EXHIBIT 10.20
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BORROWER'S SECURITY AGREEMENT
made by
SIMTEK CORPORATION
in favor of
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC
and
RENAISSANCE US GROWTH & INCOME TRUST PLC
and
BFSUS SPECIAL OPPORTUNITIES TRUST PLC
Dated as of June 28, 2002
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This BORROWER'S SECURITY AGREEMENT (this "Agreement"), dated as of June 28,
2002, is entered into by and among SIMTEK CORPORATION, a Colorado corporation
("Borrower"), RENAISSANCE US GROWTH & INCOME TRUST PLC, a public limited company
registered in England and Wales ("RUSGIT"), BFSUS SPECIAL OPPORTUNITIES TRUST
PLC, a public limited company registered in England and Wales ("BFSUS"),
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC., a Texas corporation
("Renaissance III") (RUSGIT, Renaissance III, and BFSUS, together with any
permitted assignees or successors in interest, referred to as "Lender"), and
RENAISSANCE CAPITAL GROUP, INC., a Texas corporation, as agent for the Lender
(the "Agent").
Unless indicated otherwise, all capitalized terms used herein, but not defined,
shall have the meaning given to them in the Convertible Loan Agreement (as
defined below). All references herein to Borrower shall include the
Subsidiaries, unless the context otherwise requires.
RECITALS
A. Lender, Borrower and Agent entered into that certain Convertible Loan
Agreement, dated June 28, 2002 (the "Convertible Loan Agreement"), pursuant to
which Lender will lend to Borrower the aggregate principal amount of Three
Million Dollars ($3,000,000) evidenced by the Borrower's 7.50% Convertible
Debentures of even date herewith (the "Debentures").
B. As a condition for the loan pursuant to the Convertible Loan Agreement,
Lender required that Borrower grant a security interest in all of its assets as
collateral for the loan and any other indebtedness of Borrower to Lender (the
"Obligations") as set forth in the Convertible Loan Agreement. The Obligations
shall also consist of payment of the costs and expenses of that sale or
realization, including compensation to Lender and its agents and counsel, and
all expenses, liabilities, and advances made or incurred by Lender in connection
therewith, all as set forth in the Convertible Loan Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements set forth herein, the parties agree as follows:
1. GRANT OF SECURITY INTEREST. In order to secure payment when due of the
Obligations now existing or hereafter incurred, Borrower hereby irrevocably
grants to the Lender a continuing security interest in the following property of
the Borrower (the "Collateral"), whether now owned or existing, or hereafter
acquired, owned, existing or arising (whether by contract or operation of law),
and wherever located, which shall be retained by Lender, until the Obligations
have been paid in full or the Convertible Loan Agreement has been terminated;
provided, however, that such lien in the Collateral shall be subject and
subordinate to the liens granted by Borrower to the Senior Creditor (as defined
in the Subordination and Intercreditor Agreement), in accordance with the terms
set forth in the Subordination and Intercreditor Agreement:
(a) All accounts (including inter-company receivables), contract
rights, chattel paper and rights of payment of every kind (collectively,
"Accounts") and instruments and general intangibles of Borrower.
(b) All bank accounts of Borrower.
(c) All monies and property of any kind of Borrower, now or hereafter
in the possession or under the control of Lender, Agent or a bailee of Lender.
(d) All licenses, patents (as more particularly described on Schedule 1
attached hereto and incorporated herein for all purposes), patent applications,
copyrights, trademarks, trademark applications, trade names, assumed names,
service marks and service ▇▇▇▇ applications and other intellectual property of
Borrower.
(e) All inventory, equipment (including any and all computer hardware
and components), machinery and fixtures of Borrower in all forms and wherever
located, and all parts and products thereof, all accessories thereto, and all
documents therefor.
(f) All books and records (including, without limitation, customer
lists, credit files, tapes, ledger cards, computer software and hardware,
electronic data processing software, computer programs, printouts and other
computer materials and records) of Borrower evidencing or containing information
regarding or otherwise pertaining to any of the foregoing.
(g) Contract rights under agreements between Borrower and its
Subsidiaries.
(h) All accessories to, substitutions for and all replacements,
products and proceeds of the foregoing, including, without limitation, proceeds
of insurance policies insuring the Collateral (including, but not limited to,
claims paid and premium refunds).
2. INSURANCE ON COLLATERAL. Borrower further warrants and agrees that it in
each case where the terms of any such Accounts require the Borrower or the
account debtor named in such Account to place or carry insurance in respect of
the property to which such Account relates, the Borrower or the account debtor
will pay for and maintain such insurance.
3. COVENANT FOR ACCOUNTS.
(a) The Borrower will, on the Lender's demand, make notations on its
books and records showing the Lender's security interest and, upon such demand,
make available to the Lender shipping and delivery receipts evidencing the
shipment of the goods that gave rise to an account, completion certificates or
other proof of the satisfactory performance of services that gave rise to an
account, a copy of the invoice for each account and copies of any written
contract or order from which an account arose. The Borrower shall promptly
notify the Lender if Borrower becomes aware that an account in excess of $15,000
becomes evidenced or secured by an instrument or chattel paper and upon the
Lender's request, will promptly deliver any such instrument or chattel paper to
the Lender, including any letter of credit delivered to the Borrower to support
a shipment of inventory by the Borrower.
(b) The Borrower will promptly advise the Lender whenever an account
debtor refuses to retain or returns any goods valued at more than $100,000 from
the sale of which an account arose and will comply with any instructions that
the Lender may give regarding the sale or other disposition of such returns
provided, however, that the aforementioned covenants set forth in this Section
3(b) shall not apply to the returning of goods in Borrower's ordinary course of
business or as may be specified in agreements between Borrower and any such
account debtor. From time to time with such frequency as the Lender may request,
the Borrower will report to the Lender all credits given to account debtors on
all accounts.
(c) Except with respect to contracts entered into by Q-DOT, Inc. in the
ordinary course of business consistent with past practices, the Borrower will
immediately notify the Lender if any account arises out of contracts with the
United States or any department, agency or instrumentality thereof, and with
respect to all such contracts to which Borrower or Q-DOT, Inc. is a party, will
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execute any instruments and take any steps required by the Lender so that all
monies due and to become due under such contract shall be assigned to the Lender
and notice of the assignment given to and acknowledged by the appropriate
government agency or authority under the Federal Assignment of Claims Act.
(d) Subject to the rights of the Senior Creditor, at any time after the
occurrence of an Event of Default as addressed in Section 6 below, and without
notice to the Borrower, the Lender may direct any persons who are indebted to
the Borrower on any Collateral consisting of accounts or general intangibles to
make payment directly to the Lender of the amounts due. Following such Event of
Default, the Lender is authorized to collect, compromise, endorse and sell any
such Collateral in its own name or in the Borrower's name and to give receipts
to such account debtors for any such payments and the account debtors will be
protected in making such payments to the Lender.
(e) Subject to the rights of the Senior Creditor, at any time after the
occurrence of an Event of Default (as addressed in Section 6 below), upon
Agent's request, upon the occurrence and during the continuance of an Event of
Default (as addressed in Section 6 hereof), Borrower will, at any reasonable
time and at Borrower's own expense, physically deliver to Agent, all Accounts
(including inter-company receivables) assigned to Agent at any reasonable place
or places designated by Agent. Failure to deliver any Account, or failure to
deliver physical possession of any instruments, documents or writings in respect
of any Account shall not invalidate Agent's Lien and security interest therein,
except to the extent that possession may be required by applicable law for the
perfection of said Lien or security interest, in which latter case, the Account
shall be deemed to be held by the Borrower as the custodian agent of Agent, for
the benefit of Lender. Failure of Agent to demand or require Borrower to include
any Account in any schedule, to execute any schedule, to assign and deliver any
schedule or to deliver physical possession of any instruments, documents or
writings related to any Account shall not relieve Borrower of its duty so to do.
(f) Borrower hereby agrees that it shall use commercially reasonable
efforts, at its sole cost and expense and in its own name, to promptly and
diligently collect and enforce payment of all Accounts in accordance with this
Agreement and Borrower will defend and hold Lender and Agent harmless from any
and all loss, damage, penalty, fine or expense arising from such collection or
enforcement.
4. FINANCING STATEMENTS. Borrower agrees to execute all financing
statements and amendments thereto as Agent, on behalf of the Lender, may
reasonably request from time to time to evidence the security interest granted
to Agent hereunder and will pay the cost of all filing fees and taxes, if any,
necessary to effect the filing thereof. By its signature hereon, the Borrower
hereby irrevocably authorizes the Lender to execute (on behalf of the Borrower)
and file against the Borrower one or more financing, continuation or amendment
statements pursuant to the Uniform Commercial Code in form reasonably
satisfactory to the Lender, and the Borrower will pay the cost of preparing and
filing the same in all jurisdictions in which such filing is reasonably deemed
by the Lender to be necessary or desirable in order to perfect, preserve and
protect its security interests in accordance with this Agreement and the
Convertible Loan Agreement, provided that Lender shall provide Borrower with
copies of any such filings, promptly after making such filings. Without the
written consent of Agent, Borrower will not allow any financing statement or
notice of assignment to be on file in any public office covering any Collateral,
proceeds thereof or other matters subject to the security interest granted to
Agent herein, unless such financing statement relates to a Permitted Lien.
5. LENDER'S PAYMENT OF CLAIMS. Lender may, in its sole discretion,
discharge or obtain the release of any Lien asserted by any Person against the
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Collateral, other than a Permitted Lien which, in the Lender's judgment, may
have a Material Adverse Effect on the Lender's rights with respect to the
Collateral. All sums paid by Lender in respect thereof shall be payable, on
demand, by Borrower to Lender and shall be a part of the Obligations.
6. REPRESENTATIONS AND COVENANTS OF BORROWER. Borrower hereby represents to
and agrees with Lender as follows:
(a) Borrower owns the Collateral as sole owner, free and clear of any
Liens, other than Permitted Liens.
(b) So long as any Obligations remain unpaid, Borrower agrees not to
sell, assign or transfer the Collateral, other than sales of Collateral in the
ordinary course of business, and to maintain it free and clear of any Liens,
other than Permitted Liens.
7. DEFAULT AND REMEDIES.
(a) Borrower shall be in default hereunder upon the occurrence of an
Event of Default, as set forth in the Convertible Loan Agreement.
(b) Upon the occurrence and during the continuation of any Default (i)
unless Lender or Agent shall elect otherwise, the entire unpaid amount of the
Obligations due under the Convertible Loan Agreement, as are not then otherwise
due and payable, shall become immediately due and payable without notice to
Borrower or demand by Lender or Agent and (ii) either Lender or Agent may, at
its or their option, exercise from time to time any and all rights and remedies
available to them under the Uniform Commercial Code or otherwise, including the
right to foreclose or otherwise realize upon the Collateral and to dispose of
any of the Collateral at one or more public or private sales or other
proceedings, and Borrower agrees that any of Lender, Agent or their nominee may
become the purchaser at any such sale or sales. Borrower agrees that twenty (20)
days shall be reasonable prior notice of the date of any public sale or other
disposition of the same. All rights and remedies granted Lender hereunder or
under any other agreement between Lender and Borrower shall be deemed concurrent
and cumulative and not alternative, and Lender, or Agent on its behalf, may
proceed with any number of remedies at the same time or at different times until
all the Obligations are fully satisfied. The exercise of any one right or remedy
shall not be deemed a waiver or release of, or an election against, any other
right or remedy. Borrower shall pay to Lender or Agent, on demand, any and all
expenses (including reasonable attorneys' fees and legal expenses) which may
have been incurred by Lender or Agent (i) in the prosecution or defense of any
action arising under this Agreement, the Convertible Loan Agreement, the
Collateral or any of Lender's rights therein or thereto; or (ii) in connection
with the custody, preservation, use, operation, preparation for sale or sale of
the Collateral, the incurring of all of which are hereby authorized to the
extent Lender or Agent deem the same advisable. Borrower's liability to Lender
or Agent for any such payment shall be included in the Obligations.
8. APPLICATIONS OF PROCEEDS OF COLLATERAL. Upon a foreclosure or otherwise
sale of the Collateral, the proceeds of any sale of, or other realization upon,
all or any part of the Collateral, and any other monies held by Lender under
this Agreement, shall be applied in the following order of priority:
(a) First, to payment of the costs and expenses of that sale or
realization, including compensation to Lender and its agents and counsel, and
all expenses, liabilities, and advances made or incurred by Lender in connection
therewith;
(b) Second, to payment of the interest in full;
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(c) Third, to the payment of the Principal Amount; and
(d) Finally, to payment of any surplus then remaining from such
proceeds and other monies to Borrower or its successors or assigns, or as a
court of competent jurisdiction may direct.
If the proceeds of the Collateral shall not suffice to pay all items
specified in clauses (a), (b), and (c) above, Borrower shall remain liable for
the deficiency.
10. ATTORNEY-IN-FACT. Upon the occurrence and continuation of a Default,
Lender is hereby appointed Borrower's attorney-in-fact, for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instruments which Lender may deem necessary or advisable to
accomplish the purposes hereof. This appointment as attorney-in-fact is
irrevocable and coupled with an interest. Without limiting the generality of
this appointment, upon such Default (i) Lender shall have the right and power to
receive, endorse, and collect all checks made payable to the order of Borrower
which represent any dividend, interest, or other payment or distribution in
respect of all or any of the Obligations and to give full discharge for the
same, and (ii) Lender shall have the right to exercise, as Borrower's proxy, the
powers of voting and consent pertaining to the Obligations or any part thereof.
11. MISCELLANEOUS.
(a) This Agreement shall bind and inure to the benefit of the parties
and their respective heirs, personal representatives, successors and assigns,
except that Borrower shall not assign any of its rights hereunder without the
prior written consent of holders of more than 50% of the principal amount of the
then outstanding Debentures.
(b) Any provision hereof which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without affecting the validity or
enforceability of the remainder of this Agreement or the validity or
enforceability of such provision in any other jurisdiction.
(e) This Agreement shall be governed by and construed and enforced in
accordance with the substantive laws of the State of Texas, without regard to
the conflicts of laws provisions thereof, and the applicable laws of the United
States. Venue and jurisdiction shall be in the state or federal courts in Dallas
County, Texas.
(f) Borrower hereby consents to the jurisdiction of the courts of the
State of Texas in any action or proceeding which may be brought against it under
or in connection with this Agreement or any transaction contemplated hereby or
to enforce any agreement contained herein and, in the event any such action or
proceeding shall be brought against it, Borrower agrees not to raise any
objection to such jurisdiction or to the laying of venue in Dallas County, Texas
or, if applicable, any other county in any state in which Collateral is located.
(g) All capitalized terms, unless otherwise specified, have the
meanings assigned to them in the Convertible Loan Agreement and the Debentures.
(h) Any notices or other communications required or permitted to be
given by this Agreement or any other documents and instruments referred to
herein must be (i) given in writing and personally delivered, mailed by prepaid
certified or registered mail or sent by overnight service, such as FedEx, or
(ii) made by telex or facsimile transmission delivered or transmitted to the
party to whom such notice or communication is directed, with confirmation
thereupon given in writing and personally delivered or mailed by prepaid
certified or registered mail.
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If to Borrower: Simtek Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Holme ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
1700 Lincoln, Suite 4100
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
If to Lender: Renaissance Capital Growth & Income Fund III, Inc.
c/o Renaissance Capital Group, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Renaissance US Growth & Income Trust PLC
c/o Renaissance Capital Group, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
BFSUS Special Opportunities Trust PLC
c/o Renaissance Capital Group, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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If to Agent: Renaissance Capital Group, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and CEO
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(g) Any notice delivered personally in the manner provided herein will
be deemed given to the party to whom it is directed upon the party's (or its
agent's) actual receipt. Any notice addressed and mailed in the manner provided
herein will be deemed given to the party to whom it is addressed at the close of
business, local time of the recipient, on the fourth business day after the day
it is placed in the mail, or, if earlier, the time of actual receipt.
[Signature page follows]
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IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date and year written above.
BORROWER:
SIMTEK CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Chief Executive Officer and President
LENDER:
BFSUS SPECIAL OPPORTUNITIES TRUST PLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and CEO
RENAISSANCE US GROWTH & INCOME TRUST PLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
President and CEO
RENAISSANCE CAPITAL GROWTH & INCOME FUND III, INC.
By: Renaissance Capital Group, Inc.,
Investment Adviser
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
President and CEO
AGENT:
RENAISSANCE CAPITAL GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
President and CEO
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Schedule 1
Borrower's patents
Patent # Title
5,013,943 Single ended sense amplifier with improved data recall for variable bit line current
5,055,720 Current mirror sense amplifier with reduced current consumption and enhanced output signal
5,065,362 Non-volatile RAM with integrated compact static RAM load configuration
5,309,047 Differential sense amplifier with cross connected reference circuits
5,563,839 Semiconductor memory device having a sleep mode
5,602,776 Non-Volatile, static random access memory with current limiting
5,828,599 Memory with electrically erasable and programmable redundancy
6,026,018 Non-volatile, static random access memory with store disturb immunity
6,097,629 Non-volatile, static random access memory with high speed store capability
6,163,568 Broadband, low power FM/FSK transceiver for wireless communications systems
6,343,071 Wireless desktop area network system
Borrower has not filed any trademark or copyright application with any federal
or state trademark or copyright authority.