EXHIBIT 10.9
TERMINATION AGREEMENT
This Termination Agreement (the "Agreement") is made as of March 29, 1997,
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by and between Cypress Semiconductor Corporation, a Delaware corporation
("Cypress"), and QuickLogic Corporation, a California corporation
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("QuickLogic").
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A. Cypress and QuickLogic are parties to that certain Technical
Transfer, Joint Development License and Foundry Supply Agreement dated October
2, 1992 (the "Existing Agreement").
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B. The parties desire to terminate the Existing Agreement in its
entirety and enter into this Agreement, a new wafer fabrication and license
agreements, and certain other arrangements.
C. Under the Existing Agreement, Cypress holds certain tangible and
intangible rights and intellectual property rights, including, without
limitation, patents, patent applications, mask work rights and trade secrets
(collectively, the "Rights") to antifuse field cell programmable gate array
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("FPGA") technology (the "FPGA Technology").
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D. In connection with the termination of the Existing Agreement and
subject to the License Agreement (as defined in Section 3.4 below), Cypress will
relinquish to QuickLogic all of the Rights to the FPGA Technology, and
QuickLogic will acquire from Cypress all inventories of products incorporating
the FPGA Technology (the "FPGA Products") and certain other assets. QuickLogic
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will also assume certain specified obligations of Cypress.
E. Cypress and QuickLogic have entered into a binding Letter of
Intent dated February 7, 1997 (the "Letter of Intent") reflecting their mutual
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understanding regarding the transactions contemplated by this Agreement
(collectively, the "Transactions).
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F. This Agreement, and the other agreements referenced herein (with
the exception of the Existing Agreement, supersede the Letter of Intent in its
entirety, and the Letter of Intent shall be of no further force or effect.
NOW, THEREFORE, in consideration of the mutual agreements, representations
and warranties contained in this Agreement, the parties agree as follows:
ARTICLE I
TERMINATION OF PRIOR AGREEMENT AND TRANSFER OF ASSETS
1.1. Termination of Existing Agreement. Effective as of the Closing Date
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(as defined below), the Existing Agreement is terminated in its entirety and
shall have no further force or effect.
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* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
1.2. Transfer. Subject to the terms and conditions contained in this
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Agreement, at the Closing (as defined below) or as provided in Article XI,
Cypress shall assign, grant, transfer and convey to QuickLogic, free and clear
of all liens, claims, interests and encumbrances, and QuickLogic agrees to
acquire from Cypress, all of Cypress's rights, title and interest in and to the
assets listed on Exhibit A (the "Transferred Assets"), and Cypress shall deliver
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good, clear and marketable title to each and every Transferred Asset, together
with such bills of sale, assignments and other instruments of conveyance as may
be reasonably requested by QuickLogic to permit such delivery. Without limiting
the foregoing, the Transferred Assets shall be deemed to include only the
following:
(a) All right, title and interest in the Equipment and Inventory (each
as defined in Exhibit A), and all claims and rights of Cypress with respect
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thereto, including, without limitation, all rights against suppliers thereof
under warranties listed and described in Schedule 1.1(a) hereto (to the extent
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transferable by Cypress), including, without limitation, all of Cypress's rights
under manufacturers' warranties and guarantees (to the extent transferable by
Cypress) relating to the Equipment and all benefits and proceeds with respect to
the Equipment as of and after the Closing under any policy of insurance;
(b) All books and records, whether originals or copies, whether
financial or otherwise, relating to the Transferred Assets and which do not
primarily relate to areas of Cypress's business other than the Transferred
Assets; provided that Cypress shall be entitled, at Cypress's expense, to make
and retain photocopies of such records for the purpose of accounting and tax
compliance;
(c) All licenses, permits, authorizations and other approvals from any
federal, state, local or foreign governmental, public or self-regulatory body or
authority relating to the Transferred Assets or the Assumed Obligations (as
defined below), all of which are listed in Exhibit A (collectively, the
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"Permits");
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(d) The computer software and hardware specifically used in connection
with the Equipment, including all documentation and source code, to the extent
they are legally transferable by Cypress;
(e) All rights of indemnification, claims or causes of action in favor
of Cypress, to the extent they arise out of or relate to the Transferred Assets
after the Closing Date including, without limitation, those against any person
under any purchase or other agreement pursuant to which Cypress acquired any
portion of the Transferred Assets or those arising by operation of law or equity
or otherwise; and
(f) Those other assets that relate to the Transferred Assets and are
listed in Exhibit A.
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Except as otherwise expressly stated in this Section 1.2, no other
assets are transferred to QuickLogic pursuant to this Agreement.
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1.3. FPGA Technology. Subject to the terms and conditions contained in this
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Agreement, at the Closing (as defined below) Cypress shall assign, transfer and
convey to QuickLogic all of Cypress's rights, title and interest in and to the
FPGA Technology, a descriptive (but not necessarily comprehensive) list of which
is set forth in Exhibit A-1 and which are part of the Transferred Assets, and
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Cypress shall deliver such assignments and other instruments of conveyance as
may be reasonably requested by QuickLogic to permit such transfer.
1.4. Obligations. Except as expressly provided herein, QuickLogic shall
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not assume, or take title to the Transferred Assets subject to, or in any way be
liable or responsible for, any liabilities or obligations of any kind of Cypress
and Cypress shall continue to remain responsible for the same. Those
liabilities and obligations that QuickLogic expressly assumes are set forth in
Exhibit B (the "Assumed Obligations"). Without limiting the generality of the
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foregoing, QuickLogic shall not assume or take title to the Transferred Assets
subject to any of the following:
(a) Any obligations of Cypress arising or created prior to the Closing
Date (as defined below) or outstanding on the Closing Date or arising after the
Closing Date.
(b) Any liability or obligation of Cypress arising from claims for
personal injury (including death) or damage to property, including (without
limitation) in respect of any negligence or other wrongful action in connection
therewith;
(c) Any liability or obligation of Cypress based upon or arising under
any contract or agreement existing prior to or at the time of Closing;
(d) Except as specifically included in the Assumed Obligations, any
lien, encumbrance, security interest or charge of any nature whatsoever;
(e) Any liability or obligation of Cypress, or any of its employees,
for any federal, state, local or foreign income tax; or
(f) Any liabilities or obligations arising from litigation to which
Cypress is or would be a party that is pending, threatened or based upon facts
that arise prior to the Closing.
1.5. Closing and Closing Date. Unless otherwise agreed by the parties, the
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consummation of the transactions contemplated by this Agreement shall take place
at a closing (the "Closing") to be held at the offices of Venture Law Group,
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counsel to QuickLogic, located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, on
March 29, 1997, or such other time or date as Cypress and QuickLogic shall
mutually agree, such time and date being referred to herein as the "Closing
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Date."
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1.6. Actions at the Closing. At the Closing, Cypress and QuickLogic shall
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take such actions and execute and deliver such agreements, bills of sale and
other instruments and documents as necessary or appropriate to effect the
transactions contemplated by this Agreement in accordance with its terms,
including without limitation the following:
(a) ▇▇▇▇ of Sale. Cypress shall deliver to QuickLogic a general ▇▇▇▇
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of sale in substantially the form attached as Exhibit C (the "▇▇▇▇ of Sale")
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with respect to the Transferred Assets, duly executed by Cypress, assigning to
QuickLogic all of Cypress's right, title and interest in and to the Transferred
Assets.
(b) Consideration. QuickLogic shall deliver the Consideration to
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Cypress in accordance with the provisions of Article II.
(c) Title. Subject to Section 3.2 herein, Cypress shall deliver to
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QuickLogic evidence of valid title to such of the Transferred Assets and the
FPGA Technology as QuickLogic may reasonably request prior to the Closing and
assignments of the Transferred Assets and FPGA Technology in form and substance
reasonably satisfactory to QuickLogic (including, but not limited to,
assignments of patents, patent applications, copyrights and mask work rights).
(d) Third Party Consents and Assignments. Cypress shall deliver to
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QuickLogic all assignments and required consents to assignment that it has
obtained in respect of the assignment of the Transferred Assets, duly executed
by the appropriate parties having the authority so to assign or consent to
assign, in form and substance as QuickLogic shall reasonably request.
(e) Transaction Agreements. The Transaction Agreements (as defined
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below) shall have been executed by QuickLogic, Cypress and any other parties to
such Transaction Agreements and delivered to QuickLogic and Cypress.
(f) Post Closing Actions. Subsequent to the Closing Date, Cypress
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shall from time to time use reasonable efforts to execute and deliver, upon the
request of QuickLogic, all such other and further materials and documents and
instruments of conveyance, transfer or assignment as may be requested by
QuickLogic to effect, record or verify the transfer to, and vesting in
QuickLogic, of Cypress's right, title and interest in and to the Transferred
Assets, free and clear of all liens and encumbrances, in accordance with the
terms of this Agreement.
1.7. Delivery of Transferred Assets. Title to the Transferred Assets shall
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pass to QuickLogic as of the Closing, or at such other transfer dates provided
herein, at Cypress's place of business. Following the Closing, Cypress will put
QuickLogic in control of the Transferred Assets pursuant to the Transition Plan
(as defined in Article XI). All tangible assets constituting a part of the
Transferred Assets will be delivered to QuickLogic's place of business in
Sunnyvale, California at Cypress's cost and by means of delivery reasonably
determined by
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Cypress. All other assets constituting a part of the Transferred Assets will be
made available to QuickLogic at the business location of Cypress, provided that,
if requested by QuickLogic, Cypress, to the extent practicable, will arrange for
the electronic transmission of any software or electronic data related to the
Transferred Assets to QuickLogic.
ARTICLE II
CONSIDERATION; TERMS OF PAYMENT
2.1. Consideration. The consideration for the Transactions (the
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"Consideration") shall consist of the following:
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(a) $4.5 million in cash, which is currently in the possession of
Cypress.
(b) An aggregate of 18,226,716 (the "Original Share Number") shares of
unregistered Common Stock of QuickLogic (the "Shares") shall be issued to
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Cypress, subject to potential additional issuances pursuant to Section 2.5
below. The Shares shall be delivered to Cypress by QuickLogic in accordance with
that certain Common Stock Purchase Agreement between Cypress and QuickLogic in
substantially the form attached hereto as Exhibit D (the "Stock Purchase
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Agreement").
(c) The assumption of the Assumed Obligations by QuickLogic.
2.2. Allocation of Consideration. The Consideration shall be allocated as
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provided in Schedule 2.2 hereto for purposes of complying with the requirements
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of Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code").
Each party hereto agrees to prepare its federal and state income tax returns for
all current and future tax reporting periods and file Form 8594 (and
corresponding state forms) with respect to this transaction in a manner
consistent with the allocations set forth in said Schedule 2.2. If any state or
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federal taxing authority challenges such allocation, the party receiving notice
of such challenge shall give the other prompt written notice of such challenge,
and the parties shall cooperate in good faith in responding to it in order to
preserve the effectiveness of such allocation, and shall take no position in any
tax proceeding inconsistent therewith.
2.3. Acquisition of Transferred Assets. In addition to the Consideration,
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QuickLogic shall also pay to Cypress the following amounts for its acquisition
of the Transferred Assets:
(a) A promissory note payable to Cypress by QuickLogic, in the form
attached hereto as Exhibit E (the "Note"). The Note shall be issued in
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consideration for the Inventory, where the eventual aggregate principal amount
of the Note will represent QuickLogic's standard cost of such finished and work-
in-progress inventory, discounted by $1,000,000. Such amount (prior to the
$1,000,000 discount) as of February 28, 1997 is estimated by Cypress to be
[ * ]. The Inventory will be transferred to QuickLogic in accordance with
Article XI below. Upon the initial shipment of Inventory, the Note will be
issued to
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* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
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Cypress, in a principal amount representing QuickLogic's standard cost of such
finished and work-in-progress inventory being shipped, discounted by $1,000,000.
Upon subsequent transfers of Inventory pursuant to Article XI, the principal
amount of the Note will be increased by an amount equal to QuickLogic's standard
cost of such finished and work-in-progress inventory being shipped.
(b) The Equipment shall be purchased from Cypress [*] for
the Hewlett-Packard Tester and at the prices listed on Exhibit A for all other
Equipment items. Payment for the Equipment will be made by QuickLogic within
thirty (30) days after delivery of all the Equipment.
2.4. Taxes Arising from Transfer. [ * ] shall pay any sales, use,
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recordation, transfer, excise or other similar taxes, if any, arising out of the
transfer of the Transferred Assets, or otherwise as a consequence of the
transactions contemplated by this Agreement.
2.5. Potential Additional Issuance of Common Stock upon Certain Dilutive
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Issuances. If, after the Closing, there is an adjustment to the Conversion Price
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(as defined in the Amended Articles) for any series of QuickLogic's Preferred
Stock pursuant to Article III.C.(4)(d)(iv) of the Amended Articles, then
QuickLogic shall issue to Cypress, without payment of any additional
consideration and pursuant to the delivery provisions of the Stock Purchase
Agreement, that additional number of fully paid and nonassessable shares of
QuickLogic Common Stock (the "Additional Shares"), as calculated as follows
(mathematical operations in listed order):
a) $1.16
divided by
b) The new Conversion Price for the Series F Preferred Stock (or, if the
adjustment to the Series F Preferred Stock Conversion Price has been waived by
the holders of Series F Preferred Stock, what such Conversion Price would have
been had the adjustment not been waived)
minus
c) 1
multiplied by
4) the Original Share Number
rounded to the nearest whole number
The Original Share Number shall be increased by the Additional Shares for
purposes for future calculations pursuant to this Section 2.5.
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* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CYPRESS
Except as set forth on the Cypress Disclosure Schedule attached hereto as
Schedule 3, Cypress represents and warrants to QuickLogic that:
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3.1. Organization. Cypress is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power and authority to own, lease and operate its
properties and to transact its business as it is now being conducted and to
carry out this Agreement and the transactions contemplated herein. Cypress is
duly qualified or licensed to do business and is in good standing in each place
and jurisdiction where the nature of the business conducted by it with respect
to the Transferred Assets makes such qualification necessary except where the
failure to so qualify does not in the aggregate have a material adverse effect
on Cypress's business as a whole.
3.2. Title to Transferred Assets. Cypress has and will convey on the
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Closing Date (or on any other transfer dates provided herein) full, absolute,
good and marketable title to the Transferred Assets, free and clear of all
security interests, mortgages, liens (including, but not limited to, liens with
respect to taxes), attachments, orders of court, rights of redemption, debts,
claims, indebtedness, liabilities, charges, or other encumbrances of any kind
whatsoever and not subject to any continuing commission, profit or revenue
sharing or other compensation contract or obligation that could apply to
QuickLogic or the Transferred Assets. No liens affecting any of the Transferred
Assets or the FPGA Technology will arise or would, with notice or lapse of time
or both, arise as a result of the transactions contemplated by this Agreement or
by any agreement contemplated by this Agreement. No other person has any direct
or indirect interest in the Transferred Assets or the FPGA Technology, other
than QuickLogic or pursuant to the License Agreement (as defined below), except
to the extent of existing non-exclusive license agreements. No restrictions
created by Cypress or known by Cypress exist on QuickLogic's right to sell or
resell products using any of the Transferred Assets, nor will any restrictions
be imposed as a consequence of the transactions contemplated by this Agreement.
3.3. Contracts with Respect to the Transferred Assets. No Transferred
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Asset is subject to any contract, license or agreement, and no person other than
Cypress owns any right, title or interest in or to any such Transferred Assets,
except as expressly set forth in the Cypress Disclosure Statement.
3.4. Due Authority; Valid and Binding Agreements. Cypress has the power
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and authority to enter into and be bound by the terms and conditions of this
Agreement, the Stock Purchase Agreement, the Sixth Amended and Restated
Registration Rights Agreement attached hereto as Exhibit F (the "Registration
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Rights Agreement"), the Sixth Amended and Restated Shareholders Agreement
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attached hereto as Exhibit G (the "Shareholders Agreement"), the Wafer
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Fabrication Agreement attached hereto as Exhibit H, (the "Wafer Fabrication
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Agreement") and the Cross-License Agreement attached hereto as Exhibit I (the
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"License Agreement" and collectively with the Stock Purchase Agreement, the
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Registration Rights Agreement, the
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Shareholders Agreement and the Wafer Fabrication Agreement, the "Transaction
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Agreements"), and to carry out its obligations pursuant hereto and thereto. The
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consummation by Cypress of the transactions contemplated by this Agreement and
by the Transaction Agreements has been duly authorized by all necessary
corporate action by of Cypress, and no other act or proceeding on the part of or
on behalf of Cypress is necessary to approve the execution of this Agreement and
the Transaction Agreements. Each of this Agreement and the Transaction
Agreements is a legal, valid and binding obligation of Cypress enforceable
against Cypress in accordance with its terms, subject to limitations imposed by
general principles of equity upon the availability of equitable remedies and the
enforcement of such provisions, and, with respect to the Registration Rights
Agreement , except as the enforceability of Section 7 thereof may be limited by
public policy.
3.5. No Conflicts or Violations. Neither the execution and delivery of
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this Agreement and the Transaction Agreements nor the consummation of the
transactions contemplated hereby and thereby will (i) conflict with or result in
any violation of or constitute a default under any agreement, mortgage, bond,
indenture, franchise or other instrument or obligation to which Cypress is a
party or by which it is bound, where such conflict, violation or default would
have a material adverse effect upon the Transferred Assets or the FPGA
Technology, (ii) conflict with, violate or result in any breach of the material
terms, conditions or provisions of the certificate of incorporation or bylaws of
Cypress, (iii) result in the creation of any lien or other encumbrance upon any
Transferred Asset or the FPGA Technology pursuant to the terms of any such
mortgage, bond, indenture, franchise or other instrument or obligation, (iv)
violate any judgment, order, injunction, decree or award of any court,
administrative agency or governmental body against, or binding upon, either
Cypress or upon any of the Transferred Assets or the FPGA Technology, (v)
constitute a violation by Cypress of any law or regulation of any jurisdiction
in which Cypress conducts its business, where such violation would have a
material adverse effect upon the Transferred Assets or the FPGA Technology, or
(vi) result in the breach of any of the terms or conditions of, or constitute a
default under, or otherwise cause any impairment of, any permit or license or
other governmental authorization held by Cypress, where such breach, default or
impairment would have a material adverse effect upon the Transferred Assets or
the FPGA Technology.
3.6. Equipment. The list of the Equipment set forth in Exhibit A is a
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complete and accurate list of all such Equipment as agreed to by Cypress and
QuickLogic. The Equipment is being sold "as is", and Cypress makes no warranty
whatsoever with respect thereto, except as set forth in the previous sentence.
CYPRESS EXPRESSLY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE EQUIPMENT.
3.7. Inventory. The Inventory set forth in Exhibit A is of a type and
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quality useable and saleable in the ordinary course of business; provided, that
Cypress expressly makes no representation or warranty as to the resulting yield
of the Inventory.
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3.8. No Violation of Law. Cypress has conducted its business as it relates
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to the Transferred Assets in compliance with all applicable laws and regulations
of federal, state, local and foreign governmental authorities, except where any
such violation would not have a material adverse effect upon the Transferred
Assets or the FPGA Technology. Cypress possesses, and is in compliance with,
all licenses, permits, approvals and other governmental authorizations that are
material to and necessary to the conduct of its business as it relates to the
Transferred Assets and the FPGA Technology.
3.9. Litigation, etc. There are no suits, actions or administrative,
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arbitration, unfair labor practice, worker's compensation or other proceedings,
pending or, to Cypress's knowledge, threatened, nor, to Cypress's knowledge, is
there any governmental investigation against or relating, directly or
indirectly, to the Transferred Assets, or the FPGA Technology, which could
result in a lien on or impair QuickLogic's ownership of the Transferred Assets
or the FPGA Technology and none which questions the validity of this Agreement
or the Transaction Agreements, and there are no judgments, orders, injunctions,
decrees, stipulations or awards (whether rendered by a court, administrative
agency or by arbitration, pursuant to a grievance or other procedure) against or
relating to either Cypress or the Transferred Assets that could result in a
material adverse effect, or any lien or other encumbrance, on the Transferred
Assets or the FPGA Technology.
3.10. No Brokers. Cypress is not obligated nor has Cypress obligated
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QuickLogic for the payment of fees or expenses of any broker or finder in
connection with the origin, negotiation or execution of this Agreement or in
connection with any transaction contemplated hereby.
3.11. Taxes. All sales and use taxes, real and personal property taxes,
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gross receipts taxes, documentary transfer taxes, employment taxes, withholding
taxes, unemployment insurance contributions and other taxes or governmental
charges of any kind, however denominated, for which QuickLogic could become
liable as a result of acquiring the Transferred Assets or the FPGA Technology or
which could result in a lien on or charge against the Transferred Assets or the
FPGA Technology (collectively, "Taxes") have been or will be paid for all
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periods prior to and including the Closing Date. Cypress has duly and timely
filed (or will file prior to the Closing Date) all returns and reports of Taxes
required to be filed prior to such date. To Cypress's knowledge, there are not,
and as of the Closing will not be, any liens for Taxes on any of the Transferred
Assets or the FPGA Technology (other than liens for Taxes not yet due and
payable). To Cypress's knowledge, there are no pending or threatened
proceedings with respect to Taxes.
3.12. Environmental Matters. To the extent that the failure to do so or
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be so would have a material adverse effect upon the Transferred Assets, Cypress
is in compliance with all federal, state, local and foreign laws related to
environment and hazardous materials practices that are applicable to Cypress or
its business related to the Transferred Assets, and Cypress has conducted its
business relating to the Transferred Assets in compliance with the foregoing
laws.
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3.13. Fair Consideration; No Fraudulent Conveyance; Bulk Sales. After due
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inquiry and negotiation, the sale and purchase of the Transferred Assets
pursuant to this Agreement is made in exchange for fair and equivalent
consideration. Cypress is not entering into this Agreement with the intent to
defraud, delay or hinder its creditors and the consummation of the transactions
contemplated by this Agreement will not have any such effect. The transactions
contemplated in this Agreement will not constitute a fraudulent conveyance or
any act with similar consequences or potential consequences, or otherwise give
rise to any right of any creditor of Cypress whatsoever to lodge any claim
against any of the Transferred Assets in the hands of Cypress after the Closing.
The transfer of the Transferred Assets is not a "bulk transfer," as defined in
Division 6 of the Uniform Commercial Code of the State of California.
3.14. Full Disclosure. Cypress is not aware of any infringement by the
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FPGA Technology on the rights of third parties or any infringement by third
parties of the FPGA Technology. Cypress is not aware of any facts pertaining to
the Transferred Assets that it believes materially affect, or are likely in the
future to materially affect, the Transferred Assets in a material adverse
manner. Neither this Agreement, nor any representation or warranty contained in
this Agreement, nor any other agreement (including the Transaction Agreements),
exhibit, schedule, or certificate being entered into or delivered pursuant
hereto, when read as a whole, contains any untrue statement of a material fact
or omits to state any material fact necessary in order to make the statements
contained herein or therein not misleading, provided that except as expressly
provided in other Sections of this Article III, Cypress makes no representation
and warranty as to the value of the Transferred Assets or the FPGA Technology to
QuickLogic.
3.15. Knowledge. As used in this Article III, the terms "to Cypress's
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knowledge" or "to the knowledge of Cypress" shall mean the actual knowledge of
all Cypress personnel at the director level or above, and ▇▇▇▇ ▇▇▇▇▇▇.
3.16. Reliance. The representations and warranties of QuickLogic
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contained in Article V and in the Stock Purchase Agreement constitute the sole
and exclusive representations and warranties of QuickLogic to Cypress in
connection with this Agreement and the transactions contemplated hereby, and
Cypress acknowledges that all other representations and warranties are
specifically disclaimed and may not be relied upon or serve as a basis for a
claim against QuickLogic.
3.17. Governmental Approvals. Except for compliance with ▇▇▇▇-▇▇▇▇▇-
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▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or as
disclosed in the Cypress Disclosure Schedule, no governmental authorization,
consent, approval, license, exemption of or filing or registration with any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, under any applicable laws, rules or
regulations currently in effect, is or will be necessary for, or in connection
with, the execution or delivery by Cypress of this Agreement.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF QUICKLOGIC
Except as set forth on the QuickLogic Disclosure Schedule attached hereto
as Schedule 4 (the "QuickLogic Disclosure Schedule"), QuickLogic hereby
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represents and warrants to Cypress that:
4.1. Due Authority; Valid and Binding Agreements. QuickLogic has the power
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and authority to enter into and be bound by the terms and conditions of this
Agreement and the Transaction Agreements, and to carry out its obligations
pursuant hereto and thereto. The consummation by QuickLogic of the transactions
contemplated by this Agreement and by the Transaction Agreements has been duly
authorized by all necessary corporate action by of QuickLogic, and no other act
or proceeding on the part of or on behalf of QuickLogic is necessary to approve
the execution of this Agreement and the Transaction Agreements. Each of this
Agreement and the Transaction Agreements is a legal, valid and binding
obligation of QuickLogic enforceable against QuickLogic in accordance with its
terms, subject to limitations imposed by general principles of equity upon the
availability of equitable remedies and the enforcement of such provisions, and,
with respect to the Registration Rights Agreement, except as the enforceability
of Section 7 thereof may be limited by public policy.
4.2. No Conflicts or Violations. Neither the execution and delivery of
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this Agreement and the Transaction Agreements nor the consummation of the
transactions contemplated hereby and thereby will (i) conflict with or result in
any violation of or constitute a default under any agreement, mortgage, bond,
indenture, franchise or other instrument or obligation to which QuickLogic is a
party or by which it is bound, where such conflict, violation or default would
have a material adverse effect upon the business of QuickLogic, taken as a
whole, (ii) conflict with, violate or result in any breach of the material
terms, conditions or provisions of the articles of incorporation or bylaws of
QuickLogic, (iii) violate any judgment, order, injunction, decree or award of
any court, administrative agency or governmental body against, or binding upon,
QuickLogic, where such violation would have a material adverse effect upon the
business of QuickLogic, taken as a whole, (iv) constitute a violation by
QuickLogic of any law or regulation of any jurisdiction in which QuickLogic
conducts its business, where such violation would have a material adverse effect
upon the business of QuickLogic, taken as a whole, or (v) result in the breach
of any of the terms or conditions of, or constitute a default under, or
otherwise cause any impairment of, any permit or license or other governmental
authorization held by QuickLogic, where such breach, default or impairment would
have a material adverse effect upon the business of QuickLogic, taken as a
whole.
4.3. No Brokers. QuickLogic is not obligated nor has QuickLogic obligated
----------
Cypress for the payment of fees or expenses of any broker or finder in
connection with the origin, negotiation or execution of this Agreement or in
connection with any transaction contemplated hereby.
-11-
4.4. Governmental Approvals. Except for compliance with ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
----------------------
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or as referenced
in the Stock Purchase Agreement or disclosed in the QuickLogic Disclosure
Schedule, no governmental authorization, consent, approval, license, exemption
of or filing or registration with any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, under
any applicable laws, rules or regulations currently in effect, is or will be
necessary for, or in connection with, the execution or delivery by QuickLogic of
this Agreement.
4.5 Reliance. The representations and warranties of Cypress contained in
--------
Article III, in the Stock Purchase Agreement, and in the Wafer Fabrication
Agreement constitute the sole and exclusive representations and warranties of
Cypress to QuickLogic in connection with this Agreement and the transactions
contemplated hereby, and QuickLogic acknowledges that all other representations
and warranties are specifically disclaimed and may not be relied upon or serve
as a basis for a claim against Cypress. QUICKLOGIC ACKNOWLEDGES THAT CYPRESS
DISCLAIMS ALL WARRANTIES OTHER THAN THOSE EXPRESSLY CONTAINED IN THIS AGREEMENT
AS TO THE TRANSFERRED ASSETS, OR ANY OF THEM, EITHER EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR WARRANTY OF
FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE V
INTERIM AGREEMENTS
5.1. Access; Confidentiality. Prior to the Closing at the reasonable
-----------------------
request of QuickLogic, Cypress agrees to promptly make available all books,
records, facilities, employees and information necessary for QuickLogic to
evaluate the Transferred Assets, and verify the FPGA Technology, and QuickLogic
agrees prior to the Closing at the reasonable request of Cypress to make
promptly available all books, records, facilities, employees and information
necessary for Cypress to fulfill its obligations hereunder. Except as provided
below, each party hereto shall keep confidential and shall not make use of any
information treated by the other party as confidential (including, without
limitation, the terms and conditions of this Agreement and the Transaction
Agreements), obtained from the other party concerning the assets, properties,
business or operations of the other party other than to legal counsel, auditors,
board members, consultants, financial advisers, key employees, lenders and
investment bankers where such disclosure is related to the performance of
obligations under this Agreement or the consummation of the transactions
contemplated under this Agreement (all of whom shall be similarly bound by the
provisions of this Section 5.1), except as may be required to be disclosed by
applicable law, and except as provided for in the Transaction Agreements.
Notwithstanding the foregoing, the foregoing confidentiality restrictions shall
not apply to (i) information that was in the receiving party's possession prior
to receipt from the disclosing party, (ii) information that becomes generally
available to the public other than as a result of the receiving party's fault or
action, (iii) information that becomes available to the receiving party from
some source other than the disclosing party, provided that such source is under
no non-disclosure obligation, or
-12-
(iv) information that is developed independently by the receiving party without
reference to the disclosing party's information. Neither party will use any
information provided pursuant to this Section 5.1 to compete with the other
party as their businesses are constituted after the Transactions have been
consummated. In the event the Transactions are not consummated, each party will
return to the other any materials containing information provided pursuant to
this Section 5.1, or will certify in writing that all such materials or copies
of such materials have been destroyed.
5.2. Public Announcements. The parties hereto agree that all disclosures
--------------------
and public announcements with respect to this Agreement and the Transaction
Agreements or any of the transactions contemplated hereby and thereby shall be
mutually agreed to between Cypress and QuickLogic and that no such disclosure or
announcement shall be made by any party without the prior written consent of the
other; provided, however, that nothing herein contained shall restrict Cypress
or QuickLogic from making any public announcement of the transactions
contemplated by this Agreement and the Transaction Agreements to the extent that
it, in its sole discretion reasonably exercised, is of the view that such
announcement is required or deemed advisable in order to meet its obligations
under the securities laws or stock exchange requirements in the United States;
provided further that prior to making such announcement, the party making it
shall provide particulars thereof to the other party and use reasonable efforts
to seek confidential treatment from disclosure if reasonably requested by the
other party. Notwithstanding the foregoing, either party may disclose this
Agreement and the Transaction Agreements and the transactions contemplated
hereby, to the extent reasonably necessary, in connection with (a) a private or
public offering of securities, and (b) any filing and disclosure obligations
under the Securities Act or the Exchange Act, including without limitation the
filing of this Agreement and all exhibits with the Securities and Exchange
Commission.
5.3. Occurrence of Conditions. Each party hereto shall use its reasonable
------------------------
best efforts, or where appropriate cooperate in the efforts of the other party,
to cause the occurrence of the conditions specified in Section 7 and Section 8
of this Agreement.
5.4. Other Negotiations.
------------------
(a) Between the date of this Agreement and the Closing Date or such
earlier date as QuickLogic and Cypress mutually agree to discontinue discussions
of the Transaction, Cypress will not (and it will use its reasonable best
efforts to assure that its officers, directors, employees, stockholders, its and
each of their affiliates and legal, accounting and financial advisors do not on
its behalf) take any action to solicit, initiate, seek, encourage or support any
inquiry, proposal or offer from, furnish any information to, or participate in
any negotiations with, any corporation, partnership, person or other entity or
group (other than negotiations with QuickLogic) regarding any acquisition of the
Transferred Assets.
(b) Cypress agrees that any such negotiations (other than negotiations
with QuickLogic) in progress as of the date of this Agreement will be suspended
between the date of this Agreement and the Closing Date and that, in no event,
will Cypress accept or enter into an agreement concerning any such third party
acquisition transaction during such period. Cypress
-13-
represents and warrants that it has the legal right to terminate or suspend any
such pending negotiations with third parties and agrees to indemnify QuickLogic,
its officers, directors, employees, stockholders and its and their affiliates
and advisors from and against any claims by any party to such negotiations based
upon or arising out of the discussion or any consummation of the Transaction as
contemplated by this Agreement.
5.5. Update to Disclosure. Without limiting either party's right to rely
--------------------
on the representations and warranties as set forth herein, each of Cypress and
QuickLogic shall provide the other party with updates to the disclosures
provided or made available to the other party as to material facts which arises
between the date of this Agreement and the Closing Date and which, if they had
occurred and been known prior to the date of this Agreement, would have been
required to have been disclosed in order to make the representations and
warranties contained in Articles III and IV true and correct as of the date of
this Agreement. In addition (i) Cypress shall provide QuickLogic with updates
if, between the date hereof and the Closing Date, there is a change in the
condition of the Transferred Assets or the FPGA Technology which may be
reasonably expected to have a materially adverse effect on the condition of the
Transferred Assets or the FPGA Technology and (ii) QuickLogic shall provide
Cypress with updates if, between the date hereof and the Closing Date, there is
a change in the condition (financial or otherwise) of the business, prospects,
employees, operations, obligations or liabilities of QuickLogic which, in the
aggregate, have or may be reasonably expected to have a materially adverse
effect on the condition (financial or otherwise) of the business, operations,
obligations or liabilities of QuickLogic.
5.6. Government Approvals. As soon as practicable but no later than
--------------------
promptly following the execution of this Agreement, Cypress and QuickLogic shall
each file a Premerger Notification and Report Form and all documentary
attachments thereto to be filed with the United States Federal Trade Commission
(the "FTC") and the Antitrust Division of the United States Department of
Justice (the "DOJ") pursuant to the HSR Act. Each party shall pay its own
filing fees required by the HSR Act in connection with the transactions
contemplated by this Agreement. Cypress and QuickLogic shall file any
additional information requested by the FTC or the DOJ in connection with this
Agreement or the transactions contemplated hereby as soon as practicable after
receipt of any request for such information. Neither Cypress nor QuickLogic
shall unreasonably take or fail to take any action which reasonably could be
expected to have the effect of delaying, impairing or impeding the receipt of
approval under the HSR Act as contemplated by this Section 5.9, provided,
however, that this sentence shall not be construed to require either party to
transfer or assign rights or other assets to a third party.
-14-
ARTICLE VI
CONDUCT OF BUSINESS
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing Date, the parties
acknowledge and agree that Cypress will be transitioning the business relating
to the Transferred Assets, and the relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with it
regarding such business. Notwithstanding the foregoing, Cypress agrees (except
to the extent expressly contemplated by this Agreement or as consented to in
writing by QuickLogic), to carry on its business with regard to the Transferred
Assets in the usual, regular and ordinary course in substantially the same
manner as heretofore, but conducted in a manner consistent with and giving due
regard to the transitioning of such business, to pay debts and Taxes when due
subject to good faith disputes over such debts or Taxes and to pay or perform
other obligations when due, and to use all reasonable efforts consistent with
past practice and policies to keep available the services of its officers and
key employees with respect to such business. Cypress agrees to promptly notify
QuickLogic of any material event or occurrence not in the ordinary course of its
business regarding the Transferred Assets, and of any event which could have a
material effect on the FPGA Technology or the Transferred Assets. Without
limiting the foregoing, except as expressly contemplated by this Agreement,
Cypress shall not do, cause or permit any of the following, or allow, cause or
permit any of its subsidiaries to do, cause or permit any of the following,
without the prior written consent of QuickLogic:
(a) Contracts. Enter into any new contract or commitment regarding
---------
the FPGA Technology or the Transferred Assets, or violate, amend or otherwise
modify or waive any of the terms of any existing contracts or commitments
regarding the FPGA Technology or the Transferred Assets, other than in the
ordinary course of business consistent with past practice;
(b) Intellectual Property. Transfer to any person or entity any of
---------------------
the Rights other than in the ordinary course of business consistent with past
practice;
(c) Rights. Enter into or amend any agreements pursuant to which any
------
other party is granted marketing or other rights of any type or scope with
respect to any of its products or technology relating to the FPGA Technology or
the Transferred Assets;
(d) Indebtedness. Incur any indebtedness for borrowed money or
------------
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others in such a way that would affect the FPGA
Technology or the Transferred Assets;
(e) Insurance. Materially reduce the amount of any material insurance
---------
coverage provided by existing insurance policies that materially affects the
FPGA Technology or the Transferred Assets;
-15-
(f) Termination or Waiver. Terminate or waive any right of
---------------------
substantial value regarding the FPGA Technology or the Transferred Assets, other
than in the ordinary course of business;
(g) Lawsuits. Commence a lawsuit regarding the FPGA Technology or the
--------
Transferred Assets other than (i) for the routine collection of bills, (ii) in
such cases where it in good faith determines that failure to commence suit would
result in the material impairment of a valuable aspect of the FPGA Technology or
the Transferred Assets, provided that it consults with QuickLogic prior to the
filing of such a suit, or (iii) for a breach of this Agreement;
(h) Other. Take or agree in writing or otherwise to take, any of the
-----
actions described in Sections 10.1(a) through (i) above, or any action which
would make any of its representations or warranties contained in this Agreement
untrue or incorrect or prevent it from performing or cause it not to perform its
covenants hereunder.
Cypress also agrees in good faith to use its reasonable best efforts to
maintain intact all of its current business relationships relating to the FPGA
Technology, including, without limitation, all customer relationships prior to
the Closing.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF QUICKLOGIC
Absent a waiver in writing, all obligations of QuickLogic under this
Agreement, except the obligations set forth in Sections 5, 9, 10 and 12 hereof,
are subject to the satisfaction of the following conditions, to QuickLogic's
reasonable satisfaction, on or before the completion of the Closing on the
Closing Date:
7.1. Representations, Warranties and Performance. The representations and
-------------------------------------------
warranties of Cypress contained herein shall be deemed to have been made again
at and as of the Closing Date and shall then be true and correct with the same
force and effect as if such representations and warranties have been made at and
as of the Closing Date; Cypress shall have performed and complied with all
agreements, conditions and covenants required by this Agreement and the Stock
Purchase Agreement to be performed or complied with by Cypress prior to or at
the Closing Date; and Cypress shall have furnished to QuickLogic an officer's
certificate dated the Closing Date, verifying, in such detail as QuickLogic may
reasonably request, the fulfillment of the foregoing conditions.
7.2. Absence of Adverse Changes. There shall not have been any material
--------------------------
adverse change in or to the Transferred Assets.
-16-
7.3. Litigation. There shall not be pending any litigation before any
----------
court or governmental agency (i) the outcome of which could reasonably be
expected to have a material adverse effect on the Transferred Assets, or (ii) to
restrain or prohibit or to obtain damages or other relief in connection with, or
which is related to or arises out of, this Agreement, the Transaction Agreements
or the transactions contemplated hereby or thereby.
7.4 Amended and Restated Articles. The Amended and Restated Articles of
------------------------------
QuickLogic in the form attached hereto as Exhibit J (the "Amended Articles")
--------- ----------------
shall have been filed and approved by the California Secretary of State.
7.5. Transaction Agreements. Cypress shall have executed and delivered
----------------------
each of the Transaction Agreements to which it is a party.
7.6. Approvals. All consents, approvals and filings required under any
---------
applicable law, rule or regulation to be completed or obtained prior to the
transactions contemplated by this Agreement and the Transaction Agreements shall
have been so completed or obtained, as the case may be, including without
limitation compliance with the HSR Act. All necessary consents of the Board of
Directors and the shareholders of both Cypress and QuickLogic shall have been
obtained.
7.7. No Injunctions. No temporary restraining order, preliminary or
--------------
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or prohibition preventing
the consummation of the Transaction or limiting or restricting QuickLogic's
conduct or operation of the business of QuickLogic after the Transaction shall
have been issued, nor shall any proceeding brought by a domestic administrative
agency or commission or other domestic governmental entity, seeking any of the
foregoing be pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Transaction which makes the consummation of the Transaction illegal.
7.8. Consummation of Acquisition. The Closing of the Transaction shall
----------------------------
occur no later than April 30, 1997 unless mutually agreed to by QuickLogic and
Cypress.
7.9. Legal Opinion. QuickLogic shall have received a legal opinion from
-------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel to Cypress, substantially in the form
attached hereto as Exhibit K.
---------
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF CYPRESS
Absent a waiver in writing, all obligations of Cypress under this
Agreement, except the obligations set forth in Sections 5, 9, 10 and 12 hereof,
are subject to the satisfaction of the following conditions, to Cypress's
reasonable satisfaction, on or before the completion of the Closing on the
Closing Date:
-17-
8.1. Representations, Warranties and Performance The representations and
-------------------------------------------
warranties of QuickLogic shall be deemed to have been made again at and as of
the Closing Date and shall then be true and correct with the same force and
effect as if such representations and warranties had been made at and as of the
Closing Date; QuickLogic shall have performed and complied with all agreements,
conditions and covenants required by this Agreement and the Stock Purchase
Agreement to be performed or complied with by it prior to or at the Closing
Date, and QuickLogic shall have furnished to Cypress an officer's certificate
dated the Closing Date, verifying, in such detail as Cypress may reasonably
request, to the fulfillment of the foregoing conditions.
8.2. Absence of Adverse Changes. There shall not have been any material
--------------------------
adverse change in or to the business of QuickLogic.
8.3. Litigation. There shall not be pending any litigation before any
----------
court or government agency that has not been previously set forth in the
QuickLogic Disclosure Schedule (i) the outcome of which could be reasonably be
expected to have a material adverse effect on the business of QuickLogic, or
(ii) to restrain or prohibit or to obtain damages or other relief in connection
with, or which is related to or arises out of, this Agreement, the Transaction
Agreements or the transactions contemplated hereby or thereby.
8.4. Transaction Agreements. QuickLogic shall have executed and delivered
----------------------
each of the Transaction Agreements to which it is a party.
8.5. Approvals. All consents, approvals and filings required under any
---------
applicable law, rule or regulation to be completed or obtained prior to the
transactions contemplated by this Agreement and the Transaction Agreements shall
have been so completed or obtained, as the case may be, including without
limitation compliance with the HSR Act and the Exchange Act. All necessary
consents of the Board of Directors and the shareholders of both QuickLogic and
Cypress shall have been obtained.
8.6. No Injunctions. No temporary restraining order, preliminary or
--------------
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or prohibition preventing
the consummation of the Transaction or limiting or restricting QuickLogic's
conduct or operation of the business of QuickLogic after the Transaction shall
have been issued, nor shall any proceeding brought by a domestic administrative
agency or commission or other domestic governmental entity, seeking any of the
foregoing be pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the
Transaction which makes the consummation of the Transaction illegal.
8.7. Consummation of Acquisition. The Closing of the Transaction shall
----------------------------
occur no later than April 30, 1997 unless mutually agreed to by QuickLogic and
Cypress.
-18-
8.8. Legal Opinion. Cypress shall have received a legal opinion from
-------------
Venture Law Group, special counsel to QuickLogic, substantially in the form
attached hereto as Exhibit L.
---------
ARTICLE IX
TERMINATION AND SURVIVAL
9.1. Termination. Anything contained herein to the contrary
-----------
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(a) By mutual consent of QuickLogic and Cypress;
(b) By notice in writing by QuickLogic, if any of the conditions set
forth in Section 7 shall have become incapable of fulfillment prior to April 30,
1997, through no fault of QuickLogic and shall not have been waived by
QuickLogic;
(c) By notice in writing by Cypress, if any of the conditions set
forth in Section 8 shall have become incapable of fulfillment prior to April 30,
1997, through no fault of Cypress and shall not have been waived by Cypress; or
(d) By notice in writing by either QuickLogic, on one hand, or
Cypress, on the other hand, if (i) the other has breached this Agreement in any
material respect, (ii) any of the representations and warranties made by the
other in Section 3 or Section 4 of this Agreement (as the case may be) is false
or inaccurate in any material respect, or (iii) the Closing does not occur on or
before April 30, 1997 (unless such date is extended by mutual agreement), but
only if the failure to consummate such transaction on or before such date did
not result from the failure by the party seeking such termination to fulfill any
condition set forth in Section 5.4, Section 7 or Section 8, as the case may be,
which is a condition precedent to the obligation of the other under this
Agreement to consummate the transactions contemplated hereby. To the extent a
party fails to act in good faith and consummate the Transactions, the non-
breaching party shall be entitled to obtain injunctive relief to enforce the
terms of this Agreement and the Transaction Agreements.
9.2. Effect of Termination. If this Agreement is terminated prior to
---------------------
Closing and the transactions contemplated hereby are not consummated at said
time as described above, this Agreement shall become void and of no further
force and effect, except for the provisions of Section 5.1 (relating to the
obligations of confidentiality); Section 5.2 (relating to disclosure); Section 9
(relating to termination); Section 12.1 (relating to arbitration); and Section
15 (relating to certain miscellaneous provisions) and there shall be no
liability or obligation on the part of QuickLogic or Cypress or their respective
officers, directors or stockholders; provided, however, that such termination
shall not limit any rights or obligations of any party hereto for willful breach
of this Agreement or any Transaction Agreement.
-19-
ARTICLE X
INDEMNIFICATION
10.1 Cypress's Indemnification. Cypress will indemnify and hold harmless
-------------------------
QuickLogic and each of its directors, officers, employees, advisors, affiliates,
agents and shareholders from and against any and all losses, damages,
liabilities, costs, claims and expenses, including but not limited to attorney's
fees, arising out of, based upon or resulting from:
(a) any claims against, or liabilities or obligations of, Cypress or
against the Transferred Assets the circumstances of which arose prior to the
Closing Date other than the Assumed Obligations;
(b) any inaccuracy of any representation or warranty or schedule of
Cypress which is contained in or made pursuant to this Agreement;
(c) the non-compliance by Cypress with the provisions of any
applicable bulk sales act governing the purchase and sale of the Transferred
Assets;
(d) any tax liability of Cypress including other than any sales or use
taxes resulting from the Transactions; or
(e) any breach by Cypress of any of its agreements, covenants,
warranties or obligations contained in or made pursuant to this Agreement.
Cypress shall have no obligation to indemnify QuickLogic under this Section
10.1 for any breach of Cypress's representations and warranties made in or
pursuant to this Agreement, until such time, if any, as the aggregate amount of
the liabilities, losses, damages, claims costs and expenses arising out of such
breach exceeds [ * ] and then only to the extent of such excess.
10.2 QuickLogic's Indemnification. QuickLogic will indemnify and hold
----------------------------
harmless Cypress and each of its directors, officers, employees, advisors,
affiliates, agents and stockholders from and against any and all losses,
damages, liabilities, costs, claims and expenses including but not limited to
attorney's fees arising out of, based upon or resulting from:
(a) any inaccuracy of any representation or warranty of QuickLogic
which is contained in or made pursuant to this Agreement;
(b) any breach by QuickLogic of any of its agreements, covenants,
warranties or obligations contained in or made pursuant to this Agreement; or
(c) any of the Assumed Obligations.
------------
* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
-20-
QuickLogic shall have no obligation to indemnify Cypress under this Section
10.2 for any breach of QuickLogic's representations and warranties made in or
pursuant to this Agreement, until such time, if any, as the aggregate amount of
the liabilities, losses, damages, claims costs and expenses arising out of such
breach exceeds [ * ] and then only to the extent of such excess.
10.3 Claims Procedures.
-----------------
(a) Promptly after the receipt by any party hereto of notice or upon
any party becoming otherwise aware of (x) any claim or (y) the commencement of
any action or proceeding, such party (the "Aggrieved Party") will, if a claim
with respect thereto is to be made against any party obligated to provide
indemnification (the "Indemnifying Party") pursuant to this Article X, give such
Indemnifying Party written notice of such claim or the commencement of such
action or proceeding and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting from such claim. Failure
by the Indemnifying Party to notify the Aggrieved Party of its election to
defend any such action within a reasonable time, but in no event more than
thirty days after notice thereof shall have been given to the Indemnifying
Party, shall be deemed a waiver by the Indemnifying Party of its right to defend
such action.
(b) If the Indemnifying Party assumes the defense of any such claim or
litigation resulting therefrom, (i) the obligations of the Indemnifying Party as
to such claim shall be limited to taking all steps necessary in the defense or
settlement of such claim or litigation resulting therefrom and to holding the
Aggrieved Party harmless from and against any and all losses, damages and
liabilities caused by or arising out of any settlement approved by the
Indemnifying Party or any judgment in connection with such claim or litigation
resulting therefrom and (ii) the Aggrieved Party shall not be entitled to
indemnification as to fees and expenses of any counsel retained by the Aggrieved
Party after the time at which the Indemnifying Party has so assumed such
defense. The Aggrieved Party may participate, at its expense, in the defense of
such claim or litigation provided that the Indemnifying Party shall direct and
control the defense of such claim or litigation. The Indemnifying Party shall
not, in the defense of such claim or any litigation resulting therefrom, consent
to entry of any judgment, except with the written consent of the Aggrieved
Party, such consent to not be unreasonably withheld, or enter into any
settlement, except with the written consent of the Aggrieved Party, which does
not include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Aggrieved Party of a release from all liability in respect of
such claim or litigation.
(c) If the Indemnifying Party shall not assume the defense of any such
claim or litigation resulting therefrom, the Aggrieved Party may defend against
such claim or litigation in such manner as it may deem appropriate and, unless
the Indemnifying Party shall deposit with the Aggrieved Party a sum equivalent
to the total amount demanded in such claim or litigation, or shall deliver to
the Aggrieved Party a surety bond or an irrevocable letter of credit in form and
substance reasonably satisfactory to the Aggrieved Party, the Aggrieved Party
may settle such claim or litigation on such terms as it may deem appropriate,
and the Indemnifying Party shall promptly reimburse the Aggrieved Party for the
amount of all reasonable expenses, including,
----------------
* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
-21-
without limitation, attorneys' fees, incurred by the Aggrieved Party in
connection with the defense against or settlement of such claims or litigation.
If no settlement of such claim or litigation is made, the Indemnifying Party
shall promptly reimburse the Aggrieved Party for the amount of any judgment
rendered with respect to such claim or in such litigation and of all expenses,
including, without limitation, attorneys' fees, incurred by the Aggrieved Party
in the defense against such claim or litigation.
10.4. Insurance; Tax Benefits. The amount of any liability for which an
-----------------------
Aggrieved Party shall be entitled to indemnification shall take into
consideration (i) the amount of insurance or other third party proceeds, if any,
actually received by the Aggrieved Party in respect of such liability and (ii)
any tax benefits actually realized by the Aggrieved Party in respect of such
liability. Upon making any indemnity payment, the Indemnifying Party will, to
the extent of such indemnity payment, be subrogated to all rights of the
Aggrieved Party against any third party in respect of the loss to which the
payment relates. Without limiting the generality or the effect of any other
provision hereof, the Aggrieved Party and the Indemnifying Party will duly
execute upon request all instruments reasonably necessary to evidence and
perfect the above-described subrogation and subordination rights.
10.5. Exclusive Remedy. Cypress and QuickLogic agree that, to the fullest
-----------------
extent permitted by law, the sole and exclusive legal remedy of Cypress and
QuickLogic after the Closing with respect to any claim or cause of action
asserted by either party related to or arising from breaches of the
representations, warranties or covenants of the other party contained in this
Agreement or any document, list, schedule, exhibit, certificate or other
instrument furnished or to be furnished by or on behalf of such other party or
any of its representatives in connection with the transactions contemplated by
this Agreement shall be limited to the rights, terms and conditions of this
Article X; provided, however, that nothing contained in this Section 10.5 shall
preclude either party from seeking or obtaining equitable relief to enforce or
protect its rights under this Agreement and the Transaction Agreements,
including without limitation the ability to seek equitable relief under Article
XIII below and the rights to arbitration and injunctive relief provided in the
Wafer Fabrication Agreement with respect to Cypress's obligations as to wafer
starts.
10.6. Nature of Survival of Representations, etc. All representations and
-------------------------------------------
warranties and agreements made by the parties hereto shall survive the Time of
Closing and any investigation at any time made by or on behalf of either party,
provided, however, that no suit or action may be commenced in respect of a
representation or warranty after [ * ] months from the Time of Closing.
10.7. Maximum Level of Indemnification. Neither party shall have any
---------------------------------
obligation to indemnify the other under this Article X after such time, if any,
as the aggregate amount of all indemnification payments paid by such party to
the other exceeds [ * ].
--------------
* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
-22-
ARTICLE XI
TRANSITIONAL ISSUES
11.1. Purchase Orders. Cypress will promptly contact all its customers
---------------
with outstanding purchase orders for FPGA Products and will use its reasonable
best efforts to encourage such customers to cancel all purchase orders for FPGA
Products and to enter into new purchase orders with QuickLogic for FPGA Products
as expeditiously as possible, pursuant to the plan to effect such transition
attached hereto as Exhibit J (the "Transition Plan").
---------
11.2. Sale of Products. QuickLogic will sell to Cypress FPGA Products to
----------------
the extent needed by Cypress to fill purchase orders received by Cypress and
which cannot be transferred to QuickLogic pursuant to the Transition Plan in a
timely manner because of customer demands. For such sales, QuickLogic will sell
such FPGA Products to Cypress during the six-month period following the Closing
Date at a price equal to: (i) 77.5% of Cypress's actual sales price of such
products, for the first three months after the Closing Date and (ii) 90.0% of
Cypress's actual sales price of such products for the second three months after
the Closing Date. In addition, QuickLogic will reimburse Cypress for any test
and finish costs reasonably incurred by Cypress and supported by appropriate
documentation submitted in writing to QuickLogic.
11.3. Transfer of Inventory. The Inventory (as defined on Exhibit A) will
---------------------
be transferred, at Cypress's expense, to QuickLogic's offices in Sunnyvale,
California in accordance with the Transition Plan, and in any event within
fourteen (14) days after the Closing Date. Cypress may retain a portion of the
Inventory to the extent reasonably necessary to fulfill purchase orders that
pursuant to Section 11.2 cannot be transferred to QuickLogic. Any remaining
Inventory shall be transferred, at Cypress's expense, to QuickLogic's offices in
Sunnyvale, California 90 and 180 days after the Closing Date.
11.4. Warranties and Returns. Cypress shall bear the cost of all returns,
----------------------
warranties and chargebacks for FPGA Products shipped to customers by Cypress,
regardless of the date of sale, in each case in accordance with Cypress' then-
current practices. QuickLogic will not take any action to encourage any returns
of such goods to Cypress. QuickLogic shall be responsible for all warranties
and chargebacks for FPGA Products shipped to customers by QuickLogic, regardless
of the date of sale, and shall be responsible for returns of FPGA Products from
the trade in accordance with QuickLogic's return policy. The parties hereto
agree that should QuickLogic accept returns or pay chargebacks for FPGA Products
shipped to customers by Cypress, Cypress shall reimburse QuickLogic upon
presentation of proper evidence by QuickLogic of such acceptance or payment.
-23-
ARTICLE XII
COVENANTS FOLLOWING CLOSING
12.1. Arbitration. Any dispute arising between the parties with respect
-----------
to this Agreement (including, without limitation, in regard to any claim under
Section 12.1 hereof) or any Transaction Agreement (except as provided in the
Wafer Fabrication Agreement), shall be settled by arbitration conducted in Santa
▇▇▇▇▇ County. If either party wishes to commence an arbitration hereunder, it
shall serve written notice to such effect on the other party and, within 45 days
thereafter, the parties shall mutually select a single arbitrator to conduct
such arbitration from among a list of retired federal and state trial court
judges eligible to serve in such capacity furnished to the parties by the
American Arbitration Association. If the parties are unable to select an
arbitrator by mutual agreement within such period, the arbitrator shall be
selected by the American Arbitration Association in accordance with its
procedures. In conducting the arbitration, the arbitrator shall apply the
Commercial Arbitration Rules of the American Arbitration Association as modified
by any other instructions that the parties may agree upon at the time, except
that each party shall have the right to conduct discovery in any manner and to
any extent authorized by the Federal Rules of Civil Procedure as interpreted by
the federal courts. Costs and expenses, including reasonable attorneys' fees
incurred with respect to the arbitration, shall be borne by the losing party,
unless otherwise determined by the arbitrator based on a showing of good cause
to vary from the usual rule expressed in this sentence. The arbitrator's award
shall be final and unappealable. A judgment upon the award may be entered in
any court having jurisdiction of the parties.
12.2. Support.
-------
(a) Cypress will cooperate in good faith and use reasonable efforts to
assist QuickLogic in achieving the orderly transition of the Transferred Assets
to QuickLogic in order that QuickLogic may incorporate the Transferred Assets
into its existing operations with no diminution in the value of the Transferred
Assets.
(b) Cypress shall observe faithfully the terms of all Assigned
Contracts until assignments or transfers thereof have been obtained. QuickLogic
agrees promptly to reimburse Cypress for any out-of-pocket expenses reasonably
incurred (and documented) by Cypress in carrying out the obligations under such
Assigned Contracts following the Closing Date and through the date of such
assignment, other than any outstanding liabilities under such Assigned
Contracts, which are sole responsibility of Cypress.
(c) Cypress and QuickLogic shall provide each other with such
information and access to books and records as may reasonably be requested by
the other in connection with any Claim or the preparation of any returns of
Taxes and audits or other proceedings relating to Taxes.
-24-
(d) At the Time of Closing, Cypress will deliver to QuickLogic
electronic copies of any Transaction Agreement for which the first draft was
prepared by Cypress or counsel to Cypress, for the purpose of assisting any
future obligations of Cypress to comply with ▇▇▇▇▇ disclosure requirements under
the Securities Act or the Exchange Act.
ARTICLE XIII
NON-COMPETITION AND NON-SOLICITATION
13.1 Covenant Not to Compete. Cypress agrees and acknowledges that
-----------------------
QuickLogic has spent significant time and resources on the development of the
FPGA Technology. In addition, Cypress agrees and acknowledges that the FPGA
Technology is highly confidential and proprietary to QuickLogic and has
significant commercial value to QuickLogic. Cypress also acknowledges that
Cypress's former ownership of the Rights and the Transferred Assets could
provide Cypress with the immediate and commercially valuable ability to compete
with QuickLogic in the field of antifuse FPGA products. Therefore, in
consideration of the Consideration and the other rights granted to Cypress under
this Agreement and the Transaction Agreements, Cypress agrees to the following
covenant not to compete:
(a) Non-Compete. During the ten (10) year period following the
------------
Closing Date, Cypress (including its subsidiaries) will not, directly or
indirectly, develop, manufacture, market, sell or otherwise distribute any
antifuse FPGAs or products which provide the same or similar capability to the
user and which are predominately user configurable that are pin-compatible with
existing ▇▇▇▇▇ 1 or ▇▇▇▇▇ 2 products (specifically, 1K, 2K, 3K, 4K, 5K, 7K, 8K
and 9K) (the "Field") anywhere in the world. The foregoing specifically
-----
includes any activities performed by third parties on behalf of, or in
conjunction with, Cypress (or its subsidiaries) during this ten-year term. For
purposes of this paragraph, a "subsidiary" shall mean any corporation or other
entity of which Cypress beneficially owns fifty percent (50%) or more of the
voting stock of such corporation or a fifty percent (50%) or greater interest in
the decision-making authority of such other entity.
(b) Transition Period. Notwithstanding Section 13.1(a), Cypress may
-----------------
continue to sell antifuse FPGA Products to certain customers of Cypress (i) that
required QuickLogic to be qualified until QuickLogic has been qualified to
manufacture and sell products to such customers and (ii) under existing
contracts or other binding commitments until such customers agree to release
Cypress from such obligations.
(c) Reformation. In the event that the provisions of this Section
-----------
13.1 should ever be deemed to exceed the scope, time or geographic limitations
of applicable law regarding covenants not to compete or are otherwise declared
unenforceable under applicable law, then such provisions shall be reformed to
the maximum scope, time or geographic limitations, as the case may be, permitted
under applicable law.
-25-
13.2. Representations of Cypress. Cypress represents that: (i) it is
--------------------------
familiar with the covenant not to compete set forth in Section 13.1, (ii) it is
fully aware of its obligations thereunder, including, without limitation, the
length of time, scope and geographic coverage of those covenants, (iii) it finds
the length of time, scope and geographic coverage of these covenants to be
reasonable, and (iv) it is receiving specific, bargained-for consideration for
its covenant not to compete.
13.3. Non-Solicitation. For a period of twelve (12) months from the
----------------
Closing Date (or, if the Closing does not occur, twelve months from the
termination of negotiations with regard to the Transaction), neither Cypress nor
QuickLogic shall engage or participate in any effort or act to solicit the other
party's employees to cease their association or employment with that party.
13.4. Breach by Cypress. Cypress acknowledges that in the event of a
-----------------
material breach of any of the provisions of Section 13.1 by Cypress, QuickLogic
would sustain irreparable harm, and, therefore, Cypress agrees that in addition
to any other remedies which QuickLogic may have under this Agreement or
otherwise, QuickLogic shall be entitled to obtain equitable relief, including
specific performance and injunctions restraining Cypress from committing or
continuing any such violation of this Agreement.
13.5. Breach by QuickLogic. QuickLogic acknowledges that in the event of
--------------------
a material breach of any of the provisions of Section 13.3 by QuickLogic,
Cypress would sustain irreparable harm, and, therefore, QuickLogic agrees that
in addition to any other remedies which Cypress may have under this Agreement or
otherwise, Cypress shall be entitled to obtain equitable relief, including
specific performance and injunctions restraining QuickLogic from committing or
continuing any such violation of this Agreement.
ARTICLE XIV
MISCELLANEOUS
14.1. Fees and Expenses. Each of the parties hereto shall bear its own
-----------------
fees and expenses, including fees of counsel and accountants, incurred in
connection with the negotiation of this Agreement and the Transaction Agreements
and the consummation of the transactions contemplated hereby and thereby or
otherwise arising out of, or by reason of, this Agreement or any Transaction
Agreement.
14.2. Entire Agreement; Conflicts; Third Party Beneficiaries. This
------------------------------------------------------
Agreement and the Transaction Agreements (including the exhibits and schedules
hereto and thereto) constitute the entire agreement between the parties hereto
and thereto with respect to the subject matter hereof
-26-
and thereof and supersedes all prior and contemporaneous agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties with respect thereto, including the Letter of Intent. The parties
hereto acknowledge and agree that no third party is intended to be a third-party
beneficiary of this Agreement or any Transaction Agreement.
14.4. Amendments. No amendment, modification or rescission of this
----------
Agreement shall be effective unless set forth in writing executed by the party
sought to be bound thereby.
14.5. Notices. Any notice given hereunder or under any Transaction
-------
Agreement (except as otherwise provided therein) shall be in writing and shall
be deemed effective upon the earlier of personal delivery (including personal
delivery by facsimile or other means), the day of delivery by commercial courier
to a responsible individual or the third day after mailing by certified or
registered mail, postage prepaid, as follows:
(1) If to QuickLogic:
QuickLogic Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: E. ▇▇▇▇▇▇ ▇▇▇▇, President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Venture Law Group
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
-27-
(2) If to Cypress:
Cypress Semiconductor Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party may have furnished in writing to the other
party in the manner provided above.
14.6. Assignment. Except with respect to an assignment to a successor of
----------
all or substantially all of a party's stock, business or assets (for which no
consent shall be required), no party may assign this Agreement or any
Transaction Agreement, nor may any of its rights hereunder be assignable or
transferable, in any manner by a party, without the prior written consent of the
other party. Any proposed assignment in violation of this Section 14.6 shall be
void. Subject to the foregoing, this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective transferees,
successors, assigns and legal representatives.
14.7. Incorporation by Reference. All Schedules and Exhibits referred to
--------------------------
in this Agreement are by this reference incorporated herein as an integral part
hereof.
14.8. Governing Law. This Agreement and the Transaction Agreements and
-------------
the respective rights and obligations of the parties hereto and thereto shall be
construed under and by the laws of the State of California, without reference to
conflicts of laws principles.
14.9. Captions. The title to the Sections and subsections of this
--------
Agreement and the Transaction Agreements are included herein solely for
convenience, are not a part of this Agreement or any Transaction Agreement and
do not in any way limit or amplify the terms of this Agreement or any
Transaction Agreement.
-28-
14.10. No Waiver. It is understood and agreed that no failure or delay by
---------
any party in exercising any right, power, or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any right,
power or privilege be deemed to operate as a waiver of any other right, power or
privilege hereunder.
14.11. Counterparts. This Agreement and any Transaction Agreement may be
------------
executed in any number of counterparts, each of which shall be considered to be
an original, but all of which together shall constitute one and the same
instrument.
[SIGNATURE PAGE FOLLOWS]
-29-
IN WITNESS WHEREOF, the undersigned have duly executed this Termination
Agreement as of the date first set forth above.
QUICKLOGIC: QUICKLOGIC CORPORATION
a California corporation
By: /s/ E. ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------------
Title: President & CEO
--------------------------------------
CYPRESS: CYPRESS SEMICONDUCTOR CORPORATION
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Title: CFO
--------------------------------------
EXHIBIT A TO TERMINATION AGREEMENT
----------------------------------
TRANSFERRED ASSETS
All inventory of the FPGA Products, including work in process and finished goods
but excluding wafers in process, 1K PCI bus devises, and 1K and 2K VLSI devises
(the "Inventory"). Attached is a complete listing of such Inventory as of the
date of this Agreement, which will be updated as of the Closing.
Equipment utilized for the FPGA Products (the "Equipment") as attached.
Permits: None
Other Assets: None
Exhibit A
Equipment
Units Amount
Reticles
7C382 [*] [*]
7C384 [*] [*]
7C386 [*] [*]
7C3803 [*] [*]
7C3805 [*] [*]
7C3807 [*] [*]
7C3809 [*] [*]
Sort H/W [*] [*]
Scrambler Board [*] [*]
382 Probe Card [*] [*]
384 Probe Card [*] [*]
386 Probe Card [*] [*]
388 Probe Card [*] [*]
3807 Probe Card [*] [*]
3809 Probe Card [*] [*]
3805 Probe Card [*] [*]
HP H/W [*] [*]
HP Tester [*] [*]
8K Mother Board [*] [*]
387 TQFP OUT Card [*] [*]
388 PQFP OUT Card [*] [*]
4K Mother Board [*] [*]
385 TQFP OUT Card [*] [*]
386 TQFP OUT Card [*] [*]
388 Blank TQFP OUT Card [*] [*]
2K Mother Board [*] [*]
384 TQFP OUT Card [*] [*]
384 CPGA OUT Card [*] [*]
1K Mother Board [*] [*]
382 TQFP OUT Card [*] [*]
Blank Mother Board [*] [*]
Blank Component Card [*] [*]
Blank 8K Mother Board [*] [*]
VT H/W [*] [*]
Load Boards [*] [*]
44-PLCC Hand Test Board [*] [*]
68-PLCC Hand Test Board [*] [*]
84-PLCC Hand Test Board [*] [*]
100-TQFP Hand Test Board [*] [*]
144-TQFP Hand Test Board [*] [*]
Cable Sets [*] [*]
-----------------
* An asterisk indicates confidential material that has been omitted from
this document and filed separately with the Securities and Exchange
Commission pursuant to Rule 406 of the Securities Act of 1933, as amended.
Page 1
Exhibit A
Equipment
B/I Boards [ * ]
160-COFP [ * ]
SpDE [ * ]
Programmers [ * ]
DeskFab [ * ]
Programmers [ * ]
84-PLCC Adapters [ * ]
208-PQFP Adapters [ * ]
Other [ * ]
Bench Boards [ * ]
TOTAL [ * ]
-------------
* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
EXHIBIT A-1 TO TERMINATION AGREEMENT
------------------------------------
FPGA TECHNOLOGY
PATENTS AND PATENT APPLICATIONS (SEE ATTACHED)
MASK WORK RIGHTS: NONE
EXHIBIT A
CONFIDENTIAL - SUBJECT TO ATTORNEY-CLIENT PRIVILEGE
CYPRESS U.S. PATENTS AND PATENT APPLICATIONS THAT EITHER COVER
OR MAY COVER ANTIFUSE TECHNOLOGY AND/OR CIRCUITS THAT ARE OR
MAY BE USED IN FPGA'S
---------------------
---------------------------------------------------------------------------------------------------------------
Patent/Serial No. Original Filing Date Title Status
---------------------------------------------------------------------------------------------------------------
[*] [*] [*] [*]
---------------------------------------------------------------------------------------------------------------
[*] [*] [*] [*]
---------------------------------------------------------------------------------------------------------------
[*] [*] [*] [*]
---------------------------------------------------------------------------------------------------------------
[*] [*] [*] [*]
---------------------------------------------------------------------------------------------------------------
[*] [*] [*] [*]
---------------------------------------------------------------------------------------------------------------
[*] [*] [*] [*]
---------------------------------------------------------------------------------------------------------------
[*] [*] [*] [*]
---------------------------------------------------------------------------------------------------------------
[*] [*] [*] [*]
---------------------------------------------------------------------------------------------------------------
[*] [*] [*] [*]
---------------------------------------------------------------------------------------------------------------
U.S. ▇▇▇. No. December 29, 1995 Planner Antifuse and Method Issued
5,573,971 of Fabrication
---------------------------------------------------------------------------------------------------------------
-------------
* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities and Exchange Act of 1933, as amended.
EXHIBIT B TO TERMINATION AGREEMENT
----------------------------------
ASSUMED OBLIGATIONS
1. Obligations of Cypress under purchase orders to sell FPGA Products to
Cypress' customers that are unfilled as of the Closing to the extent
transferable and attached hereto.
2. Obligations of Cypress that arise after the Closing Date in connection
with the performance by QuickLogic of such transferred purchase orders; provided
that all such orders shall not include any responsibility of QuickLogic for any
returns of product shipped by Cypress, and provided further, if Cypress has
received payment for the obligations, it shall remit such payments to
QuickLogic.
EXHIBIT C TO
------------
TERMINATION
-----------
AGREEMENT
---------
▇▇▇▇ OF SALE
This ▇▇▇▇ of Sale ("Agreement") is made as of March 29, 1997 by and
between Cypress Semiconductor Corporation, a corporation organized under the
laws of Delaware ("Seller"), and, QuickLogic Corporation, a corporation
organized under the laws of California (the "Buyer").
1. Definitions. Unless specifically designated otherwise, capitalized
-----------
terms used in this Agreement shall have the meanings given them in the
Termination Agreement between Seller and Buyer dated as of March 29, 1997 (the
"Termination Agreement").
2. Transfer. Subject to the terms and conditions of the Termination
--------
Agreement and Transition Plan, Seller shall assign, grant, transfer and convey
to Buyer, free and clear of all liens, claims, interests and encumbrances, and
Buyer agrees to acquire from Seller, all of Seller's rights, title and interest
in and to the assets listed on Exhibit A (the "Transferred Assets"), and Seller
shall deliver good, clear and marketable title to each and every Transferred
Asset, together with such bills of sale, assignments and other instruments of
conveyance as may be reasonably requested by Buyer to permit such delivery.
Without limiting the foregoing, the Transferred Assets shall be deemed to
include only the following:
(a) All right, title and interest in the Equipment and Inventory (each
as defined in Exhibit A), and all claims and rights of Seller with respect
thereto, including, without limitation, all rights against suppliers thereof
under warranties listed and described in Schedule 1.1(a) of the Termination
Agreement (to the extent transferable by Seller), including, without limitation,
all of Seller's rights under manufacturers' warranties and guarantees (to the
extent transferable by Seller) relating to the Equipment and all benefits and
proceeds with respect to the Equipment as of and after the Closing under any
policy of insurance;
(b) All books and records, whether originals or copies, whether
financial or otherwise, relating to the Transferred Assets and which do not
primarily relate to areas of Seller's business other than the Transferred
Assets; provided that Seller shall be entitled, at Seller's expense, to make and
retain photocopies of such records for the purpose of accounting and tax
compliance;
(c) All licenses, permits, authorizations and other approvals
from any federal, state, local or foreign governmental, public or
self-regulatory body or authority relating to the Transferred Assets or the
Assumed Obligations, all of which are listed in Exhibit A (collectively, the
"Permits");
(d) The computer software and hardware specifically used in
connection with the Equipment, including all documentation and source code, to
the extent they are legally transferable by Seller;
(e) All rights of indemnification, claims or causes of action
in favor of Seller, to the extent they arise out of or relate to the Transferred
Assets after the Closing Date including, without limitation, those against any
person under any purchase or other agreement pursuant to which Seller acquired
any portion of the Transferred Assets or those arising by operation of law or
equity or otherwise; and
(f) Those other assets that relate to the Transferred Assets and are
listed in Exhibit A.
3. Miscellaneous.
-------------
(a) Seller and Buyer hereby agree that they will, from time to time,
execute and deliver such further instruments of conveyance and transfer as
may be reasonably required to implement and effectuate the transfer of the
Transferred Assets pursuant to the Termination Agreement.
(b) This Agreement has been executed to implement the Termination
Agreement and nothing contained herein shall be deemed or construed to impair or
alter any of the provisions of the Termination Agreement.
(c) This Agreement is executed and delivered in, and shall be
construed and enforced in accordance with the domestic laws of the State of
California, and shall be binding upon and shall inure to the benefit of the
respective successors and assigns of the parties to this Agreement.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.
(e) Seller hereby covenants and agrees to warrant and defend the
title to the above-described Transferred Assets hereby conveyed, against the
just and lawful claims and demands of all persons whomsoever.
(f) The terms of this Agreement may only be modified by a written
agreement duly signed by persons authorized to sign agreements on behalf of the
parties hereto.
Signature page follows
-2-
IN WITNESS WHEREOF, the parties have executed this ▇▇▇▇ of Sale on the
date first above written.
"BUYER"
QUICKLOGIC CORPORATION
By:
---------------------------------------
Title:
------------------------------------
"SELLER"
CYPRESS SEMICONDUCTOR
CORPORATION
By:
---------------------------------------
Title:
------------------------------------
-3-
EXHIBIT D TO TERMINATION AGREEMENT
----------------------------------
(See Exhibit 10.20 to the Registrant's Registration Statement on Form S-1).
EXHIBIT E TO TERMINATION AGREEMENT
NON-CONVERTIBLE PROMISSORY NOTE
-------------------------------
$_________________ ______________, 1997
Sunnyvale, California
For value received, QuickLogic Corporation, a California corporation
(the "Company"), promises to pay to the order of Cypress Semiconductor
Corporation (the "Holder"), the principal sum of ____________ Dollars ($______).
Such principal sum may be increased from time to time pursuant to Paragraph 10
below. No interest shall accrue on the unpaid principal amount of this Note,
except as provided under Paragraph 9 below. This Note is subject to the
following terms and conditions.
1. MATURITY. This Note will automatically mature and be due and payable
--------
on the date nine months after the later of (i) the date hereof or (ii) the date
of any increase in principal pursuant to Paragraph 10 below (the "Maturity
--------
Date") in nine (9) equal monthly installments, with the first such installment
-----
due on the Maturity Date. The last such installment shall include any amounts
oustanding but unpaid, such that it may not equal the preceding eight (8)
installments. The entire unpaid principal sum of this Note, shall become
immediately due and payable upon the insolvency of the Company, the commission
of any act of bankruptcy by the Company, the execution by the Company of a
general assignment for the benefit of creditors, the filing by or against the
Company of a petition in bankruptcy or any petition for relief under the federal
bankruptcy act or the continuation of such petition without dismissal for a
period of ninety (90) days or more, or the appointment of a receiver, trustee,
liquidator, assignee or similar official to take possession of the property or
assets of the Company or to administer the winding up or liquidation of its
affairs.
2. PAYMENT. All payments shall be made in lawful money of the United
-------
States of America at such place as the Holder hereof may from time to time
designate in writing to the Company. Prepayment of this Note may be made at any
time without penalty.
3. TRANSFER: SUCCESSORS AND ASSIGNS. The terms and conditions of this
--------------------------------
Note shall inure to the benefit of and be binding upon the respective successors
and assigns of the parties. This Note may be transferred only upon surrender of
the original Note for registration of transfer, duly endorsed, or accompanied by
a duly executed written instrument of transfer in form satisfactory to the
Holder. Thereupon, a new note for the same principal amount will be issued to,
and registered in the name of, the transferee. Principal is payable only to the
registered holder of this Note.
4. GOVERNING LAW. This Note and all acts and transactions pursuant
-------------
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
5. NOTICES. Any notice required or permitted by this Note shall be in
-------
writing and shall be deemed sufficient upon delivery, when delivered personally
or by a nationally-recognized delivery service (such as Federal Express or UPS),
or forty-eight (48) hours after being deposited in the U.S. mail, as certified
or registered mail, with postage prepaid, addressed to the party to be notified
at such party's address as set forth below or as subsequently modified by
written notice.
6. AMENDMENTS AND WAIVERS. Any term of this Note may be amended with
----------------------
the written consent of the Company and the Holder. Any amendment or waiver
effected in accordance with this Section 7 shall be binding upon the Company and
the Holder.
7. SHAREHOLDERS, OFFICERS AND DIRECTORS NOT LIABLE. In no event shall
-----------------------------------------------
any shareholder, officer or director of the Company be liable for any amounts
due or payable pursuant to this Note.
8. ACTION TO COLLECT FEES. If action is instituted to collect this
----------------------
Note, the Company promises to pay all costs and expenses, including reasonable
attorney's fees, incurred in connection with such action.
9. DEFAULT. In the event the Company does not pay within ten (10)
-------
business days any installment payment required to be paid under Paragraph 1,
such unpaid installment shall accrue simple interest at 5.83% per year from the
original due date to the date such installment is paid in full.
10. INCREASE OF PRINCIPAL UPON SUBSEQUENT TRANSFERS OF INVENTORY. Upon
------------------------------------------------------------
subsequent transfers of inventory by Holder to the Company pursuant to Article
XI of that certain Termination Agreement dated March __, 1997 between the
Company and Holder, the principal sum due under this Note shall be increased by
an amount equal to QuickLogic's standard cost of such finished and
work-in-progress inventory being shipped.
11. OTHER. The Company expressly waives any presentment, demand,
-----
protest, notice of dishonor or any other notice of any kind in connection with
this Note now or hereafter required by applicable law.
-2-
COMPANY:
QUICKLOGIC CORPORATION
By: _________________________
Name: _______________________
(print)
Title: ______________________
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
AGREED TO AND ACCEPTED:
HOLDER:
CYPRESS SEMICONDUCTOR CORPORATION
By: _____________________________
Name: ___________________________
(print)
Title: __________________________
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT F TO TERMINATION AGREEMENT
----------------------------------
(See Exhibit 10.13 to the Registrant's Registration Statement on Form S-1).
EXHIBIT G TO TERMINATION AGREEMENT
----------------------------------
(See Exhibit 10.12 to the Registrant's Registration Statement on Form S-1).
EXHIBIT H TO TERMINATION AGREEMENT
----------------------------------
(See Exhibit 10.11 to the Registrant's Registration Statement on Form S-1).
EXHIBIT I TO TERMINATION AGREEMENT
----------------------------------
(See Exhibit 10.10 to the Registrant's Registration Statement on Form S-1).
EXHIBIT J TO TERMINATION AGREEMENT
----------------------------------
TRANSITION PLAN
[LETTERHEAD OF QUICKLOGIC]
CY Transition Agreement
Revision Date: March 20, 1997
Definitions:
-----------
Closing Date - execution date of the Transaction Agreement.
Products - pASIC1, pASIC2, programmers, adapters, development tools
Exceptions to Transition Agreement - in writing and signed by ▇. ▇▇▇▇▇▇▇▇ and
▇. ▇▇▇▇▇▇▇
Transfer Plan - inventory transfer agreement executed on March 10, 1997.
Terms and Conditions:
--------------------
Backlog - No new orders, or increases to existing orders, will be accepted by
Cypress as of the Closing Date, unless otherwise agreed to in writing by both
parties.
Continued Shipments by Cypress - It is the intent and expectation of both
parties to transition all backlog requirements to QuickLogic by the Closing
Date. Any accounts which are not expected to transition to QuickLogic by the
Closing Date must be identified and agreed to in writing by both parties.
New Orders - all new orders for Products will be referred to QuickLogic's sales
representative in the respective geographic territory.
Inventory - Inventory will transfer to QuickLogic in accordance with the terms
outlined in the Transfer Plan. Inventory and test hardware purchases will
include a one million dollar ($1,000,000) discount. This discount will be
realized by applying forty percent (40%), rounded to the nearest $100,000
for each purchase order. Each purchase order should include a single line for
the discounted dollar amount.
page two
Transition Agreement
Documentation - the Parties agree to transfer the following documents:
a) Shipments - by the Closing Date. Q1'97 quarter to date shipments by
Product by customer (identifying location of end customers); monthly
shipments by Product by customer for each month after the Closing Date
until no further shipments of Products are made by Cypress.
b) POS - Q1'97 quarter to date resale data by distributor by end customer by
Product by the Closing Date; complete Q1'97 resale data by distributor by
end customer by product within one month from the Closing Date.
c) CY Backlog - weekly backlog status in the format identified as "End
Customer Backlog Report," until no further backlog is in place at Cypress
on the Products.
d) DeskFab Programmers - list of customers which DeskFab programmers were
shipped to by Cypress by the Closing Date.
Cypress Semiconductor Corporation:
/s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice President Sales and Marketing
QuickLogic Corporation:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Vice President Sales
TRANSFER PLAN FOR CYPRESS FPGA INVENTORY TO QUICKLOGIC
March 10, 1997
All Cypress (CY) FPGA inventory will be transferred to QuickLogic (QL) within
fourteen (14) days after the closing date except for a reasonable portion
necessary to fulfill purchase orders that have not yet been transferred to QL.
Any remaining inventory shall be transferred to QL 90 days and 180 days after
the closing date.
All CY FPGA inventory will be transferred to QL at one of four WIP (Work In
Progress) positions:
1. Die Bank
2. Packaged Units (assembled but untested)
3. Bin (packaged, tested but unmarked)
4. Finished Goods (packaged, tested, marked, and finished)
The transfer pricing is as follows:
----------------------------------------------------------------------------------------------
Prime In-house
CY Part CY Pack. OL Part OL Pack. Die Bank Packaged Bin Proc. Bin FG
----------------------------------------------------------------------------------------------
381 ic.ii 1K 44 plcc [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
382 ic.ii 1K 68 plcc [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
382 ▇▇.▇▇ 1K 100 taFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
383 ic.ii 2K 68 plcc [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
384 ic.ii 2K 84 plcc [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
384 ▇▇.▇▇ 2K 100 taFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
384 gc 2K 84 pga [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
384 gm 2K 84 pga [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
385 ic.ii 4K 84 plcc [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
385 ▇▇.▇▇ 4K 100 taFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
386 ▇▇.▇▇ 4K 144 taFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
386 um 4K 160 caFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
385P ic.ii 4K PCI 84 plcc [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
385P ac.ii 4K PCI 100 taFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
386P ac.ii 4K PCI 144 taFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
3807 ▇▇.▇▇ 7K 144 taFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
3807 ▇▇.▇▇ 7K 208 paFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
387 ▇▇.▇▇ 8K 144 taFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
388 ▇▇.▇▇ 8K 208 paFo [ * ] [ * ] [ * ] [ * ] [ * ]
----------------------------------------------------------------------------------------------
The transfer price for finished goods is the prime bin transfer price minus
the cost for stripping the ▇▇▇▇: [ * ] for 44 plcc. 68 plcc. 84plcc. and
all others, respectively.
The transfer price for the in-house programming bin is [ * ].
------------
* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
Until fourteen days after the closing date the logistics of transferring
inventory will be as follows:
On Tuesday of each week CY will provide a list of all CY inventory
available to QL. The device package (if applicable) WIP position, lot
information, geographical location, and number of units will be detailed
for all available inventory.
QL will respond to this by providing a purchase order (PO) to CY which will
include the same information as above, the price, and the shipping
requirements, including location and date.
CY will respond within one business day of receipt of the PO from QL with a
confirmation of the WIP material to be shipped, the price, and the expired
delivery date to the specified location.
CY will ship the WIP material and invoice QL accordingly.
For 90 days and 180 days after the closing date, the logistics of transferring
inventory will be as follows:
Fifteen (15) days prior to the inventory transfer date, CY will provide a
list of all CY inventory available for transfer to QL. The device package
(if applicable), WIP position, lot information, geographical location, and
number of units will be detailed for all available inventory.
QL will respond to this by providing a purchase order (PO) to CY which will
include the same information as above, the price, and the shipping
requirements including location and date.
CY will respond within one business day of receipt of the PO from QL with a
confirmation of the WIP material to be shipped, the price, and the expected
delivery date to the specified location.
CY will ship the WIP material and invoice QL accordingly.
CYPRESS SEMICONDUCTOR CORPORATION
/s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 03/10/97
------------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
FPGA Product Engineering Director
QUICKLOGIC CORPORATION
/s/ ▇▇▇▇▇▇ ▇▇▇ 3/10/97
------------------------------------------
▇▇▇▇▇▇ ▇▇▇
Vice President Operations
TRANSITION PLAN FOR CYPRESS TO SUPPORT EXISTING CUSTOMER DEMAND
March 20, 1997
Cypress (CY) may continue to sell FPGA products to satisfy existing CY backlog.
Products will be supplied to customers from existing CY inventory.
The customers, devices, and quantities are limited to the following:
---------------------------------------------------------------------
Manufacturing Marketing End Number of
Part Number Part Number Customer Units
---------------------------------------------------------------------
7C384A-OAC CY7C384A-OAC [ * ] [ * ]
---------------------------------------------------------------------
7C384A-1JI CY7C384A-1JI [ * ] [ * ]
---------------------------------------------------------------------
7C385A-2JI CY7C385A-2JI [ * ] [ * ]
---------------------------------------------------------------------
7C384A-2JI CP4515AM [ * ] [ * ]
---------------------------------------------------------------------
7C382A-XA1 CP4805AM [ * ] [ * ]
---------------------------------------------------------------------
7C386A-IUMB CY7C386A-IUMB [ * ] [ * ]
---------------------------------------------------------------------
7C386A-OUMB CP4580BM [ * ] [ * ]
---------------------------------------------------------------------
7C386A-OUMB CP4581AM [ * ] [ * ]
---------------------------------------------------------------------
7C384A-2JC CY7C384A-2JC [ * ] [ * ]
---------------------------------------------------------------------
QL will provide CY with testing services for the 7C382A-XAI (1K industrial in
100-pin TQFP) and the 7C386A-IUMB and 7C386A-OUMB (4K military 883 in 160-pin
CQFP) as follows:
1. QL will provide up to [ * ] of testing capacity each week.
2. All [ * ] of testing are at any temperature required.
3. The price for each tested unit out is given in the table below.
------------------------------------------------------------------------------------
Device FT @ 25C FT @ 85C FT @ 135C FT @ -60C QA @ 25C
------------------------------------------------------------------------------------
7C382 [ * ] [ * ] [ * ] [ * ] [ * ]
------------------------------------------------------------------------------------
7C386 [ * ] [ * ] [ * ] [ * ] [ * ]
------------------------------------------------------------------------------------
CYPRESS SEMICONDUCTOR CORPORATION
/s/ J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 3/20/97 /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 03/20/97
----------------------------- -------------------------
J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President Sales and Marketing FPGA Product Engineering Director
QUICKLOGIC CORPORATION
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 3/20/97 /s/ ▇▇▇▇▇▇▇ ▇▇▇ 3/20/97
----------------------------- -------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
Vice President World-Wide Sales Vice President Operations
--------------
* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
-1-
SCHEDULE 1.1(a) TO TERMINATION AGREEMENT
----------------------------------------
LIST OF CLAIMS AND RIGHTS OF CYPRESS AGAINST SUPPLIERS UNDER WARRANTIES
None.
SCHEDULE 2.2 TO TERMINATION AGREEMENT
-------------------------------------
ALLOCATION OF CONSIDERATION
Inventory [ * ] (as estimated by Cypress as of February 28,
1997)
Equipment [ * ]
Marketing Rights and
Contract Termination [ * ]
-------------
* An asterisk indicates confidential material that has been omitted from this
document and filed separately with the Securities and Exchange Commission
pursuant to Rule 406 of the Securities Act of 1933, as amended.
SCHEDULE 3 TO TERMINATION AGREEMENT
-----------------------------------
CYPRESS DISCLOSURE SCHEDULE
No exceptions to the representations and warranties made in Article III.
SCHEDULE 4 TO TERMINATION AGREEMENT
-----------------------------------
QUICKLOGIC DISCLOSURE SCHEDULE
No exceptions to the representations and warranties made in Article IV.