Schedule 14A Information
Proxy Statement Pursuant to Section 14(a)
of the Securities and Exchange Act of 1934
(Amendment No. )
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SIMTEK CORPORATION
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(Name of Registrant as Specified in its Charter)
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[SIMTEK LOGO]
Dear Fellow Shareholder:
You are invited to attend the annual meeting of the shareholders of Simtek
Corporation which will be held at , Colorado Springs, Colorado, on , 2004, at
a.m., local time. We have enclosed a notice of the annual meeting, a proxy
statement, a proxy card and a copy of our annual report for the year ended
December 31, 2003.
At the annual meeting, our shareholders will (i) consider and vote on a
proposal to amend our amended and restated articles of incorporation to increase
the number of authorized shares of common stock from 80,000,000 to 300,000,000;
(ii) consider and vote on a proposal to elect two directors to our board of
directors to serve for a three year term; (iii) consider and vote on a proposal
to ratify the selection of Hein & Associates LLP, independent auditors, as our
auditors for the year ending December 31, 2004; and (iv) transact such other
business as may properly come before the meeting.
Our board of directors has approved the proposals and recommends that
you vote in favor of the proposals. Whether or not you are personally able to
attend the annual meeting, please complete, sign and date the enclosed proxy
card and return it in the enclosed prepaid envelope as soon as possible. This
action will not limit your right to vote in person if you do wish to attend the
meeting and vote personally.
Approval of the proposals requires the affirmative vote of a majority of
the shares of our common stock represented in person or by proxy, and entitled
to vote, at the annual meeting. Only holders of our common stock at the close of
business on , 2004, the record date, will be entitled to notice of and to vote
at the annual meeting.
Please review the entire proxy statement carefully. If you would like
assistance in completing your proxy card, or if you have any questions about the
procedure for voting your shares described in the attached proxy statement,
please contact our Investor Relations Department at (719) 531-9444.
Sincerely yours,
/s/ Douglas Mitchell
Douglas Mitchell
Chief Executive Officer
[SIMTEK LOGO]
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held on ______________, 2004
__________________, 2004
To the Shareholders of Simtek Corporation:
The annual meeting of shareholders of Simtek Corporation, a Colorado
corporation ("Simtek") will be held at ______ a.m., local time, on ____________,
2004, at ______________, _______________, Colorado Springs, Colorado, for
purposes of:
1. considering and voting upon a proposal to amend our amended and
restated articles of incorporation to increase the number of
authorized shares of common stock from 80,000,000 to 300,000,000 (the
"Authorized Shares Proposal") ;
2. considering and voting upon a proposal to elect two directors to our
board of directors each to serve for a three year term (the "Director
Election Proposal");
3. considering and voting upon a proposal to ratify the selection of Hein
& Associates LLP, independent auditors, as auditors of Simtek for the
year ending December 31, 2004 (together with the Authorized Shares
Proposal and Director Election Proposal, the "Proposals"); and
4. transacting such other business as may properly come before the
meeting.
Only shareholders of record at the close of business on __________________,
2004, the record date for the meeting, will be entitled to notice of and to vote
at the annual meeting. A copy of Simtek's annual report for the year ended
December 31, 2003, is enclosed. A list of shareholders entitled to vote at the
meeting will be kept on file at Simtek's principal office for inspection by any
shareholder, for any purpose germane to the meeting, during usual business hours
for ten days prior to the meeting.
YOU ARE INVITED TO ATTEND THE ANNUAL MEETING, BUT WHETHER OR NOT YOU PLAN
TO BE PRESENT, PLEASE COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ACCOMPANYING
PROXY IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES.
Our board of directors believes that the Proposals are advisable to and in
the best interests of us and our shareholders. Our board of directors recommends
that you vote in favor of the Proposals. Approval of each of the Proposals
requires the affirmative vote of a majority of the shares represented in person
or by proxy, and entitled to vote, at the annual meeting.
This notice and the attached proxy statement, proxy card and annual report
are first being mailed to Simtek's shareholders on or about
____________________, 2004.
By Order of the Board of Directors,
Donald Carrigan
Secretary
Colorado Springs, Colorado
_________________, 2004
SIMTEK CORPORATION
4250 Buckingham Dr. #100
Colorado Springs, Colorado 80907
(719) 531-9444
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PROXY STATEMENT
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The accompanying proxy is being solicited by the board of directors (the
"Board") of Simtek Corporation, a Colorado corporation (the "Company") for use
at the Company's annual meeting of shareholders, including any adjournment
thereof (the "Annual Meeting").
Time and Place; Purpose
The Annual Meeting will be held at ________ a.m., local time,
_______________, _________________, 2004, at ___________________,
__________________ , Colorado Springs, Colorado. At the Annual Meeting, our
shareholders will be asked to consider and vote upon the following proposals
(the "Proposals"):
1. to amend our amended and restated articles of incorporation to
increase the number of authorized shares of common stock from
80,000,000 to 300,000,000 (the "Authorized Shares Proposal") ;
2. to consider and vote upon a proposal to elect two directors to our
Board each to serve for a three year term (the "Director Election
Proposal"); and
3. to ratify the selection of Hein & Associates LLP, independent
auditors, as auditors of the Company for the year ending December 31,
2004 (together with the Authorized Shares Proposal and Director
Election Proposal, the "Proposals").
Our Board has determined that the Proposals are advisable to and in the best
interests of us and our shareholders. Our Board recommends that you vote in
favor of the Proposals.
VOTING RIGHTS; RECORD DATE
Our Board has fixed the close of business on , 2004 as the record date (the
"Record Date") for the determination of holders of common stock entitled to
receive notice of and to vote at the Annual Meeting. Accordingly, only holders
of record of shares of common stock at the close of business on the Record Date
are entitled to receive notice of and to vote at the meeting. At the close of
business on the Record Date, we had outstanding shares of common stock, par
value $0.01 per share.
The holders of shares of common stock are entitled to one vote per share on
each matter that properly comes before the Annual Meeting. The affirmative vote
of a majority of the shares of common stock represented in person or by proxy,
and entitled to vote, at the Annual Meeting will be required to approve a
Proposal. According to Colorado law and our amended and restated articles of
incorporation and bylaws, abstentions and broker non-votes will be treated as
present for purposes of determining whether a quorum exists, and will be treated
as votes against for purposes of approving a proposal. The presence, in person
or by proxy, of the holders of a majority of the outstanding shares of common
stock entitled to vote at the Annual Meeting is necessary to constitute a
quorum.
PROXIEs
Unless otherwise specified, the shares of common stock represented by the
accompanying form of proxy, properly executed and returned, will be voted FOR
the Proposals as described below. As to any other matters that may properly come
before the Annual Meeting, the persons named in the accompanying form of proxy
will vote thereon in accordance with their best judgment. Votes will be
tabulated by Continental Stock Transfer & Trust Company, the Company's transfer
agent for the common stock.
The Proposals are the only matters to be acted upon at the meeting. As to
any other matter that may properly come before the Annual Meeting the persons
named in the accompanying proxy card will vote thereon in accordance with their
best judgment. A properly submitted proxy marked "ABSTAIN," although counted for
purposes of determining whether there is a quorum and for purposes of
determining the aggregate voting power and number of shares represented and
entitled to vote at the meeting, will not be voted and will have no effect.
Shares represented by "broker non-votes" (i.e., shares held by brokers or
nominees which are represented at the Annual Meeting but with respect to which
the broker or nominee is not empowered to vote on a particular proposal) will
also be counted for purposes of determining whether there is a quorum at the
meeting.
Any person giving a proxy has the right to revoke the proxy at any time
before it is voted by giving written notice to the Secretary of the Company. The
Company will bear the cost of preparing and mailing proxy materials as well as
the cost of soliciting proxies. In addition to solicitation by mail, employees
or representatives of the Company may personally solicit proxies. Such persons
will receive no additional compensation for such work.
This proxy statement and accompanying form of proxy and annual report are
first being mailed to shareholders on or about ________________, 2004.
ANNUAL REPORT
The Company's annual report to shareholders for the year ended December 31,
2003 is being mailed to the Company's shareholders with this proxy statement.
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PROPOSAL 1 - AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION TO
INCREASE AUTHORIZED SHARES
The Board has adopted, subject to shareholder approval, an amendment to
Section 2.1 of the Company's amended and restated articles of incorporation to
increase the number of authorized shares of common stock from 80,000,000 to
300,000,000. The text of the Section 2.1 as it is proposed to be amended, is as
follows:
"2.1 Authorized Capital. The aggregate number of shares that the
corporation shall have authority to issue is 300,000,000 shares of common
stock with par value $.01 per share ("Common Stock") and 2,000,000 shares
of preferred stock with a par value of $1.00 per share ("Preferred
Stock")."
A form of the amendment to the Company's amended and restated articles of
incorporation reflecting the increase in its authorized capital is annexed to
this proxy statement as Exhibit A.
The amended and restated articles of incorporation of the Company currently
authorizes the issuance of up to 80,000,000 shares of common stock and 2,000,000
shares of preferred stock. As of the Record Date, shares of common stock were
issued and outstanding, and no preferred shares were outstanding. In addition,
there were shares subject to outstanding stock options shares subject to stock
options available for issuance under the Company's existing stock option plans.
In addition, 750,000 shares were issuable upon the exercise of certain warrants
previously issued to affiliates to RENN Capital Group, Inc.
Based upon the foregoing, the Company will only have available for issuance
an aggregate of shares of common stock for other corporate purposes.
PURPOSE AND EFFECT OF AMENDMENT
The Board is proposing that the Company's shareholders approve an increase
in the number of authorized shares of common stock from 80,000,000 to
300,000,000 in order to provide the Board with the necessary flexibility to
issue common stock in connection with financings, acquisitions, employee
benefits, stock dividends and for other general corporate purposes. Without an
increase in the number of authorized shares of common stock, the number of
available shares for issuance may be insufficient to complete one or more of
these transactions when and if the Board deems advisable.
Approving an increase in the number of authorized shares at this time will
enable the Company to take advantage of market conditions and favorable
opportunities at the time the Board deems it advisable to enter into one of the
transactions described above, without the expense and delay associated with
holding a special meeting to obtain shareholder approval to authorize additional
shares of common stock. No additional action or authorization by shareholders
would be necessary prior to the issuance of such additional shares, unless
required by the amended and restated articles of incorporation, applicable law
or the listing requirements for any exchange or market, if any, on which the
Company's common stock may be listed. Examples of circumstances in which further
shareholder authorization generally would be required for issuance of additional
stock include:
o certain mergers of the Company into another entity; and
o the sale of all, or substantially all, of the Company's assets.
Each share of common stock authorized for issuance will have the same
rights as, and will be identical in all respects with, each other share of
common stock. The newly authorized shares of common stock will not affect the
rights, such as voting and liquidation rights, of the shares of common stock
currently outstanding. Should the Board elect to issue additional shares of
common stock, existing shareholders will not have preferential rights to
purchase such stock.
ANTI-TAKEOVER PROVISIONS
We are not introducing this Proposal with the intent that it be utilized as
a type of anti-takeover device. However, the ability of the Board to issue
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additional shares of common stock without additional shareholder approval may be
deemed to have an anti-takeover effect because unissued shares of common stock
could be issued by the Board in circumstances that may have the effect of
deterring takeover bids. For example, without further shareholder approval, the
Board could strategically sell shares of common stock in a private transaction
to purchasers who would oppose a takeover. In addition, the Board could issue
additional shares of common stock and because shareholders do not have
preemptive rights under the amended and restated articles of incorporation, the
rights of existing shareholders would (depending on the particular circumstances
in which the additional shares of common stock are issued) be diluted by any
such issuance, reducing the percentage of the common stock any one shareholder
controls and increasing the potential cost to acquire control of the Company.
Although the Board is motivated by business and financial considerations in
proposing this amendment, and not by the threat of any attempt to accumulate
shares or otherwise gain control of the Company, shareholders should
nevertheless be aware that approval of the amendment could facilitate efforts by
the Company to deter or prevent changes of control in the future. The Board does
not intend to issue any additional shares of common stock except on terms that
it deems to be in the best interest of the Company and its shareholders.
The following is a description of other anti-takeover provisions in our
charter documents and other agreements. We have no current plans or proposals to
enter into any other arrangement that could have material anti-takeover
consequences.
Amended and Restated Articles of Incorporation. Our amended and restated
articles of Incorporation allows our Board to issue up to 2,000,000 shares of
preferred stock and to determine the price, rights, preferences and privileges
of those shares without any further vote or action by our shareholders. The
rights of the holders of our common stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. Issuance of preferred stock, while providing desired
flexibility in connection with possible acquisitions and other corporate
purposes, could make it more difficult for a third party to acquire a majority
of our outstanding voting stock. We have no current plans to issue shares of
preferred stock. Classified Board. Our amended and restated articles of
incorporation and bylaws provide for a classified Board when we have six or more
directors. This may have the effect of delaying or preventing changes in control
of our management, which could adversely affect the market price of our common
stock by discouraging or preventing takeover attempts that might result in the
payment of a premium price to our shareholders. Stock Option Plan. Our 1994
Non-Qualified Stock Option Plan (the "Stock Option Plan") provides for
acceleration of vesting under certain circumstances. Upon certain changes in
control of the Company, all options issued under the Stock Option Plan which
have been held for at least six months shall become exercisable in full, without
regard to applicable exercise periods set forth in the applicable option
agreements. The acceleration of vesting of options upon a change in control may
be viewed as an anti-takeover measure.
THE BOARD RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE AMENDMENT TO THE
COMPANY'S AMENDED AND RESTATED ARTICLES OF INCORPORATION.
4
PROPOSAL 2 - ELECTION OF DIRECTORS
The Company's amended and restated articles of incorporation and bylaws
provide that if the Board consists of six or more persons, then the members of
the Board shall be divided into three classes, each class to be as nearly equal
in number as possible. The Board is currently divided into three (3) classes,
each class consisting of two directors, with each class having a three-year
term. Vacancies on the Board may be filled only by persons elected by a majority
of the remaining directors. A director elected by the Board to fill a vacancy
(including a vacancy created by an increase in the Board) will serve for the
remainder of the full term of the class of directors in which the vacancy
occurred and until the director's successor is elected and qualified.
The Board presently consists of six (6) members. There are two Class 1
Directors, Messrs. Douglas Mitchell and Robert Keeley, whose terms of office
will expire at the 2004 annual meeting. The Board has nominated each of Mr.
Mitchell and Mr. Keeley for re-election. Proxies cannot be voted for a greater
number of persons than the number of nominees named. If elected at the Annual
Meeting, each of the nominees would serve until the 2007 annual meeting and
until his successor is elected and has qualified, or until such director's
earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy, and entitled to vote, at the meeting. Shares represented
by executed proxies will be voted, if authority to do so is not withheld, for
the election of Messrs. Mitchell and Keeley. In the event that any nominee
should be unavailable for election as a result of an unexpected occurrence, such
shares will be voted for the election of such substitute nominee as management
may propose. Each person nominated for election has agreed to serve if elected,
and management has no reason to believe that any nominee will be unable to
serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting. Ages are as of ______________, 2004, the Record Date.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2007 ANNUAL MEETING
DOUGLAS M. MITCHELL, age 55, served as our Chief Operating Officer from
July 1, 1997 until January 1, 1998 at which time he became Chief Executive
Officer, President and a director. Mr. Mitchell is also the Chairman of the
Board of our subsidiary, Q-DOT Group. Mr. Mitchell has over 20 years of
experience in the semiconductor and electronics systems industry holding various
marketing and sales management positions. Prior to joining us, he was President
and Chief Executive Officer of a wireless communications company, Momentum
Microsystems. Previously, Mr. Mitchell was Vice President of Marketing and Sales
for Array Microsystems, a digital signal processing integrated circuit company
specializing in video image processing. Prior to this Mr. Mitchell was Vice
President of Marketing with SGS-Thomson Microelectronics, responsible for
marketing and applications engineering of Digital Signal Processing, transputer,
microcontroller and graphics products in North America. SGS-Thomson had acquired
Inmos Corporation where Mr. Mitchell had been Manager, US Marketing and Sales.
Mr. Mitchell has held management positions at Texas Instruments and Motorola and
has been responsible for various product definition and product development. Mr.
Mitchell holds a Bachelors degree in electrical engineering from the University
of Texas and a Masters of Business Administration degree from National
University.
ROBERT H. KEELEY, age 63, has served as a director since May 1993. He is
currently the El Pomar Professor of Business Finance at the University of
Colorado at Colorado Springs. From 1986 until he joined the faculty at the
University of Colorado at Colorado Springs in 1992, Dr. Keeley was a professor
in the Department of Industrial Engineering and Engineering Management at
Stanford University. Prior to joining Stanford, he was a general partner of Hill
and Carmen (formerly Hill, Keeley and Kirby), a venture capital firm. Dr. Keeley
holds a Bachelors degree in electrical engineering from Stanford University, an
M.B.A. from Harvard University and a Ph.D. in business administration from
Stanford University. Dr. Keeley is also a director of three private companies
and is the president of one of them.
THE BOARD RECOMMENDS A VOTE "FOR" EACH NAMED NOMINEE.
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DIRECTORS CONTINUING IN OFFICE UNTIL THE 2005 ANNUAL MEETING
HAROLD A. BLOMQUIST, age 52, was originally appointed as a director in May
1998, resigned from the Board in July 2001 to avoid a potential conflict of
interest with his employer and was re-appointed in January 2002. In October
2003, Mr. Blomquist was elected to the position of Chairman of the Board. Mr.
Blomquist is currently employed as President and Chief Executive Officer of
Morpho Technologies, Inc., a three-year-old fabless semiconductor company
located in Irvine, CA. He has served as a Director on the Board of Microsemi,
Inc. since February 2003 and as a consultant to venture investors and early
stage technology companies in the semiconductor and electronic components areas.
In the past, he was employed as Chief Executive Officer of Tower Semiconductor,
USA, Inc., and President and Chief Executive Officer of ZMD America, Inc. Before
ZMD America, Inc., Mr. Blomquist served as a member of the Board of Directors of
AMIS Holding Co., Sr. Vice President of AMI Semiconductor and General Manager
and Chief Executive of two of AMIS' foreign subsidiaries, AMI GmbH in Dresden,
Germany, and AMI Japan Co. Ltd., in Tokyo, Japan. Prior to joining AMI in April
1990, Mr. Blomquist held a series of increasingly responsible positions in
engineering, sales, and marketing for several semiconductor firms, including
Texas Instruments, Inmos Corporation and General Semiconductor. Mr. Blomquist
was granted a BSEE degree with a double major in Business Administration from
the University of Utah and also attended the University of Houston, where he
pursued a joint Juris Doctor/MBA course of study.
ROBERT C. PEARSON, age 68, has served as a director since July 2002. He
joined RENN Capital Group in April 1997 and is Senior Vice
President-Investments. From May 1994 to May 1997, Mr. Pearson was an independent
financial management consultant primarily engaged by RENN Capital Group. From
May 1990 to May 1994, he served as Chief Financial Officer and Executive Vice
President of Thomas Group, Inc., a management consulting firm, where he was
instrumental in moving a small privately held company from a start-up to a
public company with over $40 million in revenues. Prior to 1990, Mr. Pearson
spent 25 years at Texas Instruments Incorporated where he served in several
positions including Vice President-Controller and later as Vice President-
Finance. Mr. Pearson holds a BS in Business from the University of Maryland and
was a W.A. Paton Scholar with an MBA from the University of Michigan. He is
currently a Director of Poore Brothers, Inc., CaminoSoft, Inc., Advanced Power
Technology, Inc., and Simtek, all publicly held. He is also a Director of
eOriginal, Inc., a privately held company.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2006 ANNUAL MEETING
RON SARTORE, age 54, has served as a director since March 2004. Mr. Sartore
has over 30 years experience in the computer and semiconductor fields and is
currently the Vice President of Engineering for Cypress Semiconductor's Personal
Communication Division, a position he attained shortly after Cypress's May 1999
accretive acquisition of Anchor Chips, where he was its CEO, and President. Mr.
Sartore currently holds 11 US patents and obtained a BS degree in Electrical
Engineering from Purdue University.
ALFRED J. STEIN, age 71, has served as a director since March 2004. He is
currently a Consultant and Advisor to startup companies in the high technology
industry. He previously served at VLSI Technology, Inc. as Chairman of the Board
and Chief Executive Officer from 1982 until its acquisition by Philips
Electronics in 1999. He also has served on the board of directors at Applied
Materials, Radio Shack Corporation and was Chairman of the Board for the
Semiconductor Industry Association (SIA). He served on the Board of Trustees for
St. Mary's University of Texas.
INFORMATION REGARDING THE BOARD AND ITS COMMITTEES
MEETINGS AND COMMITTEES OF THE BOARD
Our business, property and affairs are managed under the direction of our
Board and its committees. Members of our Board are kept informed of our business
through discussions with our Chairman and our Chief Executive Officer and other
officers and employees, by reviewing materials provided to them, by visiting our
offices and by participating in meetings of the Board and its committees.
6
During the fiscal year ended December 31, 2003, the Board held four
meetings. During that same period, the Board acted by unanimous consent three
times. No incumbent director attended fewer than 75% of the aggregate of (i) the
total number of meetings of the Board, and (ii) the total number of meetings
held by all committees of the board on which such directors served.
The Board has an Audit Committee, a Compensation Committee, a Stock
Committee, and a Governance Committee. The Governance Committee was established
in February 2004. Below is a the information that provides membership and
meeting information for each of the Board committees. In fiscal year 2003, each
committee member attended 100% of the meetings of each applicable committee held
after becoming a member of that committee.
AUDIT COMMITTEE. The Audit Committee consists of Harold Blomquist as the
chairperson, Robert Keeley and Klaus Wiemer (prior to his resignation from the
Board in March 2004). The Audit committee held one meeting during the fiscal
year 2003. Following Mr. Wiemer's resignation, Mr. Sartore was appointed to the
Audit Committee.
COMPENSATION COMMITTEE. The Compensation Committee consists of Harold
Blomquist as the chairperson, Robert Keeley and Klaus Wiemer (prior to his
resignation from the Board in March 2004). The Compensation Committee held two
meetings during the fiscal year 2003. Following Mr. Wiemer's resignation, Mr.
Sartore was appointed to the Compensation Committee.
STOCK COMMITTEE. The Stock Committee consists of Robert Keeley as the
chairperson, Harold Blomquist and Klaus Wiemer (prior to his resignation from
the Board in March 2004). The Stock Committee acts by unanimous consent and they
acted seven times during the fiscal year 2003. Following Mr. Wiemer's
resignation, Mr. Sartore was appointed to the Stock Committee.
Below is a description of each committee of the Board. Each of the
committees has authority to engage legal counsel or other experts or consultants
as it deems appropriate to carry out its responsibilities
AUDIT COMMITTEE. The Audit Committee assists the Board in its oversight of
the integrity of the Company's accounting, auditing, and reporting practices.
The Audit Committee is comprised of Messrs. Blomquist, Keeley and Wiemer (prior
to his resignation from the Board in March 2004). Our Board has determined that
Mr. Keeley has the requisite education, background or experience to be
considered an "audit committee financial expert" as that term is defined by the
Securities and Exchange Commission (the "SEC"). All members of the Audit
Committee are "independent" under current Nasdaq Stock Market, Inc. listing
standards.
COMPENSATION COMMITTEE. The primary responsibilities of the Compensation
Committee are to review and recommend to the Board the compensation of the Chief
Executive Officer of the Company and perform such other functions regarding
compensation as the Board may delegate. The Compensation Committee consists of
Messrs. Blomquist, Keeley and Sartore, each of whom is independent under current
Nasdaq Stock Market, Inc. listing standards.
GOVERNANCE COMMITTEE. The primary responsibilities of the Governance
Committee are to ensure company compliance with the SEC and other government
regulations concerning the conduct of the Company, its officers, directors and
employees. The Governance Committee responsibilities also include nomination for
membership to the Board. The Governance Committee consists of Messrs. Blomquist,
Pearson and Mitchell. The governance committee will consider nominees
recommended by shareholders. Any such suggestions in connection with the 2005
Annual Meeting should be made to the Governance Committee (in care of the
Company at its principal executive offices) by delivering notice to our
Secretary at our principal executive offices in accordance with the provisions
of our bylaws and the provisions set forth herein under the heading "Shareholder
Proposals." The notice must contain certain prescribed information about the
proponent and the nominee(s), including such information about the nominee(s) as
would have been required to be included in a proxy statement filed pursuant to
the rules of the SEC had such nominee been nominated by the Board.
STOCK COMMITTEE. The primary responsibilities of the Stock Committee are to
review and approve grants of stock options to employees, directors and
consultants under the Company's stock option plan. The Stock Committee consists
of Messrs. Keeley, Blomquist and Sartore.
7
STATEMENT ON CORPORATE GOVERNANCE
We regularly monitor developments in the area of corporate governance by
reviewing new federal laws affecting corporate governance, such as the
Sarbanes-Oxley Act of 2002, as well as rules adopted by the SEC. In response to
those developments, we review our processes and procedures and implement
corporate governance practices which we believe are in the best interest of the
Company and its shareholders.
The Board has approved a Code of Business Conduct and Ethics (collectively,
the "Code of Conduct"), posted on the Company's website under "Company."
Employees and Directors are required to report any conduct that they believe in
good faith to be an actual or apparent violation of the Code of Conduct.
DIRECTOR COMPENSATION OVERVIEW
Through the year ended December 31, 2003, each director who was not an
employee received $1,000 for each meeting of the Board, attended in person, and
$500 for each meeting of a committee of the Board. The Chairman of the Board
received $4,000 per calendar quarter, $1,000 for each meeting of the Board,
attended in person, and $500 for each meeting of a committee of the Board. Each
member of the Board received, during the month of April, a grant of options to
purchase15,000 shares of common stock of the Company. Directors were also
reimbursed for their reasonable out-of- pocket expenses incurred in connection
with their duties to us.
In March 2004, the Board approved a new compensation plan for its
directors. Each director who is not also an employee receives $1,500 for
attending each meeting of the Board, attended in person, and $500 for each
meeting of a committee of the Board. Each director of the Board shall receive a
$10,000 annual stipend which will start January 1, 2005, the stipend will be
paid quarterly. Until the time as the Company has two consecutive quarters of
net profit, the stipend will be paid in restricted common stock. The cost per
common share will be calculated based on the average closing price of the
Company's common stock during the 20 trading days prior to issuance. Commencing
the first quarter after the Company has shown two consecutive quarters of
audited net profit, the stipend will be paid in cash. Upon initial appointment
or election to the Board, each newly appointed or elected member shall receive
options to purchase 100,000 shares of the Company's common stock. Each member of
the Board shall receive, within the first month of each calendar year, while
serving as a member of the Board, a grant of options to purchase 35,000 shares
of the Company's common stock. Along with the above compensation, the Chairman
of the Board also receives $4,000 per calendar quarter. Directors are also
reimbursed for their reasonable out-of-pocket expenses incurred in connection
with their duties to us.
8
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our directors and executive officers are as follows:
Name Age Position
---- --- --------
Douglas M. Mitchell............... 55 Director, Chief Executive Officer, President and Chief
Financial Officer (acting) and Chairman of the Board of
Q-DOT Group, Inc.
Thomas Linnenbrink................ 60 Director, President, Chief Executive Officer, and
Technical Director of Q-DOT Subsidiary
Donald G. Carrigan................ 56 Vice President Sales and Marketing, Corporate
Secretary
David W. Still ................ 48 Vice President of Engineering
Ron Sartore ................ 54 Director
Alfred J. Stein ................ 71 Director
Robert H. Keeley.................. 63 Director
Harold Blomquist.................. 52 Director, Chairman of the Board
Robert C. Pearson................. 68 Director
See "Proposal 2--Election of Directors" for the biographies of Messrs.
Mitchell, Keeley, Blomquist, Pearson, Sartore and Stein..
THOMAS E. LINNENBRINK has served as President, Chief Executive Officer,
Technical Director and a director of Q-DOT, Inc. since he co-founded it in 1977.
Mr. Linnenbrink also founded Q-DOT Group, in 1990 and served as its President,
Chief Executive Officer, and a director until Simtek acquired it in March 2001.
Mr. Linnenbrink has served in various technical management and marketing
positions for more than 35 years while advancing the state-of-the-art in data
acquisition and signal processing. He pioneered high-speed charge-coupled device
(CCD) and silicon germanium (SiGe) technology and applications. Mr. Linnenbrink
has published numerous technical papers and holds more than a dozen patents. He
currently chairs IEEE Technical Committee, which writes and promotes standards
for ADCs, DACs, digital waveform recorders, and pulse technology. Mr.
Linnenbrink holds a Bachelors degree in electrical engineering from the Illinois
Institute of Technology and a Masters of Science degree in engineering science
with emphasis on automatic control from Rensselaer Polytechnic Institute.
DONALD G. CARRIGAN has served as Vice President of Sales and Marketing and
Corporate Secretary since joining the Company in September of 2001. Mr. Carrigan
has over 29 years experience in the semiconductor industry. Prior to joining the
Company he was vice president of sales for Ramtron International Corporation and
an executive officer of Ramtron. During his 12 years at Ramtron, Mr. Carrigan
held various marketing and sales positions as well as General Manager of the
ferroelectric product business unit. Prior to joining Ramtron, Mr. Carrigan was
with Inmos Corporation for 8 years where he held various positions in
engineering and marketing management including the Director of Marketing
position. Mr. Carrigan also held positions in engineering management and R & D
with NCR Microelectronics and Texas Instruments. Mr. Carrigan holds a Bachelors
degree in Electrical Engineering from the University of Tennessee, Knoxville,
Tennessee and a Masters degree in Electrical Engineering from Southern Methodist
University, Dallas, Texas.
DAVID W. STILL has served as the Vice President of Engineering at the
Company since December of 2001. Mr. Still has over 25 years experience in
9
various corporate, management, and technical positions within the semiconductor
industry, where he has successfully managed engineering teams developing
products in CMOS, bipolar, and GaAs processes, as well as associated CAD
software. Prior to his work at Simtek, he served as Vice President of IC
engineering for Comsilica, developing SOC WLAN products for 802.11a and b
wireless networks. Previously, he served as manager of the Colorado Design
Center for Lattice Semiconductor (formerly Minc), an FGPA / CPLD CAD software
company. Mr. Still was also a Vice President of Engineering at Array
Microsystems, a digital video product company, where he managed the CMOS IC
design and software development groups. He has also held engineering management
positions with Prisma and Honeywell. At Honeywell, he received two technical
excellence awards for his contributions to PLA designs. Mr. Still has published
over 18 technical papers and has received two patents. Mr. Still holds a Masters
Degree in Electrical Engineering from Arizona State University and a Bachelors
Degree in Electrical Engineering from the University of Nebraska.
Officers serve at the discretion of the Board.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The first table below sets forth information regarding ownership of our
common stock as of the Record Date by each person who is known by us to
beneficially own more than five percent of our common stock, by each director,
by each executive officer named in the summary compensation table and by all
directors and executive officers as a group. Shares issuable within sixty days
after the Record Date upon the exercise of options and are deemed outstanding
for the purpose of computing the percentage ownership of persons beneficially
owning such options or holding such notes but are not deemed outstanding for the
purpose of computing the percentage ownership of any other person. Shares
issuable upon the conversion of the debentures have been included for the
purpose of computing the percentage ownership. To the best of our knowledge, the
persons listed below have sole voting and investment power with respect to the
shares indicated as owned by them subject to community property laws where
applicable and the information contained in the notes to the table.
Name and Amount and Nature
Address of of Beneficial Percent of
Beneficial Owner Ownership Class
---------------- ----------------- ----------
Douglas M. Mitchell 1,062,164(1) 1.82%
205 Ridge Dr.
Woodland Park, CO 80863
Robert H. Keeley 85,000(2) *
P. O. Box 25599
Silverthorne, CO 80497
Thomas E. Linnenbrink 1,079,961 (3) 1.88%
1457 Smoochers Circle
Colorado Springs, CO 80904
Harold A. Blomquist 75,000(4) *
13625 Antelope Station
Poway, CA 92064
Donald G. Carrigan 236,056(5) *
425 Scrub Oak Circle
Monument, CO 80132
David W. Still 223,611(6) *
4250 Buckingham Dr. Suite 100
Colorado Springs, CO 80907
10
Mr. Robert Pearson 15,000(7) *
8080 N. Central Expressway,
Suite 210-LB59
Dallas, TX 75203
RENN Capital Group (8) 14,017,367(9) 20.74%
8080 N. Central Expressway,
Suite 210-LB59
Dallas, TX 75203
All officers and directors as
a group (7 persons) 3,041,792(10) 4.70%
------------------
* Less than one percent.
(1) Represents 44,386 shares of our common stock that Mr. Mitchell acquired
through our acquisition of Q- DOT Group, 20,000 shares of our common stock
that Mr. Mitchell personally owns and includes 997,778 shares issuable upon
exercise of options.
(2) Includes 60,000 shares issuable upon exercise of options. Includes 15,000
shares of our common stock the Mr. Keeley acquired upon the exercise of 15,
000 options and includes 10,000 shares of our common stock held by Mr.
Keeley's wife, Sandra D. Keeley. Mr. Keeley disclaims beneficial ownership
of these shares.
(3) Represents 894,128 shares of our common stock that Mr. Linnenbrink acquired
through our acquisition of Q-DOT Group and includes 185,833 shares issuable
upon exercise of options.
(4) Includes 75,000 shares issuable upon exercise of options.
(5) Represents 500 shares of our common stock that Mr. Carrigan personally owns
and includes 235,556 shares issuable upon exercise of options.
(6) Includes 223,611 shares issuable upon exercise of options.
(7) Includes 15,000 shares issuable upon exercise of options.
(8) Pursuant to the Convertible Loan Agreement, dated as of June 28, 2002, by
and among the Company and three investment funds that are affiliates of
RENN Capital Group (the "RENN Investment Funds") have the right to
designate a nominee to serve as a member of the Board. Mr. Robert C.
Pearson currently serves on the Board as such nominee.
(9) Assumes conversion, at a conversion price of $0.312 per share, of all
debentures issued to the RENN Investment Funds. Assumes exercise of
warrants held by the RENN Investment Funds for 750,000 shares of our common
stock. Also represents 1,651,982 shares of our common stock that the RENN
Investment Funds acquired pursuant to the $1,500,000 equity investment on
November 7, 2003.
(10) Includes 1,972,778 shares issuable upon exercise of options. Does not
include the 14,017,367 shares beneficially owned by RENN Capital Group. Mr.
Robert Pearson is a Senior Vice President of RENN Capital Group. Mr.
Pearson also holds the position of a director on the Board.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
To our knowledge, based solely upon a review of reports furnished to us and
written representations that no other reports were required, during the fiscal
year ended December 31, 2003, all filing requirements applicable to officers,
directors and greater than 10% beneficial owners of our common shares under
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act") were complied with, except as noted below: Mr. Douglas Mitchell filed one
amendment to Form 4 on April 14, 2003 (which amended a Form 4 previously filed
on April 2, 2003 with respect to a transaction occurring on April 2, 2003), one
11
Form 4 on May 23, 2003 with respect to the acquisition of stock on March 14,
2001 and five stock option grants occurring on June 24, 1997, June 5, 1998,
April 27, 1999, January 14, 2000 and January 2, 2001, respectively, and one Form
3 on May 23, 2003 with respect to an event occurring on May 21, 1997. Mr. Robert
Pearson filed one Form 4 on April 21, 2003 with respect to a transaction
occurring on April 15, 2003. Mr. Robert Keeley filed one Form 4 on May 23, 2003
with respect to five stock option grants occurring on June 5, 1998, April 27,
1999, April 17, 2000, April 16, 2001 and April 15, 2002, respectively, and one
Form 3 on May 23, 2003 with respect to an event occurring on May 25, 1993. Mr.
John Heightley filed: one Form 4 on May 23, 2003 with respect to three stock
option grants occurring on April 17, 2000, April 16, 2001 and April 15, 2002,
respectively; and one Form 3 on May 23, 2003 with respect to an event occurring
on September 21, 1998. Mr. Klaus Wiemer filed one Form 4 on May 23, 2003 with
respect to five stock option grants occurring on June 5, 1998, April 27, 1999,
April 17, 2000, April 16, 2001 and April 15, 2002, respectively, and one Form 3
on May 23, 2003 with respect to an event occurring on May 25, 1993. Mr. Harold
Blomquist filed one Form 4 on May 23, 2003 with respect to a stock option grant
occurring on April 15, 2002, and one Form 3 on May 23, 2003 with respect to an
event occurring on January 02, 2002. Mr. Harold Blomquist also filed one Form 4
on January 13, 2004 for an event occurring on October 31, 2003. Mr. David Still
filed one Form 3 on January 24, 2003 with respect to an event occurring on
December 4, 2001. Mr. Donald Carrigan filed one Form 3 on January 24, 2003 with
respect to an event occurring on September 19, 2001. Mr. Thomas Linnenbrink
filed one Form 3 on February 5, 2003 with respect to an event occurring on March
13, 2001.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information for each of our last three
fiscal years with respect to the annual and long-term compensation of the only
individual acting as the Chief Executive Officer during the fiscal year ended
December 31, 2003 and each other executive officer of the Company who served
during any part of 2003 whose annual salary and bonus for the fiscal year ended
December 31, 2003 exceeded $100,000.
Summary Compensation Table
Long Term Compensation
----------------------
Annual Compensation Awards
----------------------------------------- ----------------------
Name Other
and Annual Securities
Principal Compen- Underlying
Position Year Salary($) Bonus($) sation($) Options
--------- ---- --------- -------- --------- ----------
Douglas M. Mitchell(1) 2003 $175,000 -- -- 200,000
Chief Executive Officer 2002 $175,000 -- -- --
Chief Financial Officer 2001 $167,708 $34,375 -- 300,000
(acting) and President
Thomas Linnenbrink(2) 2003 $141,200 -- -- 30,000
Chief Executive Officer 2002 $135,408 -- -- 30,000
President and Technical 2001 $111,447 $13,520(3) $5,700(4) 150,000
Director of Q-DOT
Subsidiary
Donald G. Carrigan(5) 2003 $132,500 $29,268(6) -- 30,000
Vice President of Sales 2002 $130,000 $42,228(6) -- --
and Marketing 2001 $ 40,625 -- -- 250,000
David W. Still(7) 2003 $134,000 -- -- 50,000
Vice President of 2002 $130,000 -- -- --
Engineering 2001 $ 20,417 -- -- 250,000
7
(1) Mr. Mitchell became our Chief Executive Officer and President on January 1,
1998.
(2) Simtek acquired Q-DOT Group on March 14, 2001 and these payments reflect
what Mr. Linnenbrink was paid after that date in his capacity as President
of our Q-DOT Group subsidiary.
(3) Mr. Linnenbrink personally secured bank loans used in the operations of
Q-DOT Group. Mr. Linnenbrink was guaranteed compensation for personally
securing these loans. The loans were paid off on March 14, 2002 and Mr.
Linnenbrink will receive no further compensation related to these loans.
(4) At the time of the Q-DOT Group acquisition, Mr. Linnenbrink was paid for
vacation hours that were in excess of Simtek's vacation policy.
(5) Mr. Carrigan became our Vice President of Sales and Marketing on August 31,
2001.
(6) Mr. Carrigan is on a bonus plan that is directly related to net revenue and
department spending.
(7) Mr. Still became our Vice President of Engineering on December 3, 2001.
OPTION GRANT TABLE
The following table sets forth certain information with respect to options
granted by us during the fiscal year ended December 31, 2003 to the individuals
named in the summary compensation table above.
Shares Potential
subject to Market Realizable Value
Shares Options Price at Assumed
Subject to Granted to Exercise per Annual Rate of
Options Employees Price Share on Stock Price
Granted in in Fiscal Year Per Date of Expiration Appreciation for
Name Fiscal Year % of Total Share Grant Date Option Term
-------------------- ----------- -------------- --------- -------- ---------- --------------------
5% 10%
--------------------
Douglas Mitchell 200,000(1) 26.16% $0.14 $0.14 3/3/2010 $11,399 $26,564
Thomas Linnenbrink 30,000(2) 3.92% $0.16 $0.16 2/3/2010 $1,954 $4,554
Donald Carrigan 30,000(3) 3.92% $0.17 $0.17 1/22/2010 $2,076 $4,838
David Still 50,000(4) 6.54% $0.17 $0.17 1/22/2010 $3,460 $8,064
(1) 200,000 options were granted to Mr. Mitchell in his capacity as Chief
Executive Officer, President and acting Chief Financial Officer, these
options vest at 1/36th per month over 3 years.
(2) 30,000 options were granted to Mr. Linnenbrink in his capacity as Chief
Executive Officer, President and Technical Director of our Q-DOT Group
subsidiary; these options vest at 1/36th per month over 3 years.
(3) 30,000 options were granted to Mr. Carrigan in his capacity as Vice
President of Sales and Marketing, these options vest at 1/36th per month
over 3 years.
(4) 50,000 options were granted to Mr. Still in his capacity as Vice President
of Engineering, these options vest at 1/36th per month over 3 years.
13
YEAR-END OPTION TABLE
The following table sets forth, as of December 31, 2003, the number of
shares subject to unexercised options held by the individuals named in the
summary compensation table above. 1,505,279 exercisable options had an exercise
price less than the last sale price of our common stock underlying the options
as reported by the OTC Electronic Bulletin Board on the last trading day of the
fiscal year ended December 31, 2003.
Shares Potential
subject to Market Realizable Value
Shares Options Price at Assumed
Subject to Granted to Exercise per Annual Rate of
Options Employees Price Share on Stock Price
Granted in in Fiscal Year Per Date of Expiration Appreciation for
Name Fiscal Year % of Total Share Grant Date Option Term
-------------------- ----------- -------------- --------- -------- ---------- --------------------
5% 10%
--------------------
Douglas Mitchell 200,000(1) 26.16% $0.14 $0.14 3/3/2010 $11,399 $26,564
Thomas Linnenbrink 30,000(2) 3.92% $0.16 $0.16 2/3/2010 $1,954 $4,554
Donald Carrigan 30,000(3) 3.92% $0.17 $0.17 1/22/2010 $2,076 $4,838
David Still 50,000(4) 6.54% $0.17 $0.17 1/22/2010 $3,460 $8,064
EMPLOYMENT AGREEMENTS
Mr. Mitchell is employed as President and Chief Executive Officer pursuant
to an employment agreement with us. Under the terms of the employment agreement,
Mr. Mitchell receives an annual salary of $175,000 and such additional benefits
that are generally provided other employees. Mr. Mitchell's employment agreement
expired June 1, 2001 but was, and is, automatically renewed for successive
one-year terms unless we or Mr. Mitchell elects not to renew. If we terminate
the employment of Mr. Mitchell without cause, Mr. Mitchell is entitled to
continuation of his base salary and benefits, mitigated by income Mr. Mitchell
may earn, for the remainder of the term of the agreement. Mr. Mitchell is
subject to a noncompetition covenant for a period of one year from the date of
termination.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 1, 2002, we received funding of $3,000,000 in a convertible
debenture financing transaction with the RENN Investment Funds. RENN Capital
Group is the agent for the investment funds. Mr. Robert Pearson, a Senior Vice
President of RENN Capital Group, became a director of the Company following such
transaction. RENN Capital Group, or its affiliates, owns 2,000,000 shares of our
common stock.
On November 7, 2003, we closed a $1,500,000 equity financing with the RENN
Investment Funds. One of our directors holds the position of Senior Vice
President of RENN Capital Group. In exchange for the $1,500,000, we issued
1,651,982 shares of our common stock to the RENN Investment Funds. In addition
to the shares of common stock, each fund received warrants to acquire 250,000
shares of our common stock. The warrants have a 5-year term with an exercise
price of $1.25 per share for 125,000 shares and $1.50 per share for 125,000
shares.
CONFIDENTIALITY AND NONDISCLOSURE AGREEMENTS
We generally require our employees to execute confidentiality and
nondisclosure agreements upon the commencement of employment with us. The
agreements generally provide that all inventions or discoveries by the employee
related to our business and all confidential information developed or made known
to the employee during the term of employment shall be the exclusive property of
us and shall not be disclosed to third parties without the prior approval of us.
14
DIRECTORS' COMPENSATION
Through the year ended December 31, 2003, each director who was not also an
employee received $1,000 for each meeting of the Board, attended in person, and
$500 for each meeting of a committee of the Board. The Chairman of the Board
received $4,000 per calendar quarter, $1,000 for each meeting of the Board,
attended in person, and $500 for each meeting of a committee of the Board.
Directors are also reimbursed for their reasonable out-of-pocket expenses
incurred in connection with their duties to us. During the fiscal year ended
December 31, 2003, 15,000 stock options were granted, at the market price on
date of grant, to Mr. Harold Blomquist, Dr. Klaus Wiemer, Dr. Robert Keeley, Mr.
John Heightley and Mr. Robert Pearson, which market price was $0.165 per share.
During 2003, Mr. Harold Blomquist was granted an additional 75,000 stock options
which he received for his appointment as Chairman of the Board. The options were
granted at the market price on date of grant, which market price was $0.83 per
share.
We have adopted a Code of Business Conduct and Ethics that applies to our
Chief Executive Officer, the Chief Financial Officer, and the Controller, as
well as to our directors and employees. The Code of Business Conduct and Ethics
can be found at our Internet website at www.simtek.com.
REPORT OF THE AUDIT COMMITTEE
Notwithstanding anything to the contrary set forth in any of our previous
or future filings with the SEC that might incorporate this proxy statement, in
whole or in part, the following report of the Audit Committee shall not be
deemed to be "soliciting materials" or "filed" or incorporated by reference in
our filings with the SEC, or subject to the liabilities of Section 18 of the
Exchange Act, except to the extent that we specifically incorporate it by
reference into a document filed under the Securities Act of 1933, as amended, or
the Exchange Act.
THE AUDIT COMMITTEE
As of the date of this proxy, the Audit Committee of the Board (the "Audit
Committee") was composed of three (3) directors appointed by the Board. All of
the committee members, Mr. Keeley, Mr. Blomquist, and Mr. Sartore satisfy the
independence requirements of the Audit Committee Policy of the Nasdaq Stock
Market, Inc. and Mr. Keeley has been designated by the Board as the Audit
Committee's "financial expert." For a description of Mr. Keeley's relevant
experience, please see his biographical information contained in Proposal 2 of
this Proxy Statement. On March 24, 2003, the Board adopted a charter for the
Audit Committee (the "Charter"). A copy of the Charter is included with this
proxy statement as Exhibit B.
Management is responsible for the preparation, presentation, and integrity
of the Company's financial statements, accounting and financial reporting
principles, internal controls and procedures designed to ensure compliance with
accounting standards, applicable laws and regulations. The Company's independent
accountants, Hein & Associates LLP, are responsible for performing an
independent audit of the financial statements and expressing an opinion on the
conformity of those financial statements with generally accepted accounting
principles.
The Audit Committee's primary responsibilities are to:
1. monitor the integrity of the Company's financia reporting process and
the Company's systems of internal accounting and financial controls
regarding finance, accounting and legal compliance;
2. monitor the independence and performance of the Company's external
auditors;
3. provide an avenue of communication among the independent auditors,
management, and the Board;
4. pre-approve all audit and permitted non-audit services; and
5. develop procedures for receiving, on an anonymous basis, and
responding to concerns about the Company's accounting and auditing
practices.
15
REVIEW OF FISCAL YEAR 2003 FINANCIAL STATEMENTS
In connection with its review of the Company's Fiscal Year 2003 Financial
Statements, the Audit Committee has:
(1) reviewed and discussed the audited financial statements with
management;
(2) discussed with Hein & Associates LLP, the Company's independent
accountants, the matters required to be disclosed by SAS 6, as
modified and supplement; and
(3) received from Hein & Associates LLP the written disclosures and letter
required by Independence Standards Board Standard No. 1 ("ISB 1") and
discussed with Hein & Associates LLP its independence.
Based upon the review and discussions described above, the Audit Committee
recommended to the Board that the audited financial statements for fiscal year
ended December 31, 2003 be included in the Company's 2003 Annual Report on Form
10-KSB.
BY THE AUDIT COMMITTEE OF THE BOARD:
Harold Blomquist
Robert Keeley
Klaus Wiemer (former director)
16
PROPOSAL 3 - APPOINTMENT OF
INDEPENDENT ACCOUNTANTS
Hein & Associates LLP served as the Company's principal accountants for the
fiscal year ended December 31, 2003, and the Board has selected Hein &
Associates LLP as the Company's principal accountants for the 2004 fiscal year.
Management of the Company does not expect representatives of Hein & Associates
LLP to be present at the Annual Meeting.
AUDIT FEES
The Company was billed an aggregate of approximately $55,000 and $56,000 in
fees for professional services rendered during the fiscal years ended December
31, 2003 and December 31, 2002, respectively in connection with the audit of the
Company's consolidated financial statements for such fiscal years and the
reviews of the financial statements included in the Company's Forms 10-QSB for
such fiscal years and statutory and regulatory filings or engagements for such
years.
AUDIT-RELATED FEES
The Company was not billed for any assurance and related services by Hein &
Associates LLP during the fiscal years ended December 31, 2003 and December 31,
2002.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
During the year ended December 31, 2003, Hein & Associates LLP did not
provide or bill the Company for any services related to the design and
implementation of financial information systems.
ALL OTHER FEES
Hein & Associates LLP did not bill the Company for any other services
rendered to the Company for the fiscal years ended December 31, 2003 and
December 31, 2002.
TAX FEES
The Company was billed an aggregate of approximately $14,000 and $14,000 in
fees for professional services rendered during the fiscal year ended December
31, 2003 and December 31, 2002, respectively for tax compliance, tax advice and
tax planning.
The Audit Committee pre-approves all audit and non-audit services performed
by the Company's auditor and the fees to be paid in connection with such
services in order to assure that the provision of such services does not impair
the auditor's independence. Unless the Audit Committee provides general
pre-approval of a service to be provided by the auditor and the related fees,
the service and fees must receive specific pre-approval from the Audit
Committee. None of the Audit-Related Fees, Tax Fees or All Other Fees were
approved pursuant to Rule 2- 01(c)(7)(i)(C) of Regulation S-X.
THE BOARD RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO RATIFY THE SELECTION
OF HEIN & ASSOCIATES LLP, INDEPENDENT AUDITORS, AS AUDITORS OF THE COMPANY FOR
THE YEAR ENDING DECEMBER 31, 2004.
17
SHAREHOLDER PROPOSALS
Proposals that shareholders seek to have included in the proxy statement
for the Company's next annual meeting must be received by the Company no later
than December 31, 2004. If next year's annual meeting is held on a date more
than 30 calendar days from May 31, 2005, a shareholder proposal must be received
by a reasonable time before the Company begins to print and mail its proxy
solicitation materials. A shareholder proposal or nomination for director for
consideration at the 2005 annual meeting but not included in the proxy statement
and proxy must be received by the Company no later than 30 days prior to the
first anniversary of the initial notice of the Annual Meeting, provided that
such proposal need not be given more than 50 days prior to the first anniversary
of the initial notice of the Annual Meeting. The procedures for submitting a
shareholder proposal or nomination not included in the proxy statement and proxy
are more fully described in the Company's bylaws. Any shareholder proposals will
be subject to the requirements of the proxy rules adopted by the SEC.
ADDITIONAL INFORMATION
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR ENDED
DECEMBER 31, 2003 FILED WITH THE SEC WILL BE FURNISHED WITHOUT THE ACCOMPANYING
EXHIBITS TO SHAREHOLDERS WITHOUT CHARGE UPON WRITTEN REQUEST THEREFOR SENT TO
SIMTEK CORPORATION AT 4250 BUCKINGHAM DR. #100, COLORADO SPRINGS, COLORADO
80907. Each such request must set forth a good faith representation that as of
the Record Date the person making the request was the beneficial owner of common
stock of the Company entitled to vote at the Annual Meeting. We are subject to
the informational requirements of the Exchange Act and in accordance therewith
file reports, proxy and information statements, and other information with the
SEC. Such reports, proxy and information statements, and other information we
file can be inspected and copied at the public reference facilities maintained
by the SEC at 450 Fifth Street, N.W., Washington, D.C. Copies of such materials
can be obtained from the Public Reference Section of the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The SEC maintains a
World Wide Web site that contains reports, proxy and information statements, and
other information filed through the SEC's Electronic Data Gathering, Analysis
and Retrieval System. This Web site can be accessed at http://www.sec.gov.
18
Exhibit A
---------
ARTICLES OF AMENDMENT
TO THE
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
SIMTEK CORPORATION
Pursuant to Section 7-110-106 and part 3 of article 90 of title 7, Colorado
Revised Statutes ("C.R.S."), these Articles of Amendment to the Amended and
Restated Articles of Incorporation are delivered to the Colorado Secretary of
State for filing.
1. The name of the corporation is: Simtek Corporation.
2. Section 2.1 of Article SECOND of the Amended and Restated Articles of
Incorporation, is hereby amended to read as follows:
2.1 Authorized Capital. The aggregate number of shares that the
corporation shall have authority to issue is 300,000,000 shares of
common stock with a par value of $0.01 per share ("Common Stock"), and
2,000,000 shares of preferred stock with a par value of $1.00 per
share ("Preferred Stock").
3. The amendment to the Amended and Restated Articles of Incorporation
was adopted by vote of the shareholders on the ___day of _______, 2004, as
provided in Section 7-110-103, C.R.S. The number of votes cast for the amendment
by each voting group entitled to vote separately on the amendment was sufficient
for approval by that voting group.
4. The name and mailing address of any one or more of the individuals who
cause this document to be delivered for filing, and to whom the Secretary of
State may deliver notice if filing of this document is refused, are:
Douglas Mitchell
Simtek Corporation
4250 Buckingham Dr. #100
Colorado Springs, CO 80907
Exhibit B
---------
AUDIT COMMITTEE CHARTER
SIMTEK CORPORATION
ADOPTED MARCH 24, 2003
PURPOSE
The primary function of the Audit Committee is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing: the financial reports
and other financial information provided by the Corporation to any governmental
body or the public; the Corporation's systems of internal controls regarding
finance, accounting, and ethics that management and the Board have established;
and the Corporation's auditing, accounting and financial reporting processes
generally. Consistent with this function, the Audit Committee should encourage
continuous improvement of, and should foster adherence to, the corporation's
policies, procedures and practices at all levels. The Audit Committee's primary
duties and responsibilities are to:
o Serve as an independent and objective party to monitor the
Corporation's financial reporting process and internal control system.
o Review and appraise the audit efforts of the Corporation's independent
accountants.
o Provide an open avenue of communication among the independent
accountants, financial and senior management, and the Board of
Directors.
MEMBERSHIP
The audit committee will be composed of not less than 3 members of the Board.
They will be selected by the Board, taking into account prior experience in
matters to be considered by the committee, probable availability at times
required for consideration of such matters, and their individual independence
and objectivity.
The committee's membership will meet the requirements of the audit committee
policy of the National Association of Securities Dealers (NASD). Accordingly,
all of the members will be directors independent of management and free from
relationships that, in the opinion of the Board of Directors, would interfere
with the exercise of independent judgment as a committee member.
Former officers or employees of the Company or any of its subsidiaries may serve
on the committee (even though the former officer may be receiving pension or
deferred compensation payments from the Company) if, in the opinion of the Board
of Directors, the former officer will exercise independent judgment and will
significantly assist the committee to function. However, a majority of the
committee will be directors who were not formerly officers of the Company or any
of its subsidiaries.
When considering relationships that might affect independence, including
possible affiliate status, the Board of Directors will give appropriate
consideration, in addition to its audit committee policy, to guidelines issued
by the NASD, which were provided to assist Board of Directors in observing the
spirit of the NASD policy.
MEETINGS
The Committee shall meet at least two times annually, or more frequently as
circumstances dictate. As part of its job to foster open communication, the
Committee should meet a least annually with management, and the independent
auditors in separate executive sessions to discuss any matters that the
Committee or each of these groups believe should be discussed privately. In
addition, the Committee or at least its Chair should meet with the independent
auditors and management quarterly to review the Corporation's financials.
ACTIONS OF THE COMMITTEE
The committee's activities will include the following actions:
o Oversight of the financial statements and relations with the
independent auditors.
o Instruct the independent auditors that the Board of Directors is
the client in its capacity as the shareholders' representative.
o Expect the independent auditors to meet with the Board of
Directors at least annually so the Board has a basis on which to
recommend the independent auditors' appointment to the
shareholders or to ratify its selection of the independent
auditors.
o Expect financial management and the independent auditors to
analyze significant financial report issues and practices on a
timely basis.
o Expect financial management and the independent auditors to
discuss with the audit committee:
o Qualitative judgments about whether current or proposed
accounting principles and disclosures are appropriate, not
just acceptable.
o Aggressiveness or conservatism of accounting principles and
financial estimates.
o Expect the independent auditors to provide the audit committee
with:
o Independent judgments about the appropriateness of the
Company's current or proposed accounting principles and
whether current or proposed financial disclosures are clear.
o Views on whether the accounting principles chosen by
management are conservative, moderate, or aggressive as they
relate to income, asset, and liability recognition, and
whether these accounting principles are commonly used.
o Reasons why accounting principles and disclosure practices
used for new transactions or events are appropriate.
o Reasons for accepting or questioning significant estimates
made by management.
o Views on how selected accounting principles and disclosure
practices affect shareholder and public attitudes about the
Company.
o Actions taken on the Board's behalf that require Board
notification but not Board approval:
o Review and approve the scope of the Company's audit and that
of its subsidiaries as recommended by the independent
auditors and the president.
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o Answer questions raised by shareholders during an annual
shareholders' meeting on matters relating to the committee's
activities if asked to do so by the Board of Directors.
o Ask the president to have the internal staff study a
particular area of interest or concern to the audit
committee.
o Matters requiring the committee's review and study before making a
recommendation for the Board of Directors' action:
o Appointment of the independent auditors.
o Implementation of major accounting policy changes.
o SEC registration statements to be signed by the Board of
Directors.
o The auditors' reports and financial statements prior to
publication in the annual report.
o Matters requiring the committee's review and study before providing
summary information to the Board of Directors:
o Accounting policy changes proposed or adopted by organizations
such as the Financial Accounting Standards Board (FASB), the
Securities and Exchange Commission (SEC), and the American
Institute of Certified Public Accountants (AICPA), or by
comparable bodies outside the U.S.
o The independent auditors' assessment of the strengths and
weaknesses of the Company's financial staff, systems, controls,
and other factors that might be relevant to the integrity of the
financial statements.
o Quarterly financial statements review before earnings release or
publication.
o The performance of management and operating personnel under the
Company's code of ethics.
o Gaps and exposures in insurance programs.
o Reports about the Company or its subsidiaries submitted by
agencies of governments in countries in which the Company or its
subsidiaries operate.
o Periodic SEC filings and the adequacy of programs and procedures
to assure compliance with SEC regulations and regulations of the
NASD.
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