and disbursements of its counsel.
(b) If Cypress intends to distribute the Registrable Securities
covered by its
request by means of an underwriting, it shall so advise Simtek as part of its
request made pursuant to this Section 2.9, and Simtek shall include such
information in the written notice referred to in Section 2.9(a).
2.10. Assignment of Registration Rights. The rights to cause Simtek to
register Registrable Securities pursuant to this Section 2 may be assigned (but
only with all related obligations) by Cypress to a transferee or assignee of
such securities that (i) is an Affiliate of Cypress, or (ii) after such
assignment or transfer, holds at least 500,000 shares of Registrable Securities
(subject to appropriate adjustment for stock splits, stock dividends,
8
combinations and other recapitalizations), provided: (a) Simtek is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned; (b) such transferee or
assignee agrees in writing to be bound by and subject to the terms and
conditions of this Agreement; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Securities Act. For the
purposes of determining the number of shares of Registrable Securities held by a
transferee or assignee, the holdings of transferee or assignee (i) that is a
subsidiary, parent or 10% or more stockholder of Cypress, or (ii) that is an
Affiliate of Cypress shall be aggregated together and with those of Cypress;
provided that all assignees and transferees who would not qualify individually
for assignment of registration rights shall have a single attorney in fact for
the purpose of exercising any rights, receiving notices or taking any action
under this Section 2.
2.11. Termination of Registration Rights. The rights set forth in this
Section 2 shall terminate on the earliest to occur of (i) the liquidation of
Simtek, (ii) such time as the Registrable Securities (together with any
Affiliate of the holder with whom the holder must aggregate its sales under SEC
Rule 144) could be sold without restriction under SEC Rule 144 within a ninety
(90) day period, or (iii) such time as all of the Registrable Securities have
been publicly sold.
3. Miscellaneous.
3.1. Transfers, Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
3.2. Governing Law. This Agreement shall be governed by and construed in
accordance with the State of California as to matters within the scope thereof,
and as to all other matters shall be governed by and construed in accordance
with the internal laws of the State of California, without regard to its
principles of conflicts of laws.
3.3. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed and delivered by facsimile signature and in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4. Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
3.5. Notices. All notices and other communications given or made pursuant
to this Agreement shall be in writing and shall be deemed effectively given: (a)
9
upon personal delivery to the party to be notified, (b) when sent by confirmed
electronic mail or facsimile if sent during normal business hours of the
recipient, and if not so confirmed, then on the next business day, (c) five (5)
days after having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (d) one (1) business day after deposit with a
nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the
respective parties at their address as set forth below:
Notices to be given to Cypress will be addressed to:
Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attention: Senior Vice President, Memory Products Division
With a copy to:
Cypress Semiconductor Corporation
3901 North First Street
San Jose, CA 95134-1599
Facsimile: (408) 456-1821
Attention: Laura Norris, Esq.
Notices to be given to Simtek will be addressed to:
Simtek Corporation
4250 Buckingham Drive, Suite 100
Colorado Springs, CO 80907
Facsimile: (719) 531-9765
Attention: Douglas Mitchell
3.6. Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively) only with
the written consent of Simtek and Cypress. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon Simtek and Cypress.
3.7. Severability. The invalidity of unenforceability of any provision
hereof shall in no way affect the validity or enforceability of any other
provision.
3.8. Aggregation of Stock. All shares of Registrable Securities held or
acquired by Affiliates shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
3.9. Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with respect to the subject
10
matter hereof, and any other written or oral agreement relating to the subject
matter hereof existing between the parties are expressly canceled.
3.11 Transfers of Rights. Subject to Section 2.10, Cypress hereby agrees
that it will not, and may not, assign any of its rights and obligations
hereunder, unless such rights and obligations are assigned by Cypress to (a) any
person or entity to which all of the Registrable Securities are transferred by
Cypress, or (b) to any Affiliate of Cypress; provided that such assignment of
rights shall be contingent upon the transferee providing a written instrument to
Simtek notifying Simtek of such transfer and assignment and agreeing in writing
to be bound by the terms of this Agreement.
3.12 Dispute Resolution. Any unresolved controversy or claim arising out of
or relating to this Agreement shall be resolved pursuant to the terms of the
Development Agreement.
3.13 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any party under this Agreement, upon any breach or default
of any other party under this Agreement, shall impair any such right, power or
remedy of such non-breaching or non-defaulting party nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any party of any breach or
default under this Agreement, or any waiver on the part of any party of any
provisions or conditions of this Agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
FOR SIMTEK FOR CYPRESS
Simtek Corporation Cypress Semiconductor Corporation
Signed: /S/ DOUGLAS MITCHELL Signed:/S/ A.R. ALVAREZ
-------------------- ----------------
By: Douglas Mitchell By: A.R. Alvarez
Title: CEO/President Title: GM & SR VP, Memory Products
Date: May 4, 2005 Date: May 4, 2005