Filed Pursuant to Rule 424(b)(3)
Registration No. 333-132180
Prospectus Supplement No. 1 dated November 20, 2006
(to Prospectus dated October 5, 2006)
This Prospectus Supplement No. 1 supplements and amends the Prospectus
dated October 5, 2006 (the "Prospectus"), relating to the resale of 12,106,586
shares of common stock, par value $0.0001 per share, of Simtek Corporation
("Simtek"). You should read this Prospectus Supplement No. 1 in conjunction with
the Prospectus. Prospectus Supplement No. 1 is not complete without, and may not
be delivered or utilized except in connection with, the Prospectus, including
any amendments or supplements thereto.
Attached hereto and incorporated by reference herein is Simtek's: (a)
Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, filed
with the Securities and Exchange Commission ("SEC") on November 14, 2006; (b)
Current Report on Form 8-K12G3 filed with the SEC on October 10, 2006; (c)
Current Report on Form 8-K filed with the SEC on October 12, 2006; (d) Current
Report on Form 8-K filed with the SEC on October 12, 2006; (e) Current Report on
Form 8-K filed with the SEC on October 27, 2006; and (f) Current Report on Form
8-K/A filed with the SEC on November 9, 2006. This Prospectus Supplement No. 1
should be read in conjunction with, and delivered with, the Prospectus and is
qualified by reference to the Prospectus except to the extent that the
information in this Prospectus Supplement No. 1 supersedes the information
contained in the Prospectus.
The Prospectus, together with this Prospectus Supplement No. 1, constitutes
the prospectus required to be delivered by Section 5(b) of the Securities Act of
1933, as amended, with respect to the offers and sales of the Simtek common
stock offered hereby.
See the section of the Prospectus titled "Risk Factors", beginning on page
4 thereof, for certain factors relating to an investment in the shares of Simtek
common stock offered hereby.
Neither the SEC nor any other state securities commission has approved or
disapproved of the Simtek common stock offered hereby or passed upon the
adequacy or accuracy of the Prospectus or this Prospectus Supplement No. 1. Any
representation to the contrary is a criminal offense.
The date of this Prospectus Supplement No. 1 is November 20, 2006.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
----------------------------------
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Quarter ended September 30, 2006
OR
[ ] Transition report pursuant to section 13 or 15 (d) of the Securities
Exchange Act of 1934
Commission file number 0-19027
SIMTEK CORPORATION
(Exact name of registrant as specified in its charter)
------------------------------------------------------
Delaware 84-1057605
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
4250 Buckingham Drive, Suite 100,
Colorado Springs, Colorado 80907
(Address of principal executive offices) (Zip Code)
(719) 531-9444
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes No X
--- ---
The total number of shares of Common Stock issued and outstanding as of
November 8, 2006 was 8,120,606.
SIMTEK CORPORATION
INDEX
For the Quarter Ended September 30, 2006
PART 1. FINANCIAL INFORMATION
ITEM 1 Page
----
Condensed Consolidated Balance Sheets as of September 30,
2006 and December 31, 2005 3
Condensed Consolidated Statements of Operations for the
three months and nine months ended September 30, 2006 and 2005 4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 2006 and 2005 5
Notes to Condensed Consolidated Financial Statements 6-14
ITEM 2
Management's Discussion and Analysis of Financial Condition
and Results of Operations 15
ITEM 3
Quantitative and Qualitative Disclosures about Market Risk 23
ITEM 4
Controls and Procedures 24
PART 2. OTHER INFORMATION
ITEM 1 Legal Proceedings 25
ITEM 1A Risk Factors 25
ITEM 2 Unregistered Sales of Equity Securities and
Use of Proceeds 28
ITEM 3 Defaults Upon Senior Securities 28
ITEM 4 Submission of Matters to a Vote of Security Holders 28
ITEM 5 Other Information 28
ITEM 6 Exhibits 28
SIGNATURES 29
2
SIMTEK CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except par value and share amounts)
ASSETS
------
September 30, 2006 December 31, 2005
------------------ -----------------
(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 3,653 $ 1,766
Restricted investments 1,775 2,281
Accounts receivable - trade, net 5,051 1,456
Inventory, net 5,394 2,068
Prepaid expenses and other current assets 401 99
Deposits - 600
------------- ------------
Total current assets 16,274 8,270
EQUIPMENT AND FURNITURE, net 1,128 571
DEFERRED FINANCING COSTS AND DEBT ISSUANCE COSTS 127 111
GOODWILL 992 876
NON-COMPETITION AGREEMENT 7,571 8,910
OTHER ASSETS 41 20
------------- ------------
TOTAL ASSETS $ 26,133 $ 18,758
============= ============
LIABILITES AND SHAREHOLDERS' EQUITY
-----------------------------------
CURRENT LIABILITIES:
Accounts payable $ 3,287 $ 2,822
Accrued expenses 1,237 1,419
Accrued vacation payable 200 145
Accrued wages 230 40
Obligation under capital leases - 13
Line of credit 917 -
Debentures, current 480 240
------------- ------------
Total current liabilities 6,351 4,679
DEBENTURES, NET OF CURRENT 2,220 2,760
------------- ------------
Total liabilities 8,571 7,439
Temporary equity, 8,028,170 shares of common stock,
$0.0001 par value, subject to penalties under
registration rights agreements, net of financing
costs of $708 14,847 8,459
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.0001 par value; 200,000 shares authorized,
none issued - -
Common stock, $.0001 par value; 30,000,000 shares authorized,
8,005,903 and 8,006,903 shares issued and outstanding
at September 30, 2006 and 7,817,082 and 7,818,082 shares
issued and outstanding at December 31, 2005, excluding
temporary equity 1 1
Additional paid-in capital 51,430 49,051
Treasury stock, at cost; 1,000 shares (1) (1)
Accumulated deficit (48,795) (46,191)
Accumulated other comprehensive income:
Cumulative translation adjustment 80 -
------------- ------------
Total shareholders' equity 2,715 2,860
------------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 26,133 $ 18,758
============= ============
The accompanying notes are an integral part of these financial statements.
3
SIMTEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------- --------------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
REVENUE:
Product sales, net $ 8,251 $ 2,412 $ 19,436 $ 7,591
Royalty revenue -- -- 1,518 --
------------ ------------ ------------ ------------
Total revenue 8,251 2,412 20,954 7,591
Cost of sales 4,979 1,807 13,016 5,490
------------ ------------ ------------ ------------
GROSS PROFIT 3,272 605 7,938 2,101
OPERATING EXPENSES:
Research and development costs 1,351 1,572 4,578 4,697
Sales and marketing 1,250 321 3,233 1,164
General and administrative 838 412 2,595 1,759
------------ ------------ ------------ ------------
Total operating expenses 3,439 2,305 10,406 7,620
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (167) (1,700) (2,468) (5,519)
OTHER INCOME (EXPENSE):
Interest income 36 45 112 56
Interest expense (113) (63) (247) (177)
Exchange rate variance (7) -- (4) --
Other income (expense) 2 -- 2 (1)
------------ ------------ ------------ ------------
Total other expense (82) (18) (137) (122)
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES (249) (1,718) (2,605) (5,641)
Provision for income taxes -- -- -- --
------------ ------------ ------------ ------------
LOSS FROM CONTINUING OPERATIONS (249) (1,718) (2,605) (5,641)
INCOME FROM DISCONTINUED OPERATIONS
(including gain on disposal of $1,689) -- 1,701 -- 1,706
------------ ------------ ------------ ------------
NET LOSS $ (249) $ (17) $ (2,605) $ (3,935)
============ ============ ============ ============
NET LOSS PER COMMON SHARE:
Basic and diluted
Loss from continuing operations $ (.02) $ (.24) $ (.18) $ (.84)
Income (Loss) from discontinued
operations (.00) .24 (.00) .25
------------ ------------ ------------ ------------
Total $ (.02) $ (.00) $ (.18) $ (.59)
============ ============ ============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic and diluted 14,966,916 7,073,599 14,791,191 6,713,113
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
4
SIMTEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(Amounts in thousands)
Nine Months Ended September 30,
-------------------------------
2006 2005
---------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(2,605) $(3,935)
Income from discontinued operations -- (17)
Adjustments to reconcile net loss to net cash used in operating
Activities:
Depreciation and amortization 361 326
Expense related to stock options 417 --
Issuance of common stock per compensation
agreements 53 139
Expense related to issuance of warrants -- 5
Gain from discontinued operations -- (1,689)
Amortization of non-competition agreement 1,339 --
Net change in allowance accounts 577 64
Deferred financing fees 37 12
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (3,687) 1,447
Inventory (3,799) 575
Prepaid expenses and other 282 (163)
Increase (decrease) in:
Accounts payable 461 (366)
Accrued expenses 996 663
------- -------
Net cash used in operating activities of continuing operations (5,568) (2,939)
Net cash provided by operating activities of discontinued operations -- 104
------- -------
Net cash used in operating activities (5,568) (2,835)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and furniture, net (914) (207)
Proceeds from discontinued operations, net -- 1,867
Purchase of certain assets from ZMD (116) --
------- -------
Net cash provided by (used in) investing activities of
continuing operations (1,030) 1,660
Net cash used in investing activities of discontinued operations -- (36)
------- -------
Net cash provided by (used in) investing activities (1,030) 1,624
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligation (13) (37)
Receipts from restricted cash 200 --
Funds received from December 2005 equity financing, net 1,874 --
Warrants issued for license rights 1,478 --
Equity financing, net -- 3,944
Transfer to restricted investment -- (3,200)
Proceeds from sale of common stock -- 108
Payments from restricted investment 306 355
Funds received from September 2006 equity financing, net 4,515 --
Exercise of stock options 78 197
------- -------
Net cash provided by financing activities 8,438 1,367
------- -------
Effect of exchange rate changes on cash 47 --
------- -------
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,887 156
CASH AND CASH EQUIVALENTS, beginning of period 1,766 2,147
------- -------
CASH AND CASH EQUIVALENTS, end of period $ 3,653 $ 2,303
======= =======
Cash Paid for interest $ 222 $ 172
======= =======
Warrants issued for debt issuance cost $ 53 $ --
======= =======
Conversion of debentures $ 300 $ --
======= =======
The accompanying notes are an integral part of these financial statements.
5
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated financial statements include the accounts of Simtek and
its wholly owned subsidiaries. Intercompany accounts and transactions have been
eliminated. The financial statements included herein are presented in accordance
with the requirements of Form 10-Q and consequently do not include all of the
disclosures normally made in the registrant's annual Form 10-K filing. These
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Annual Report and Form
10-K and Annual Report and Form 10-K/A for Simtek Corporation ("Simtek" or the
"Company") filed on April 7, 2006 and April 28, 2006, respectively for fiscal
year 2005.
In the opinion of management, the unaudited financial statements reflect
all adjustments of a normal recurring nature necessary to present a fair
statement of the results of operations for the respective interim periods. The
year-end balance sheet data was derived from audited financial statements, but
does not include all disclosures required by accounting principles generally
accepted in the United States of America. Results of operations for the interim
periods are not necessarily indicative of the results of operations for the full
fiscal year.
On October 5, 2006, Simtek completed a 1 for 10 reverse stock split. All
share and per share amounts have been restated to reflect the effect of the
reverse stock split as if it had occurred as of the balance sheet date or as of
the beginning of each fiscal period presented. In addition, on October 5, 2006,
Simtek converted from a Colorado corporation to a Delaware corporation. This
reincorporation had no effect on the consolidated financial statements.
Stock-Based Compensation
------------------------
Effective January 1, 2006, the Company adopted the fair value recognition
provisions of Statement of Financial Accounting Standard 123(R) "Share-Based
Payment" ("SFAS 123(R)") using the modified prospective transition method. In
addition, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 107 "Share-Based Payment" ("SAB 107") in March, 2005, which
provides supplemental SFAS 123(R) application guidance based on the views of the
SEC. Under the modified prospective transition method, compensation cost
recognized in the three and nine month periods ending September 30, 2006
includes: (a) compensation cost for all share-based payments granted prior to,
but not yet vested as of January 1, 2006, based on the grant date fair value
estimated in accordance with the original provisions of SFAS No. 123, and (b)
compensation cost for all share-based payments granted beginning January 1,
2006, based on the grant date fair value estimated in accordance with the
provisions of SFAS 123(R). In accordance with the modified prospective
transition method, results for prior periods have not been restated.
The adoption of SFAS 123(R) resulted in stock compensation expense for the
three months and nine months ended September 30, 2006 of $139,000 and $417,000,
respectively to loss from continuing operations and loss before income taxes.
The Company did not recognize a tax benefit from the stock compensation expense
because the Company considers it is more likely than not that the related
deferred tax assets, which have been reduced by a full valuation allowance, will
not be realized. The following table summarizes the effects of the share-based
compensation resulting from the application of SFAS No. 123(R) to options
granted under the Company's stock option plan.
6
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Nine Months
Ended Ended
September 30, 2006 September 30, 2006
------------------ ------------------
(In thousands except per share amounts)
Research and development $ 43 $ 129
Sales and marketing 20 60
General and administrative 76 228
--------- ---------
Share-based compensation effect on loss from continuing
operations before provision for income taxes $ 139 $ 417
Provision for income taxes - -
--------- ----------
Net share-based compensation effects on net loss $ 139 $ 417
========= =========
Share-based compensation effects on basic and diluted loss
per common share $ .01 $ .03
========= ==========
Share-based compensation effects on cash flow from
operations $ 139 $ 417
========= =========
The Black-Scholes option-pricing model was used to estimate the option fair
values. The option-pricing model requires a number of assumptions, of which the
most significant are expected stock price volatility and the expected option
term (the amount of time from the grant date until the options are exercised or
expire). Expected volatility was calculated based upon actual historical stock
price movements over the most recent periods ending September 30, 2006 equal to
the expected option term. In accordance with SFAS No. 123(R), the Company
adjusts share-based compensation on a quarterly basis for changes to the
estimate of expected forfeitures based on actual forfeiture experience. The
effect of adjusting the forfeiture rate for all expense amortization after
January 1, 2006 is recognized in the period the forfeiture estimate is changed.
The effect of forfeiture adjustments in the three and nine months ended
September 30, 2006 was insignificant. The expected option term was calculated
using the "simplified" method permitted by SAB 107.
SFAS 123(R) requires tax benefits resulting from tax deductions in excess
of the compensation cost recognized for those options ("excess tax benefits") to
be classified and reported as both an operating cash outflow and a financing
cash inflow upon adoption of SFAS 123(R). As discussed in Note 7 - Taxes from
the Company's report on Form 10-K for the period ending December 31, 2005, as a
result of the Company's net operating losses, the excess tax benefits that would
otherwise be available to reduce income taxes payable have the effect of
increasing the Company's net operating loss carry forwards. Accordingly, because
the Company is not able to realize these excess tax benefits, such benefits have
not been recognized in the condensed statement of cash flow for the nine months
ended September 30, 2006.
Pro-Forma Stock Compensation Expense for the three and nine months Ended
September 30, 2005
Prior to January 1, 2006, as permitted under the SFAS No. 123, Accounting
for Stock-Based Compensation, the Company accounted for its stock-based
compensation in accordance with the provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees. As such,
compensation expense was recorded on the date of grant if the current market
price of the underlying stock exceeded the exercise price. Certain pro forma net
loss and EPS disclosures for employee stock option grants are included below as
if the fair value method as defined in SFAS No. 123 had been applied.
Transactions in equity instruments with non-employees for goods or services are
accounted for by the fair value method. Had compensation cost been determined
based on the fair value at the grant dates for awards under employee stock based
compensation plans consistent with the fair value method for the three and nine
months ending September 30, 2005, the Company's net loss and net loss per share
would have been increased to the pro forma amounts indicated below.
7
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2005 2005
---- ----
(In thousands except per share amounts)
Net loss as reported $ (17) $ (3,935)
Add: Stock based compensation included in reported
Net loss - -
Deduct: Fair value of stock based compensation (363) (1,091)
------------ ------------
Proforma net loss $ (380) $ (5,026)
============ ============
Net loss as reported - basic and diluted $ (.00) $ (.06)
Proforma net loss - basic and diluted $ (.01) $ (.07)
In accordance with the modified prospective transition method of SFAS
123(R), the prior comparative quarterly results have not been restated.
Stock Options as of the three and nine month periods ended September 30, 2006
The Company adopted a Non-Qualified Stock Option Plan in 1994, as amended,
that authorizes 2,060,000 non-qualified stock options that may be granted to
directors, employees, and consultants. The plan permits the issuance of
non-statutory options and provides for a minimum exercise price equal to 100% of
the fair market value of the Company's common stock on the date of grant. The
maximum term of options granted under the plan are 10 years and options granted
to employees expire three months after the termination of employment. In 2004,
the Non-Qualified Stock Option Plan was extended for 10 more years.
The following table summarizes stock options outstanding and changes during
the nine months ended September 30, 2006:
Outstanding Options
---------------------------------------------------------------
Weighted
Average
Remaining
Weghted Contractual Aggregate
Average Term Intrinsic
Number of Shares Exercise Price (in years) Value(1)
---------------- -------------- ------------ ----------
Options outstanding at January 1, 2006................... 796,937 $6.20
Granted................................................ 428,585 3.46
Exercised.............................................. (40,583) (1.89) $ 68
Cancelled or forfeited................................. (31,678) (9.46)
--------- -----
Options outstanding at September 30, 2006................ 1,153,261 $5.21 4.068
========= ===== ===== ====
Options exercisable at September 30, 2006................ 568,095 $6.34 4.068 $ 68
========= ===== ===== ====
- ----------------
(1) Represents the difference between the exercise price and the value of
Simtek stock at the time of exercise.
8
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Stock options outstanding and currently exercisable at September 30, 2006 are as
follows:
Outstanding Exercisable
- ------------------------------------------------------------------ ------------------------------
Weighted Average
------------------------------------------------
Remaining Weighted Weighted
Number Contractual Life Average Number Average
Exercise Price Outstanding in Months Exercise Price Exercsisable Exercise Price
- -------------- ----------- ---------------- -------------- ------------ --------------
$1.40-$3.50 369,426 48 $ 2.94 110,197 $ 2.41
$3.65-$6.00 456,189 58 $ 4.48 191,147 $ 4.48
$6.20-$9.00 222,912 54 $ 6.57 162,017 $ 6.56
$11.25-$15.00 82,234 28 $ 12.37 82,234 $ 12.37
$15.30-$19.00 22,500 55 $ 17.77 22,500 $ 17.77
--------- -------
1,153,261 568,095
========= =======
Total estimated unrecognized compensation cost from unvested stock options
as of September 30, 2006 was approximately $1.5 million, which is expected to be
recognized over the next four years.
The weighted average per share fair value of stock options granted during
the three months ending September 30, 2006 and 2005 were $3.00 and $2.30,
respectively. The weighted average per share fair value stock options granted
during the nine months ending September 30, 2006 and 2005 were $2.30 and $3.70,
respectively. The fair value was estimated as of the grant date using the
Black-Scholes option pricing model with the following assumptions:
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
--------------------- -------------------
Volatility 79.38% 85.28% 80.22% 84.32%
Expected option term 5 years 4 years 4.80 years 4 years
Risk-free interest rate 5.33% 4.00% 5.02% 3.75%
Expected dividend yield 0% 0% 0% 0%
Modifications of Stock Options Granted
In May 2005, the Company accelerated vesting of certain unvested and
out-of-the-money stock options previously awarded to employees and officers.
Because the price of the Company's common stock was $5.70 on the day of
acceleration, the options, which are exercisable at $6.20 and above, had no
economic value on the date of acceleration. As a result of the acceleration,
options to purchase approximately 170,000 shares of Simtek common stock are now
exercisable. Options held by non-employee directors were excluded from the
vesting acceleration.
Non-competition Agreement
-------------------------
In December 2005, the Company entered into a non-competition agreement with
Zentrum Mikroelektronik Dresden AG ("ZMD") as part of the acquisition of ZMD's
nvSRAM product line. The Company assigned a value of $8,910,000 to the
non-competition agreement in December 2005. The value assigned to the
9
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
non-competition agreement is being amortized on a straight-line basis over its
five-year life. The Company recorded an expense for the amortization of
approximately $1,339,000 to sales and marketing for the nine months ended
September 30, 2006.
Goodwill
--------
Goodwill represents the excess of the total amount paid to ZMD for the
nvSRAM assets acquired on December 30, 2005 and the fair value assigned to
specific assets. This amount will not be amortized, but will be reviewed for
impairment on a periodic basis. As of September 30, 2006 no impairment of value
has been recorded.
Accumulated other comprehensive income (loss)
---------------------------------------------
The functional currency for Simtek GmbH is the local currency, the Euro.
Assets and liabilities for this foreign subsidiary are translated at the
exchange rate in effect at the balance sheet date, and income and expenses are
translated at average exchange rates prevailing during the period. Translation
gains or losses are included within shareholders' equity as part of accumulated
other comprehensive income (loss). As of September 30, 2006, the Company
recorded approximately $80,000 in comprehensive income.
2. Liquidity
During the three and nine months ended September 30, 2006 and the twelve
months ended December 31, 2005, the Company incurred net losses from continuing
operations of approximately $249,000, $2,605,000 and $7,490,000, respectively
and has an accumulated deficit of $48,795,000 as of September 30, 2006. The
Company was also not in compliance with its debentures throughout 2005 and the
first nine months of 2006, but was successful in obtaining waivers through
October 1, 2007 from the debenture holders. The Company has working capital of
approximately $9,923,000 as of September 30, 2006.
The Company operates in a volatile industry, whereby its average selling
prices and product costs are influenced by competitive factors. Furthermore, the
Company continues to incur significant research and development costs for
product development. These factors create pressures on sales, costs, earnings
and cash flows, which will impact liquidity.
On September 21, 2006, the Company raised gross proceeds of $4,555,000 in a
private placement. The Company issued 1,153,171 shares of our common stock at a
per share price of $3.95 and 172,981 warrants to purchase common stock. The
warrants have a per share exercise price of $5.40 and a five-year term. The
Company anticipates using the proceeds for general working capital and to
produce silicon wafers to support revenue growth. The shares have been included
in the Consolidated Balance Sheet as Temporary Equity, because of the potential
penalties associated with the Registration Rights Agreement.
3. Recent Accounting Pronouncements
In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes ("FIN 48"). The interpretation clarifies the
accounting for uncertainty in income taxes recognized in a company's financial
statements in accordance with Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes. Specifically, the pronouncement prescribes a
recognition threshold and a measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. The interpretation also provides guidance on the related
derecognition, classification, interest and penalties, accounting for interim
periods, disclosure and transition of uncertain tax positions. The
interpretation is effective for fiscal years beginning after December 15, 2006.
The adoption of FIN 48 is expected to have an immaterial impact on the Company's
consolidated financial position, results of operations or cash flows.
In September 2006, the FASB issued Statement of Financial Accounting
Standards No. 157, "Fair Value Measurements" ("FAS 157"). This Statement defines
fair value as used in numerous accounting pronouncements, establishes a
10
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
framework for measuring fair value in generally accepted accounting principles
and expands disclosure related to the use of fair value measures in financial
statements. The Statement is to be effective for the Company's financial
statements issued in 2008; however, earlier application is encouraged. The
Company is currently evaluating the timing of adoption and the impact that
adoption might have on its financial position or results of operations.
In September 2006, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 108 ("SAB 108"). Due to diversity in practice
among registrants, SAB 108 expresses SEC staff views regarding the process by
which misstatements in financial statements are evaluated for purposes of
determining whether financial statement restatement is necessary. SAB 108 is
effective for fiscal years ending after November 15, 2006, and early application
is encouraged. The Company does not believe SAB 108 will have a material impact
on its financial position or results from operations.
In February 2006, the FASB issued SFAS No. 155, Accounting for Certain
Hybrid Financial Instruments ("SFAS 155"), which amends SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities and SFAS No. 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities. SFAS 155 simplifies the accounting for certain derivatives embedded
in other financial instruments by allowing them to be accounted for as a whole
if the holder elects to account for the whole instrument on a fair value basis.
The statement also clarifies and amends certain other provisions of SFAS No. 133
and SFAS No. 140. SFAS 155 is effective for all financial instruments acquired,
issued, or subject to a remeasurement event occurring in fiscal years beginning
after September 15, 2006. We do not expect the adoption of SFAS 155 to have an
impact on our results of operations or financial condition.
4. Revenue Recognition
Revenue Recognition - Product sales revenue is recognized when a valid
purchase order has been received with a fixed price and the products are shipped
to customers FOB origin (Colorado Springs, Colorado or Dresden, Germany),
including distributors. Based on historic business with the majority of the
Company's customers and, in the case of new customers, the Company is reasonably
assured that collectibility on our shipments will occur. Customers receive a
one-year product warranty and sales to distributors are subject to a limited
product exchange program and a price protection in the event of changes in the
Company's product price. The Company provides a reserve for possible product
returns, product price protection and warranty costs at the time the sale is
recognized. The Company has a detailed procedure to ensure that its estimates
for reserves are reasonable and reliable. The reserve for product returns is
based on the actual inventory value of the Company's semiconductor products held
by its distributors. The Company's distributors are permitted to rotate up to 5%
of their stock every six months with the stipulation that they must submit a
replacement order of equal dollar value to the stock that they are returning.
The reserve for price protection is used when the Company authorizes special
pricing to one of its distributors for a specific customer. To date, the
estimates have not been materially different from the credits the Company has
issued under these reserves.
Revenue from royalties related to non-refundable prepaid royalty payments
is recognized upon receipt. Revenue from royalties related to sales of products
by license partners is recognized upon the notification to us of shipment of
product from the Company's technology license partners to direct customers.
5. Inventories
The Company records inventory using the lower of cost (first-in, first-out)
or market. Inventory at September 30, 2006 and December 31, 2005 included:
11
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2006 December 31, 2005
(In thousands)
Raw Materials $ 51 $ 33
Work in progress 4,011 1,096
Finished Goods 1,932 1,056
--------- ---------
5,994 2,185
Less reserves for excess inventory (600) (117)
--------- ----------
$ 5,394 $ 2,068
========= =========
6. Line of Credit
On June 2, 2006, the Company secured a $3.6 million revolving line of
credit by entering into an Account Purchase Agreement (the "Agreement") with
Wells Fargo Bank, National Association ("Wells Fargo"). Pursuant to the
Agreement, the Company may sell up to $3.6 million of eligible accounts
receivable to Wells Fargo. Advances are limited to 80% of the eligible
receivables. The amount actually collected on any receivable by Wells Fargo that
is beyond the advance will be forwarded to the Company, less certain discounts
and fees retained by Wells Fargo (including a minimum fee of $7,500 per month
for the term of the Agreement). To secure the Company's obligations under the
Agreement, the Company granted Wells Fargo a security interest in certain of the
Company's property. The Agreement has a term of two years, but may be terminated
at any time by the Company upon 60 days' written notice. As of September 30,
2006, the Company had financed receivables with Wells Fargo for approximately
$917,000.
7. Convertible Debentures
On July 1, 2002, the Company received funding of $3,000,000 in a financing
transaction with Renaissance Capital Growth & Income Fund III, Inc., Renaissance
US Growth Investment Trust PLC and US Special Opportunities Trust PLC. RENN
Capital Group, Inc. is the agent for the RENN investment funds. One of the
Company's directors holds the position of Senior Vice President of RENN Capital
Group. The $3,000,000 funding consists of convertible debentures with a 7-year
term at a 7.5% per annum interest rate. Each fund equally invested $1,000,000.
The holder of the debenture shall have the right, at any time, to convert all,
or in multiples of $100,000, any part of the Debenture into fully paid and
nonassessable shares of Simtek Corporation common stock. The debentures were
originally convertible into Simtek common stock at $3.12 per share, which was in
excess of the market price per share on July 1, 2002. At March 31, 2006, the
Company was not in compliance with two of the covenants set forth in the loan
agreement. In order to obtain a waiver for the covenants, the Company issued the
debenture holders a total of 5,000 warrants for receipt of the waiver. Through
September 30, 2006, the Company was not in compliance with two of the covenants
set forth in the loan agreement. These covenants relate to the interest coverage
ratio and debt to equity ratio. On November 10, 2006, the Company received a
waiver for the two covenants through October 1, 2007. However, significant
variances in future actual operations from the Company's current estimates could
result in the reclassification of this note to current liabilities. The
Convertible Debentures allows for an adjustment in the conversion price, if the
Company issues Common Stock in connection with an equity financing, where the
sale price is less than the conversion price of $3.12. This occurred in December
2005 in connection with the common stock sale of $11,000,000 at a price of $1.60
per share. Pursuant to the terms of the 2002 convertible debentures, the Company
agreed with the RENN Capital Group that the conversion price would be reduced to
$2.20 per share. Based on the conversion rate of $2.20 per share, each RENN
investment fund is entitled to 409,091 shares upon conversion.
On June 28, 2005, the Company received a waiver from the debenture holders
extending until July 1, 2006 the commencement date for principal payments of the
$3 million aggregate principal amount. The original terms of the debentures
required the Company to make monthly principal payments of $10 per $1,000 of the
then remaining principal amount, beginning on June 28, 2005. The Company will
12
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
still be required to make interest payments. Under the terms of the waiver,
monthly principal payments of $13.33 per $1,000 of the then remaining
outstanding principal amount were to commence on July 1, 2006. The final
maturity date remains as June 28, 2009. As consideration for the extension, the
Company has issued to the debenture holders warrants to purchase 20,000 shares
of Simtek common stock at $5.00 per share, a premium to the market price on the
date of the waiver. The Company estimated the value of the warrants at the time
of grant, using the Black Scholes option-pricing model, to be approximately
$62,000. The Company recognized $12,000 as additional interest expense for the
nine months ending September 30, 2006. On July 24, 2006, each of the debenture
holders converted $100,000 of the amount due into 45,455 shares of the Company's
common stock in lieu of the Company making the principal payment it was required
to make on July 1, 2006.
8. Non-Refundable Prepaid Royalties
On March 24, 2006, the Company entered into a License and Development
Agreement with Cypress pursuant to which, among other things, Cypress agreed to
license certain intellectual property from the Company to develop and
manufacture standard, custom and embedded nvSRAM products and Cypress has agreed
to pay to the Company $4,000,000 in non-refundable pre-paid royalties of which
$2 million was paid upon signing of the agreement and $1 million was paid on
June 30, 2006 and $1 million will be paid on December 31, 2006. In addition, the
Company licensed rights to use certain intellectual property from Cypress for
use in its products. As part of the License and Development Agreement, the
Company agreed to issue Cypress warrants to purchase 2 million shares of the
Company's common stock for $7.50 per share. The warrants have a ten year life.
The warrants will be issued upon receipt of each of the prepaid royalty amounts.
As of September 30, 2006, the Company had received $3,000,000 from Cypress in
pre-paid royalties, in exchange for which the Company has issued warrants to
purchase 1.5 million shares of common stock. The value of the warrants issued of
$1,482,000 was determined by an independent valuation firm and has been recorded
as an increase in additional paid in capital. The net balance of the
non-refundable prepaid royalties of $1,035,000 for the March 31, 2006 payment
and $483,000 for the June 30, 2006 payment were recognized as revenue at the
time the payments were received.
9. Geographic Concentration
Sales of the Company's semiconductor products by location for the three
month and nine month periods ended September 30, 2006 and 2005 were as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2006 2005 2006 2005
---- ---- ---- ----
United States 29% 29% 23% 27%
Europe 23% 20% 27% 19%
Far East 41% 43% 42% 44%
All Others 7% 8% 8% 10%
----- ----- ----- -----
100% 100% 100% 100%
===== ===== ===== =====
13
SIMTEK CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
10. Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) net of tax is as follows:
Foreign Currency
Translation Adjustment
Balance at January 1, 2006 $ -
Current period change 80
---------
Balance September 30, 2006 $ 80
=========
11. Discontinued Operation
On August 30, 2005, the Company, along with the Company's wholly-owned
subsidiary, Q-DOT, Inc. ("Q-DOT"), entered into an Asset Purchase Agreement with
Hittite Microwave Corporation ("Hittite") and a wholly-owned subsidiary of
Hittite, HMC Acquisition Corporation ("HMC Acquisition"), whereby substantially
all of the assets of Q-DOT were sold to HMC Acquisition in exchange for a cash
payment of approximately $2.2 million. The Company realized a net gain of
approximately $1,689,000. In addition, Hittite assumed certain future
obligations of Q-DOT, including obligations related to Q-DOT's real estate lease
and certain software license agreements. Incident to the Asset Purchase
Agreement, the parties also entered an Escrow Agreement, whereby $200,000 of the
purchase price was placed in escrow for one year to secure certain
indemnification obligations of Simtek and Q-DOT. In addition, the parties
entered into a Confidentiality, Non-Disclosure and Restrictive Covenant
Agreement, whereby, among other things, Simtek and Q-DOT agreed not to compete
against Hittite and HMC Acquisition for a period of four years with respect to
certain businesses relating to Q-DOT's operations. On September 1, 2006, the
Company received the $200,000 that was placed in the escrow account.
In accordance with SFAS No. 144, the consolidated financial statements of
the Company have been recast to present this business as a discontinued
operation. Accordingly, the revenues, the costs and expenses and assets and
liabilities of the discontinued operation have been excluded from the respective
captions in the accompanying Consolidated Statements of Operations and
Consolidated Balance Sheets. In addition, certain of the Notes to the
Consolidated Financial Statements have been recast for all periods to reflect
the discontinuance of this operation.
14
SIMTEK CORPORATION
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis in this quarterly report on Form 10-Q
is intended to provide greater details of the results of operations and
financial condition of our Company. The following discussion should be read in
conjunction with our condensed consolidated financial statements and notes
thereto and other financial data included elsewhere herein. Certain statements
under this caption constitute forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The reader should not place undue reliance on these forward looking
statements for many reasons including those risks discussed in this document. In
addition, when used in this quarterly report, the words "believes,"
"anticipates," "expects," "plans," "intends" and similar expressions are
intended to identify forward-looking statements. Forward-looking statements and
statements of expectations, plans and intent are subject to a number of risks
and uncertainties. Actual results in the future could differ materially from
those described in the forward-looking statements, as a result, among other
things, of changes in technology, customer requirements and needs. We undertake
no obligation to release publicly the results of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America, which
require us to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and the related disclosures. Our
accounting policies are discussed in Note 1 of the Notes to Consolidated
Financial Statements included in our 2005 Form 10-K. The estimates used by us
are based upon our historical experiences combined with our understanding of
current facts and circumstances. Certain of our accounting polices are
considered critical as they are both important to the portrayal of our financial
condition and the results of our operations and require significant or complex
judgments on our part. We believe that the following represent the critical
accounting policies of Simtek as described in Financial Reporting Release No.
60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies,
which was issued by the Securities and Exchange Commission: inventories;
deferred income taxes; allowance for doubtful accounts; and, allowance for sales
returns.
Product sales revenue is recognized when a valid purchase order has been
received with a fixed price and the products are shipped to customers FOB origin
(Colorado Springs, Colorado or Dresden, Germany), including distributors. Based
on historic business with the majority of our customers and, in the case of new
customers, we are reasonably assured that collectibility on our shipments will
occur.
Revenue from royalties related to non-refundable prepaid royalty payments
is recognized upon receipt. Revenue from royalties related to sales of products
by license partners is recognized upon the notification to us of shipment of
product from our technology license partners to direct customers and
collectibility is reasonable assured.
The allowance for doubtful accounts reflects a reserve that reduces
customer accounts receivable to the net amount estimated to be collectible.
Estimating the credit worthiness of customers and the recoverability of customer
accounts requires management to exercise considerable judgment. In estimating
uncollectible amounts, we consider factors such as industry specific economic
conditions, historical customer performance and anticipated customer
performance. While we believe our processes to be adequate to effectively
quantify our exposure to doubtful accounts, changes in industry or specific
customer conditions may require us to adjust our allowance for doubtful
accounts.
15
SIMTEK CORPORATION
We record an allowance for sales returns as a net adjustment to customer
accounts receivable. The allowance for sales returns consists of two separate
segments, distributor stock rotation and distributor price reductions. When we
record the allowance, the net method reduces customer accounts receivables and
gross sales. Generally, we calculate the stock rotation portion of the allowance
based upon actual reported distributor inventory levels. The contracts we have
with certain of our distributors generally allow them to return to us 5% percent
of their inventory every 6 months, in exchange for inventory that better meets
their demands. At times, our distributors reduce the selling price of a specific
device in order to meet competition related to a specific end customer program,
which we support through a credit back to the distributor for that specific
program. When this occurs, we record an allowance for potential credit that our
distributors will be requesting. This allowance is based on approved pricing
changes, inventory affected and historical data. We believe that our processes
to adequately predict our allowance for sales returns are effective in
quantifying our exposures due to industry or specific customer conditions.
We record an allowance that directly relates to the warranty of our
products for one year. The allowance for warranty return reduces our gross
sales. This allowance is calculated by looking at annual revenues and historical
rates of our products returned due to warranty issues. While we believe this
process adequately predicts our allowance for warranty returns, changes in the
manufacturing or design of our product could materially affect valuation of our
warranties.
The valuation of inventories involves complex judgments on our part. Excess
finished goods inventories are a natural component of market demand of
semiconductor devices. We continually evaluate and balance the levels of
inventories based on sales projections, current orders scheduled for future
delivery and historical product demand. While certain finished goods items will
sell out, quantities of other finished goods items will remain. These finished
goods are reserved as excess inventory. We believe we have adequate controls
with respect to the amount of finished goods inventories that are anticipated to
become excess. While we believe this process produces a fair valuation of
inventories, changes in general economic conditions of the semiconductor
industry could materially affect valuation of our inventories.
We assess the impairment of long-lived assets when events or changes in
circumstances indicate that the carrying value of the assets may not be
recoverable. Factors that we consider in deciding when to perform an impairment
review include significant under-performance of the business in relation to
expectations, significant negative industry or economic trends, and significant
changes or planned changes in our use of the assets. Recoverability of assets
that will continue to be used in our operations is measured by comparing the
carrying amount of the assets to our estimate of the related future net cash
flows. If the asset's carrying amount is not recoverable through the related
cash flows, the asset is considered to be impaired. The impairment is measured
by the difference between the asset's carrying amount and its fair value, based
on the best information available, including market prices or discounted cash
flows.
Goodwill represents the excess of the purchase price over the fair value of
identifiable net tangible and intangible assets acquired in the acquisition of
the nvSRAM assets from ZMD. Goodwill is required to be tested for impairment.
This assessment requires estimates of future revenue, operating results and cash
flows, as well as estimates of critical valuation inputs such as discount rates,
terminal values and similar data. We will continue to perform periodic and
annual impairment analyses of goodwill. As a result of such impairment analyses,
impairment charges may be recorded and may have a material adverse impact on our
financial position and operating results. Additionally, we may make strategic
business decisions in future periods which impact the fair value of goodwill,
which could result in significant impairment charges. There can be no assurance
that future goodwill impairments will not occur.
We have recorded a valuation allowance on deferred tax assets. Future
operations may change our estimate in connection with potential utilization of
these assets.
16
SIMTEK CORPORATION
Overview
Total revenue for the three and nine months ended September 30, 2006 was
$8.3 million and $21.0 million, respectively, including $1.5 million of royalty
revenue for the nine months ended September 30, 2006. Total unit shipments of
our semiconductor memory products increased in both the three and nine month
periods compared to the 2005 periods. Our net product revenue was $8,251,000 and
$19,436,000 for the three and nine months ended September 30, 2006,
respectively, up from $2,412,000 and $7,591,000 for the comparable periods of
2005, an approximate 242% and 156% increase, respectively. This increase was due
primarily to increased product demand and the addition of revenue from customers
previously serviced by ZMD prior to the acquisition of the nvSRAM product line
from ZMD in December 2005.
Increased operating expenses had an impact on our profitability for the
three and nine months ended September 30, 2006 compared to the three and nine
months ended September 30, 2005. The increase in operating expenses includes
non-cash charges of $446,000 and $1,339,000 for amortization of the non-compete
agreement with ZMD and $139,000 and $417,000 for expenses related to employee
stock options, for the three and nine months ended September 30, 2006,
respectively. Operating expenses also included first-time operating expenses of
$580,000 and $1,074,000 for our European subsidiary, Simtek GmbH, for the three
and nine months ended September 30, 2006, respectively.
Simtek reported a net loss for the three months ended September 30, 2006 of
$249,000. However, excluding the amortization of the non-compete agreement with
ZMD of $446,000 and expense related to stock options of $139,000, Simtek
achieved a net profit of $317,000 for the quarter. This non-GAAP measure of
financial performance is important because it highlights the progress Simtek has
made in improving its operating results. The non-GAAP results are also directly
comparable to the third quarter of 2005 in which Simtek posted a loss from
continuing operations of $1,718,000.
Results of Operations:
Revenues
The following table sets forth our net revenues for semiconductor devices
by product markets for the three and nine months ended September 30, 2006 and
2005 (in thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
2006 2005 Variance 2006 2005 Variance
---- ---- -------- ---- ---- --------
Commercial $ 7,754 $ 2,171 $ 5,583 $17,736 $ 6,387 $11,349
High-end industrial and
military 497 241 $ 256 $ 1,700 $ 1,204 $ 496
------- -------- ------- ------- ------- -------
Total Semiconductor
Revenue $ 8,251 $ 2,412 $ 5,839 $19,436 $ 7,591 $11,845
======= ======== ======= ======= ======= =======
Commercial revenues include revenue generated from our 0.8-micron products
built from silicon wafers received from Chartered Semiconductor or purchased as
finished units from ZMD, and from our 0.25-micron products built from silicon
wafers received from Dongbu Electronics (DBE). Commercial revenues increased by
$5,583,000 and $11,349,000 for the three and nine months ended September 30,
2006 as compared to the three and nine months ended September 30, 2005. As
stated previously, this increase was due primarily to increased unit demand and
the addition of revenue from customers previously serviced by ZMD prior to the
acquisition of the nvSRAM product line from ZMD in December 2005.
17
SIMTEK CORPORATION
High-end industrial and military product revenues accounted for an
increase of approximately $256,000 and $496,000 for the three and nine months
ended September 30, 2006 as compared to the same period in 2005. The increase
was due to the addition of new customer demand for our products and increased
pricing to certain of our customers for industrial and military products.
The following table sets forth the unit volumes for each period in thousands of
units:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
2006 2005 Variance 2006 2005 Variance
---- ---- -------- ---- ---- --------
0.8 micron 256K devices 1,551 407 1,144 4,076 1,153 2,923
0.25 micron devices 178 37 141 269 73 196
Other devices 469 166 303 1,187 571 616
----- ---- ----- ----- ----- -----
Total Units 2,198 610 1,588 5,532 1,797 3,735
===== ==== ===== ===== ===== =====
One distributor and two direct customers accounted for approximately 36%
and 28% of our revenue for the three and nine months ended September 30, 2006,
respectively. Products sold to distributors are sold without material recourse.
Distributors sell our products to various end customers. If this distributor was
to terminate its relationship with us, we believe that there would not be a
material impact on our product sales, as we believe that we would be able to
service these various end customers through other distributors.
Cost of Sales and Gross Profit
We recorded cost of sales of $4,979,000 and $13,016,000 for the three and
nine months ended September 30, 2006, respectively as compared to $1,807,000 and
$5,490,000 for the comparable periods in 2005. The resulting product gross
margin percentages for the three and nine months ended September 30, 2006 were
40% and 33%, respectively and 25% and 28% for the three and nine months ended
September 30, 2005, respectively. The overall improvement in gross margin
percentages is due to: (i) increased volume; (ii) higher overall average selling
prices; and (iii) continued cost reductions in the 1 megabit device. We expect
to see gross margins increase in the next several quarters, as average selling
prices continue to increase, unit costs for all 0.25 micron devices continues to
be reduced, and the benefits of moving final test operations offshore to more
cost effective locations.
Research and Development
In order to maintain our growth, we must continue to invest in new product
development and to increase the percentage of the overall nvRAM market that our
products serve. In July 2006, we completed full qualification of the 1 megabit
device with real time clock and the 0.25 micron 256 kilobit device both with and
without the real time clock feature. Thus all of our 0.25 micron based products
are fully qualified. We anticipate that we will continue to invest in the next
several months in continued cost reductions, yield enhancements, and back end
test efficiencies.
In May 2005, we began joint development of our next generation nvSRAM
product family, in conjunction with Cypress, pursuant to the terms of the May 5,
2005 development agreement. This new product family will be based on Cypress'
0.13-micron "S8" process and we expect it will include memory densities up to
and beyond 4-megabits. In the first half of 2006 we achieved our third major
18
SIMTEK CORPORATION
milestone under the development agreement, as scheduled. For the three and nine
months ended September 30, 2006, we recognized expenses related to the Cypress
development of $0 and $642,000, respectively. In 2005, the expense was $564,000
and $612,000 for the three and nine month periods, respectively.
As part of our strategic product development activities, on March 24, 2006,
Simtek entered into a License and Development Agreement with Cypress which
expands the agreement the two companies signed in May 2005. Under the terms of
the new agreement:
o Cypress will retain the right to include nvSRAM functionality on
future programmable system-on-chip (PSoC(TM)) and customized
integrated circuits originally granted in the May 2005 agreement, now
with clearly defined royalty payments to Simtek for the use of its
SONOS-based nvSRAM intellectual property;
o Simtek is granted the right to use certain intellectual property of
Cypress in developing future generation nvSRAM products, including the
jointly developed 0.13u SONOS-based CMOS process, advanced SRAM
intellectual property, design-related intellectual property,
design-for-manufacturability know-how and other intellectual property
related to Cypress' advanced CMOS manufacturing processes and
procedures;
o Simtek and Cypress agree to broad manufacturing support terms that
will provide Simtek with a range of industry-leading manufacturing
skills and know-how to enable cost-effective manufacturing of
leading-edge SONOS nvSRAMs;
o Simtek and Cypress will extend the deployment of Simtek's proprietary
nvSRAM technology, and work to establish SONOS as the preferred
technology for high reliability, high endurance, and scaleable
non-volatile products at 65nm and below;
o Simtek and Cypress will jointly develop and market a family of
products utilizing Simtek's patented SONOS-based non-volatile
technology for production using Cypress's advanced manufacturing
processes.
Upon signing the agreement, Simtek received $2 million from Cypress. Simtek
also received an additional payment of $1 million on June 30, 2006 and will
receive an additional payment of $1 million on December 31, 2006. The agreement
also calls for Simtek to issue warrants to Cypress to purchase a total of 2
million shares of its common stock, 1 million of which were already issued upon
the execution of the agreement, 500,000 of which were issued on June 30, 2006
upon the payment by Cypress of certain royalties and 500,000 of which are
expected to be issued on December 31, 2006 upon the payment by Cypress of
certain royalties. The warrants have, or will have, an exercise price of $7.50
per share. Simtek believes that this new agreement will accelerate the timing of
expanding nvSRAM adoption in new markets and shorten future product development
cycle time. Please read Note 8 to the Condensed Consolidated Financial
Statements for a discussion of the accounting treatment for the transactions
related to this agreement.
Total research and development expenses were $1,351,000 and $4,578,000 for
the three and nine months ended September 30, 2006, respectively, as compared to
$1,572,000 and $4,697,000 for the three and nine months ended September 30,
2005, respectively.
The $221,000 decrease for the three month period was primarily due to a
decrease in product development costs of $641,000 which included decreased costs
related to the joint development with Cypress discussed previously. The decrease
was offset by an increase in payroll related costs of $252,000, including the
engineering staff at Simtek GmbH and expenses related to stock options,
equipment related expenses of $148,000 and travel of $17,000 for engineers
traveling to and from Simtek GmbH. The decrease in product development costs was
due to the timing of costs related to the joint development with Cypress
The $119,000 decrease for the nine month period was primarily due to a
decrease of $768,000 for the charges related to the development of our .25
19
SIMTEK CORPORATION
micron product that we incurred in 2005 and a decrease of $61,000 related to
contract services. These decreases were partially offset by increases in payroll
related costs of $571,000, and travel of $72,000.
General and Administration
Total general and administration expenses were $838,000 and $2,595,000 for
the three and nine months ended September 30, 2006, respectively, as compared to
$412,000 and $1,759,000, respectively, for the same periods in 2005.
The $426,000 increase for the three month period was primarily due to
increases in payroll related costs of $80,000, accounting and legal expenses of
$215,000, contract services of $14,000, travel of $28,000 and other
miscellaneous expenses of $89,000. The increases in audit and legal expenses and
contract services were primarily related to costs incurred for our securities
related work. The increase in payroll related costs were related to increased
headcount in both our Colorado Springs and Germany offices and expenses related
to stock option grants.
The $836,000 increase for the nine month period was primarily due to
increases of $498,000 in payroll related costs, $363,000 in legal and audit
fees, contract services of $81,000, travel of $103,000, bad debt expense of
$30,000 and other miscellaneous expenses of $81,000. The increases were
partially offset by a decrease of $320,000 in one-time costs related to
separation and employment agreements that were incurred in the first six months
of 2005. The increases in legal and audit fees and contract services were
primarily related to expenses related to our shareholder meeting, securities
related work and the license agreement entered into with Cypress in March 2006.
The increases in payroll and payroll overhead costs were due to increased
headcount in both our Colorado Springs and Germany offices and for the expenses
related to stock option grants.
Sales and Marketing
Total sales and marketing expenses were $1,250,000 and $3,233,000 for the
three and nine months ended September 30, 2006, respectively, as compared to
$321,000 and $1,164,000, respectively, for the same periods in 2005.
The increases for the three and nine month periods were due to the
amortization of the non-compete agreement discussed in Note 1 to the Condensed
Consolidated Financial Statements of $446,000 and $1,339,000, increase in
payroll related costs of $310,000 and $523,000, respectively, and an increase in
sales commissions of $146,000 and $181,000, respectively. The increase in
payroll related costs were directly related to increased headcount and the
increase in sales commissions was related to the higher revenue.
Loss from Continuing Operations
We recorded a net loss, from continuing operations, of $249,000 and
$2,605,000 for the three and nine months ended September 30, 2006, respectively,
as compared to $1,718,000 and $5,641,000 for the three and nine months ended
September 30, 2005, respectively. The decreases of $1,469,000 and $3,036,000 for
the three and nine month periods reflect the revenue and expense items discussed
above.
Liquidity and Capital Resources
As of September 30, 2006, we had a net working capital of $9,923,000 as
compared to a net working capital of $3,591,000 as of December 31, 2005.
20
SIMTEK CORPORATION
On September 21, 2006, we raised gross proceeds of $4,555,000 in a private
placement. We issued 1,153,171 shares of our common stock at a per share price
of $3.95 and 172,981 warrants to purchase common stock. The warrants have a per
share exercise price of $5.40 and a five-year term. We anticipate using the
proceeds for general working capital and to produce silicon wafers to support
revenue growth. The shares have been included in the Consolidated Balance Sheet
as Temporary Equity, because of the potential penalties associated with the
Registration Rights Agreement.
As discussed previously, on March 24, 2006, we entered into a License and
Development Agreement with Cypress pursuant to which, among other things,
Cypress has agreed to license certain intellectual property from us to develop
and manufacture standard, custom, and embedded nvSRAM products. Cypress agreed
to pay to Simtek royalties across all products they develop and sell which
include intellectual property licensed from Simtek. We agreed to license from
Cypress certain of their intellectual property for use in our design efforts. We
agreed with Cypress to co-develop certain nvSRAM products and Cypress has agreed
to pay us $4 million in nonrefundable prepaid royalties, $2 million of which was
received at the time the contract was executed. On June 30, 2006, we received
the second installment of $1,000,000 and the remaining $1 million is scheduled
to be paid on December 31, 2006. In addition, we agreed with Cypress to work
together to develop new products and processes. Please read Note 8 to the
Condensed Consolidated Financial Statements for a discussion of the accounting
treatment for the transactions related to this agreement.
Cash flows used in operating activities from continuing operations for the
nine months ended September 30, 2006 were $5,568,000 compared to $2,939,000 in
the same period in 2005, an increase of $2,629,000. The net increase is
primarily due to investment in working capital to support revenue growth. The
key components of the cash (uses) and sources in working capital are as follows,
in thousands of dollars:
2006 2005 Change
-------- -------- --------
Accounts receivable $(3,687) $ 1,447 $(5,134)
$
Inventory $(3,799) $ 575 $(4,374)
Accounts payable $ 466 $ (366) $ 832
The increase in working capital was partially off set by the reduction in
net loss for the 2006 period of $2.6 million from $3.9 million in the 2005
period, the amortization of the non-compete agreement in 2006 of $1.3 million
and the $1.7 million gain from discontinued operations in the 2005 period.
Cash flows used in investing activities from continuing operations
increased for the nine months ended September 30, 2006 by approximately
$2,690,000 as compared to the same period in 2005. The increase was primarily
the result of the purchase of equipment and furniture for our facility in
Germany and test equipment for our research and development, which was offset by
proceeds from discontinued operations of $1.9 million recorded in the 2005
period.
The increase of $7,071,000 in cash flows provided by financing activities
from continuing operations was primarily due to the net proceeds from our
September 2006 equity financing of $4.55 million, the value assigned to the
warrants issued to Cypress under the License and Development Agreement and
receipt of funds related to the sale of common stock completed on December 30,
2005, for which some funds were received on January 3, 2006.
21
SIMTEK CORPORATION
Short-term liquidity.
Our unrestricted cash balance at September 30, 2006 was $3,653,000.
Our future liquidity will depend on our revenue growth and our ability to
generate cash flow from operations. Through December 31, 2006, we expect to
spend approximately $4,000,000, for operating expenses and working capital. We
expect to meet these cash needs from cash generated by operations, the funds
still due to us from Cypress under the Joint Development and License Agreement,
and from our existing cash reserves and credit facility with Wells Fargo.
Management believes that the current cash reserves and additional cash generated
from operations will be sufficient to meet the cash flow needs for at least the
next twelve months.
Long-term liquidity.
The Company has experienced significant revenue growth over the nine months
ended September 30, 2006 and expects that growth trend to continue for the
foreseeable future. With the improved financial results and current cash and
credit reserves, management believes that it has sufficient capital to meet its
operating cash requirements. However, should the company identify possible
strategic opportunities, it may need to raise additional capital to exploit such
opportunities. While the Company has no specific plans, management is constantly
looking for new strategic product and technology opportunities that may provide
significant revenue growth in the future.
22
SIMTEK CORPORATION
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk represents the risk of loss that may impact our financial
position, results of operations or cash flows due to adverse changes in
financial and commodity market prices and rates. We are exposed to market risk
in the areas of changes in United States interest rates and changes in foreign
currency exchange rates as measured against the United States dollar. These
exposures are directly related to our normal operating activities. We currently
have no derivative financial instruments.
Interest payable on our convertible debentures is fixed at 7.5% over the
term of the debentures. As such, changes in interest rates will not affect
future expenses or cash flows.
We manage interest income by investing our excess cash in cash equivalents
bearing variable interest rates, which are tied to various market indices. We do
not believe that near-term changes in interest rates will result in a material
effect on future earnings, fair values or cash flows.
We do not speculate in the foreign exchange market and do not manage
exposures that arise in the normal course of business related to fluctuations in
foreign currency exchange rates by entering into offsetting positions through
the use of foreign exchange forward contracts.
Average selling prices of our products have not increased significantly as
a result of inflation during the past several years, primarily due to intense
competition within the semiconductor industry. The effect of inflation on our
costs of production has been minimized through improvements in production
efficiencies. We anticipate that these factors will continue to minimize the
effects of any foreseeable inflation and other price pressures within the
industry and markets in which we participate.
23
SIMTEK CORPORATION
ITEM 4 CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Harold Blomquist, who serves as the Company's chief executive officer, and Brian
Alleman, who serves as the Company's chief financial officer, after evaluating
the effectiveness of the Company's disclosure controls and procedures as of the
end of the period covered by this quarterly report (the "Evaluation Date")
concluded that as of the Evaluation Date, the Company's disclosure controls and
procedures were effective to ensure that information required to be disclosed by
the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported as specified in the SEC's rules and
forms and to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is accumulated and
communicated to our management to allow timely decisions regarding required
disclosure.
(b) Changes in internal control over financial reporting.
There were no changes in the Company's internal control over financial reporting
during the three months ended September 30, 2006, that have materially affected,
or are reasonably likely to materially affect, internal control over financial
reporting.
24
SIMTEK CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings -None
Item 1A. Risk Factors - The following new risk factors (each of which has
been previously disclosed) represent material changes from the old
risk factors set forth in Simtek's 10-K:
-------------------------------------------------------------- ------------------------------------------------------------
Old Risk Factor New Risk Factor
-------------------------------------------------------------- ------------------------------------------------------------
LIMITED OPERATING CAPITAL AND ABILITY TO RAISE ADDITIONAL OUR LIMITED OPERATING CAPITAL AND OUR ABILITY TO RAISE
MONEY MAY HARM OUR ABILITY TO DEVELOP AND MARKET PRODUCTS ADDITIONAL MONEY MAY HARM OUR ABILITY TO DEVELOP AND MARKET
OUR PRODUCTS AS AS WELL AS SUPPORT FUTURE REVENUE GROWTH
We require significant capital for product development, To date, we have required significant capital for product
subcontracted production, and marketing. We have funded development, subcontracted production and marketing. We have
these needs from the sale of products, the sale of product funded these from the sale of products, the sale of product
and technology licenses, from royalties, as well as and technology licenses and from royalties as well as from
from the sale of our convertible debt and equity the sale of our convertible debt and equity securities.
securities.
In recent months, we have experienced significant
We have not seen any significant increase in product revenue growth. In order to support that growth, we must
sales in the past year and gross margins are less than order more silicon wafers than we have historically. The
anticipated. Our cash requirements have been difficult to cash required for inventory purchases, including silicon
meet. We cannot guarantee that we will be able to achieve an wafers, has been greater than the cash generated from
increase in product sales and gross margins. We may need sales. Therefore, our cash requirements have been
more capital in the future to develop new products. We are difficult to maintain. We may need more capital in the
not sure that we will be able to raise more capital on future to develop new products and support higher revenue.
reasonable terms, if at all. If we cannot, then we may not We cannot guarantee that we will be able to raise more
be able to develop and market new products. The development, capital on reasonable terms, if at all. If we cannot, then
subcontracted production and marketing of existing products we may not be able to purchase adequate amounts of inventory
may also suffer, causing our financial position and stock to support revenue growth or to develop and market new
price to deteriorate. products, causing our financial position and stock price
to deteriorate.
-------------------------------------------------------------- ------------------------------------------------------------
WE MAY BE UNABLE TO SUCCESSFULLY INTEGRATE THE ASSETS
ACQUIRED FROM ZMD ON DECEMBER 30, 2005 [Intentionally Omitted (i.e., risk factor deleted)]
On December 30, 2005, we closed our acquisition from
ZMD of certain intellectual property and assets related to
ZMD's nvSRAM product line. We may be unable to integrate
successfully into our operations the assets acquired from
ZMD, including:
o by a failure to gain customer agreement to
purchase products from us or to qualify our designs or
processes;
o by a failure to coordinate international operations,
relationships and facilities, which may be subject to
additional constraints imposed by geographic distance,
local laws and regulations; and
o by a failure to implement and maintain uniform
standards, internal controls, business processes, procedures,
policies and information systems.
Our failure to meet any of these challenges could
cause us to fail to realize any accretive benefits of
the acquisition of the assets from ZMD and could seriously
harm our results of operations.
-------------------------------------------------------------- ------------------------------------------------------------
25
SIMTEK CORPORATION
-------------------------------------------------------------- ------------------------------------------------------------
WE MAY BE UNABLE TO RETAIN AN EFFECTIVE FOCUS IN OUR
INDUSTRY OR RETAIN CUSTOMERS FOLLOWING THE ACQUISITION OF [Intentionally Omitted (i.e., risk factor deleted)]
ASSETS FROM ZMD
The challenges to us as a result of the acquisition
of certain intellectual property and assets from ZMD on
December 30, 2005 include:
o communicating a strategic vision to the market
regarding us and executing on that strategic vision;
o implementing sales and marketing efforts to
effectively communicate to customers our capabilities;
o overcoming possible concerns of certain customers
about not having two sources of supply for the products
they previously purchased from both ZMD and us;
o gaining acceptance from former ZMD customers for
our designs, products or processes; and
o overcoming any perceived adverse changes in business
focus, including demonstrating to customers that the
acquisition of certain assets from ZMD will not result in
an adverse change in customer service standards or business
focus and helping customers conduct business easily with us
going forward.
The failure to meet any of these challenges could
seriously hinder our plans for product development as well
as business and market expansion following the acquisition
of certain intellectual property and assets from ZMD.
-------------------------------------------------------------- ------------------------------------------------------------
The Registration Rights Agreement entered into as
[Intentionally Omitted (i.e., risk factor did not exist)] part of the September 21, 2006 Securities Purchase
Agreement amounting to $4,555,000 contained a provision
whereby the investors therein would receive certain
amounts of penalty shares if certain procedures are not
followed or an effective Registration Statement is not
maintained for the shares purchased by, and the shares
issuable under the warrants issued to, the investors. The
penalties are 2% of the shares purchased for each month
that a breach occurs. We cannot assure you that we will be
able to follow the required procedures or obtain or
maintain such effective Registration Statement.
-------------------------------------------------------------- ------------------------------------------------------------
OUR CERTIFICATE OF INCORPORATION AND DELAWARE LAW MAY
[Intentionally Omitted (i.e., risk factor did not exist)] OPERATE AS ANTI-TAKEOVER PROTECTIONS AND THUS MAY
DISCOURAGE TAKEOVER ATTEMPTS AND/OR DEPRESS THE MARKET
PRICE OF OUR COMMON STOCK
We have opted to be governed, in our Delaware certificate
of incorporation, by Section 203 of the Delaware General
Corporation Law, which provides for a three-year moratorium on
certain business combination transactions with "interested
stockholders" (generally, persons who beneficially own
-------------------------------------------------------------- ------------------------------------------------------------
26
SIMTEK CORPORATION
-------------------------------------------------------------- ------------------------------------------------------------
15% or more of the corporation's outstanding voting stock).
Although we believe that Section 203 will encourage any
potential acquirer to negotiate with our board of directors,
Section 203 also might have the effect of limiting the
ability of a potential acquirer to make a two-tiered bid
for the company in which all stockholders would not be treated
equally. In addition, Section 203 gives the board the power to
reject a proposed business combination in certain circumstances,
even though a potential acquirer may be offering a substantial
premium for our common stock over the then-current market price.
Section 203 would also discourage certain potential acquirers
who are unwilling to comply with its provisions.
Because a proposed amendment to our certificate of
incorporation may not be submitted to a vote of shareholders
without the approval of the board of directors, amending or
removing any provisions in our certificate of incorporation
that have anti-takeover effects requires the consent of the
board of directors, which in turn may have anti-takeover
effects.
-------------------------------------------------------------- ------------------------------------------------------------
THE REVERSE SPLIT MAY NOT RESULT IN AN INCREASE IN THE
[Intentionally Omitted (i.e., risk factor did not exist)] STOCK PRICE AND MAY NOT LEAD TO ANY OF THE BENEFITS
(INCLUDING QUALIFICATION FOR LISTING ON AMEX OR THE NASDAQ
CAPITAL MARKET) THAT WE INTENDED IN DECIDING TO EFFECT
SUCH REVERSE SPLIT
There can be no assurance that the total market
capitalization of our common stock (the aggregate value of
all our common stock at the then market price) will not drop
back below the total market capitalization before the
reverse split, that the per share market price of our common
stock will not drop back below the per share market price
before the reverse split or that the per share market price
of our common stock will increase to (or once increased to,
remain at) a price that is inversely proportionate to the
one-for-ten reduction in the number of shares of common
stock outstanding before the reverse split.
The per share market price of our common stock may
not be high enough to attract institutional investors or
investment funds or to satisfy the investing guidelines
of such investors and, consequently, the trading liquidity
of our common stock may not improve. In addition, the per
share market price of our common stock may not be high
enough to allow us to comply with the initial listing
requirements of the NASDAQ Capital Market or the American
Stock Exchange. Even if the per share market price of our
common stock is sufficiently high for purposes of the initial
listing requirements, we cannot guarantee you that we will be
able to satisfy the other requirements for listing on the
NASDAQ Capital Market or the American Stock Exchange, which
requirements include, among other things, a minimum number
of shares that must be in the public float and a minimum
number of round lot holders.
-------------------------------------------------------------- ------------------------------------------------------------
27
SIMTEK CORPORATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits
10.1 Securities Purchase Agreement, dated as of September 21,
2006, by and between Simtek Corporation and each purchaser
identified on the signature pages thereto (the
"Purchasers"), incorporated by reference to the Company's
Current Report on Form 8-K filed by the Company with the SEC
on September 25, 2006.
10.2 Securities Purchase Agreement, dated as of September 21,
2006, by and between Simtek Corporation and each Purchaser,
incorporated by reference to the Company's Current Report on
Form 8-K filed by the Company with the SEC on September 25,
2006.
10.3 Form of Stock Purchase Warrant, dated as of September 21,
2006, by and between Simtek Corporation and each Purchaser,
incorporated by reference to the Company's Current Report on
Form 8-K filed by the Company with the SEC on September 25,
2006.
31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 of Principal Executive Officer
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 of Principal Financial Officer
32.1 Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 of Principal Executive Officer
32.2 Certification pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 of Principal Financial Officer
28
SIMTEK CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SIMTEK CORPORATION
(Registrant)
November 14, 2006 By: /s/Harold Blomquist
----------------------------------
HAROLD BLOMQUIST
Chief Executive Officer, President
November 14, 2006 By: /s/Brian Alleman
----------------------------------
BRIAN ALLEMAN
Chief Financial Officer
29
Exhibit 31.1
CERTIFICATIONS
I, Harold Blomquist, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Simtek Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: November 14, 2006
/s/Harold Blomquist
-------------------------------------
Harold Blomquist
Chief Executive Officer and President
Exhibit 31.2
CERTIFICATIONS
I, Brian Alleman, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Simtek Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
(b) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(c) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: November 14, 2006
/s/ Brian Alleman
-------------------------------------
Brian Alleman
Chief Financial Officer
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND PRESIDENT
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Harold Blomquist, certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
Quarterly Report of Simtek Corporation on Form 10-Q for the quarterly period
ended September 30, 2006 fully complies with the requirements of Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 and that information contained
in such Form 10-Q fairly presents, in all material respects, the financial
condition and results of operations of Simtek Corporation.
/s/Harold Blomquist
-------------------------------------
Harold Blomquist
Chief Executive Officer and President
November 14, 2006
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Brian Alleman, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly
Report of Simtek Corporation on Form 10-Q for the quarterly period ended
September 30, 2006 fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934 and that information contained in
such Form 10-Q fairly presents, in all material respects, the financial
condition and results of operations of Simtek Corporation.
/s/Brian Alleman
-------------------------------------------
Brian Alleman
Chief Financial Officer
November 14, 2006
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K12G3
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 4, 2006
Simtek Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 0-19027 84-1057605
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4250 Buckingham Dr. #100, Colorado Springs, CO 80907
(Address of Principal Executive Offices)
(719) 531-9444
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
================================================================================
Item 1.01 Entry into a Material Definitive Agreement.
Conversion / Plan of Conversion
On October 4, 2006, Simtek Corporation, a Colorado corporation
("Simtek-Colorado") adopted a Plan of Conversion (the "Plan") pursuant to which
Simtek-Colorado converted (the "Conversion"), effective October 5, 2006, under
Colorado and Delaware law, into a Delaware corporation named "Simtek
Corporation" ("Simtek-Delaware", together with Simtek-Colorado, is referred to
herein as the "Company"). A copy of the Plan is included herewith as Exhibit 2.1
and is incorporated herein by reference. The form of the Plan should be reviewed
for the complete set of terms and conditions relating thereto.
Item 3.03 Material Modifications to Rights of Security Holders.
Reverse Stock Split Ratio / Effect of Conversion
As disclosed in the Company's Current Report on Form 8-K filed July 10,
2006 (the "July 10 Form 8-K"), on June 29, 2006, at the 2006 Annual Meeting of
Shareholders (the "Annual Meeting"), the Company shareholders approved a
proposal providing for a reverse split of the issued and outstanding common
stock of the Company at a specific conversion ratio to be later determined at
the discretion of the Board of Directors of the Company (the "Board") within a
predetermined range that was approved at the Annual Meeting.
On September 5, 2006, pursuant to the authority granted by the shareholders
of the Company, the Board approved a one-for-ten conversion ratio for the
reverse split of the issued and outstanding common stock of the Company.
As described in Item 1.01 above, on October 5, 2006, Simtek-Colorado
reincorporated from Colorado into Delaware through the Conversion as
contemplated under the provisions of the Plan. Upon the effectiveness of the
Conversion, as provided in the Plan, (i) each issued and outstanding ten (10)
shares of the common stock, par value $0.01 per share, of Simtek-Colorado (the
"Colorado Common Stock") automatically, without the surrender of stock
certificates or any further action on the part of the holder or the payment of
any additional consideration, were combined and converted into one (1) validly
issued, fully paid, and nonassessable share of the common stock, par value
$0.0001 per share, of Simtek-Delaware (the "Delaware Common Stock"); and (ii)
each option, warrant, convertible debenture, or other right to acquire shares of
Colorado Common Stock was converted into and became an equivalent option,
warrant, convertible debenture, or other right to acquire a number of shares of
Delaware Common Stock equal to one (1) share of Delaware Common Stock for every
ten (10) shares of Colorado Common Stock covered by such security at an exercise
price per share of Delaware Common Stock equal to ten (10) times the exercise
price applicable to a share of Colorado Common Stock covered by any such
Simtek-Colorado option, warrant, or stock acquisition right immediately prior to
the Conversion and otherwise on the same terms and conditions applicable to such
security.
Pursuant to the provisions of the Plan, the Company did not issue
fractional shares with respect to the Conversion and any fractional shares of
Delaware Common Stock that would otherwise have been issued as a result of the
Conversion were rounded up to the nearest whole share. Following the Conversion,
each previously issued and outstanding share of Colorado Common Stock was
cancelled, retired, and ceased to exist.
Each outstanding stock certificate, option, warrant, convertible debenture,
or other instrument representing shares of Colorado Common Stock continues to
represent the number of shares of Delaware Common Stock into which such shares
of Colorado Common Stock converted. However, stockholders of the Company will be
required to undertake an exchange of their Simtek-Colorado stock certificates
for Simtek-Delaware stock certificates pursuant to instructions from the Company
or its transfer agent.
2
Simtek-Delaware's Certificate of Incorporation, Bylaws, and the specimen
stock certificate for shares of Delaware Common Stock, which documents are
included herewith as Exhibits 3.1, 3.2, and 4.1, respectively and are
incorporated herein by reference, will now govern the rights of holders of what,
prior to the Conversion, was Simtek-Colorado's common stock. After the
Conversion, Delaware corporate law is generally applicable in the determination
of the rights of stockholders under state corporate laws.
The Colorado Common Stock was registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). By virtue of
the operation of Rule 12g-3 under the Exchange Act, the shares of Delaware
Common Stock are deemed automatically registered under Section 12(g) of the
Exchange Act. Simtek-Delaware will continue to be subject to the reporting
requirements of Section 13 of the Exchange Act in the same manner as
Simtek-Colorado had been subject to such requirements immediately prior to the
reincorporation.
As of the effective date of the Conversion, the Company ceased to exist
under Colorado law but continued to exist as a Delaware corporation. The
Conversion effects a change in the legal domicile of the Company. The Conversion
will not result in any significant change in the Company's business, management,
employees, fiscal year, assets, or liabilities, will not cause the principal
executive offices or other facilities of the Company to be moved, and will not
result in any relocation of management or other employees. As disclosed in the
July 10 Form 8-K, the holders of a majority of the outstanding shares of the
common stock of Simtek-Colorado approved the reincorporation and reverse split
on June 29, 2006, at the Annual Meeting.
Description of Capital Stock
The Company is authorized to issue, pursuant to its Delaware Certificate of
Incorporation, 30,000,000 shares of Delaware Common Stock and 200,000 shares of
preferred stock, par value $0.0001 per share. The following is a summary of the
material terms of the Company's capital stock. The Company's Certificate of
Incorporation and Bylaws should be referred to for more detailed information and
are incorporated herein by reference.
Common Stock
Each share of Delaware Common Stock entitles its record holder to one vote
on all matters to be voted on by the stockholders of the Company. When a quorum
is present at any meeting of stockholders, a plurality of the stockholders shall
decide the election of directors and a majority of the stockholders shall decide
any other question, unless the question is one upon which Delaware law, the
Certificate of Incorporation or the Bylaws require a different vote.
The Board consists of five directors, all of whom are elected annually at
the annual meeting of stockholders, and is not classified. No provision of the
Company's Certificate of Incorporation or Bylaws provides for cumulative voting
in the case of the election of directors or on any other matter.
Each holder of Delaware Common Stock is entitled to share pro rata in any
dividends paid on the Delaware Common Stock in funds legally available for that
purpose, when, as and if declared by the Board in its discretion. The shares of
Delaware Common Stock have no preferred dividend rights or any conversion,
redemption, or other rights, or any rights to payment from any sinking or
similar fund. The shares of Delaware Common Stock also do not have any
preemptive, subscription, or other similar rights. There are no restraints in
the Certificate of Incorporation or Bylaws of the Company on the right of
holders of shares of Delaware Common Stock to sell or otherwise alienate their
shares of stock in the Company. There are no provisions in the Certificate of
Incorporation or Bylaws of the Company providing for any calls or assessments
against holders of shares of Delaware Common Stock or discriminating against any
existing or prospective holder of shares of Delaware Common Stock as a result of
such security holder owning a substantial amount of securities. Upon
liquidation, dissolution, or winding up of the Company, each holder of shares of
3
Delaware Common Stock will be entitled to receive a pro rata share of the assets
of the Company, after payment of all the Company's debts and liabilities and
subject to any applicable liquidation or other payments owed to preferred
stockholders.
The Company's common stock is currently traded on the Over-the-Counter
Bulletin Board (OTCBB) under the trading symbol "SMTE".
Preferred Stock
The shares of preferred stock of the Company are not designated by series,
and there are no currently outstanding shares of preferred stock. The Company
may issue preferred stock from time to time in one or more series. The Board is
authorized, without the approval of existing stockholders, to authorize from
time to time the issuance of one or more classes or series of preferred stock
and to fix the designations, powers, preferences, and relative, participating,
optional, or other rights, if any, and the qualifications, limitations, or
restrictions thereof, if any, with respect to each such class or series of
preferred stock and the number of shares constituting each such class or series,
and to increase or decrease the number of shares of any such class or series to
the extent permitted by law. The issuance of preferred stock by our Board could
dilute and harm the rights of the holders of our common stock. It could
potentially be used to discourage attempts by others to obtain control of us
through merger, tender offer, proxy contest, or otherwise by making such
attempts more difficult to achieve or more costly.
Anti-Takeover Provisions
The Company, as discussed in the preceding paragraph, may issue preferred
stock from time to time in one or more series, pursuant to certain authority
held by the Board, including the authority to fix the designations, powers,
preferences, and relative, participating, optional, or other rights, if any, and
the qualifications, limitations, or restrictions of such preferred stock. The
issuance of preferred stock may have the effect of making removal of management
more difficult and delaying, deferring, or preventing a change in control of the
Company.
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal
Year.
Please see response to Item 3.03.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
-------------- -----------
2.1 Plan of Conversion of Simtek Corporation, a
Colorado corporation, into Simtek Corporation, a
Delaware corporation, dated October 4, 2006.
3.1 Certificate of Incorporation for Simtek Corporation,
a Delaware corporation.
3.2 Bylaws of Simtek Corporation, a Delaware corporation.
4.1 Form of Common Stock Certificate of Simtek
Corporation, a Delaware corporation.
4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIMTEK CORPORATION
By: /s/ Brian Alleman
------------------------------------
Brian Alleman, Secretary, Vice President,
and Chief Financial Officer
October 10, 2006
5
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
2.1 Plan of Conversion of Simtek Corporation, a Colorado
corporation, into Simtek Corporation, a Delaware corporation,
dated October 4, 2006.
3.1 Certificate of Incorporation for Simtek Corporation,
a Delaware corporation.
3.2 Bylaws of Simtek Corporation, a Delaware corporation.
4.1 Form of Common Stock Certificate of Simtek Corporation, a
Delaware corporation.
6
Exhibit 2.1
PLAN OF CONVERSION OF
SIMTEK CORPORATION, a Colorado corporation,
INTO
SIMTEK CORPORATION, a Delaware corporation
This PLAN OF CONVERSION (this "Plan"), dated as of October 4, 2006, is
hereby adopted and approved by Simtek Corporation, a Colorado corporation
("Simtek-Colorado"), in order to set forth the terms, conditions and procedures
governing the conversion of Simtek-Colorado into a Delaware corporation pursuant
to Sections 7-90-201 and 7-90-202 of the Colorado Corporations and Associations
Act (as amended, the "CCAA") and Section 265 of the Delaware General Corporation
Law (as amended, the "DGCL").
WHEREAS, Simtek-Colorado's board of directors has approved the Conversion
(as defined below) and recommended the same to Simtek-Colorado's shareholders,
and such shareholders have approved the Conversion, all in accordance with the
CCAA and the Colorado Business Corporation Act.
NOW, THEREFORE, Simtek-Colorado does hereby adopt this Plan to effectuate
the conversion of Simtek-Colorado into a Delaware corporation as follows:
1. Conversion; Effect of Conversion. Upon and subject to the terms and
conditions of this Plan and pursuant to the relevant provisions of the CCAA and
the DGCL, including, without limitation, Sections 7-90-201 and 7-90-202 of the
CCAA and Section 265 of the DGCL, Simtek-Colorado shall convert (referred to
herein as the "Conversion") into a Delaware corporation named "Simtek
Corporation" (referred to herein as "Simtek-Delaware") at the Effective Time (as
defined below). Simtek-Delaware shall thereafter be subject to all of the
provisions of the DGCL, except that notwithstanding Section 106 of the DGCL, the
existence of Simtek-Delaware shall be deemed to have commenced on the date
Simtek-Colorado commenced its existence in Colorado. Following the Conversion,
Simtek-Delaware shall, for all purposes of the laws of the State of Delaware, be
deemed to be the same entity as Simtek-Colorado. Upon the Effective Time, all of
the rights, privileges and powers of Simtek-Colorado, and all property, real,
personal and mixed, and all debts due to Simtek-Colorado, as well as all other
things and causes of action belonging to Simtek-Colorado, shall remain vested in
Simtek-Delaware and shall be the property of Simtek-Delaware and the title to
any real property vested by deed or otherwise in Simtek-Colorado shall not
revert or be in any way impaired, but all rights of creditors and all liens upon
any property of Simtek-Colorado shall be preserved unimpaired, and all debts,
liabilities and duties of Simtek-Colorado shall remain attached to
Simtek-Delaware and may be enforced against it to the same extent as if said
debts, liabilities and duties had originally been incurred or contracted by it
in its capacity as a Delaware corporation. The rights, privileges, powers and
interests in property of Simtek-Colorado, as well as the debts, liabilities and
duties of Simtek-Colorado, shall not be deemed, as a consequence of the
Conversion, to have been transferred to Simtek-Delaware for any purpose of the
laws of the State of Delaware. The Conversion shall not be deemed to affect any
obligations or liabilities of Simtek-Colorado incurred prior to the Effective
Time or the personal liability of any person incurred prior thereto.
Simtek-Colorado shall not be required to wind up its affairs or pay its
liabilities and distribute its assets, and the Conversion shall not be deemed to
constitute a dissolution of Simtek-Colorado and shall constitute a continuation
of the existence of Simtek-Colorado in the form of a Delaware corporation.
Simtek-Colorado is the same entity as Simtek-Delaware.
2. Certificate of Conversion; Simtek-Delaware Charter Documents; Effective Time.
The Conversion shall be effected by the filing with the Secretary of State of
the State of Colorado of a duly executed Statement of Conversion meeting the
requirements of Section 7-90-201 of the CCAA (the "Colorado Statement of
Conversion") and the filing with the Secretary of State of the State of Delaware
of: (a) a duly executed Certificate of Conversion meeting the requirements of
Section 265 of the DGCL (the "Delaware Certificate of Conversion"), and (b) a
Certificate of Incorporation of "Simtek Corporation", substantially in the form
of Exhibit A attached hereto (the "Certificate of Incorporation"). The
Conversion shall be effective upon the date indicated in the Colorado Statement
of Conversion, the Delaware Certificate of Conversion and the Certificate of
Incorporation (the "Effective Time").
3. Governance and Other Matters Related to Simtek-Delaware.
(a) Bylaws. At the Effective Time, the Bylaws of Simtek-Delaware shall be
as set forth in Exhibit B attached hereto (the "Bylaws"), and shall be adopted
as such by the Board of Directors of Simtek-Delaware.
(b) Directors and Officers. The officers and directors of Simtek-Delaware
immediately after the Effective Time shall be the officers and directors of
Simtek-Colorado immediately prior to the Effective Time. Simtek-Colorado and,
after the Effective Time, Simtek-Delaware and its Board of Directors, shall take
any necessary actions to cause each of such individuals to be appointed as an
officer and/or director, if necessary, of Simtek-Delaware, or to confirm such
appointments.
4. Effect of the Conversion on the Common Stock of Simtek-Colorado. Subject to
the terms and conditions of this Plan, at the Effective Time, automatically by
virtue of the Conversion and without any further action on the part of
Simtek-Colorado, Simtek-Delaware or any common stock holder thereof, the common
stock, par value $0.01 per share, of Simtek-Colorado (the "Colorado Common
Stock") shall be converted as follows:
(a) Conversion of Colorado Common Stock. Each issued and outstanding ten
(10) shares of Colorado Common Stock shall automatically, without the surrender
of stock certificates or any further action on the part of the holder or the
payment of any additional consideration, be combined and convert into one (1)
validly issued, fully paid and nonassessable share of common stock, par value
$0.0001 per share, of Simtek-Delaware (the "Delaware Common Stock").
Simtek-Delaware shall not issue fractional shares with respect to the
Conversion. Any fractional share of Delaware Common Stock that would otherwise
be issued as a result of the Conversion will be rounded up to the nearest whole
share. Following the Effective Time, all Colorado Common Stock shall no longer
be outstanding and shall automatically be canceled and retired and shall cease
to exist, and each holder of Colorado Common Stock immediately prior to the
Effective Time shall cease to have any rights with respect thereto.
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(b) Certificates. At and after the Effective Time, all of the outstanding
certificates which immediately prior thereto represented shares of Colorado
Common Stock or options, warrants, convertible debentures or other securities of
Simtek-Colorado shall be deemed for all purposes to evidence ownership of and to
represent shares of Delaware Common Stock, or options, warrants, convertible
debentures or other securities of Simtek-Delaware, as the case may be, into
which the shares of Colorado Common Stock, or options, warrants, convertible
debentures or other securities of Simtek-Colorado represented by such
certificates have been converted as herein provided and shall be so registered
on the books and records of Simtek-Delaware or its transfer agent. Each holder
of record of a stock certificate of Colorado Common Stock shall surrender such
certificate or certificates to Simtek-Delaware or its transfer agent and, upon
such surrender, receive in exchange therefor a new certificate or certificates
evidencing and representing the number of shares of Delaware Common Stock to
which such holder is entitled. Notwithstanding the foregoing, the registered
owner of any such outstanding certificate shall, until such certificate shall
have been surrendered for transfer or otherwise exchanged, have and be entitled
to exercise any voting and other rights with respect to, and to receive any
dividends and other distributions upon, the shares of Delaware Common Stock, or
options, warrants, purchase rights or other securities of Simtek-Delaware, if
any, as the case may be, evidenced by such outstanding certificate, as above
provided.
5. Filings, Licenses, Permits, Titled Property, Etc. As necessary, following the
Effective Time, Simtek-Delaware shall apply for new qualifications to conduct
business (including as a foreign corporation), licenses, permits and similar
authorizations on its behalf and in its own name in connection with the
Conversion and to reflect the fact that it is a corporation. As required or
appropriate, following the Effective Time, all real, personal or intangible
property of Simtek-Colorado which was titled or registered in the name of
Simtek-Colorado shall be re-titled or re-registered, as applicable, in the name
of Simtek-Delaware by appropriate filings and/or notices to the appropriate
parties (including, without limitation, any applicable governmental agencies).
6. Further Assurances. If, at any time after the Effective Time, Simtek-Delaware
shall determine or be advised that any deeds, bills of sale, assignments,
agreements, documents or assurances or any other acts or things are necessary,
desirable or proper, consistent with the terms of this Plan, (a) to vest,
perfect or confirm, of record or otherwise, in Simtek-Delaware its right, title
or interest in, to or under any of the rights, privileges, immunities, powers,
purposes, franchises, properties or assets of Simtek-Colorado, or (b) to
otherwise carry out the purposes of this Plan, Simtek-Delaware and its proper
officers and directors (or their designees), are hereby authorized to solicit in
the name of Simtek-Colorado any third-party consents or other documents required
to be delivered by any third-party, to execute and deliver, in the name and on
behalf of Simtek-Colorado all such deeds, bills of sale, assignments,
agreements, documents and assurances and do, in the name and on behalf of
Simtek-Colorado, all such other acts and things necessary, desirable or proper
to vest, perfect or confirm its right, title or interest in, to or under any of
the rights, privileges, immunities, powers, purposes, franchises, properties or
assets of Simtek-Colorado and otherwise to carry out the purposes of this Plan
and the Conversion.
7. Implementation and Interpretation; Termination and Amendment. This Plan shall
be implemented and interpreted, prior to the Effective Time, by the Board of
Directors of Simtek-Colorado and, following the Effective Time, by the Board of
3
Directors of Simtek-Delaware, (a) each of which shall have full power and
authority to delegate and assign any matters covered hereunder to any other
party(ies), including, without limitation, any officers of Simtek-Colorado or
Simtek-Delaware, as the case may be, and (b) the interpretations and decisions
of which shall be final, binding, and conclusive on all parties. The Board of
Directors of Simtek-Colorado or the Board of Directors of Simtek-Delaware, as
applicable, at any time and from time to time, may terminate, amend or modify
this Plan.
8. Third Party Beneficiaries. This Plan shall not confer any rights or remedies
upon any person or entity other than as expressly provided herein.
9. Severability. Whenever possible, each provision of this Plan will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Plan is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Plan.
10. Governing Law. This Plan shall be construed in accordance with and governed
by the laws of the State of Colorado, without regard to the conflict of laws
provisions thereof.
[Signature page follows]
4
IN WITNESS WHEREOF, Simtek-Colorado has caused this Plan to be executed by
its duly authorized representative as of the date first stated above.
SIMTEK CORPORATION, a Colorado corporation
By: /S/ HAROLD BLOMQUIST
-------------------------------------------------
Name: Harold Blomquist
Title: Chairman of the Board and Chief Executive Officer
5
EXHIBIT A
CERTIFICATE OF INCORPORATION
[Intentionally Omitted]
EXHIBIT B
BYLAWS
[Intentionally Omitted]
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
SIMTEK CORPORATION
ARTICLE I
The name of this corporation is Simtek Corporation (the "Corporation").
ARTICLE II
The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801, and the name of registered agent of the Corporation in the State
of Delaware at such address is The Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Delaware General Corporation
Law, as amended (the "DGCL").
ARTICLE IV
The name of the Corporation's sole incorporator is Brian Alleman and his
mailing address is 4250 Buckingham Dr. #100, Colorado Springs, CO 80907. The
powers of the sole incorporator shall terminate upon the filing of this
certificate of incorporation, and the names of the persons to serve as directors
until the first annual meeting of stockholders or until successors are elected
and qualify are:
Harold A. Blomquist
Ronald Sartore
Alfred J. Stein
Robert H. Keeley
Robert C. Pearson
The mailing address for each of the persons listed above is 4250 Buckingham
Dr. #100, Colorado Springs, CO 80907.
ARTICLE V
The Corporation is authorized to issue two classes of stock to be
designated "Common Stock" and "Preferred Stock." The total number of shares
which the Corporation is authorized to issue is 30,200,000, consisting of
30,000,000 shares of Common Stock, $0.0001 par value per share, and 200,000
shares of Preferred Stock, $0.0001 par value per share. The board of directors
is hereby empowered to authorize by resolution or resolutions from time to time
the issuance of one or more classes or series of Preferred Stock and to fix the
designations, powers, preferences and relative, participating, optional or other
rights, if any, and the qualifications, limitations or restrictions thereof, if
any, with respect to each such class or series of Preferred Stock and the number
of shares constituting each such class or series, and to increase or decrease
the number of shares of any such class or series to the extent permitted by the
DGCL.
ARTICLE VI
A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director, except for liability (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any
transaction from which the director derived an improper personal benefit. If the
DGCL is amended after approval by the stockholders of this Article VI to
authorize corporate action further eliminating or limiting the personal
liability of directors then the liability of a director of the Corporation shall
be eliminated or limited to the fullest extent permitted by the DGCL as so
amended.
Any repeal or modification of the foregoing provisions of this Article VI
shall not adversely affect any right or protection of a director of the
Corporation existing at the time of such repeal or modification.
ARTICLE VII
The Corporation shall indemnify its officers and directors, and shall
provide for advancement of the expenses of such persons, to the fullest extent
provided by Section 145 of the DGCL. To the fullest extent permitted by
applicable law, the Corporation is authorized to provide indemnification of (and
advancement of expenses to) employees and agents of the Corporation (and any
other persons to which state law permits the Corporation to provide
indemnification). The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article VII shall not be deemed exclusive of any
other rights to which those seeking indemnification or advancement of expenses
may be entitled under the Bylaws, agreement, vote of stockholders or
disinterested directors of otherwise.
Any repeal or modification of the foregoing provisions of this Article VII
shall not adversely affect any right or protection of a director, officer,
agent, or employee of the Corporation existing at the time of such repeal or
modification.
2
ARTICLE VIII
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on stockholders herein
are granted subject to this reservation.
ARTICLE IX
Election of directors need not be by written ballot unless the Bylaws of
the Corporation shall so provide.
ARTICLE X
The number of directors which shall constitute the whole Board of Directors
of the Corporation shall be fixed from time to time by, or in the manner
provided in, the Bylaws of the Corporation or in an amendment thereof duly
adopted by the Board of Directors of the Corporation or by the stockholders of
the Corporation.
ARTICLE XI
Meetings of stockholders of the Corporation may be held within or without
the State of Delaware, as the Bylaws of the Corporation may provide. The books
of the Corporation may be kept (subject to any provision contained in the
statutes) outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors of the Corporation or in
the Bylaws of the Corporation.
ARTICLE XII
Except as otherwise provided in this Certificate of Incorporation, in
furtherance and not in limitation of the powers conferred by statute, the Board
of Directors of the Corporation is expressly authorized to make, repeal, alter,
amend and rescind any or all of the Bylaws of the Corporation.
ARTICLE XIII
Whenever a compromise or arrangement is proposed between the Corporation
and its creditors or any class of them and/or between the Corporation and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the
Corporation or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for the Corporation under the provisions of
Section 291 of the DGCL or on the application of trustees in dissolution or of
any receiver or receivers appointed for the Corporation under the provisions of
Section 279 of the DGCL order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or class
of creditors, and/or of the stockholders or class of stockholders of the
3
Corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the Corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the Corporation, as the case may be,
and also on the Corporation.
ARTICLE XIV
The provision of Section 203 of the DGCL shall apply to the Corporation.
This Article XIV shall be amended, altered or repealed only as provided in
Section 203 of the DGCL.
ARTICLE XV
Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of such
stockholders and may not be effected by any consent in writing by such
stockholders.
ARTICLE XVI
A delayed effective time and date for this Certificate of Incorporation
hereby is requested and specified as being 2:01 a.m. (E.S.T.) on October 5,
2006.
[Remainder of Page Left Intentionally Blank]
4
IN WITNESS WHEREOF, the undersigned has signed this Certificate of
Incorporation this 3rd day of October, 2006.
/S/ BRIAN ALLEMAN
-----------------------------------------
Brian Alleman
Sole Incorporator
5
Exhibit 3.2
BYLAWS
OF
SIMTEK CORPORATION
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the Board of Directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held at such place as
may be fixed from time to time by the Board of Directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the Board of Directors and stated in the notice of the meeting.
Section 2. Annual meetings of stockholders shall be held at such date and
time as shall be designated from time to time by the Board of Directors and
stated in the notice of the meeting. At each annual meeting, the stockholders
shall elect directors to succeed those directors whose terms expire in that year
and shall transact such other business as may properly be brought before the
meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten (10) nor more than sixty (60) days before the date of
the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make available, at least ten (10) days before
every meeting of stockholders, a complete list of the stockholders entitled to
vote at the meeting, arranged in alphabetical order, and showing the address of
each stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten (10) days prior to the meeting, either at a place within the
city where the meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the corporation's principal
executive offices. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, may only be called by the President, the Chairman of the Board, or a
majority of the Board of Directors.
Section 6. Unless otherwise required by law, written notice of a special
meeting of the stockholders stating the place, date and hour of the meeting and
the purpose or purposes for which the meeting is called, shall be given not
fewer than ten (10) nor more than sixty (60) days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, either the President, the Chairman of the
Board, or the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented any business may be transacted that might have been
transacted at the meeting as originally notified. If the adjournment is for more
than thirty (30) days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a plurality of the stock having voting power present in person or represented
by proxy shall decide the election of directors and the affirmative vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy shall decide any other question brought before such
meeting, unless the question is one upon which by express provision of
applicable statute or of the certificate of incorporation, a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation,
each stockholder of record shall at every meeting of the stockholders be
entitled to one (1) vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be voted
on after eleven (11) months from its date, unless the proxy provides for a
longer period.
Section 11. Nominations for election to the Board of Directors must be made
by the Board of Directors or by a committee appointed by the Board of Directors
for such purpose or by any stockholder of any outstanding class of capital stock
of the corporation entitled to vote for the election of directors. Nominations
by stockholders must be preceded by notification in writing received by the
Secretary of the corporation not less than ninety (90) days nor more than one
hundred twenty (120) days prior to the first anniversary of the preceding year's
annual meeting; provided, however, that in the event that the annual meeting of
2
stockholders is called for a date that is not within thirty (30) days before or
after such anniversary date or in the event of a special meeting of stockholders
called for the purpose of electing directors, notification by the stockholder
must be received by the Secretary of the corporation not later than the close of
business on the tenth day following the day on which the corporation's notice of
the date of the meeting is first given or made to the stockholders or disclosed
to the general public (which disclosure may be effected by means of a publicly
available filing with the Securities and Exchange Commission), whichever occurs
first. Such notification shall contain the written consent of each proposed
nominee to serve as a director if so elected and the following information as to
each proposed nominee and as to each person, acting alone or in conjunction with
one or more other persons as a partnership, limited partnership, syndicate or
other group, who participates or is expected to participate in making such
nomination or in organizing, directing or financing such nomination or
solicitation of proxies to vote for the nominee:
(a) the name, age, residence address, and business address of each
proposed nominee and of each such person;
(b) the principal occupation or employment, the name, type of business
and address of the corporation or other organization in which such employment is
carried on of each proposed nominee and of each such person;
(c) the class and number of shares of stock of the corporation owned
beneficially, either directly or indirectly, by each proposed nominee and each
such person;
(d) a description of any arrangement or understanding of each proposed
nominee and of each such person with each other or any other person regarding
future employment or any future transaction to which the corporation will or may
be a party; and
(e) any other information required by the Securities Exchange Act of
1934, as amended.
The presiding officer of the meeting shall have the authority to determine
and declare to the meeting that a nomination not preceded by notification made
in accordance with the foregoing procedure shall be disregarded.
Section 12. At any meeting of the stockholders, only such business shall be
conducted as shall have been brought before the meeting (a) pursuant to the
corporation's notice of meeting, (b) by or at the direction of the Board of
Directors or (c) by any stockholder of the corporation who is a stockholder of
record at the time of giving of the notice provided for in this Bylaw, who shall
be entitled to vote at such meeting and who complies with the notice procedures
set forth in this Bylaw.
For business (other than nominations for election to the Board of
Directors, which are governed by Section 11 above) to be properly brought before
any meeting by a stockholder pursuant to clause (c) above of this Section 12,
the stockholder must have given timely notice thereof in writing to the
Secretary of the corporation. To be timely, a stockholder's notice must be
received by the Secretary of the corporation not less than ninety (90) days nor
more than one hundred twenty (120) days prior to the first anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
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annual meeting of stockholders is called for a date that is not within thirty
(30) days before or after such anniversary date or in the event of a special
meeting of stockholders, notification by the stockholder must be received by the
Secretary of the corporation not later than the close of business on the tenth
day following the day on which the corporation's notice of the date of the
meeting is first given or made to the stockholders or disclosed to the general
public (which disclosure may be effected by means of a publicly available filing
with the Securities and Exchange Commission), whichever occurs first. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the meeting (a) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (b) the name and address, as they appear on the
corporation's books, of the stockholder proposing such business, and the name
and address of the beneficial owner, if any, on whose behalf the proposal is
made, (c) the class and number of shares of the corporation which are owned
beneficially and of record by such stockholder of record and by the beneficial
owner, if any, on whose behalf the proposal is made, (d) any material interest
of such stockholder of record and the beneficial owner, if any, on whose behalf
the proposal is made in such business, and (e) any other information required by
the Securities Exchange Act of 1934, as amended.
Notwithstanding anything in these bylaws to the contrary, no business shall
be conducted at a meeting except in accordance with the procedures set forth in
this Section 12. The presiding officer of the meeting shall, if the facts
warrant, determine and declare to the meeting that business was not properly
brought before the meeting and in accordance with the procedures prescribed by
this Section 12, and if such person should so determine, such person shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted. Notwithstanding the foregoing provisions of
this Section 12, a stockholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder with respect to the matters set forth in this Section
12.
Section 13. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the Board of Directors may fix, in advance, a record date,
which shall not be more than sixty (60) nor less than ten (10) days before the
date of such meeting, nor more than sixty (60) days prior to any other action.
If no record date is fixed, the record date shall be the close of business on
the day next preceding the date on which the notice of the meeting is given, or
if the notice is waived, then the close of business on the day next preceding
the date on which the meeting is held. A determination of stockholders of record
entitled to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
ARTICLE III
DIRECTORS
Section 1. The number of directors of this corporation that shall
constitute the whole Board of Directors shall be not less than five (5) nor more
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than nine (9), with such actual number being determined by resolution of the
Board of Directors; provided, however, that no decrease in the number of
directors shall have the effect of shortening the term of an incumbent director.
Section 2. Any vacancy occurring in the Board of Directors may be filled by
the affirmative vote of a majority of the remaining directors even if less than
a quorum. A director elected to fill a vacancy shall be elected for the
unexpired term of his/her predecessor in office, and shall hold such office
until his/her successor is duly elected and shall qualify. Any directorship to
be filled by reason of an increase in the number of directors beyond the range
authorized in these bylaws shall be filled by the affirmative vote of a majority
of the directors then in office or by an election at an annual meeting, or at a
special meeting of stockholders called for that purpose. A director chosen to
fill a position resulting from an increase in the number of directors shall hold
office until the next annual meeting of stockholders and until his/her successor
shall have been elected and shall qualify. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
Section 3. The business of the corporation shall be managed by or under the
direction of its Board of Directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected Board of Directors shall
be held immediately after and at the same place as the annual meeting of
stockholders and no notice of such meeting shall be necessary to the newly
elected directors in order to legally constitute the meeting, provided a quorum
shall be present. In the event such meeting is not held at such time, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the Board of Directors, or
as shall be specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the Board of Directors may be held without
notice at such time and at such place as shall from time to time be determined
by the Board of Directors.
Section 7. Special meetings of the Board of Directors may be called by the
Chairman of the Board or the President on twenty four (24) hours' notice to each
director by phone, fax or electronic mail; special meetings shall be called by
the Chairman of the Board, the President or Secretary in like manner and on like
notice on the written request of a majority of the Board of Directors unless the
Board of Directors consists of only one (1) director, in which case special
meetings shall be called by the Chairman of the Board, the President or
Secretary in like manner and on like notice on the written request of the sole
director.
Section 8. At all meetings of the Board of Directors a majority of the
directors then in office shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at any meeting at
which there is a quorum shall be the act of the Board of Directors, except as
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may be otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any meeting of the Board of
Directors, the directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these bylaws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if all members of the Board of Directors or committee, as the case may
be, consent thereto in writing or by electronic transmission, and the writing or
writings or the electronic transmission or transmissions are filed with the
minutes of proceedings of the Board of Directors or committee.
Section 10. Unless otherwise restricted by the certificate of incorporation
or these bylaws, members of the Board of Directors, or any committee designated
by the Board of Directors, may participate in a meeting of the Board of
Directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The Board of Directors may, by resolution passed by a majority
of the whole Board of Directors, designate one or more committees, each
committee to consist of one or more of the directors of the corporation or such
higher number of directors as may be required by law or the standards of any
stock exchange on which shares of the corporation are listed. The Board of
Directors may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Committees may include, without limitation, an executive
committee, audit committee, compensation committee, nominating committee and
governance committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board
of Directors, shall have and may exercise all the powers and authority of the
Board of Directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers that may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the Board of Directors when required.
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COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of incorporation
or these bylaws, the Board of Directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice (except as provided in Section 7 of Article III of these bylaws), but
such notice may be given, without limiting the manner by which notice may
otherwise be given, (i) by a form of electronic transmission that satisfies the
requirements of the General Corporation Law of the State of Delaware (the
"General Corporation Law") and has been consented to by the stockholder to whom
notice is given, and such notice shall be deemed to be given at the time sent to
the stockholder or (ii) in writing, by mail, addressed to such director or
stockholder, at his/her address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Notice to
directors may also be given by telephone, electronic mail, telegram or
facsimile.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, or a waiver thereof by electronic transmission by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board of
Directors and shall be a Chief Executive Officer, a President, a Chief Financial
Officer and a Secretary. The Board of Directors may elect from among its members
a Chairman of the Board. The Board of Directors may also choose one or more
vice-presidents, assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
or these bylaws otherwise provide, except that the same person may not
simultaneously hold the offices of President and Secretary.
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Section 2. The Board of Directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the Board of Directors.
Section 3. The salaries of all officers of the corporation shall be fixed
by the Board of Directors or any committee established by the Board of Directors
for such purpose. The salaries of agents of the corporation shall, unless fixed
by the Board of Directors, be fixed by the Chief Executive Officer, President or
any vice-president of the corporation.
Section 4. The officers of the corporation shall hold office until their
successors are chosen and qualify or until their earlier death, resignation or
removal. Any officer elected or appointed by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the Board of
Directors but such removal shall be without prejudice to the contract rights of
the person so removed. Election or appointment of an officer or agent shall not,
of itself, create contract rights.
THE CHAIRMAN OF THE BOARD
Section 5. The Chairman of the Board, if any, shall preside at all meetings
of the Board of Directors and of the stockholders at which he/she shall be
present. He/she shall have and may exercise such powers as are, from time to
time, assigned to him/her by the Board of Directors and as may be provided by
law.
CHIEF EXECUTIVE OFFICER
Section 6. The Chief Executive Officer, if any, shall serve as the chief
executive officer of the corporation and shall have general and active
management authority with respect to the business of the corporation and shall
see that all orders and resolutions of the Board of Directors are carried into
effect; subject, however, to the right of the directors to delegate specific
powers, except those exclusively conferred by statute on the Chief Executive
Officer, to any other officers of the corporation. The Chief Executive Officer
shall, in the absence of the Chairman of the Board, preside at all meetings of
the stockholders and the Board of Directors.
Section 7. The Chief Executive Officer shall be authorized to execute
bonds, mortgages and other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be otherwise signed
and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the corporation.
THE PRESIDENT AND VICE-PRESIDENTS
Section 8. The President shall, in the absence of the Chairman of the Board
and the Chief Executive Officer, preside at all meetings of the stockholders and
the Board of Directors. In the absence of the Chief Executive Officer, the
President shall have general and active management authority with respect to the
business of the corporation and shall see that all orders and resolutions of the
Board of Directors are carried into effect; subject, however, to the right of
the directors to delegate specific powers, except those exclusively conferred by
statute on the Chief Executive Officer or President, to any other officers of
the corporation. The President shall perform other duties commonly incident to
8
the office and shall perform such other duties and have such other powers as the
Board of Directors may from time to time prescribe.
Section 9. The President or any vice president shall be authorized to
execute bonds, mortgages and other contracts requiring a seal, under the seal of
the corporation, except where required or permitted by law to be otherwise
signed and executed and except where the signing and execution thereof shall be
expressly delegated by the Board of Directors to some other officer or agent of
the corporation.
Section 10. In the absence of the President or in the event of his/her
inability or refusal to act, the vice-president, if any, (or in the event there
be more than one vice-president, the vice-presidents in the order designated by
the directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the President, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
President. The vice-presidents shall perform such other duties and have such
other powers as the Board of Directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 11. The Secretary shall attend all meetings of the Board of
Directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the Board of Directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He/she shall give, or cause to be given, notice of all meetings
of the stockholders and special meetings of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, under whose supervision he/she shall be. He/she shall have custody of
the corporate seal of the corporation and he/she, or an assistant secretary,
shall have authority to affix the same to any instrument requiring it and when
so affixed, it may be attested by his/her signature or by the signature of such
assistant secretary. The Board of Directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his/her signature.
Section 12. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Secretary or in the event of his/her inability or refusal to
act, perform the duties and exercise the powers of the Secretary and shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
THE CHIEF FINANCIAL OFFICER
Section 13. The Chief Financial Officer shall be the chief financial
officer and treasurer of the corporation, shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit of
the corporation in such depositories as may be designated by the Board of
Directors.
Section 14. He/she shall disburse the funds of the corporation as may be
ordered by the Board of Directors, taking proper vouchers for such
9
disbursements, and shall render to the President and the Board of Directors, at
its regular meetings, or when the Board of Directors so requires, an account of
all his/her transactions as Chief Financial Officer and of the financial
condition of the corporation.
Section 15. The assistant treasurer, or if there be more than one, the
assistant treasurers in the order determined by the Board of Directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the Chief Financial Officer or in the event of his/her inability
or refusal to act, perform the duties and exercise the powers of the Chief
Financial Officer and shall perform such other duties and have such other powers
as the Board of Directors may from time to time prescribe. ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
Chairman of the Board, or the President or a vice-president and the treasurer or
an assistant treasurer, or the Secretary or an assistant secretary of the
corporation, certifying the number of shares owned by him/her/it in the
corporation.
If the corporation shall be authorized to issue more than one class of
stock or more than one series of any class, the powers, designations,
preferences and relative, participating, optional or other special rights of
each class of stock or series thereof and the qualification, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock, provided that, except as
otherwise provided in section 202 of the General Corporation Law, in lieu of the
foregoing requirements, there may be set forth on the face or back of the
certificate that the corporation shall issue to represent such class or series
of stock, a statement that the corporation will furnish without charge to each
stockholder who so requests the powers, designations, preferences and relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
Any of or all the signatures on the certificate may be facsimile. In case
any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent or registrar before such certificate is issued, it may
be issued by the corporation with the same effect as if he/she were such
officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 2. The Board of Directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
11
issue of a new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his/her
legal representative, to advertise the same in such manner as it shall require
and/or to give the corporation a bond in such sum as it may direct as indemnity
against any claim that may be made against the corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 3. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
REGISTERED STOCKHOLDERS
Section 4. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
INDEMNIFICATION
Section 1. (a) Subject to Section 3 of this Article VII, the corporation
shall indemnify, to the fullest extent that it shall have power under applicable
law to do so and in a manner permitted by such law, any person who is made or
threatened to be made a party to or is otherwise involved (as a witness or
otherwise) in any threatened, pending, or completed action, suit, or proceeding,
whether civil, criminal, administrative, or investigative (hereinafter, a
"Proceeding"), by reason of the fact that such person is or was a director or
officer of the corporation, or while serving as a director or officer of the
corporation, is or was serving at the request of the corporation as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, including service with respect to an employee
benefit plan (collectively, "Another Enterprise") (such person hereinafter, a
"Mandatory Indemnitee"), against expenses (including attorneys' fees),
judgments, fines (including ERISA excise taxes or penalties) and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such Proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
(b) The corporation may indemnify, to the fullest extent that it shall
have power under applicable law to do so and in a manner permitted by such law,
any person who is made or threatened to be made a party to or is otherwise
involved (as a witness or otherwise) in any threatened, pending, or completed
Proceeding, by reason of the fact that such person is or was an employee or
agent of the corporation, or while serving as an employee or agent of the
corporation, is or was serving at the request of the corporation as a director,
officer, employee, or agent of Another Enterprise (such person hereinafter, a
"Permissive Indemnitee"), against expenses (including attorneys' fees),
judgments, fines (including ERISA excise taxes or penalties) and amounts paid in
settlement actually and reasonably incurred by him or her in connection with
such Proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
(c) Anything in this Section 1 of Article VII to the contrary
notwithstanding, if a person was or is a party or was or is threatened to be
made a party to any Proceeding by or in the right of the corporation to procure
a judgment in its favor by reason of the fact that such person is or was a
director, officer, employee, or agent of the corporation, or is or was serving
at the request of the corporation as a director, officer, employee, or agent of
Another Enterprise, then the corporation shall not indemnify such person for any
judgment, fines, or amounts paid in settlement to the corporation in connection
with such Proceeding. The corporation shall indemnify any such person who is a
Mandatory Indemnitee, and may indemnify any such person who is a Permissive
Indemnitee, in each case to the fullest extent that it shall have power under
applicable law to do so and in a manner permitted by such law, and subject to
Section 3 of this Article VII, against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such Proceeding if he or she acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to the best
interests of the corporation; provided, however, that no indemnification for
such expenses shall be made in respect of any claim, issue, or matter in such
Proceeding as to which the person shall have been adjudged liable to the
corporation unless (and only to the extent that) the Court of Chancery of the
State of Delaware or the court in which such Proceeding was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses that the Court of Chancery or such other
court shall deem proper.
(d) To the extent that a present or former director or officer of the
corporation has been successful on the merits or otherwise in defense of any
threatened, pending, or completed Proceeding referred to in Section 145(a) or
(b) of the General Corporation Law, or in defense of any claim, issue, or matter
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
(e) The termination of any Proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendre or its equivalent, shall not, of
itself, create a presumption that the person seeking indemnification did not act
in good faith and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
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Section 2. (a) Subject to Section 3 of this Article VII, with respect to
any person who is made or threatened to be made a party to or is otherwise
involved (as a witness or otherwise) in any threatened, pending, or completed
Proceeding, by reason of the fact that such person is or was a director or
officer of the corporation, or while serving as a director or officer of the
corporation, is or was serving at the request of the corporation as a director,
officer, employee, or agent of Another Enterprise, the corporation shall pay the
expenses (including attorneys' fees) incurred by such person in defending any
such Proceeding in advance of its final disposition (hereinafter an "advancement
of expenses"); provided, however, that any advancement of expenses shall be made
only upon receipt of an undertaking (hereinafter an "undertaking") by such
person to repay all amounts advanced if it shall ultimately be determined by
final judicial decision from which there is no further right to appeal that such
person is not entitled to be indemnified for such expenses under this Article
VII or otherwise.
(b) With respect to any person who is made or threatened to be made a
party to or is otherwise involved (as a witness or otherwise) in any threatened,
pending, or completed Proceeding, by reason of the fact that such person is or
was an employee or agent of the corporation, or while serving as an employee or
agent of the corporation, is or was serving at the request of the corporation as
a director, officer, employee, or agent of Another Enterprise, the corporation
may, in its discretion and upon such terms and conditions, if any, as the
corporation deems appropriate, pay the expenses (including attorneys' fees)
incurred by such person in defending any such Proceeding in advance of its final
disposition.
Section 3. Anything in Section 1(a) or Section 2(a) of this Article VII to
the contrary notwithstanding, except as provided in Section 5(b) of this Article
VII, with respect to a Proceeding initiated against the corporation by a
director or officer of the corporation (whether initiated by such person in such
capacity or in any other capacity, including as a director, officer, employee,
or agent of Another Enterprise), the corporation shall not be required to
indemnify or to advance expenses (including attorneys' fees) to such person in
connection with prosecuting such Proceeding (or part thereof) or in defending
any counterclaim, cross-claim, affirmative defense, or like claim of the
corporation in such Proceeding (or part thereof) unless such Proceeding was
authorized by the Board of Directors of the corporation.
Section 4. With respect to any person who is made or threatened to be made
a party to or is otherwise involved (as a witness or otherwise) in any
threatened, pending, or completed Proceeding, by reason of the fact that such
person is or was a director or officer of the corporation, or while serving as a
director or officer of the corporation, is or was serving at the request of the
corporation as a director, officer, employee, or agent of Another Enterprise,
the rights to indemnification and to the advancement of expenses conferred in
Sections 1(a) and 2(a) of this Article VII shall be contract rights. Any
amendment, repeal, or modification of, or adoption of any provision inconsistent
with, this Article VII (or any provision hereof) shall not adversely affect any
right to indemnification or advancement of expenses granted to any person
pursuant hereto with respect to any act or omission of such person occurring
prior to the time of such amendment, repeal, modification, or adoption
(regardless of whether the Proceeding relating to such acts or omissions is
commenced before or after the time of such amendment, repeal, modification, or
adoption).
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Section 5. (a) If (X) a claim under Section 1(a) of this Article VII with
respect to any right to indemnification is not paid in full by the corporation
within sixty (60) days after a written demand has been received by the
corporation or (Y) a claim under Section 2(a) of this Article VII with respect
to any right to the advancement of expenses is not paid in full by the
corporation within twenty (20) days after a written demand has been received by
the corporation, then the person seeking to enforce a right to indemnification
or to an advancement of expenses, as the case may be, may at any time thereafter
bring suit against the corporation to recover the unpaid amount of the claim.
(b) If successful in whole or in part in any suit brought pursuant to
Section 5(a) of this Article VII, or in a suit brought by the corporation to
recover an advancement of expenses (whether pursuant to the terms of an
undertaking or otherwise), the person seeking to enforce a right to
indemnification or an advancement of expenses hereunder or the person from whom
the corporation sought to recover an advancement of expenses, as the case may
be, shall be entitled to be paid by the corporation the reasonable expenses
(including attorneys' fees) of prosecuting or defending such suit.
(c) In any suit brought by a person seeking to enforce a right to
indemnification hereunder (but not a suit brought by a person seeking to enforce
a right to an advancement of expenses hereunder), it shall be a defense that the
person seeking to enforce a right to indemnification has not met any applicable
standard for indemnification under applicable law. With respect to any suit
brought by a person seeking to enforce a right to indemnification or right to
advancement of expenses hereunder or any suit brought by the corporation to
recover an advancement of expenses (whether pursuant to the terms of an
undertaking or otherwise), neither (i) the failure of the corporation to have
made a determination prior to commencement of such suit that indemnification of
such person is proper in the circumstances because such person has met the
applicable standards of conduct under applicable law, nor (ii) an actual
determination by the corporation that such person has not met such applicable
standards of conduct, shall create a presumption that such person has not met
the applicable standards of conduct or, in a case brought by such person seeking
to enforce a right to indemnification, be a defense to such suit.
(d) In any suit brought by a person seeking to enforce a right to
indemnification or to an advancement of expenses hereunder, or by the
corporation to recover an advancement of expenses (whether pursuant to the terms
of an undertaking or otherwise), the burden shall be on the corporation to prove
that the person seeking to enforce a right to indemnification or to an
advancement of expenses or the person from whom the corporation seeks to recover
an advancement of expenses is not entitled to be indemnified, or to such an
advancement of expenses, under this Article VII or otherwise.
Section 6. Any indemnification required or permitted under this Article VII
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the present or
former director, officer, employee or agent is proper in the circumstances
because he or she has met all applicable standards of conduct set forth in this
Article VII and Section 145 of the General Corporation Law. Such determination
shall be made, with respect to a person who is a director or officer of the
corporation at the time of such determination, (i) by a majority vote of the
14
directors who are not parties to such action, suit or proceeding, even though
less than a quorum; (ii) by a committee of such directors designated by majority
vote of such directors, even though less than a quorum; (iii) if there are no
such directors, or if such directors so direct, by independent legal counsel in
a written opinion; or (iv) by the stockholders. Such determination shall be
made, with respect to any person who is not a director or officer of the
corporation at the time of such determination, in the manner determined by the
Board of Directors (including in such manner as may be set forth in any general
or specific action of the Board of Directors applicable to indemnification
claims by such person) or in the manner set forth in any agreement to which such
person and the corporation are parties.
Section 7. The indemnification and advancement of expenses provided in this
Article VII shall not be deemed exclusive of any other rights to which any
person may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be such director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such person.
Section 8. The corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee, or agent of Another Enterprise against any
liability asserted against such person and incurred by such person in any such
capacity, or arising out of such person's status as such, whether or not the
corporation would have the power to indemnify such person against such liability
under the provisions of this Article VII or otherwise.
Section 9. If any provision or provisions of this Article VII shall be held
to be invalid, illegal, or unenforceable for any reason whatsoever: (a) the
validity, legality, and enforceability of the remaining provisions of this
Article VII (including, without limitation, each portion of any paragraph or
clause containing any such provision held to be invalid, illegal, or
unenforceable, that is not itself held to be invalid, illegal, or unenforceable)
shall not in any way be affected or impaired thereby; and (b) to the fullest
extent possible, the provisions of this Article VII (including, without
limitation, each such portion of any paragraph or clause containing any such
provision held to be invalid, illegal, or unenforceable) shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal, or unenforceable.
Section 10. For purposes of this Article VII: (a) references to serving at
the request of the corporation as a director or officer of Another Enterprise
shall include any service as a director or officer of the corporation that
imposes duties on, or involves services by, such director or officer with
respect to an employee benefit plan; (b) references to serving at the request of
the corporation as a employee or agent of Another Enterprise shall include any
service as an employee or agent of the corporation that imposes duties on, or
involves services by, such employee or agent with respect to an employee benefit
plan; (c) a person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner not
opposed to the best interests of the corporation; and (d) references to a
director of Another Enterprise shall include, in the case of any entity that is
not managed by a board of directors, such other position, such as manager or
trustee or member of the governing body of such entity, that entails
responsibility for the management and direction of such entity's affairs,
15
including, without limitation, general partner of any partnership (general or
limited) and manager or managing member of any limited liability company.
ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the Board of Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purposes as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the Board of Directors.
SEAL
Section 5. The Board of Directors may adopt a corporate seal having
inscribed thereon the name of the corporation, and the words "Corporate Seal,
Delaware" or variations thereof. The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE IX
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new bylaws
may be adopted by the affirmative vote of holders of at least a majority vote of
the outstanding voting stock of the corporation. These bylaws may also be
altered, amended or repealed or new bylaws may be adopted by the Board of
Directors, when such power is conferred upon the Board of Directors by the
certificate of incorporation. The foregoing may occur at any regular meeting of
the stockholders or of the Board of Directors or at any special meeting of the
stockholders or of the Board of Directors if notice of such alteration,
amendment, repeal or adoption of new bylaws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal bylaws is conferred upon
the Board of Directors by the certificate of incorporation it shall not divest
or limit the power of the stockholders to adopt, amend or repeal bylaws.
16
CERTIFICATE OF ADOPTION BY THE SECRETARY OF SIMTEK CORPORATION
The undersigned, Brian Alleman, hereby certifies that he is the duly
elected and acting Secretary of Simtek Corporation, a Delaware corporation, and
that the bylaws attached hereto constitute the bylaws of said corporation as
duly adopted by the Board of Directors.
IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name as of
the 5th day of October, 2006.
/S/ BRIAN ALLEMAN
----------------------------------------------
Brian Alleman, Secretary
17
EXHIBIT 4.1
[LOGO]
NUMBER SHARES
STK______ _______
SIMTEK
INCORPORATED UNDER THE LAWS SEE REVERSE FOR
OF THE STATE OF DELAWARE CERTAIN DEFINITIONS
CUSIP 829204 30 4
THIS CERTIFIES THAT
is the record holder of
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, $0.0001 PAR VALUE OF
=====================================================SIMTEK CORPORATION=============================================================
transferable only on the books of the Corporation by the holder hereof in person or by an attorney upon surrender of this
certificate properly endorsed. This certificate is not valid until countersigned by the Transfer Agent and Registrar of the
Corporation.
Witness the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated:_____________
[SEAL]
/s/ Brian Alleman /s/ Harold Blomquist
SECRETARY CHAIRMAN OF THE BOARD
COUNTERSIGNED AND REGISTERED.
CONTINENTAL STOCK TRANSFER & TRUST COMPANY
(JERSEY CITY, N.J.)
TRANSFER AGENT
AND REGISTRAR
By
AUTHORIZED OFFICER
The Corporation will furnish to any shareholder upon request and without charge a full statement of
the designations, preferences, limitations and relative rights of the shares of each class authorized to
be issued and the variations in the relative rights and preferences between the shares of each series of
preferred stock authorized to be issued, to the extent that such rights and preferences have been fixed
and determined, and the authority of the board of directors to fix and determine the relative rights and
preferences of subsequent series.
----------------------------------------------------------------------------------------------
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in
fullaccording to applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT MIN ACT-..........Custodian..........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act..........
in common State
COM PROP - as community property
UNIF GIFT MIN ACT-..........Custodian..........
(Cust) (Minor)
(until age _______) under Uniform
Transfers to Minors Act..........
State
Additional abbreviations may also be used though not in the above
list.
----------------------------------------------------------------------------------------------
For Value Received,______________________________________________hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
-------------------------------------
| |
|-------------------------------------|
-------------------------------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
--------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------
Shares
--------------------------------------------------------------------------------------------------
of the Common Stock represented by the within certificate, and do hereby irrevocably constitute and appoint
__________________________________________________________________________________________________Attorney
to transfer the said shares on the books of the within named Corporation with
full power of substitution in the premises.
Dated:____________________________________
-------------------------------------------------------
NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH
THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT
OR ANY CHANGE WHATSOEVER.
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: October 11, 2006
Simtek Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 0-19027 84-1057605
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification #)
4250 Buckingham Dr. #100, Colorado Springs, CO 80907
(Address of Principal Executive Office)
(719) 531-9444
(Registrant's telephone number, including area code)
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
================================================================================
Item 7.01: Regulation FD Disclosure
On October 11, 2006, Simtek Corporation (the "Company") issued a press
release announcing to investors that revenue is expected to exceed high end of
guidance for the third quarter 2006, that new orders exceeded $11 million in the
third quarter and the date of the third quarter 2006 conference call. A copy of
the press release is included herewith as Exhibit 99.1
Item 9.01: Financial Statements and Exhibits
(d) Exhibits
Exhibit Number Description
-------------- -----------
99.1 Press release of the Company dated October 11, 2006,
titled "Simtek Announces Revenue to Exceed High End
of Guidance for Third Quarter 2006"
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIMTEK CORPORATION
By: /s/Brian Alleman
--------------------------------------
Brian Alleman, Chief Financial Officer
October 11, 2006
3
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
99.1 Press release of the Company dated October 11, 2006,
titled "Simtek Announces Revenue to Exceed High End of
Guidance for Third Quarter 2006".
4
Exhibit 99.1
SIMTEK ANNOUNCES REVENUE TO EXCEED HIGH
END OF GUIDANCE FOR THIRD QUARTER 2006
o New Orders Exceeded $11 Million in the Third Quarter
o Investor Conference Call to be Held October 26th
COLORADO SPRINGS, Colorado- October 11, 2006 - Simtek Corporation (OTC Bulletin
Board: SMTE), the inventor, pioneer, and world's leading supplier of monolithic
nonvolatile static random access memory (nvSRAM) integrated circuits, announced
today that product revenues for the quarter ended September 30, 2006 are
expected to be in excess of $8.0 million which exceeds the high end of guidance
previously given of $7.5 million to $8.0 million.
New orders for the quarter exceeded $11 million resulting in excellent revenue
in the third quarter and establishing a solid backlog of orders to achieve
previously guided revenue in the fourth quarter of 2006 of between $9.0 million
and $9.3 million. As of the beginning of the fourth quarter, backlog of orders
scheduled to ship in the fourth quarter stands at approximately $7 million.
The Company remains on track to achieve profit on a pro-forma basis (GAAP Net
Income minus the amortization of the ZMD transaction and expensing of stock
options) for the third quarter and on a GAAP basis for the fourth quarter.
The investor conference call for third quarter 2006 will be held on Thursday,
October 26th, 2006, at 10:00am EDT. Further details will be provided at a later
date.
About Simtek Corporation
Simtek Corporation designs and markets high-speed, re-programmable, nonvolatile
semiconductor memory products, for use in a variety of systems including RAID
servers, high performance workstations, GPS navigational systems, robotics,
copiers and printers, and networking and broadcast equipment. Information on
Simtek products can be obtained from its web site: www.simtek.com; email:
information@simtek.com. The company is headquartered in Colorado Springs,
Colorado.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements predicting
Simtek's future growth. These forward-looking statements are inherently
difficult to predict and involve risks and uncertainties that could cause actual
results to differ materially, including, but not limited to, projections of
future performance including predictions of future profitability and
expectations of the business environment in which Simtek operates. For a
detailed discussion of these and other risk factors, please refer to Simtek's
filings with the Securities and Exchange Commission (SEC), including its Annual
Report on Form 10-KSB and subsequent Form 10-Q and Form 8-K filings.
Source: Simtek
IR Contact for Simtek
Sheldon Lutch
Fusion IR & Communications
sheldon@fusionir.com
212.268.1816
Company Contact for Simtek:
Brian Alleman
information@simtek.com
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: October 6, 2006
Simtek Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 0-19027 84-1057605
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification #)
4250 Buckingham Dr. #100, Colorado Springs, CO 80907
(Address of Principal Executive Office)
(719) 531-9444
(Registrant's telephone number, including area code)
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
================================================================================
Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers
(d) On October 6, 2006, the Board of Directors of Simtek Corporation, a Delaware
corporation (the "Company"), filled the vacant position on the Board of
Directors with Mr. John Hillyard and elected Mr. Hillyard as a Director until
the next annual meeting of stockholders. As of the date of this report, Mr.
Hillyard had not been named as a member of any of the committees of the Board
and it is unknown at the time of this report to what committees, if any, Mr.
Hillyard is expected to be named. A copy of the press release announcing Mr.
Hillyard's election is included herewith as Exhibit 99.1.
Item 8.01 Other Events
Mr. Hillyard will receive the standard compensation for a member of the
Board of Directors, which standard compensation arrangement has changed, upon
recommendation and approval from the Compensation Committee, since the 2006
annual meeting of stockholders. Under the new standard compensation arrangement
for directors, upon the initial election of a director, such director is granted
options to purchase 25,000 (as opposed to 15,000 under the prior arrangement)
shares of common stock, par value $0.0001 per share, of the Company ("Common
Stock"). If a director is appointed as the Chairman of a committee of the Board
(and for each director already serving as a committee Chairman on the effective
date of the new compensation arrangement), such director is granted options to
purchase 15,000 shares of Common Stock; the grant of options as a result of
serving as the Chairman of a committee of the Board is a new feature of the
standard compensation arrangement for directors. Effective January 1, 2007, each
member of the Board of Directors receives, within the first month of each
calendar year, while serving as a member of the Board of Directors, a grant of
options to purchase 10,000 (as opposed to 3,500 under the prior arrangement)
shares of Common Stock. The vesting schedule for options granted to directors
has not changed: all options are still subject to cliff vesting on the date that
is six months from the date of grant. If a director resigns before an option has
vested, such option is forfeited. Each director receives $1,500 for each meeting
of the Board of Directors, attended in person, and $500 for each meeting of a
committee of the Board, attended in person. If a director attends telephonically
a meeting of the Board of Directors or a meeting of a committee of the Board,
such director is paid 50% of the "in person" fee. Each director receives a
$10,000 annual stipend, which is paid quarterly. Directors are also reimbursed
for their reasonable out-of-pocket expenses incurred in connection with their
duties to the Company. None of the cash payment provisions of the standard
compensation arrangement have changed since the 2006 annual meeting of
stockholders.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
-------------- -----------
99.1 Press release of the Company, dated October 12, 2006,
titled "Simtek Strengthens Board of Directors Through the
Addition of John Hillyard of Lefthand Networks".
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIMTEK CORPORATION
By: /s/ Brian Alleman
--------------------------------------
Brian Alleman, Chief Financial Officer
October 12, 2006
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
99.1 Press release of the Company, dated October 12, 2006, titled
"Simtek Strengthens Board of Directors Through the Addition
of John Hillyard of Lefthand Networks".
Exhibit 99.1
SIMTEK STRENGTHENS BOARD OF DIRECTORS THROUGH THE ADDITION OF
JOHN HILLYARD OF LEFTHAND NETWORKS
COLORADO SPRINGS, Colorado-October 12, 2006 - Simtek Corporation (OTC Bulletin
Board: SMTE), the world's leading supplier of nonvolatile static random access
memory (nvSRAM) integrated circuits, announced today that Mr. John Hillyard, CFO
of LeftHand Networks, a leading storage company headquartered in Boulder,
Colorado, has been added to Simtek's Board of Directors to fill the seat vacated
by Mr. Tom Surrette (who became a Board observer).
Mr. Hillyard joins the Simtek Board of Directors with more than 25 years
experience as a senior finance and operations executive in the technology
market, with significant domestic and international experience at both public
and private companies. Prior to commencing his position as the CFO of LeftHand
Networks, a pioneer in the open iSCSI SAN market, Hilllyard was EVP, Finance and
Operations and Chief Financial Officer for FrontRange Solutions; Vice President
and Chief Financial Officer for daly.commerce, Inc.; Vice President and Chief
Financial Officer for InteliData Technologies Corp.; and Senior Vice President
and Chief Financial Officer for eFunds Corporation. Hillyard has been a CFO for
companies traded on domestic and international stock exchanges. He studied
Business Economics at the University of California at Santa Barbara and earned
his CPA while working at PriceWaterhouseCoopers.
Hillyard stated, "Having been an executive with other high growth, successful
entrepreneurial companies in the Colorado Front Range, it has been exciting to
see Simtek begin to flourish like it has. I'm excited to be part of the team and
look forward to the bright future at Simtek."
Harold Blomquist, Chairman, President, and CEO of Simtek stated, "Simtek is
excited to have a professional of John's caliber join the Board. He has
considerable experience as a financial expert which is increasingly important in
today's corporate governance environment. His experience in international
business and finance is especially important as Simtek expands globally. In
addition, John comes with experience in the data storage market which is a
business sector that is very important to Simtek. We are proud to have John join
our Board of Directors and look forward to his contributions."
About Simtek Corporation
Simtek Corporation designs and markets high-speed, re-programmable, nonvolatile
semiconductor memory products, for use in a variety of systems including RAID
servers, high performance workstations, GPS navigational systems, robotics,
copiers and printers, and networking and broadcast equipment. Information on
Simtek products can be obtained from its web site: www.simtek.com; email:
information@simtek.com. The company is headquartered in Colorado Springs,
Colorado.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements predicting
Simtek's future growth. These forward-looking statements are inherently
difficult to predict and involve risks and uncertainties that could cause actual
results to differ materially, including, but not limited to, projections of
future performance including predictions of future profitability and
expectations of the business environment in which Simtek operates. For a
detailed discussion of these and other risk factors, please refer to Simtek's
filings with the Securities and Exchange Commission (SEC), including its Annual
Report on Form 10-KSB and subsequent Form 10-Q and Form 8-K filings.
Source: Simtek
IR Contact for Simtek
Sheldon Lutch
Fusion IR & Communications
sheldon@fusionir.com
212.268.1816
Company Contact for Simtek:
Brian Alleman
information@simtek.com
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: October 27, 2006
Simtek Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 0-19027 84-1057605
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification #)
4250 Buckingham Dr. #100, Colorado Springs, CO 80907
(Address of Principal Executive Office)
(719) 531-9444
(Registrant's telephone number, including area code)
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
================================================================================
Item 2.02 Results of Operations and Financial Condition.
On October 26, 2006, Simtek Corporation (the "Company") issued a press
release titled, "Simtek Reports Record Revenue for Third Quarter of 2006".
Total revenue was $8.3 million for the third quarter of 2006 an increase of
242% over the third quarter of 2005, and an increase of 28% quarter-over-quarter
compared to second quarter 2006. The Company reported a net loss from continuing
operations of $0.2 million for the third quarter 2006 or a loss of $0.02 per
share compared to a net loss from continuing operations of $1.7 million or a
loss of $0.00 per share for the third quarter of 2005. Excluding the effects of
stock options and amortization of acquisition related costs, the net income was
$0.3 million for the third quarter of 2006. There were no such charges in the
2005 period.
Total revenue for the first nine months of 2006 was $21.7 million,
including royalty revenue of $1.5 million. Product sales for the first nine
months of 2006 were $19.4 million, an increase of 156% from the $7.6 million
recorded in the first nine months of 2005. The Company reported a net loss from
continuing operations of $2.6 million for the nine months ended September 30,
2006 or a loss of $0.18 per share, compared to a net loss from continuing
operations of $5.6 million or a net loss of $0.84 per share for the same period
in 2005. Excluding the effects of stock options and amortization of acquisition
related costs, the net loss was $.9 million for the 2006 period. There were no
such charges in the 2005 period.
The full text of the press release is attached as Exhibit 99.1 to this Form
8-K Current Report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
-------------- -----------
99.1 Press Release, dated October 26, 2006, titled "Simtek
Reports Record Revenue for the Third Quarter of
2006".
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIMTEK CORPORATION
By: /S/ Brian Alleman
---------------------------------------------
Brian Alleman, Chief Financial Officer
October 27, 2006
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
99.1 Press Release, dated October 26, 2006 titled "Simtek
Reports Record Revenue for Third Quarter of 2006".
Exhibit 99.1
SIMTEK REPORTS RECORD REVENUE
FOR THIRD QUARTER OF 2006
o Record Revenue for Third Quarter and First Nine Months of 2006
o More Than 1,000 Basis Point Increase in Gross Margin from Q2 2006
o Ex-item Profitability for the Third Quarter
o Reverse Stock Split and Reincorporation in Delaware Now Complete
COLORADO SPRINGS, Colorado - October 26, 2006 - Simtek Corporation (OTC Bulletin
Board: SMTE), the inventor, pioneer, and world's premier supplier of nonvolatile
static random access memory (nvSRAM) integrated circuits, today announced its
financial results for the third quarter and nine months ended September 30,
2006.
Key Highlights
o Product revenue of $8.3 million for Q3 2006, a 242% increase over Q3
2005 and 28% over Q2 2006
o Product revenue of $19.4 million for the first nine months of 2006, a
156% increase over the same period in 2005
o Booking of new orders in the third quarter were a record $11.0
million, with a book-to-bill ratio of 1.33
o Record total revenue of $21.0 million for the first nine months of
2006, a 176% increase over 2005
o Ex-item (non-GAAP) net profit of $335,000, or $0.02 per share, for Q3
2006 versus a loss from continuing operations of $1.7 million or
$(0.24) per share for Q2 2005.
o Gross product margin increased to 40% for Q3 2006 from 25% a year ago
and 29% for Q2 2006
o Cash balance as of September 30, 2006 was $5.4 million, including $1.8
million restricted cash
o 1 megabit units shipped in Q3 2006 increased 114% from Q2 2006
Financial Results
Total revenue, consisting entirely of product sales, was $8.3 million for Q3
2006, a 242% increase over $2.4 million of product sales in Q3 2005, and a 28%
increase over Q2 2006 product sales of $6.4 million. The Company reported a net
loss for Q3 2006 of $0.2 million, or $(0.02) per share, compared to a net loss
from continuing operations of $1.7 million, or $(0.24) per share, for Q3 2005.
Excluding the effects of stock options and amortization of acquisition related
costs, the Company generated an ex-item (non-GAAP) net profit of $335,000, or
$0.02 per share, for Q3 2006. There were no such charges in the 2005 period.
Total revenue for the first nine months of 2006 was a record $21.0 million,
including royalty revenue of $1.5 million, a 176% increase over the first nine
months of 2005. Product revenue for the first nine months of 2006 was $19.4
million, a 156% increase over the $7.6 million for the first nine months of
2005. The Company reported a net loss for the nine months ended September 30,
2006 of $2.6 million, or a loss of $(0.18) per share, compared to a net loss
from continuing operations of $5.6 million, or a loss of $(0.84) per share, for
the same period in 2005. Excluding the effects of stock options and amortization
of acquisition related costs, the ex-item (non-GAAP) net loss was $852,000, or
$(0.06) per share, for the first nine months of 2006. There were no such charges
in the 2005 period. All per share amounts reflect the effect of the 1 for 10
reverse stock split that was completed on October 5, 2006.
"I am pleased with the strong financial results for the third quarter and for
the first nine months of 2006," said Harold Blomquist, President and Chief
Executive Officer of Simtek. "During the first nine months we focused on
improving gross margins, raising revenue, and increasing production capacity to
support surging customer demand, especially for our 1 megabit family. During the
quarter and the first nine months of 2006, we added several significant new
customers and made progress on many aspects of operational effectiveness,"
continued Blomquist. "Our engineering team, in close collaboration with Cypress
is nearing completion of the 4 megabit design and process development. We remain
optimistic about our prospects for the remainder of 2006 and beyond as we
continue to execute on our game plan to strengthen our position in the
nonvolatile semiconductor memory marketplace. I am also pleased that the market
has reacted so well to our recently completed reverse stock split and
reincorporation in the State of Delaware. We believe that we are well positioned
to complete in the fourth quarter of 2006 Simtek's application to one of the
major national stock exchanges for listing," Blomquist concluded.
Outlook for the Fourth Quarter 2006 and First Half of 2007
Simtek currently estimates that product revenue for Q4 2006 will be in the range
of $9.0 million to $9.3 million with total revenue between $9.2 million and $9.8
million due to the final installment of prepaid royalties from Cypress. Total
revenue for 2006 is expected to be approximately $31 million. The Company's
order backlog, scheduled for delivery in the fourth quarter, was $7.0 million at
September 30, 2006 and represents a higher percentage of guided revenue than in
any previous quarter. The Company expects bookings in Q4 2006 to be
approximately $12 million, continuing the strong trend experienced throughout
2006. The book-to-bill ratio is expected to remain strong at nearly 1.3. Gross
margin is projected to improve by 200 to 400 basis points from the third quarter
to the fourth quarter of 2006, and the Company anticipates posting a net profit
for the Q4 2006. On an ex-item basis the Company anticipates achieving a modest
profit for the entire year 2006. The Company also reaffirmed its revenue
guidance for 1H 2007 of between $20 and $24 million.
Conference Call
Simtek management will host a conference call at 10:00 a.m. EDT (7:00 a.m. PDT)
today to discuss these results. The call can be accessed by dialing 800-257-3401
and giving the company name, "Simtek." Participants are asked to call the
assigned number approximately 10 minutes before the conference call begins. A
replay of the conference call will be available two hours after the call for the
following five business days by dialing 800-405-2236 and entering the following
pass code: 11074215#. Also, the conference call together with supplemental
financial information will be available over the Internet at
http://www.simtek.com in the Investor Info area of the site or by going to
http://www.mkr-group.com.
Ex-item Information
Simtek reports net income or loss in accordance with GAAP and additionally uses
ex-item (non-GAAP) financial measures which are adjusted from the most directly
comparable GAAP financial measures to exclude charges related to new, unusual or
non-recurring expenses the Company may incur from time to time, in order to
provide additional comparative information between periods. Management believes
that these ex-item measures are important to investor understanding of the
Company's disclosures regarding past, current and future operating results.
About Simtek Corporation
Simtek Corporation designs and markets high-speed, re-programmable, nonvolatile
semiconductor memory products, for use in a variety of systems including RAID
servers, high performance workstations, GPS navigational systems, robotics,
copiers and printers, and networking and broadcast equipment. Information on
Simtek products can be obtained from its web site: www.simtek.com; email:
information@simtek.com. The Company is headquartered in Colorado Springs,
Colorado.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, including statements predicting
Simtek's future growth. These forward-looking statements are inherently
difficult to predict and involve risks and uncertainties that could cause actual
results to differ materially, including, but not limited to, projections of
future performance including predictions of future profitability and
expectations of the business environment in which Simtek operates. For a
detailed discussion of these and other risk factors, please refer to Simtek's
filings with the Securities and Exchange Commission (SEC), including its Annual
Report on Form 10-K and subsequent Form 10-Q and Form 8-K filings.
IR Contact for Simtek Company Contact for Simtek:
MKR Group, Inc. Brian Alleman, CFO
Todd Kehrli or Marie Dagresto information@simtek.com
323-468-2300
smte@mkr-group.com
Following is reconciliation* of the Ex-item (non-GAAP) financial measures to the
most comparable GAAP financial measures:
Unaudited Three Months Ended Nine Months Ended
(Amounts in thousands, except per share amounts) September 30, 2006 September 30, 2006
Loss from Continuing Operations as reported $ (249) $(2,605)
Adjusted-GAAP items:
Amortization of Non-compete Agreement 445 1,336
Costs associated with employee stock options 139 417
------ -------
Ex-item Income (Loss) from Continuing Operations $ 335 $ (852)
====== =======
Per Share Data:
Loss from Continuing Operations as reported $(0.02) $ (0.18)
Amortization of Non-compete Agreement $ 0.03 $ 0.09
Costs associated with employee stock options $ 0.01 $ 0.03
------ -------
Ex-item Loss Per Share from Continuing Operations $ 0.02 $ (0.06)
====== =======
* Pursuant to the requirements of Regulation G.
Simtek reports net income or loss in accordance with GAAP and additionally uses
ex-item (non-GAAP) financial measures which are adjusted from the most directly
comparable GAAP financial measures to exclude charges related to unusual or
non-recurring expenses the Company may incur from time to time, in order to
provide additional comparative information between periods. Management believes
that these ex-item measures are important to investor understanding of the
Company's disclosures regarding past, current and future operating results.
As of September 30, 2006 there were 16,035,968 shares outstanding, after giving
effect to the 1 for 10 reverse stock split that took effect on October 5, 2006.
SIMTEK CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Amounts in thousands, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
---- ---- ---- ----
Product sales, net $ 8,251 $ 2,412 $ 19,436 $ 7,591
Royalty revenue - - 1,518 -
-------- -------- -------- ---------
Total revenue 8,251 2,412 20,954 7,591
Cost of sales 4,979 1,807 13,016 5,490
-------- -------- -------- ---------
GROSS PROFIT 3,272 605 7,938 2,101
OPERATING EXPENSES:
Research and development costs 1,351 1,572 4,578 4,697
Sales and marketing 1,250 321 3,233 1,164
General and administrative 838 412 2,595 1,759
-------- -------- -------- ---------
Total operating expenses 3,439 2,305 10,406 7,620
-------- -------- -------- ---------
LOSS FROM CONTINUING OPERATIONS (167) (1,700) (2,468) (5,519)
OTHER INCOME (EXPENSE):
Interest income 36 45 112 56
Interest expense (113) (63) (247) (177)
Exchange rate variance (7) - (4) -
Other income (expense) 2 - 2 (1)
-------- -------- -------- ----------
Total other expense (82) (18) (137) (122)
-------- -------- -------- ----------
LOSS FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES (249) (1,718) (2,605) (5,641)
Provision for income taxes - - - -
-------- -------- -------- ----------
LOSS FROM CONTINUING OPERATIONS (249) (1,718) (2,605) (5,641)
INCOME FROM DISCONTINUED OPERATIONS
(including gain on disposal of $1,689) - 1,701 - 1,706
-------- -------- -------- ---------
NET LOSS $ (249) $ (17) $ (2,605) $ (3,935)
======== ======== ======== =========
NET LOSS PER COMMON SHARE:
Basic and diluted
Loss from continuing operations $ (.02) $ (.24) $ (.18) $ (.84)
Income from discontinued operations (.00) .24 (.00) (.25)
-------- -------- -------- ---------
Total $ (.02) $ (.00) $ (.18) $ (.59)
======== ======== ======== =========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic and diluted 14,966,916 7,073,599 14,791,191 6,713,113
========== ========= ========== =========
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: November 3, 2006
Simtek Corporation
(Exact Name of Registrant as Specified in Charter)
Delaware 0-19027 84-1057605
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
4250 Buckingham Dr. #100, Colorado Springs, CO 80907
(Address of Principal Executive Offices)
(719) 531-9444
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
================================================================================
Item 1.01 Entry into a Material Definitive Agreement.
As previously disclosed, on May 23, 2006, Simtek Corporation (the
"Company") entered into a preliminary agreement with Ronald Sartore, a director
of the Company, whereby Mr. Sartore would provide certain consulting services
with respect to new nvSRAM-based product definitions and other
engineering-related matters at the Company. On November 3, 2006, the Company
entered into a definitive written agreement with Mr. Sartore whereby Mr. Sartore
will be employed as an Executive Vice-President of the Company with a main focus
on new product development. Mr. Sartore's base annual salary will be $225,000
and he will be eligible to receive a bonus, based on performance, in accordance
with the Company's Executive Incentive Compensation Plan. Mr. Sartore will also
be entitled to options to purchase 100,000 shares of the Company's common stock,
vesting at 1/48th per month beginning immediately upon commencement of his
employment. In exchange for transferring to the Company ownership of certain
inventions initiated by Mr. Sartore prior to Mr. Sartore becoming an employee of
the Company and during the period of his consulting arrangement with the
Company, Mr. Sartore will be entitled to receive 1,500 shares of the Company's
common stock upon the filing of a patent application for each such invention and
2,500 shares upon a patent being issues for each such invention. A copy of Mr.
Sartore's offer letter is included herewith as Exhibit 10.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number Description
-------------- -----------
10.1 Offer letter from the Company to Ronald Sartore,
dated November 3, 2006.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SIMTEK CORPORATION
By: /S/ BRIAN ALLEMAN
--------------------------------------
Brian Alleman, Chief Financial Officer
November 9, 2006
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
10.1 Offer letter from the Company to Ronald Sartore,
dated November 3, 2006.
EXHIBIT 10.1
Simtek Corporation
4250 Buckingham Drive #100
Colorado Springs, CO 80907 USA
[SIMTEK LOGO] Tel: 719-531-9444 Fax: 719-531-9481
================================================================================
November 3, 2006
Mr. Ron Sartore
14445 Cypress Point
Poway, CA 92064
Dear Ron,
I am pleased to extend to you this offer to join Simtek Corporation ("SIMTEK")
as Executive Vice-President. Your employment start date is expected to be
Monday, November 13, 2006. This letter states the complete terms and conditions
of your offer, and supersedes and novates any previous understandings or oral or
written discussions regarding the terms and conditions of your employment. If
you agree to these terms and conditions, please initial the bottom of each page
and sign at the end of this letter in the space indicated.
Among other engineering and leadership duties, your main focus will be new
product development. You will report to me, as President and Chief Executive
Officer, and I will be primarily responsible for evaluating your performance.
In consideration for all services rendered by you in such employment, you will
be paid at a monthly rate of $18,750, paid semi-monthly and subject to
withholding, which equates to an annual base salary of $225,000. As of January
1, 2007, you will be eligible to participate in the Executive Incentive
Compensation Plan (EICP) as established, and from time to time, amended by the
Compensation Committee of the Board of Directors. By way of example, your target
incentive payment at 100% performance to the goals as set forth in the EICP is
50% of your base salary, or $112,500. Calculation and payment of compensation
earned on the EICP will be completed annually based on completion of goals at
the end of the calendar year.
SIMTEK acknowledges and agrees that you will be provided certain other
compensation related to inventions that were initiated by you prior to you
becoming an employee of SIMTEK. Compensation for these inventions is shown in
Exhibit A. Payment of the amounts shown on Exhibit A is subject to your making
appropriate arrangements with SIMTEK for the payment of the required
withholding. You hereby unconditionally and irrevocably assign, convey,
transfer, and sell to SIMTEK all right, title and interest you have in and to
the inventions described in Exhibit A, and represent and warrant to SIMTEK that
you have not assigned, transferred, conveyed, pledged, or sold any right, title
or interest in or to such inventions. You agree to execute and deliver such
further documents and take such actions as SIMTEK may require in order for
SIMTEK to perfect its right, title or ownership in or to any of such inventions.
Any options granted to you as a Director, prior to your date of employment with
SIMTEK will remain in effect, with vesting per the normal vesting period for
Directors' options. The Compensation Committee has authorized that the options
granted to you as an employee will vest per the current normal vesting period
(which is four years), provided that due to your time of service as a Director
and consultant, the one-year cliff vesting will be waived and vesting will begin
immediately at 1/48th per month.
Any hours worked or expenses incurred in conjunction with the prior consulting
agreement between you and SIMTEK should be invoiced or submitted per normal
procedure and will be paid in accordance with the Company's normal practice;
provided however, that all such amounts shall be invoiced and paid on or before
December 31, 2006.
Upon commencement of your employment with SIMTEK, the Committee that administers
the 1994 Non-Qualified Stock Option intends to grant you an option to purchase
up to 100,000 shares of SIMTEK Common Stock pursuant to the terms of the 1994
Non-Qualified Stock Option Plan (the "Option Plan") as the Committee determines
in its discretion. The exercise price (which shall not be less than the fair
market value of the Common Stock (as defined in the Option Plan) on the date the
option is granted) and other terms and conditions will be determined by the
Committee at the time Committee takes the action necessary to grant the option.
As part of your employment you will be eligible for SIMTEK's standard benefit
plans, programs and arrangements, according to the terms and conditions of the
plans, programs and arrangements, as such terms and conditions may be modified
from time to time or terminated, and on the same basis as other employees of
SIMTEK, including health and life insurance, holiday and vacation pay, and long
and short-term disability coverage. You will be eligible to participate in
SIMTEK Corporation's 401(k) Retirement Savings Plan according to the terms and
conditions of the 401(k) Retirement Plan and on the same basis as other
employees of SIMTEK. You will accrue vacation at a rate of 1.67 days per month.
This is equivalent to 20 days per year.
Your employment with SIMTEK will be "at-will." This means that either you or
SIMTEK may terminate your employment at any time, with or without cause, with or
without notice, and for any reason or no reason.
Unless you've already signed the following documents, as part of your employment
with SIMTEK you will be expected to execute, concurrently with the execution of
this offer letter, the SIMTEK Invention and Patent Agreement and the SIMTEK
Confidentiality, Proprietary Information, and Trade Secret Agreement, Simtek's
Code of Business Conduct and Ethics and Simtek's Insider Trading Policy. Copies
of these documents have been provided to you separately. You will also be
expected to sign the Employment Eligibility Verification Form I-9 published by
the Immigration and Naturalization Services in order to comply with the
Immigration Reform and Control Act. A copy of Form I-9 is being provided to you
herewith.
This offer expires at 5:00 PM Mountain Time on 11/03/06. I look forward to your
favorable response to this offer and to you joining the SIMTEK team on a full
time basis.
Sincerely,
Simtek Corporation
By:
/s/ HAROLD BLOMQUIST
-----------------------------------------
HAROLD A. BLOMQUIST
Chief Executive Officer and
President
I have read this offer and I understand and I accept its terms.
/s/ RON SARTORE
------------------------------------
Ron Sartore
Date: November 3, 2006
Exhibit A
Special Compensation for Inventions
The following inventions have been preliminarily defined between Mr. Sartore and
Simtek. These are all inventions that predate Mr. Sartore's employment date. In
the event that SIMTEK wishes to proceed with any or all possible patent
applications for these inventions Mr. Sartore is to be compensated according to
the following table. All grants are for stock, not options, and are to be priced
at the time of the qualifying event. These grants may create a taxable event for
Mr. Sartore for which he will be totally responsible.
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
Invention Date Description Additional Information Shares Granted on Shares Granted on
Patent Application Issuance of Patent(2)
Being Filed(1)
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
1,500 shares 2,500 shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
1,500 shares 2,500 shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
1,500 shares 2,500 shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
1,500 shares 2,500 shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
1,500 shares 2,500 shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
1,500 shares 2,500 shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
1,500 shares 2,500 shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
1,500 shares 2,500 shares
------------------------- ---------------------- ----------------------- ---------------------- ----------------------
(1) The date that an "Application" shall be deemed "Filed" shall be the date
that SIMTEK's patent application with respect to the applicable invention
described in the aforementioned table shall be filed with the United States
Patent and Trademark Office ("PTO"). The shares shall be "Granted" on the date
that is 30 days after the Application is Filed with the PTO. Each invention
shall relate to only one patent.
(2) With respect to each invention, the date that a patent shall be deemed
"Granted" shall be the date that the PTO grants and issues a patent with respect
to such invention. The shares issuable to Mr. Sartore upon the PTO's issuance of
a patent shall be issued on the date that is 30 days after the PTO issues such
patent. Each invention shall relate to only one patent.