<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
IMP, Inc.
- -------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- -------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
$13,000,000
----------------------------------------------------------------------
5) Total fee paid:
$2,600 at the time of filing preliminary proxy
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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<PAGE> 2
IMP, INC.
2830 North First Street
San Jose, California 95134
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 16, 1995
TO THE STOCKHOLDERS OF IMP, INC.:
The Annual Meeting of Stockholders of IMP, Inc. (the
"Company") will be held at the Le Baron Hotel, 1350 North First Street, San
Jose, California on Wednesday, August 16, 1995, at 2:00 p.m. (the "Annual
Meeting") for the following purposes:
1. To elect the Board of Directors to serve until the
next Annual Meeting and until their successors are elected and qualified;
2. To approve an amendment to the Stock Option Plan (the
"Option Plan") to (i) increase the number of shares of Common Stock reserved
for issuance by an additional 500,000 shares, (ii) approve an additional grant
of 20,000 shares to non-employee directors every 4 years under the Automatic
Option Grant Program, (iii) limit the maximum number of shares for which any
one individual may be granted stock options or separately exercisable stock
appreciation rights to 1,000,000 shares in the aggregate over the remaining
term of the Option Plan, excluding any options granted prior to July 31, 1994
and (iv) change the name of the Option Plan.
3. To ratify the appointment of Price Waterhouse as the
Company's independent auditors for the fiscal year ending March 31, 1996; and
4. To transact such other business as may properly come
before the meeting or any adjournment thereof.
The foregoing items of business are more fully described in
the Proxy Statement accompanying this Notice. Any stockholders of record at
the close of business on June 20, 1995 will be entitled to vote at the Annual
Meeting and at any adjournment thereof. The transfer books will not be closed.
A list of stockholders entitled to vote at the Annual Meeting will be available
for inspection at the offices of the Company. If you do not plan to attend the
Annual Meeting in person, please sign, date and return the enclosed proxy in
the envelope provided. If you attend the Annual Meeting and vote by ballot
your proxy will be revoked automatically and only your vote at the Annual
Meeting will be counted. The prompt return of your proxy will assist us in
preparing for the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
San Jose, California Charles S. Isherwood
July 5, 1995 Secretary
<PAGE> 3
IMP, INC.
2830 North First Street
San Jose, California 95134
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 16, 1995
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
IMP, Inc., a Delaware corporation (the "Company"), for use at the annual
meeting of stockholders to be held on August 16, 1995 (the "Annual Meeting").
The Annual Meeting will be held at 2:00 p.m. at the Le Baron Hotel, 1350 North
First Street, San Jose, California. Stockholders of record on June 20, 1995
will be entitled to notice of and to vote at the Annual Meeting.
This Proxy Statement and accompanying proxy (the "Proxy") and Notice
of Annual Meeting were first mailed to all stockholders entitled to vote on or
about July 5, 1995.
VOTING
On June 20, 1995, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were 27,405,925 shares of Common
Stock outstanding. No shares of the Company's preferred stock are outstanding.
Each stockholder is entitled to one vote for each share of Common Stock held by
such stockholder. All votes will be tabulated by the inspector of election
appointed for the meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes. Abstentions and broker
non-votes are counted for purposes of determining the presence or absence of a
quorum for the transaction of business. Abstentions will be counted towards
the tabulations of votes cast on proposals presented to the stockholders and
will have the same effect as negative votes, whereas broker non-votes will not
be counted for purposes of determining whether a proposal has been approved or
not.
REVOCABILITY OF PROXIES
Any person giving a Proxy has the power to revoke it at any time
before its exercise. It may be revoked by filing with the Secretary of the
Company at the Company's principal executive offices, IMP, Inc., 2830 North
First Street, San Jose, California, 95134, a notice of revocation or another
signed Proxy with a later date. You may also revoke your Proxy by attending the
Annual Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials furnished to stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, or other means by directors, officers, employees or agents
of the Company. No compensation will be paid to these individuals for any such
services. Except as described above, the Company does not presently intend to
solicit proxies other than by mail.
<PAGE> 4
SHARE OWNERSHIP
The following table sets forth certain information known to the
Company regarding the ownership of the Company's Common Stock as of March 26,
1995 for (i) each director and nominee, (ii) all persons who are beneficial
owners of five percent (5%) or more of the Company's Common Stock, (iii) the
executive officers named in the compensation tables, and (iv) all current
directors and executive officers of the Company as a group. Unless otherwise
indicated, each of the stockholders has sole voting and investment power with
respect to the shares beneficially owned, subject to community property laws
where applicable.
<TABLE>
<CAPTION>
Number of Percent of Total
Name Shares Shares Outstanding(1)
---- ------ ---------------------
<S> <C> <C>
Barry M. Carrington(2) . . . . . . . . . . . 715,702 2.55%
A. Kenneth Davis(3) . . . . . . . . . . . . . 196,873 *
Charles S. Isherwood(4) . . . . . . . . . . . 137,307 *
Bernard V. Vonderschmitt(5) . . . . . . . . . 32,000 *
Peter D. Olson(6) . . . . . . . . . . . . . . 105,000 *
Zvi Grinfas(7) . . . . . . . . . . . . . . . 653,161 2.33%
Heinz Fellinger(8) . . . . . . . . . . . . . 15,000 *
All directors and officers as a
group (10 persons)(9) . . . . . . . . . 1,949,447 6.96%
</TABLE>
- -------------------
* Less than one percent (1%).
(1) Percentage of beneficial ownership is calculated assuming
28,044,000 shares of Common Stock were outstanding on March 26,
1995. This percentage may include Common Stock of which such
individual or entity has the right to acquire beneficial ownership
within sixty days of March 26, 1995, including but not limited to
the exercise of an option; however, such Common Stock shall not be
deemed outstanding for the purpose of computing the percentage
owned by any other individual or entity. Such calculation is
required by General Rule 13d-3(d)(1)(i) under the Securities
Exchange Act of 1934.
(2) Includes 13,000 shares held in trust for Mr. Carrington's children,
for which he serves as trustee, as to which shares Mr. Carrington
disclaims beneficial ownership. Also includes 436,202 shares
issuable upon exercise of options within sixty (60) days of March
26, 1995.
(3) Includes 186,317 shares issuable upon exercise of options within
sixty (60) days of March 26, 1995.
(4) Includes 115,000 shares issuable upon exercise of options within
sixty (60) days of March 26, 1995.
(5) Includes 20,000 shares issuable upon exercise of options within
sixty (60) days of March 26, 1995.
(6) Includes 20,000 shares issuable upon exercise of options within
sixty (60) days of March 26, 1995.
2.
<PAGE> 5
(7) Includes 30,934 shares as to which Mr. Grinfas has a power of
attorney which includes the power to vote and dispose of the
shares, as to which Mr. Grinfas disclaims beneficial ownership, and
20,000 shares issuable upon exercise of options within sixty (60)
days of March 26, 1995.
(8) Consists of 15,000 shares issuable upon exercise of options within
sixty (60) days of March 26, 1995.
(9) Includes 847,890 shares issuable upon exercise of options within
sixty (60) days of March 26, 1995.
3.
<PAGE> 6
================================================================================
PROPOSAL NO. 1 -- ELECTION OF DIRECTORS
================================================================================
The persons named below are nominees for director to serve until the
next annual meeting of stockholders and until their successors have been
elected and qualified. The Company's Bylaws provide that the authorized number
of directors shall be determined by resolution of the Board of Directors or by
the stockholders at the annual meeting of stockholders. The authorized number
of directors is currently four (4). The Board of Directors has selected four
(4) nominees, all of which are currently directors of the Company. Proxies
cannot be voted for a greater number of persons than four (4). Each person
nominated for election has agreed to serve if elected and management has no
reason to believe that any nominee will be unavailable to serve. Unless
otherwise instructed, the proxyholders will vote the proxies received by them
for the nominees named below. The four (4) candidates receiving the highest
number of affirmative votes of the shares entitled to vote at the Annual
Meeting will be elected directors of the Company.
NOMINEES
Set forth below is information regarding the nominees, including
information furnished by them as to principal occupations, certain other
directorships held by them, any arrangements pursuant to which they were
selected as directors or nominees and their ages as of March 26, 1995.
<TABLE>
<CAPTION>
FIRST YEAR ELECTED
NAME AGE DIRECTOR
---- --- ------------------
<S> <C> <C>
Barry M. Carrington 52 1982
Zvi Grinfas 54 1981
Peter D. Olson 52 1989
Bernard V. Vonderschmitt 71 1991
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
Mr. Carrington, 52, joined the Company in May 1982 as Vice President,
Operations. In October 1982 he was named President and Chief Operating
Officer. He has been a director since October 1982. In October 1986 he was
appointed Chief Executive Officer. Prior to joining IMP, Mr. Carrington was
employed by the Semiconductor Division of Gould, Inc. (formerly American
Microsystems Inc.) for 10 years, where the last position he held was Senior
Vice President and Manufacturing Group Manager.
Mr. Grinfas, 54, a co-founder of the Company, has been a director of
the Company since its organization in January 1981. He served as Senior Vice
President for the Company, managing the Business Development Group, until
December 1984. At that time he became Senior Vice President, Engineering, a
position he held until May 1986, when he became Vice President, Business
Development and Sales Director of Southern Europe of IMP Europe Limited. Mr.
Grinfas ceased working for IMP Europe Limited in December 1988, and has been
employed as a consultant since that time, including serving in the function of
General Manager, Microelectronic Operations for Elron Electronics Industries,
Ltd. from February 1989 through February 1990.
Mr. Olson, 52, has been a director of the Company since August 1989.
Since July 1994, Mr. Olson has been President of Spatial Media, Inc. Mr. Olson
was a co-founder of Octel Communications Corporation ("Octel"), a
telecommunications company, and served as Executive Vice President and Chief
Technical Officer of Octel from 1982 to July 1994.
4.
<PAGE> 7
Mr. Vonderschmitt, 71, was a co-founder of Xilinx, Inc. ("Xilinx"), a
supplier of field programmable gate arrays. He has served as the President of
Xilinx since February 1984 and is currently a director of Xilinx. Mr.
Vonderschmitt also serves as a director on the boards of directors of Chips and
Technologies, Inc., Credence Systems Corporation and Sanmina Corporation, as
well as various private companies. He has been a director of the Company since
February 1991.
There are no family relationships among executive officers or
directors of the Company.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended March 26, 1995, the Board of Directors
held four (4) meetings. As of March 26, 1995, the Company had three standing
Committees: an Audit Committee, a Compensation Committee and a Nominating
Committee.
The Audit Committee is primarily responsible for approving the
services performed by the Company's independent auditors and reviewing reports
of the Company's external auditors regarding the Company's accounting practices
and systems of internal accounting controls. This Committee currently consists
of Messrs. Grinfas, Olson and Vonderschmitt. This Committee held four (4)
meetings during the last fiscal year.
The Compensation Committee reviews and approves the Company's general
compensation policies and sets compensation levels for the Company's executive
officers. This Committee currently consists of Messrs. Grinfas, Olson and
Vonderschmitt. This Committee held no meetings during the last fiscal year,
but met on May 10, 1995.
The Nominating Committee is responsible for recommending nominees for
members of the Company's Board of Directors. This Committee currently consists
of Messrs. Carrington, Olson and Vonderschmitt. This Committee held no
meetings during the last fiscal year, but met on May 10, 1995. The Nominating
Committee has not instituted proceedings to consider nominees recommended by
security holders, but may do so in the future.
No incumbent director serving for the full fiscal year attended fewer
than 75% of the aggregate number of meetings of the Board of Directors and
meetings of Committees of the Board on which he serves.
DIRECTORS' COMPENSATION
Each non-employee member of the Board of Directors receives $1,500 for
each full fiscal quarter that he serves as a member of the Board of Directors,
and $1,000 for each meeting he attends. Mr. Grinfas does not receive fees, but
instead receives reimbursement for his travel expenses incurred in attending
meetings of the Board of Directors, which totalled approximately $24,000 in
fiscal 1995. In addition, non-employee members of the Board are eligible to
receive options to purchase shares of the Company's Common Stock.
Each individual who was serving as a non-employee Board member at the
time of the 1989 Annual Meeting of Stockholders was granted at that time an
automatic option grant for 20,000 shares of Common Stock under the Company's
Stock Option Plan ("Option Plan"). Each individual newly elected or appointed
as a non-employee member of the Board after the 1989 Annual Meeting will be
granted on such date of election or appointment an automatic option grant for
20,000 shares of Common Stock under the Option Plan. Each individual who
continues to serve as a non-employee Board member shall receive additional
automatic option grants, each for 20,000 shares of Common Stock, at successive
four (4)-year intervals over his or her period of continued Board service. The
first such additional grant shall be made on the later of (A) the date of the
1994 Annual Stockholders Meeting or (B) the date of the Annual Stockholders
Meeting held in the calendar year in which occurs the fourth anniversary of the
grant date of the initial automatic option grant made to such individual,
provided he or she is re-elected to the Board at that Annual Meeting.
Additional automatic grants
5.
<PAGE> 8
for 20,000 shares each shall be made to such individual at every fourth Annual
Stockholders Meeting thereafter over such individual's period of continued
service as a non-employee Board member. Any such option grants made at the
1994 Annual Meeting shall not become exercisable in whole or in part unless and
until this 1994 restatement of the Plan shall have been approved by the
stockholders at the 1995 Annual Meeting.
Each such grant becomes exercisable for all of the shares upon the
optionee's completion of six (6) months of service on the Board and becomes
immediately exercisable for all of the option shares if the Company is acquired
by merger, asset sale or hostile take-over. The option shares are subject to
repurchase at the original exercise price; the repurchase right lapses, and the
Board member vests, in twenty-five percent (25%) of the option shares upon
completion of one (1) year of Board service and in thirty-six (36) equal
monthly installments thereafter, subject to accelerated vesting upon the
optionee's death or disability or if the Company is acquired by merger, asset
sale or hostile take-over. Such options have a maximum term of ten (10) years,
subject to earlier termination upon the optionee's cessation of Board service.
Upon the successful completion of a hostile tender offer for more than fifty
percent (50%) of the Company's outstanding Common Stock, each automatic option
grant will be cancelled, and the non- employee Board member will be entitled to
a cash distribution from the Company based upon the tender-offer price.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR the nominees listed
herein.
6.
<PAGE> 9
================================================================================
PROPOSAL NO. 2
APPROVAL AND RATIFICATION OF AMENDMENT TO THE STOCK OPTION PLAN
================================================================================
INTRODUCTION
On August 18, 1994, the Board of Directors adopted, subject to
stockholder approval, a restatement of the Company's 1992 Restated Stock Option
Plan (the "Option Plan"). The amendments will effect five (5) principal
changes to the existing provisions of the Option Plan:
1. Increase the number of shares of the Company's common
stock ("Common Stock") issuable thereunder by 500,000 shares to
4,677,000 in the aggregate, to assure that the Company will continue
to have a sufficient reserve of Common Stock available under the
Option Plan to attract and retain the services of key individuals
essential to the Company's long-term growth and success;
2. Amend the automatic option grant program to provide
for additional grants of 20,000 shares to each non-employee Board
member at successive four (4)-year intervals over such Board member's
continued service. The Company believes this amendment will aid in
attracting and retaining the services of key individuals essential to
the Company's long-term growth and success;
3. Limit the maximum number of shares for which any one
individual may be granted stock options or separately exercisable
stock appreciation rights to 1,000,000 shares in the aggregate over
the remaining term of the Option Plan, not including any options
granted prior to July 31, 1994. The Company believes this amendment
is necessary to qualify any compensation attributable to stock options
or stock appreciation rights exercised under the Option Plan as
performance-based compensation which will not be subject to the $1
million limitation per executive officer, which Internal Revenue Code
Section 162(m) imposes upon the deductibility, for Federal income tax
purposes, of the compensation which the Company pays to certain
executive officers;
4. Rename the Option Plan as the IMP, Inc. Stock Option
Plan; and
5. Extend the term of the Option Plan to August 16, 2005.
The Option Plan was adopted by the Board in October 1981. A
restatement of the Option Plan was adopted by the Board on December 16, 1986
and approved by the stockholders on February 26, 1987. The Board further
amended the Option Plan on May 3, 1989 to establish an automatic option grant
program for non-employee directors, and such amendment was approved by the
stockholders on August 2, 1989. On May 13, 1992, the Board of Directors
adopted, subject to stockholder approval, a restatement of the Option Plan,
which, among other things, increased the number of shares issuable thereunder
by 500,000 shares and extended the term of the Option Plan. The 1992
restatement was approved by the stockholders in August 1992.
The terms and provisions of the Option Plan, as amended and restated,
are described more fully below. The description, however, is not intended to
be a complete exposition of all the terms of the Option Plan. A copy of the
Option Plan will be furnished by the Company to any stockholder upon written
request to the Secretary of the Company at the corporate offices in San Jose,
California.
7.
<PAGE> 10
STRUCTURE/ELIGIBILITY
The Option Plan is divided into two (2) separate components: the
Discretionary Option Grant Program and the Automatic Option Grant Program.
Under the Discretionary Option Grant Program, options may be issued to key
employees (including officers and directors) and consultants of the Company (or
its parent or subsidiary companies) who contribute to the management, growth
and financial success of the Company (or its parent or subsidiary companies).
Under the Automatic Option Grant Program, current and future non-employee Board
members receive an initial automatic option grant and then receive subsequent
automatic option grants every four (4) years as long as they continue in
service as non-employee Board members.
As of March 26, 1995, approximately 354 employees (including 4
executive officers) were eligible to participate in the Discretionary Option
Grant Program, and 4 non-employee Board members were eligible to participate in
the Automatic Option Grant Program.
OPTION GRANTS / NEW PLAN BENEFITS
The table below shows, as to the Company's Chief Executive Officer,
each of the other executive officers named in the Summary Compensation Table
and the other indicated persons and groups, the number of shares of Common
Stock and the weighted average exercise price per share subject to the stock
option grants made under the Option Plan for each of the last three (3) fiscal
years.
<TABLE>
<CAPTION>
NUMBER OF OPTION WEIGHTED AVERAGE
NAME AND POSITION SHARES EXERCISE PRICE ($)
===================================================================================================
<S> <C> <C> <C>
Barry M. Carrington, 1995: 0 --
President and Chief Executive 1994: 0 --
Officer, Chairman of the Board 1993: 0 --
---------------------------------------------------------------------------------------------------
A. Kenneth Davis, 1995: 0 --
Vice President, Business Development(1) 1994: 0 --
1993: 200,000 $1.77
---------------------------------------------------------------------------------------------------
Charles S. Isherwood, 1995: 0 --
Senior Vice President, Corporate Services, 1994: 0 --
Chief Financial Officer and Secretary 1993: 0 --
---------------------------------------------------------------------------------------------------
Robert Crossley, 1995: 0 --
Vice President, Administration 1994: 0 --
1993: 0 --
---------------------------------------------------------------------------------------------------
David Laws, 1995: 400,000 $1.50
Senior Vice President, 1994: 0 --
Marketing and Business Development(2) 1993: 0 --
---------------------------------------------------------------------------------------------------
All current executive officers as a group (5 1995: 400,000 $1.50
persons) 1994: 0 --
1993: 200,000 $1.77
---------------------------------------------------------------------------------------------------
</TABLE>
8.
<PAGE> 11
<TABLE>
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Zvi Grinfas, Director(3) 1995: 20,000 $1.88
1994: 0 --
1993: 0 --
---------------------------------------------------------------------------------------------------
Heinz Fellinger, Director(4) 1995: 0 --
1994: 0 --
1993: 20,000 $1.38
---------------------------------------------------------------------------------------------------
Peter D. Olson, Director(3) 1995: 20,000 $1.88
1994: 0 --
1993: 0 --
---------------------------------------------------------------------------------------------------
Bernard V. Vonderschmitt 1995: 0 --
1994: 0 --
1993: 0 --
---------------------------------------------------------------------------------------------------
All directors (other than executive officers) as a 1995: 40,000 $1.88
group (4 persons) 1994: 0 --
1993: 20,000 $1.38
---------------------------------------------------------------------------------------------------
All employees, including current officers who are 1995: 174,800 $1.78
not executive officers, as a group (382 persons in 1994: 29,890 $2.17
1995, 323 persons in 1994, and ___ persons in 1993: 96,340 $1.40
1993)
---------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Davis ceased active employment with the Company on April 3, 1995.
(2) Mr. Laws joined the Company in February 1995.
(3) The grant in fiscal year 1995 is subject to stockholder approval of
Automatic Option Grant Program. See page 13 for description of
Automatic Option Grant Program.
(4) On May 10, 1995, Mr. Fellinger resigned from the Board of Directors.
SHARES SUBJECT TO PLAN
The total number of shares of Common Stock issuable over the term of
the Option Plan may not exceed 4,677,000 shares (assuming stockholder approval
of this Proposal No. 2), subject to adjustment in the event of certain changes
to the capitalization of the Company (see "Changes in Capitalization" below).
Such shares will be made available either from the Company's authorized but
unissued Common Stock or from Common Stock reacquired by the Company. Should
an option be terminated or cancelled for any reason prior to exercise or
surrender in full, the shares subject to the portion of the option not so
exercised or surrendered will be available for subsequent grant. Shares
subject to any option or portion thereof cancelled in accordance with the stock
appreciation rights provisions of the Option Plan shall not be available for
subsequent grants.
As of March 26, 1995, approximately 1,705,400 shares of Common Stock
had been issued upon the exercise of options granted under the Option Plan,
2,321,559 shares of Common Stock were subject to outstanding options under the
Option Plan and 650,041 shares of Common Stock were available for issuance
under future option grants (assuming approval of this Proposal No. 2).
ADMINISTRATION
The Discretionary Option Grant Program is administered by a committee
comprised of two (2) or more Board members (the "Committee"). No Board member
is eligible to serve on the Committee if such individual has, within the twelve
(12)-month period immediately preceding the date he or she is to be appointed
thereto,
9.
<PAGE> 12
been eligible for or received any option grant, stock appreciation right or
stock award under this Option Plan or any other stock plan of the Company (or
any parent or subsidiary corporation), other than pursuant to the Automatic
Option Grant Program. Members of the Committee shall be subject to removal by
the Board at any time.
The Committee has full authority to determine the eligible individuals
who are to receive option grants, the number of shares to be covered by each
option, the date or dates on which the option is to become exercisable, and the
maximum term for which the option is to be outstanding. The Committee also has
the discretion to determine whether the option is to be an incentive stock
option under the Federal tax laws or a nonstatutory option. In addition, the
Committee has full authority to accelerate the exercisability of outstanding
options upon such terms and conditions as it deems appropriate. Membership on
the Committee will constitute Board service for purposes of any indemnification
agreements between the Company and the Committee members. All expenses
incurred in administering the Option Plan will be paid by the Company.
Option grants under the Automatic Option Grant Program will be made in
strict compliance with the express provisions of that program, and the
Committee shall not have any discretionary authority with respect to such
option grants.
PRICE AND EXERCISABILITY
The exercise price of shares issued under the Discretionary Option
Grant Program may not be less than eighty-five percent (85%) of the fair market
value of the Common Stock on the grant date and no option may be outstanding
for more than a ten (10)-year term. If the granted option is intended to be an
incentive stock option under the Federal tax laws, the exercise price must not
be less than one hundred percent (100%) of the fair market value per share of
the Common Stock on the grant date. Options issued under the Discretionary
Option Grant Program may become exercisable in installments over a period of
months or years as determined by the Committee. The aggregate fair market
value (as of the date or respective dates of grant) of shares of Common Stock
for which options granted to any employee under the Option Plan may initially
become exercisable as incentive stock options under the Federal tax laws may
not exceed $100,000 per optionee in a calendar year.
Upon exercise, the exercise price may be paid in cash or in shares of
Common Stock. Outstanding options may also be exercised through a cashless
exercise procedure pursuant to which a designated brokerage firm is to effect
an immediate sale of the shares purchased under the option and pay over to the
Company, out of the sales proceeds available on the settlement date, sufficient
funds to cover the exercise price for the purchased shares plus all applicable
withholding taxes. The Committee may extend the cashless exercise procedure to
one or more optionees holding outstanding options. The Committee may also
assist any optionee (including an officer) in the exercise of outstanding
options under the Discretionary Option Grant Program by authorizing a loan from
the Company or permitting the optionee to pay the exercise price in
installments over a period of years. The terms and conditions of any such loan
or installment payment will be established by the Committee in its sole
discretion, and may include provision for forgiveness of such indebtedness in
whole or in part, but in no event may the maximum credit extended to the
optionee exceed the aggregate exercise price payable for the purchased shares
(less the par value), plus any Federal and state income or employment taxes
incurred in connection with the purchase.
No optionee is to have any stockholder rights with respect to the
option shares until such optionee has exercised the option, paid the exercise
price for the purchased shares and been issued a stock certificate for the
purchased shares. Options are not assignable or transferable other than by
will or the laws of inheritance and, during the optionee's lifetime, the option
may be exercised only by such optionee.
10.
<PAGE> 13
VALUATION
For purposes of establishing the exercise price and for all other
valuation purposes under the Option Plan, the fair market value per share of
Common Stock on any relevant date will be the closing selling price per share
on such date as reported on the Nasdaq National Market. As of March 26, 1995
the fair market value per share of the Common Stock was $1.78 per share.
CHANGES IN CAPITALIZATION
In the event any change is made to the Common Stock issuable under the
Option Plan by reason of (A) a Corporate Transaction (as defined below) or (B)
any stock split, stock dividend, combination of shares, recapitalization or
other similar change in the corporate structure of the Company effected without
receipt of consideration, then unless such change results in the termination of
all outstanding options pursuant to the Corporate Transaction provisions of the
Option Plan, appropriate adjustments will be made to (i) the aggregate number
and/or class of shares available for issuance under the Option Plan, (ii) the
number and/or class of shares and price per share in effect under each
outstanding option under the Discretionary Option Grant Program, (iii) the
number and/or class of shares per non-employee Board member for which automatic
option grants are subsequently to be made under the Automatic Option Grant
Program, and (iv) the number and/or class of shares and price per share of the
Common Stock in effect under each automatic grant outstanding under the
Automatic Option Grant Program. The purpose of such adjustments to the
outstanding options is to preclude the enlargement or dilution of rights and
benefits under such options.
TERMINATION OF SERVICE
All options granted under the Discretionary Option Grant Program must
be exercised within three (3) months (or such longer period up to twelve (12)
months as the Committee may establish at the time of grant) after the optionee
ceases for any reason to be in the employ or service of the Company or its
parent or subsidiary corporations. In the event of the optionee's death
following his or her cessation of employment or service, the option may be
exercised within one (1) year of the optionee's death by the personal
representative of the optionee's estate or by the person inheriting the option,
but only for that number of shares for which the option is exercisable on the
date of the optionee's cessation of employment or service. Should the optionee
die prior to his or her cessation of employment or service, the option may be
exercised within one (1) year of the optionee's death, for all or any part of
the shares at the time subject to such option, by the personal representative
of the optionee's estate or by the person inheriting the option. If the
optionee's employment is terminated for misconduct or the optionee makes or
attempts to make any unauthorized use of confidential information of the
Company or its parent or subsidiary corporations, then any outstanding option
held by the optionee will terminate and cease to be exercisable at such time.
The Committee will, however, have complete discretion to extend the period of
time for which any option is to remain exercisable following the optionee's
cessation of employment or service, but under no circumstances may an option be
exercised after the specified expiration date of the option term.
Other than as set forth above, each option under the Discretionary
Option Grant Program will be exercisable only to the extent of the number of
shares for which such option is exercisable at the time of the optionee's
cessation of employment or service, unless the Committee determines at such
time to accelerate the exercisability of the option in whole or in part.
CORPORATE TRANSACTION
Each outstanding option under the Discretionary Option Grant Program
will become immediately exercisable for all of the shares of Common Stock
subject to such option in the event of a Corporate Transaction (as defined
below), unless (i) such option is assumed by the successor corporation (or its
parent corporation) or replaced with a comparable option to purchase shares of
stock of the successor corporation (or its parent
11.
<PAGE> 14
corporation) or (ii) the acceleration of such option is precluded by other
limitations imposed by the Committee at the time of grant. A Corporate
Transaction includes one or more of the following transactions:
(i) a merger or acquisition in which the Company is not
the surviving entity, except for a transaction the principal purpose
of which is to change the State of the Company's incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company; and
(iii) any reverse merger in which the Company is the
surviving entity, but in which fifty percent (50%) or more of the
Company's outstanding voting stock is transferred to holders different
from those who held the stock immediately prior to such merger.
Upon the consummation of the Corporate Transaction, all outstanding options
will, to the extent not previously exercised by the optionees or assumed by the
successor corporation (or its parent company), terminate and cease to be
exercisable.
STOCK APPRECIATION RIGHTS
At the discretion of the Committee, options under the Discretionary
Option Grant Program may be granted with stock appreciation rights. A stock
appreciation right grants the holder the right to surrender all or part of an
unexercised option in exchange for a distribution from the Company equal in
amount to the excess of (i) the fair market value (on the date of surrender) of
the shares of Common Stock in which the optionee is at the time vested under
the surrendered option over (ii) the aggregate exercise price payable for such
shares. The appreciation distribution may be made, at the discretion of the
Committee, either in shares of Common Stock valued at fair market value on the
date of surrender, in cash or in a combination of cash and Common Stock. No
surrender of an option will be effective unless it is approved by the
Committee.
One or more officers of the Company subject to the short-swing profit
restrictions of the Federal securities laws may, in the Committee's discretion,
be granted limited stock appreciation rights in tandem with their outstanding
options under the Discretionary Option Grant Program. Any option with such a
limited stock appreciation right in effect for at least six (6) months will
automatically be cancelled upon the occurrence of a Hostile Take-Over, and the
optionee will in return be entitled to a cash distribution from the Company in
an amount equal to the excess of (i) the Take-Over Price of the number of
shares of Common Stock in which the optionee is at the time vested under the
cancelled option over (ii) the aggregate exercise price payable for such vested
shares. Such distribution shall be made within five (5) days of the
consummation of the Hostile Take-Over. Neither the Committee's approval nor
the Board's consent will be required in connection with such cancellation and
cash distribution.
For purposes of such option cancellation provisions, the following
definitions are in effect under the Option Plan:
- Hostile Take-Over means (A) the acquisition by any person or
related group of persons (other than the Company or its affiliates) of
securities possessing more than fifty percent (50%) of the combined voting
power of the Company's outstanding securities pursuant to a tender or exchange
offer which the Board does not recommend the Company's stockholders to accept
and (B) more than fifty percent (50%) of the securities so acquired in such
tender or exchange offer are obtained from holders other than the officers and
directors of the Company participating in the Option Plan.
- Take-Over Price means the greater of (A) the fair market value
of the shares subject to the cancelled option, measured on the cancellation
date in accordance with the valuation provisions of the Option Plan described
above or (B) the highest reported price per share paid in effecting the Hostile
Take-Over.
12.
<PAGE> 15
The acceleration of options in the event of a Corporate Transaction
and the cash-out of options upon a Hostile Take-Over may be seen as
anti-takeover provisions and may have the effect of discouraging a merger
proposal, takeover attempt or other effort to gain control of the Company.
CANCELLATION AND NEW GRANT OF OPTIONS
The Committee has the authority to effect, at any time and from time
to time, with the consent of the affected optionees, the cancellation of any or
all options outstanding under the Discretionary Option Grant Program and to
grant in substitution therefor new options covering the same or different
numbers of shares of Common Stock but having an exercise price per share not
less than eighty-five percent (85%) of the fair market value per share of the
Common Stock on the new grant date (or one hundred percent (100%) of fair
market value if the new option is to be an incentive stock option). It is
anticipated that the exercise price in effect under the new grant will in all
instances be less than the exercise price in effect under the cancelled option.
AUTOMATIC OPTION GRANT PROGRAM
Under the Automatic Option Grant Program, option grants have been made
to the current non-employee Board members and option grants will be made to
individuals who join the Board as non-employee Board members in the future.
These special grants may be summarized as follows:
- Each individual who first becomes a non-employee Board member
at any time after the 1989 Annual Meeting is automatically granted at the time
of such initial election or appointment, a nonstatutory stock option to
purchase Twenty Thousand (20,000) shares of Common Stock; and
- Each individual who continues to serve as a non-employee Board
member shall receive additional automatic option grants, each for Twenty
Thousand (20,000) shares of Common Stock, at successive four (4)-year intervals
over his or her period of continued Board service. The first such additional
grant shall be made on the later of (A) the date of the 1994 Annual
Stockholders Meeting or (B) the date of the Annual Stockholders Meeting held in
the calendar year in which occurs the fourth anniversary of the grant date of
the initial automatic option grant made to such individual, provided he or she
is re-elected to the Board at that Annual Meeting. Additional automatic grants
for Twenty Thousand (20,000) shares each shall be made to such individual at
every fourth Annual Stockholders Meeting thereafter over the individual's
period of continued service as a non-employee Board member. Any such option
grants made at the 1994 Annual Meeting shall not become exercisable in whole or
in part unless and until this Proposal No. 2 is approved.
Each option grant under the Automatic Option Grant Program is subject
to the following terms and conditions:
1. The exercise price per share will be equal to one hundred
percent (100%) of the fair market value per share of Common Stock on the
automatic grant date and each option is to have a maximum term of ten (10)
years measured from the grant date.
2. Each initial automatic option grant will become exercisable
for the option shares in six (6) months measured from the grant date, provided
that the non-employee Board member continues as a member of the Board.
3. Shares purchased under the automatic option grant will be
subject to repurchase by the Company, at the exercise price, in the event the
optionee ceases to be a member of the Board. Provided the optionee continues
as a member of the Board, the Company's repurchase right will lapse with
respect to twenty-five percent (25%) of the option shares one (1) year after
the automatic grant date and will lapse with respect to the remaining option
shares in a series of thirty-six (36) monthly installments. The repurchase
right will also
13.
<PAGE> 16
terminate upon the death or permanent disability of the optionee while a member
of the Board, upon a Change in Control (as defined below) or in the event of a
Corporate Transaction (as defined above).
4. Each automatic option will remain exercisable for a six
(6)-month period following the optionee's termination of service as a Board
member for any reason other than death. Should the optionee die while serving
as a Board member or during the six (6)-month period following his or her
cessation of Board service, then such option will remain exercisable for a
twelve (12)- month period following such optionee's death and may be exercised
by the personal representatives of the optionee's estate or the person to whom
the grant is transferred by the optionee's will or the laws of inheritance. In
no event, however, may the option be exercised after the expiration date of the
option term. During the applicable exercise period, the option may not be
exercised for more than the number of shares (if any) for which it is
exercisable at the time of the optionee's cessation of Board service.
5. The option will become immediately exercisable for all of the
shares of Common Stock at the time subject to such option in the event of a
Corporate Transaction (see "Corporate Transaction" above). Upon the
consummation of the Corporate Transaction, all automatic option grants will
terminate and cease to be outstanding.
6. The option will become immediately exercisable for all of the
shares of Common Stock at the time subject to such option in the event of a
Change in Control. A Change in Control will be deemed to occur under the
Option Plan in the event:
(i) any person or related group of persons (other than
the Company or any affiliate) acquires beneficial ownership of securities
possessing more than fifty percent (50%) of the combined voting power of the
Company's outstanding securities pursuant to a tender or exchange offer which
the Board does not recommend the Company's stockholders to accept; or
(ii) there is a change in the composition of the Board
over a period of twenty-four (24) consecutive months or less such that a
majority of the Board members cease, by reason of one or more proxy contests
for the election of Board members, to be comprised of individuals who are
either (A) Board members who have served continuously during such period
(continuing Board members) or (B) Board members who were elected or nominated
during such period by continuing Board members.
7. Each automatic option in effect for at least six (6) months
will automatically be cancelled upon the occurrence of a Hostile Take-Over (see
"Stock Appreciation Rights" above), and the optionee will in return be entitled
to a cash distribution from the Company in an amount equal to the excess of (A)
the Take-Over Price of the shares of Common Stock at the time subject to the
cancelled option (whether or not the option is otherwise at the time
exercisable for such shares) over (B) the aggregate exercise price payable for
such shares.
The acceleration of options in the event of a Corporate Transaction or
Change in Control and the cash-out of options upon a Hostile Take-Over may be
seen as anti-takeover provisions and may have the effect of discouraging a
merger proposal, takeover attempt or other effort to gain control of the
Company.
8. The remaining terms and conditions of the option grants under
the Automatic Option Grant Program will in general conform to the terms
described above for option grants made under the Discretionary Option Grant
Program and will be incorporated into the option agreement evidencing the
automatic grant.
EXCESS GRANTS
The Option Plan permits the grant of options to purchase shares of
Common Stock in excess of the number of shares then available for issuance
under the Option Plan. Any option so granted cannot be exercised
14.
<PAGE> 17
prior to stockholder approval of an amendment increasing the number of shares
available for issuance under the Option Plan.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend or modify the Option Plan in any or all respects
whatsoever; provided, however, that (i) the rights of existing optionees may
not be altered without their consent and (ii) any amendments to the Automatic
Option Grant Program (or any options outstanding thereunder) may not occur at
intervals more frequently than once every six (6) months, other than to the
extent necessary to comply with applicable Federal tax laws and regulations.
Further, the Board may not amend the Option Plan without the approval of the
stockholders of the Company if such amendment would materially increase the
maximum number of shares issuable under the Option Plan (other than in
connection with certain changes in the Company's capital structure), materially
modify the eligibility requirements for option grants under the Option Plan, or
otherwise materially increase the benefits accruing to participants under the
Option Plan.
The Board may terminate the Option Plan at any time, but in all events
the Option Plan will terminate upon the earlier of August 16, 2005 (assuming
approval of this Proposal No. 2) or the date all shares available for issuance
under the Option Plan are issued or cancelled pursuant to the exercise or
surrender of options granted under the Option Plan. Any options outstanding at
the time of the termination of the Option Plan will remain in force in
accordance with the provisions of the instruments evidencing such grants.
FEDERAL TAX CONSEQUENCES
Options granted under the Option Plan may be either incentive stock
options which satisfy the requirements of Section 422 of the Internal Revenue
Code or nonstatutory options which are not intended to meet such requirements.
The Federal income tax treatment for the two (2) types of options differs as
follows:
Incentive Stock Options. No taxable income is recognized by the
optionee at the time of the option grant, and no taxable income is generally
recognized at the time the option is exercised. The optionee will, however,
recognize taxable income in the year in which the purchased shares are sold or
otherwise disposed of. The optionee will, however, recognize taxable income in
the year in which the purchased shares are sold or otherwise made the subject
of disposition. For purposes of the alternative minimum tax, the difference
between the fair market value of the purchased shares and the option price is
generally includible in alternative minimum taxable income in the year of
exercise.
For Federal tax purposes, dispositions are divided into two (2)
categories: (i) qualifying and (ii) disqualifying. A qualifying disposition
occurs if the sale or other disposition is made after the optionee has held the
shares for more than two (2) years after the option grant date and more than
one (1) year after the exercise date. If either of these holding periods is
not satisfied, then a disqualifying disposition will result. Upon a qualifying
disposition, the optionee will recognize long-term capital gain in an amount
equal to the excess of (i) the amount realized upon the sale or other
disposition of the purchased shares over (ii) the option price paid for the
shares. If there is a disqualifying disposition of the shares, then the excess
of (i) the fair market value of those shares on the date of exercise over (ii)
the option price paid for the shares will be taxable as ordinary income. Any
additional gain recognized upon the sale or disposition will be capital gain.
If the optionee makes a disqualifying disposition of the purchased
shares, then the Company will be entitled to an income tax deduction, for the
taxable year in which such disposition occurs, equal to the excess of (i) the
fair market value of such shares on the option exercise date over (ii) the
exercise price paid for the shares.
Nonstatutory Options. No taxable income is recognized by an optionee
upon the grant of a nonstatutory option. The optionee will in general
recognize ordinary income, in the year in which the option is exercised,
15.
<PAGE> 18
equal to the excess of the fair market value of the purchased shares on the
exercise date over the exercise price paid for the shares, and the optionee
will be required to satisfy the tax withholding requirements applicable to such
income.
If the shares acquired upon exercise of the nonstatutory option are
unvested and subject to repurchase by the Company in the event of the
optionee's termination of service prior to vesting in those shares, then the
optionee will not recognize any taxable income at the time of exercise but will
have to report as ordinary income, as and when the Company's repurchase right
lapses, an amount equal to the excess of (i) the fair market value of the
shares on the date the repurchase right lapses over (ii) the exercise price
paid for the shares. The optionee may, however, elect under Section 83(b) of
the Internal Revenue Code to include as ordinary income in the year of exercise
of the option an amount equal to the excess of (i) the fair market value of the
purchased shares on the exercise date over (ii) the exercise price paid for
such shares. If the Section 83(b) election is made, the optionee will not
recognize any additional income as and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised nonstatutory option. The deduction will in general be allowed for
the taxable year of the Company in which such ordinary income is recognized by
the optionee.
STOCK APPRECIATION RIGHTS
An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. The Company will be entitled to an income tax deduction equal to
the appreciation distribution for the taxable year in which such ordinary
income is recognized by the optionee.
ACCOUNTING TREATMENT
Option grants with exercise prices less than the fair market value of
the shares on the grant date will result in a compensation expense to the
Company's earnings equal to the difference between the exercise price and the
fair market value of the shares on the grant date. Such expense will be
accruable by the Company over the period that the option shares are to vest.
Option grants at one hundred percent (100%) of fair market value will not
result in any charge to the Company's earnings. Whether or not granted at a
discount, the number of outstanding options may be a factor in determining the
Company's earnings per share on a fully- diluted basis.
Should the new FASB exposure draft on the compensatory treatment of
stock option grants become effective, then all stock options granted during the
three (3)-year phase-in period (which is currently retroactive to January 1,
1994) with an exercise price equal to the fair market value of the option
shares on the grant date may be subject to footnote disclosure in the Company's
financial statements. Such footnote must reflect the reduction to the
Company's reported earnings which would have arisen had the value of the option
been recorded as a compensation expense.
Should one or more optionees be granted stock appreciation rights
which have no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to the
Company's earnings.
Should one or more optionees be granted limited stock appreciation
rights exercisable upon a Hostile Take-Over, then such rights will generally
not result in a compensation expense to be charged against the Company's
earnings unless it is deemed more likely that the option will be surrendered
rather than be exercised.
16.
<PAGE> 19
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Company is seeking the affirmative vote of a majority of the
issued and outstanding voting shares for approval of the amendments to the
Option Plan. The Board of Directors believes that the amendments to the Option
Plan are necessary in order to continue to provide equity incentives to attract
and retain the services of key employees, consultants and non-employee Board
members. For this reason, the Board of Directors recommends that the
stockholders vote FOR this Proposal No. 2.
17.
<PAGE> 20
================================================================================
PROPOSAL NO. 3
RATIFICATION OF INDEPENDENT AUDITORS
================================================================================
The Company is asking the stockholders to ratify the selection of
Price Waterhouse as the Company's independent auditors for the fiscal year
ending March 31, 1996. The affirmative vote of the holders of a majority of
the Common Stock present or represented at the Annual Meeting will be required
to ratify the selection of Price Waterhouse.
In the event the stockholders fail to ratify the appointment, the
Board of Directors will reconsider its selection. Even if the selection is
ratified, the Board in its discretion may direct the appointment of a different
independent accounting firm at any time during the year if the Board feels that
such a change would be in the best interests of the Company and its
stockholders.
Price Waterhouse has audited the Company's financial statements
annually beginning with the fiscal year ended March 27, 1994. Its
representatives are expected to be present at the Annual Meeting. They will
have the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors recommends that the stockholders vote FOR the
ratification of the selection of Price Waterhouse to serve as the Company's
independent auditors for the fiscal year ending March 31, 1996.
================================================================================
ADDITIONAL INFORMATION
================================================================================
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers, and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities, to file with
the Commission initial reports of ownership and reports of changes in ownership
of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent (10%) stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) reports they
file.
Based solely upon review of the copies of such reports furnished to
the Company and written representations that no other reports were required,
the Company believes that all reporting requirements under Section 16(a) for
such fiscal year were met in a timely manner by its executive officers, Board
members and greater than ten percent (10%) stockholders.
18.
<PAGE> 21
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION COMMITTEE REPORT
As members of the Compensation Committee of the IMP, Inc. Board of
Directors ("Board"), it is our duty to set the base salary of executive
officers and to administer the Option Plan and the Employee Stock Purchase Plan
(the "Purchase Plan") under which grants may be made to such officers and other
key employees. In addition, we approve the individual bonus programs to be in
effect for executive officers each fiscal year and the base salaries of the
Company's executive officers.
For the 1995 fiscal year, the Committee established the compensation
payable to Mr. Carrington, President and Chief Executive Officer, and the
Company's other executive officers, Mr. Crossley, Vice
President-Administration; Mr. Davis, Executive Vice President and General
Manager-ASSP Group; Mr. Isherwood, Senior Vice President-Corporate Services,
Chief Financial Officer and Secretary, and Mr. Laws, the Senior Vice
President-Marketing and Business Development.
GENERAL COMPENSATION POLICY. Each executive officer's compensation
package is comprised of three elements: (i) base salary which reflects
individual performance and Company performance and is designed generally to be
competitive with salary levels in the industry, (ii) annual bonus awards
payable in cash and tied to the Company's achievement of performance goals, and
(iii) long-term stock-based incentive awards which strengthen the mutuality of
interests between the executive officers and the Company's stockholders.
FACTORS. Several of the more important factors which were considered
in establishing the components of each executive officer's compensation package
for the 1995 fiscal year are summarized below. Additional factors were also
taken into account to a lesser degree. The Committee may in its discretion
apply entirely different factors, particularly different measures of financial
performance, in setting executive compensation for future fiscal years.
* BASE SALARY. The base salary for each executive officer is
set on the basis of personal performance, the salary levels in effect for
comparable positions with the Company's principal competitors, and internal
comparability standards. The Committee believes that the Company's most direct
competitors for executive talent are not necessarily all of the companies that
the Company would use in a comparison for shareholder returns. Therefore, the
compensation comparison group is not necessarily the same as the industry group
index in the Performance Graph, below. On March 28, 1994, merit increases were
approved for all of the officers largely to restore officer salaries to
competitive levels and, in the case of Mr. Crossley, based on internal
comparability standards.
* ANNUAL INCENTIVE COMPENSATION. Targeted annual bonuses, set
as a targeted percentage of salary based on position, are earned by each
executive officer on the basis of the Company's achievement of certain sales
and profitability goals established by the Committee at the start of the fiscal
year. For fiscal year 1995, the performance targets were based on the
Company's 1995 Operating Plan as approved by the Committee. Actual awards are
subject to decrease or increase on the basis of the Company's performance and
at the discretion of the Committee. Company performance for 1995 was measured
on the basis of annual revenue and earnings per share growth, as well as
performance on specific technical objectives. The revenue growth goal,
earnings per share growth goal, and technical objectives as a group were
weighted equally in determining bonuses. In 1995, the revenue growth goal was
not met, earnings per share growth was slightly below target, and technical
objectives as a group were completed as targeted. No payouts were made to
executive officers during fiscal year 1995.
19.
<PAGE> 22
* LONG-TERM INCENTIVE COMPENSATION. The Committee periodically
approves grants of stock options under the Option Plan to the Company's
executive officers. The grants are designed to align the interests of each
executive officer with those of the stockholders and provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the business. Each grant generally allows the
officer to acquire shares of Common Stock at a fixed price per share (the
market price on the grant date) over a specified period of time (up to 10
years), thus providing a return to the executive officer only if the market
price of the shares appreciates over the option term. During the 1993 fiscal
year, the Committee approved an evergreen program under the Option Plan
designed to provide for the annual grant of options to ensure that top
performing employees, including executive officers, have a significant equity
stake in the Company. The program takes into account the individual's option
holdings, as well as direct stock holdings, at the time annual awards are made.
The size of the option grant to each executive officer, generally is set to
achieve a potential percentage ownership stake in the Company that the
Committee deems appropriate in order to create a meaningful opportunity for
stock ownership based upon the individual's current position with the Company,
but also takes into account the individual's potential for future
responsibility and promotion over the option term and the individual's personal
performance in recent periods. Each such factor is given equal weight. No
option grants were made to the executive officers in fiscal year 1995 except
that to Mr. Laws incident to his employment with the Company.
CEO COMPENSATION. The annual base salary for the Company's Chief
Executive Officer, Mr. Carrington was established by action of the full Board
on August 1, 1988 and remained in effect until March 28, 1994, when it was
increased in an amount consistent with merit increases awarded to all officers.
No bonus was paid to Mr. Carrington for the 1995 fiscal year. No option grant
was made to Mr. Carrington during the 1995 fiscal year in view of the
significant equity stake in the Company that he currently holds.
We conclude our report with the acknowledgement that no member of the
Compensation Committee is a former or current officer or employee of the
Company or any of its subsidiaries except as follows: Mr. Grinfas was a
co-founder of the Company and served as Senior Vice President for the Company,
managing the Business Development Group, until December 1984. At that time he
became Senior Vice President, Engineering, a position he held until May 1986,
when he became Vice President, Business Development and Sales Director of
Southern Europe of IMP Europe Limited, at the time a subsidiary of the Company.
Mr. Grinfas ceased working for IMP Europe Limited in December 1988.
Tax Limit. The cash compensation to be paid to each of the Company's
executive officers for the 1995 fiscal year is not expected to exceed the $1
Million limit on the tax deductibility of such compensation imposed under
federal tax legislation enacted in 1993. In addition, the Board has amended
the Option Plan to impose a limit on the maximum number of shares of Common
Stock for which any one participant may be granted stock options over the
remaining term of the plan in order to ensure that any compensation deemed paid
to an executive officer upon the exercise of an outstanding option under the
Option Plan will qualify as performance-based compensation which will not be
subject to the $1 Million limitation. No other changes to the Company's
executive compensation programs will be made as a result of the new limitation
until final Treasury Regulations are issued with respect to such limitation.
Compensation Committee
Zvi Grinfas
Peter D. Olson
Bernard V. Vonderschmitt
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate future filings, including this
Proxy Statement, in whole or in part, the foregoing report and the Performance
Graph which follows shall not be deemed to be incorporated by reference into
any such filings.
20.
<PAGE> 23
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning
the compensation earned by the Company's Chief Executive Officer and each of
the other executive officers of the Company (determined as of the end of the
last fiscal year) whose total annual salary and bonus for the past fiscal year
exceeded $100,000 ("Named Executive Officers"), for services rendered in all
capacities to the Company and its subsidiaries for each of the last three (3)
fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------
Long Term
Name and Securities Other
Principal Underlying Compensa-
Position Year Salary($)(1) Bonus($) Options(#) tion($)(2)
- -------- ---- ------------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Barry M. Carrington 1995 175,870 0 0 2,304
President and Chief 1994 165,110 4,013 0 2,304
Executive Officer 1993 162,838 12,039 0 1,152
A. Kenneth Davis 1995 173,554 0 0 4,020
Vice President, 1994 163,507 40,000 0 2,304
Business Development(3) 1993 160,014 60,000 200,000 38,939
Charles S. Isherwood 1995 156,053 0 0 1,418
Senior Vice President- 1994 146,269 3,546 0 5,616
Corporate Services, Chief 1993 147,000 10,639 20,000 1,152
Financial Officer and
Secretary
Robert Crossley 1995 106,523 0 0 3,600
Vice President- 1994 95,920 2,275 0 3,276
Administration 1993 95,786 6,825 16,000 2,391
</TABLE>
________________________
(1) Salary includes amounts deferred pursuant to the Company's 401(k) plan.
The amounts shown under the Bonus column include cash bonuses earned for
the indicated fiscal years.
(2) In accordance with Commission rules, "All Other Compensation" excludes
perquisites, if less than $50,000 or 10% of annual salary or bonus.
Amounts include an amount for each executive officer for supplemental
life insurance.
(3) From March 23, 1992 until December 23, 1994, Mr. Davis served as Executive
Vice President and General Manager - ASSP Group. Mr. Davis ceased active
employment with the Company on April 3, 1995. Pursuant to the terms of his
employment agreement with the Company, and provided that he continues to
satisfy certain conditions, Mr. Davis will continue to be paid by the
Company through November 2, 1995.
21.
<PAGE> 24
STOCK OPTIONS
No option grants were made to the Named Executive Officers during the
1995 fiscal year.
OPTION EXERCISES AND HOLDINGS
The table below sets forth information concerning unexercised options
held as of the end of the 1995 fiscal year by the Named Executive Officers for
such fiscal year. For purposes of this calculation, the FY-End market value of
the shares is deemed to be the closing sale price of the Company's Common Stock
as reported on the National Association of Securities Dealers Automated
Quotations System on Friday, March 24, 1995. No options were exercised by such
executive officers in fiscal 1995.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($1.78)
----------------- ---------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Barry M. Carrington 436,202 0 423,116 0
A. Kenneth Davis 156,666 58,334 52,850 13,750
Charles S. Isherwood 114,166 5,834 102,666 2,334
Robert Crossley 39,666 6,334 30,183 3,117
</TABLE>
22.
<PAGE> 25
STOCK PERFORMANCE GRAPH
The graph depicted below shows the Company's stock price as an index
for the last five-year period, assuming $100 invested on March 31, 1990 and the
reinvestment of dividends. Also depicted are the composite prices of companies
listed on the Nasdaq National Market-U.S. Companies Index and the Index of
Electronic Component Stocks on the Nasdaq National Market--comprised of
companies primarily engaged in the manufacture of electronic components and
accessories, also assuming $100 invested on March 31, 1990. This information
has been provided to the Company by the Center for Research in Securities
Prices and the Nasdaq National Market.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURNS
[GRAPH]
<TABLE>
<CAPTION>
3/31/90 3/31/91 3/31/92 3/31/93 3/31/94 3/31/95
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
IMP / / $100.00 $ 60.00 $ 96.00 $133.00 $104.00 $104.00
Nasdaq + $100.00 $114.00 $144.00 $167.00 $180.00 $201.00
Nasdaq Component Stock * $100.00 $121.00 $149.00 $246.00 $298.00 $391.00
---------------------------------------------------------------------------------------------------------------
</TABLE>
23.
<PAGE> 26
This Section is not "Soliciting Material," is not deemed filed with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1992, the Company entered into an arrangement with Mr. A.
Kenneth Davis, Jr., the Company's then Executive Vice President and General
Manager-ASSP Group, which provides that if his employment had been terminated
prior to April 1, 1994 by: (a) reason of his death or disability, (b) reason of
a change in control of the Company, or (c) the Company for any reason, Mr.
Davis would have been entitled to twelve (12) months salary. If termination
for any of the above reasons occurs after April 1, 1994, he will be entitled to
six (6) months salary. In addition, if the termination were due to a change in
control of the Company, all of his then unexercisable options would become
exercisable. If the Company terminates him or if he dies or becomes disabled,
then one-half of his then unexercisable options would have become exercisable.
The above severance arrangement is subject to satisfaction of certain
conditions on the part of Mr. Davis. Mr. Davis ceased active employment with
the Company on April 3, 1995. Pursuant to the terms of his employment
agreement with the Company, and provided that he continues to satisfy certain
conditions, Mr. Davis will continue to be paid by the Company through November
2, 1995 and one-half of his unexercisable options on April 3, 1995 became
exercisable.
In connection with the employment of David Laws as Senior Vice
President, Marketing and Business Development, the Company entered into an
employment agreement dated February 10, 1995 (the "Employment Agreement")
providing for initial annual base salary and bonus for fiscal year 1996 of
$160,000 and $40,000, respectively, subject to periodic increases over time.
Mr. Laws' fiscal year 1997 bonus is conditioned upon the Company achieving the
performance goals set forth in its annual plan as approved by the Company's
Board of Directors. The Employment Agreement further provides that should the
Company terminate Mr. Laws within the first year of his employment with the
Company without cause, Mr. Laws' salary and benefits shall be continued for a
period of twelve (12) months from the date of such termination.
In June 1993, the Company entered into an addendum (the "Technology
Addendum") to an existing Technology Transfer Agreement with South African
Micro Electronics Systems [Pty.], Ltd. ("SAMES"). Mr. Barry Carrington, a
director of the Company and its President and Chief Executive Officer, is a
former director of SAMES. Mr. Heinz Fellinger, a director of the Company until
May 10, 1995, is the Managing Director of SAMES. Pursuant to the Technology
Addendum, the Company licensed its proprietary 1.0 micron process technology to
SAMES, in exchange for a total payment price of $750,000, paid in a series of
installments through January 1, 1995. SAMES shall also pay the Company for
technical services rendered by the Company in connection with the license. In
fiscal year 1993, 1994 and 1995, respectively, the Company purchased $0,
$430,000 and $2,700,000 of inventory from SAMES.
In June 1993, the Company also entered into an addendum to its existing
Foundry Agreement with SAMES, where SAMES agreed to fabricate the Company's 1.0
micron products, and allocated fabrication capacity to the Company through
1996.
STOCKHOLDER PROPOSALS FOR 1996 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the
Company's annual meeting of stockholders to be held in 1996 must be received by
the Company no later than March 2, 1995 in order to be included in the proxy
statement and related proxy materials.
24.
<PAGE> 27
FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF
THE ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES
AND LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO INVESTOR RELATIONS, IMP,
INC., MS 200/JE, 2830 NORTH FIRST STREET, SAN JOSE, CALIFORNIA 95134
OTHER BUSINESS
The Board of Directors knows of no other business that will be
presented for consideration at the Annual Meeting. If other matters are
properly brought before the Annual Meeting, however, it is the intention of the
persons named in the accompanying proxy to vote the shares represented thereby
on such matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Charles S. Isherwood, Secretary
Dated: July 5, 1995
25.
<PAGE> 28
PROXY IMP, INC.
Annual Meeting of Stockholders, August 16, 1995
This Proxy is solicited on Behalf of the Board of Directors of
IMP, INC.
The undersigned revolkes all previous proxies, acknowledges receipt of
the Notice of the Annual Meeting of Stockholders to be held August 16, 1995 and
the Proxy Statement and appoints Barry M. Carrington and Charles S. Isherwood
and each of them, the Proxy of the undersigned, with full power of
substitution, to vote all shares of Common Stock of IMP, Inc. (the "Company")
which the undersigned is entitled to vote, either on his or her own behalf or
on behalf of any entity or entities, at the Annual Meeting of Stockholders of
the Company to be held at the Le Baron Hotel, 1350 North First Street, San
Jose, California, on Wednesday, August 16, 1995 at 2:00 p.m. (the "Annual
Meeting"), and at any adjournment or postponement thereof, with the same force
and effect as the undersigned might or could do if personally present thereof.
The shares represented by this Proxy shall be voted in the followig Manner.
-----------
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
-----------
_______________________________________________________________________________
/X/ Please mark votes as in this example.
The Board of Directors recommends a vote FOR each of the directors listed below
and a vote FOR the other proposals. This Proxy, when properly executed, will be
voted as specified below. This Proxy will be voted FOR the election of the
directors listed below and FOR the other proposals if no specification is made.
1. To elect the following directors to serve until the next annual meeting of
stockholders and until their successors are elected and specified.
Nominees: Barry M. Carrington, Zvi Grinfas, Peter D. Olson and Bernard V.
Vonderschmitt
FOR WITHHELD
/ / / /
/ /______________________________________
For all nominees except as noted above
2. To approve an amendment to the 1992 Restated Stock Option Plan to increase
the number of shares issuable by 500,000 shares.
FOR AGAINST ABSTAIN
/ / / / / /
3. To ratify selection by the Board of Directors of Price Waterhouse LLP to
serve as the Company's independent auditors for the fiscal year ending
March 31, 1995.
FOR AGAINST ABSTAIN
/ / / / / /
4. To transact such business as may properly come before the Annual Meeting or
any adjournment or postponement thereof.
MARK HERE
FOR ADDRESS / /
CHANGE AND / /
NOTE AT LEFT
Please print the name(s) appearing on each share certificate(s) over which you
have voting authority.
Signature: _______________________________________ Date ______________________
Signature: _______________________________________ Date ______________________
