<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] 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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
- -------------------------------------------------------------------------------
(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] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(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:
(5) Total fee paid:
[ ] 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:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
IMP, INC.
2830 North First Street
San Jose, California 95134
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 20, 1997
TO THE STOCKHOLDERS OF IMP, INC.:
The Annual Meeting of Stockholders of IMP, Inc. (the "Company") will
be held at the executive offices of IMP, Inc., 2830 North First Street, San
Jose, California on Wednesday, August 20, 1997, 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 increase the number of shares of Common Stock reserved for issuance by an
additional 750,000 shares.
3. To ratify the appointment of Price Waterhouse as the Company's
independent auditors for the fiscal year ending March 29, 1998; 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 25, 1997 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
/s/ George Rassam
San Jose, California George Rassam
July 11, 1997 Secretary and Chief Financial Officer
<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 20, 1997
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 20, 1997 (the "Annual Meeting").
The Annual Meeting will be held at 2:00 p.m. at the executive offices of IMP,
Inc., 2830 North First Street, San Jose, California 95134. Stockholders of
record on June 25, 1997 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 11, 1997.
VOTING
On June 25, 1997, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were approximately 30,284,000
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 30,
1997 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>
James Phillips Ferguson . . . . . . . . . . . . . . . . . . . . -- *
David A. Laws (2) . . . . . . . . . . . . . . . . . . . . . . . 62,593 *
Zvi Grinfas(3) . . . . . . . . . . . . . . . . . . . . . . . . 369,976 1.2%
Bernard V. Vonderschmitt(4) . . . . . . . . . . . . . . . . . . 32,000 *
Peter D. Olson(5) . . . . . . . . . . . . . . . . . . . . . . . 23,416 *
Barry Carrington(6) . . . . . . . . . . . . . . . . . . . . . . 12,746 *
Russell Almand(7) . . . . . . . . . . . . . . . . . . . . . . . 31,916 *
Jerry DaBell . . . . . . . . . . . . . . . . . . . . . . . . . 2,500 *
Moiz Khambaty . . . . . . . . . . . . . . . . . . . . . . . . . -- *
Charles S. Isherwood . . . . . . . . . . . . . . . . . . . . . 417 *
Greg Koskowich(8) . . . . . . . . . . . . . . . . . . . . . . . 10,415 *
All directors and executive officers as a
group (11 persons)(9) . . . . . . . . . . . . . . . . . . . . . 554,388 1.8%
</TABLE>
- --------------------
* Less than one percent (1%).
(1) Percentage of beneficial ownership is calculated assuming
30,284,000 shares of Common Stock were outstanding on March 30,
1997. This percentage may include Common Stock of which such
individual or entity has the right to acquire beneficial ownership
within sixty days of March 30, 1997, 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 62,499 shares issuable upon exercise of options within
sixty (60), days of March 30, 1997.
(3) Includes 33,749 shares issuable upon exercise of options within
sixty (60) days of March 30, 1997.
(4) Includes 30,000 shares issuable upon exercise of options within
sixty (60) days of March 30, 1997.
-2-
<PAGE> 5
(5) Includes 5,416 shares issuable upon exercise of options within
sixty (60) days of March 30, 1997.
(6) Includes 12,746 shares registered in the name of the Carrington
Family Living Trust for which Barry and Rebecca Carrington are
beneficial owners.
(7) Includes 27,916 shares issuable upon exercise of options within
sixty (60) days of March 30, 1997.
(8) Includes 10,415 shares issuable upon exercise of options within
sixty (60) days of March 30, 1997.
(9) Includes 173,781 shares issuable upon exercise of options within
sixty (60) days of March 30, 1997.
-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 five (5). The Board of Directors has selected five
(5) nominees, all of which are currently directors of the Company. Proxies
cannot be voted for a greater number of persons than five (5). 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 five (5) 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 31, 1997.
<TABLE>
<CAPTION>
FIRST YEAR ELECTED
NAME AGE DIRECTOR
---- --- -------
<S> <C> <C>
James Phillips Ferguson 66 1997
Zvi Grinfas 56 1981
David A. Laws 55 1996
Peter D. Olson 54 1989
Bernard V. Vonderschmitt 73 1991
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
Mr. Ferguson, 66, joined the Company in June 1997 as President, Chief
Executive Officer and a member of the Board of Directors. He served as a
consultant to the Company from December 1996 to June 1997. From 1967 to June
1997 he was a principal in Ferguson Associates, a firm providing domestic and
international consulting services. In recent consulting assignments, Mr.
Ferguson assumed chief executive officer or chief operating officer
responsibilities with QuickLogic Corporation, Plus Logic and Paradigm
Technologies. Mr. Ferguson's prior employment included positions at Texas
Instruments and Fairchild Semiconductor, and he was founder, President and
Chief Executive Officer of General Microelectronics.
Mr. Grinfas, 56, 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. Laws, 55, joined the Company in February 1995 as its Senior Vice
President, Marketing and Business Development. From May 1996 until June 1997,
he served as President and Chief Executive Officer and also as a director of
the Company, and in June 1997 he was appointed to serve as Chairman of the
Board of Directors. Prior to joining the Company, Mr. Laws was self-employed as
a consultant from January 1994 to February 1995.
-4-
<PAGE> 7
Mr. Laws was President and Chief Executive Officer of QuickLogic Corporation, a
company engaged in the development of field programmable gate arrays, from
September 1990 to January 1994. From January 1986 to September 1990, Mr. Laws
was Vice President of Marketing for Altera Corporation, a supplier of
programmable logic devices. Prior to working at Altera, he served in various
positions at Advanced Micro Devices from May 1975 to January 1986, including as
Managing Director of the PLD business unit and Vice President of Business
Development.
Mr. Olson, 54, has been a director of the Company since August 1989.
Since July 1994, Mr. Olson has been President of H3D Entertainment, 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. Mr. Olson also serves on
the board of directors of several private companies.
Mr. Vonderschmitt, 73, was a co-founder of Xilinx, Inc. ("Xilinx"), a
supplier of field programmable gate arrays. He served as the President of
Xilinx from its inception in February 1984 to August 1994 and as its Chief
Executive Officer from August 1994 to January 1996 and is currently Chairman of
the Board 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 30, 1997, the Board of Directors
held four (4) meetings. As of March 30, 1997, the Company had four standing
Committees: an Audit Committee, a Compensation Committee, a Nominating
Committee and a Stock Option 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 one (1) meeting during the last fiscal year
and also acted by unanimous written consent three (3) times.
The Nominating Committee is responsible for recommending nominees for
members of the Company's Board of Directors. This Committee currently consists
of Messrs. Laws, Olson and Vonderschmitt. This Committee held one (1) meeting
during the last fiscal year. The Nominating Committee has not instituted
proceedings to consider nominees recommended by security holders, but may do so
in the future.
The Stock Option Committee has been granted separate but concurrent
jurisdiction to make option grants under the Company's Discretionary Option
Grant Program to individuals that are not subject to the short-swing trading
restrictions under the federal securities laws. This Committee currently
consists of Mr. Ferguson, but consisted of Mr. Laws until June 1997. This
Committee held no meetings during the last fiscal year but acted by unanimous
written consent eighteen (18) times.
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.
-5-
<PAGE> 8
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 totaled approximately $24,000 in
fiscal 1997. In addition, non- employee members of the Board are eligible to
receive options to purchase shares of the Company's Common Stock.
Each individual newly elected or appointed as a non-employee member of
the Board will be granted on such date of election or appointment an automatic
option grant for 20,000 shares of Common Stock under the Company's Stock Option
Plan (the "Option Plan"). Each individual who continues to serve as a
non-employee Board member will 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
will 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 20,000 shares each will 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.
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 if the optionee ceases Board service
prior to vesting in the shares. The Board member will vest in twenty-five
percent (25%) of the option shares upon completion of one (1) year of Board
service, and the balance will vest in thirty-six (36) successive equal monthly
installments over the optionee's continued period of Board service, 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
The Company's stockholders are being asked to approve an amendment to
the Company's Stock Option Plan (the "Option Plan") which will increase the
maximum number of shares of Common Stock authorized for issuance over the term
of the Option Plan by an additional 750,000 shares The purpose of the new
amendment is 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. The amendment was adopted by the Board of Directors on May 14, 1997,
subject to stockholder approval at the 1997 Annual Meeting.
The following is a summary of the principal features of the Option
Plan as amended, together with the applicable tax and accounting implications
for the Company and the participants. However, the summary does not purport to
be a complete description of all the provisions of the Option Plan. Any
stockholder of the Company who wishes to obtain a copy of the actual plan
document may do so upon written request to the Secretary of the Company at the
Company's principal executive offices in San Jose, California.
The Option Plan was originally adopted by the Board in October 1981
and subsequently approved by the stockholders. 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 Plan as so restated was subsequently
amended on several occasions, and those amendments were approved by the
Company's stockholders on August 3, 1988 and again on August 2, 1989, at which
time an automatic grant program for non-employee Board members was approved.
On May 13, 1992, the Plan was further restated by the Board, and the 1992
restatement was approved by the Company's stockholders at the 1992 Annual
Meeting of Stockholders. On August 18, 1994, the Plan was again restated to
authorize additional automatic option grants to non-employee Directors at
successive four (4)- year intervals over such person's period of continued
Board service. Such restatement was approved by the Company's stockholders at
the 1995 Annual Meeting of Stockholders. The Option Plan was subsequently
amended by the Board on May 15, 1996 and that amendment was subsequently
approved by the stockholders at the 1996 Annual Meeting of Stockholders.
STRUCTURE
The Option Plan is divided into two 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 key consultants in the service
of the Company (or its parent or subsidiary companies) who contribute to the
management, growth and financial success of the Company. Under the Automatic
Option Grant Program, non-employee Board members will receive a series of
option grants over their period of continued service on the Board.
ADMINISTRATION
The Compensation Committee of the Board administers the provisions of
Discretionary Option Grant Program with respect to all officers and directors
of the Company subject to the short-swing trading restrictions of the federal
securities laws. With respect to all other participants, the Discretionary
Option Grant Program may be administered by either the Compensation Committee
or a committee of one or more Board members appointed by the Board or by the
entire Board itself. Currently, the Compensation Committee administers the
Discretionary Option Grant Program with respect to all participants. The Board
has also created a Stock Option Committee that has separate but concurrent
jurisdiction with the Compensation Committee to make option grants under the
Discretionary Option Grant Program to individuals who are not subject to the
short-swing trading restrictions of the federal securities laws. Each entity,
whether the Compensation Committee or the secondary committee or the Board,
will be referred to in this summary as Plan Administrator with respect to its
particular administrative functions under the Discretionary Option Grant
-7-
<PAGE> 10
Program, and each such Plan Administrator will have complete discretion
(subject to the provisions of the Option Plan) to authorize grants under the
Discretionary Option Grant Program within the scope of its administrative
jurisdiction.
Accordingly, the Plan Administrator will have full authority to
determine the eligible individuals who are to receive option grants, the time
or times when the option grants are to be made, the number of shares of Common
Stock subject to each such grant, 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 Plan Administrator will also have the discretion to determine
whether the granted option is to be an incentive stock option under the Federal
tax laws or a nonstatutory option. In addition, the Plan Administrator will
have full authority to accelerate the exercisability of one or more outstanding
options at any time upon such terms and conditions as it deems appropriate.
Option grants under the Automatic Option Grant Program will be made in
strict compliance with the express provisions of that program, and no Plan
Administrator will have any discretionary authority with respect to those
option grants.
SHARE RESERVE
A total of 6,177,000 shares of Common Stock have been reserved for
issuance over the ten-year term of the Option Plan, including the 750,000-share
increase for which stockholder approval is sought under this Proposal. In no
event, however, may any one participant in the Option Plan be granted stock
options or separately exercisable stock appreciation rights for more than
1,000,000 shares in the aggregate under the Option Plan. For purposes of such
limitation, stock options and stock appreciation rights granted prior to July
31, 1994 will not be taken into account.
As of March 30, 1997 approximately 3,521,030 shares of Common Stock
had been issued upon the exercise of options granted under the Option Plan,
1,224,063 shares of Common Stock were subject to outstanding options under the
Option Plan, and 1,424,853 shares of Common Stock were available for issuance
under future option grants, assuming approval of this Proposal No. 2.
Should an option expire or terminate for any reason prior to exercise
in full, the shares subject to the portion of the option not so exercised will
be available for subsequent issuance under the Option Plan. Shares subject to
any option surrendered in accordance with the stock appreciation right
provisions of the Option Plan will not be available for subsequent issuance.
ELIGIBILITY
Officers and other key employees of the Company and its parent or
subsidiary corporations (whether now existing or subsequently established), key
consultants in the service of the Company or such parent or subsidiary
corporations and non-employee Board members (other than those serving on the
Compensation Committee) will be eligible to participate in the Discretionary
Option Grant and Stock Issuance Programs. Non-employee Board members
(including those serving on the Compensation Committee) will also participate
in the Automatic Option Grant Program.
As of March 30, 1997, approximately 226 employees (including eight
executive officers) were eligible to participate in the Discretionary Option
Grant Program, and three non-employee Board members were eligible to
participate in the Automatic Option Grant Program.
PRICE AND EXERCISABILITY
The exercise price of shares issued under the Discretionary Option
Grant Program may not be less than 85% of the fair market value per share of
Common Stock on the grant date, and no option may be outstanding for more than
a 10-year term. If the granted option is intended to be an incentive stock
option under the Federal tax laws, the option price must not be less than 100%
of the fair market value per share of Common Stock on the grant date. Options
issued under the Discretionary Option Grant Program generally become
exercisable in a series of installments over the optionee's period of service
with the Company.
-8-
<PAGE> 11
The option price is payable 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
option price for the purchased shares plus all applicable withholding taxes.
The Plan Administrator 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 option price in installments over a period of years. The terms and
conditions of any such loan or installment payment will be established by the
Plan Administrator 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 option 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 option
price for the purchased shares and been issued a stock certificate for those
shares. Options are not assignable or transferable other than by will or the
laws of inheritance following the optionee's death and, during the optionee's
lifetime, the option may be exercised only by the optionee.
VALUATION
For purposes of establishing the option 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 on the Nasdaq National Market. On March 30, 1997 the fair market
value per share of Common Stock was $2.062 on the basis of the closing selling
price on that date.
TERMINATION OF SERVICE
All options granted under the Discretionary Option Grant Program must
be exercised within twelve months (or such shorter period as the Plan
Administrator 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. The Plan Administrator 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. 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 immediately
terminate.
Each option under the Discretionary Option Grant Program will be
exercisable only to the extent of the number of shares for which that option is
exercisable at the time of the optionee's cessation of employment or service,
unless the Plan Administrator accelerates the exercisability of the option in
whole or in part. Such acceleration may be authorized at any time while the
option remains outstanding, whether before or after the optionee's actual
cessation of service.
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) that 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 corporation) or (ii) the
acceleration of such option is precluded by other limitations imposed by the
Plan Administrator at the time of grant. A Corporate Transaction includes one
or more of the following transactions:
a. 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;
-9-
<PAGE> 12
b. the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
c. 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.
Immediately following the consummation of the Corporate Transaction,
all outstanding options will terminate, except to the extent assumed by the
successor corporation (or its parent company).
STOCK APPRECIATION RIGHTS
At the discretion of the Plan Administrator, options 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 under the
Discretionary Option Grant Program 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 option price
payable for such shares. The appreciation distribution may be made, at the
discretion of the Plan Administrator, 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 Plan Administrator.
One or more officers of the Company subject to the short-swing profit
restrictions of the Federal securities laws may, in the Plan Administrator's
discretion, be granted limited stock appreciation rights in tandem with their
outstanding options under the Discretionary Grant Program. Any option with
such a limited stock appreciation right in effect for at least six 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. Neither the Plan Administrator'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:
1. Hostile Take-Over means the acquisition by any person or
related group of persons (other than the Company or its affiliates) of
securities possessing more than 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, provided at
least 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.
2. 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.
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 Plan Administrator 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 85% of the fair market value per share of Common Stock on
the new grant date (or 100% of fair market value if the new option is to be an
incentive stock option).
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<PAGE> 13
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:
1. Each individual who was serving as a non-employee Board member
at the time of the 1989 Annual Meeting was automatically granted on such date a
nonstatutory stock option to purchase 20,000 shares of Common Stock at the fair
market value of the Common Stock on such date.
2. Each individual who first becomes a non-employee Board member
at any time after the 1989 Annual Meeting, whether through election by the
stockholders or appointment by the Board, will be automatically granted, at the
time of such initial election or appointment, a nonstatutory stock option to
purchase 20,000 shares of Common Stock.
3. Each individual who continues to serve as a non-employee Board
member will 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 will be made upon
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 20,000 shares each will
be made to such individual at every fourth Annual Stockholders Meeting
thereafter over such individual's continued period of service as a non-
employee Board member.
Each option grant under the Automatic Option Grant Program is subject
to the following terms and conditions:
- The option price per share will be equal to 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 years measured from the grant date.
- Each automatic option grant will become exercisable for the
option shares six months after the grant date, provided the optionee continues
as a member of the Board.
- Shares purchased under the automatic option grant will be
subject to repurchase by the Company, at the option price paid per share, in
the event the optionee should cease to be a Board member prior to vesting in
those shares. The option shares will vest in a series of installments over the
optionee's period of Board service as follows: 25% of the option shares will
vest upon optionee's completion of one year of Board service measured from the
automatic grant date, and the balance of the option shares will vest in a
series of 36 successive equal monthly installments upon the optionee's
completion of each additional month of Board service thereafter. Full and
immediate vesting of the option shares will occur upon the optionee's death or
permanent disability while a Board member.
- Each automatic option will remain exercisable for a six-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-month period following his or her cessation of Board
service, then such option will remain exercisable for a 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) in which the optionee is vested at
the time of his or her cessation of Board service.
- 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). Immediately
following the consummation of the Corporate Transaction, the option will
terminate, except to the extent assumed by the successor corporation (or its
parent company).
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<PAGE> 14
- 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:
(A) any person or related group of persons (other than
the Company or any affiliate) acquires beneficial ownership of
securities possessing more than 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
(B) there is a change in the composition of the Board
over a period of 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 (i) Board members who have served continuously during such
period (continuing Board members) or (ii) Board members who were
elected or nominated during such period by continuing Board members.
- Each automatic option in effect for at least six 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 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 the
Company's Common Stock in excess of the number of shares then available for
issuance under the Option Plan. Any option so granted cannot be exercised
prior to stockholder approval of an amendment increasing the number of shares
available for issuance under the Option Plan.
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 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 maximum number
and/or class of securities available for issuance under the Option Plan, (ii)
the maximum number and class of securities for which any one participant may be
granted stock options and separately exercisable stock appreciation rights
under the Option Plan, (iii) the number and/or class of securities and price
per share in effect under each outstanding option under the Discretionary
Option Grant Program, (iv) the number and/or class of securities per
non-employee Board member for which automatic option grants are subsequently to
be made under the Automatic Option Grant Program, and (v) the number and/or
class of securities 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.
STOCK OPTIONS
The table below shows, as to each of the Company's executive officers
named in the Summary Compensation Table of the Executive Compensation and
Related Information section of this Proxy Statement and the various
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<PAGE> 15
indicated individuals and groups, the number of shares of Common Stock subject
to options granted under the Option Plan during the last fiscal year, together
with the weighted average exercise price payable per share.
<TABLE>
<CAPTION>
NUMBER OF OPTION WEIGHTED AVERAGE
NAME AND POSITION SHARES EXERCISE PRICE ($)
====================================================================================================
<S> <C> <C>
David A. Laws, 0 --
President and Chief Executive Officer (1)
----------------------------------------------------------------------------------------------------
Barry M. Carrington, 0 --
Former President and Chief Executive Officer(2)
----------------------------------------------------------------------------------------------------
Russell Almand, 50,000 2.57
Senior Vice President Sales and Marketing(3)
----------------------------------------------------------------------------------------------------
Jerry DaBell, 45,000 2.57
Vice President Marketing and Applications(4)
----------------------------------------------------------------------------------------------------
Moiz Khambaty, 30,000 2.57
Vice President, Technology
----------------------------------------------------------------------------------------------------
Charles S. Isherwood, 0 --
Former Senior Vice President, Corporate Services,
Chief Financial Officer and Secretary (5)
----------------------------------------------------------------------------------------------------
Greg Koskowich, 35,000 2.57
Vice President, Product Development(6)
----------------------------------------------------------------------------------------------------
All current executive officers as a group (8 persons) 210,000 2.57
----------------------------------------------------------------------------------------------------
Zvi Grinfas, Director 0 --
----------------------------------------------------------------------------------------------------
Peter D. Olson, Director 0 --
----------------------------------------------------------------------------------------------------
Bernard V. Vonderschmitt, Director 0 --
----------------------------------------------------------------------------------------------------
All directors (other than executive officers) as a group (3 0 --
persons)
----------------------------------------------------------------------------------------------------
All employees, including current officers who are not 415,300 2.57
executive officers, as a group (218 persons)
====================================================================================================
</TABLE>
- ----------------------
(1) Mr. Laws served as President and Chief Executive Officer of the Company
from May 15, 1996 until June 19, 1997, at which time he was succeeded
by James Phillips Ferguson. Upon his appointment as President and Chief
Executive Officer in fiscal year 1998, Mr. Ferguson was granted an
incentive stock option for 100,000 shares of the Company's Common
Stock.
(2) Mr. Carrington resigned as President and Chief Executive Officer on
May 15, 1996.
(3) Effective July 7, 1997, Mr. Almand resigned his position with the
Company and was succeeded on July 8, 1997 by Barry W. Wiley who was
appointed Vice President, Sales and Marketing.
(4) Effective May 19, 1997, Mr. DaBell was promoted to the position of
Senior Vice President, Product Development.
(5) Mr. Isherwood retired from his position as Senior Vice President,
Corporate Services, Chief Financial Officer and Secretary in October
1996.
(6) Effective May 23, 1997, Dr. Koskowich resigned his position with the
Company.
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<PAGE> 16
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend or modify the Option Plan in any or all respects
whatsoever. However, the Board will not, without stockholder approval,
increase the maximum number of shares available for issuance under the Option
Plan except in the event of certain changes to the Company's capitalization,
and certain other amendments may require stockholder approval pursuant to
applicable laws or regulations.
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 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 INCOME TAX CONSEQUENCES
OPTION GRANTS
Options granted under the 1995 Plan may be either incentive stock
options which satisfy the requirements of Section 422 of the Internal Revenue
Code or non-statutory options which are not intended to meet such requirements.
The Federal income tax treatment for the two types of options differs as
follows:
Incentive 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 made the
subject of a taxable disposition. For Federal tax purposes, dispositions are
divided into two 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 years after the option grant
date and more than one year after the exercise date. If either of these two
holding periods is not satisfied, then a disqualifying disposition will result.
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. In no other instance will the Company be
allowed a deduction with respect to the optionee's disposition of the purchased
shares.
Non-Statutory Options. No taxable income is recognized by an optionee
upon the grant of a non-statutory option. The optionee will in general
recognize ordinary income, in the year in which the option is exercised, 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 non-statutory 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 non-statutory 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.
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<PAGE> 17
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
such distribution for the taxable year in which the ordinary income is
recognized by the optionee.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Company anticipates that any compensation deemed paid by it in
connection with disqualifying dispositions of incentive stock option shares or
exercises of non-statutory options granted with exercise prices equal to the
fair market value of the shares on the grant date will qualify as
performance-based compensation for purposes of Code Section 162(m) and will not
have to be taken into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid to certain
executive officers of the Company.
ACCOUNTING TREATMENT
Option grants or stock issuances with exercise or issue prices less
than the fair market value of the shares on the grant or issue date will result
in a compensation expense to the Company's earnings equal to the difference
between the exercise or issue price and the fair market value of the shares on
the grant or issue date. Such expense will be accruable by the Company over the
period that the option shares or issued shares are to vest. Option grants or
stock issuances at 100% of fair market value will not result in any charge to
the Company's earnings, but the Company must disclose, in pro-forma statements
to the Company's financial statements, the impact those options would have upon
the Company's reported earnings were the value of those options at the time of
grant treated as compensation expense. 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 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 compensation expense to the
Company's earnings.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The affirmative vote of a majority of the shares present or
represented at the 1997 Meeting and entitled to vote on Proposal No. 2 is
required for approval of the amendment to the Option Plan. The Board of
Directors believes that the amendment to the Option Plan is 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
Should such stockholder approval not be obtained, then the
750,000-share increase to the share reserve will not be implemented, and any
stock options granted on the basis of that increase will immediately terminate
without becoming exercisable for the shares of Common Stock subject to those
options. No additional options will be granted on the basis of such share
increase, and the Option Plan will terminate as to future issuances once the
existing share reserve as last approved by the stockholders has been issued. In
addition, without such stockholder approval, the non-employee Board members
will not become eligible to receive option grants under the Discretionary
Option Grant Program, but will continue to participate in the Automatic Option
Grant Program.
NEW PLAN BENEFITS
There have been no option grants made on the basis of the 750,000
shares increase which forms part of the amendment to the Option Plan for which
stockholder approval is sought under this Proposal No. 2.
-15-
<PAGE> 18
================================================================================
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 29, 1998. 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 29, 1998.
================================================================================
ADDITIONAL INFORMATION
================================================================================
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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
the fiscal year ended March 30, 1997 were met in a timely manner by its
executive officers, Board members and greater than ten percent (10%)
stockholders, except that Messrs. Almand, Block, DaBell, Dailor and Khambaty
each filed one late Form 3 and Messrs. Carrington, Olson and Isherwood each
filed one late Form 4, reporting, respectively, two transactions by Mr.
Carrington, one transaction by Mr. Olson and Mr. Isherwood's retirement from
the Company.
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<PAGE> 19
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 1997 fiscal year, the Committee established the compensation
payable to Mr. Carrington and Mr. Laws, each of whom served as President and
Chief Executive Officer. Mr. Carrington resigned on May 15, 1996 and was
succeeded by Mr. Laws as President and Chief Executive Officer effective as of
that date. The Committee also established the compensation payable to the
Company's other executive officers.
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. The primary factors which were considered in establishing
the components of each executive officer's compensation package for the 1997
fiscal year are summarized below. 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, however, the Committee does not take into account any
specific salary surveys in setting the base salary levels for the Company's
executive officers. 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.
* 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 1997, the performance targets were based on the
Company's 1997 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 fiscal 1997 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 the first quarter of fiscal 1997,
the revenue growth goal was met, the earnings per share growth goal was met,
and technical objectives as a group were completed as targeted. Payouts to
executive officers during fiscal year 1997 are illustrated in the Summary
Compensation Table below.
* 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
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<PAGE> 20
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. Option grants to executive officers in fiscal
year 1997 are set forth in the subsection titled Stock Options under Proposal
No. 2.
CEO COMPENSATION. The annual base salary of the Company's Chief
Executive Officer, David Laws, was established by action of the full Board of
Directors on May 15, 1996, which provided for an initial annual base salary and
bonus for fiscal year 1997 of $185,985 and $40,000, respectively, subject to
periodic increases over time. Mr. Laws' equity incentives and vesting remained
unchanged. In a subsequent action by the Compensation Committee of the Board
on December 9, 1996 Mr. Laws was granted, in addition to the above
compensation, a retention bonus of $250,000 should he continue to be employed
by the Company as of June 1, 1997. (The retention bonus was also subject to
acceleration upon the completion of a specified milestone prior to June 1,
1997, which was not accomplished.) The December 9, 1996 Compensation Committee
action further guaranteed Mr. Laws a six-month salary and benefit continuation
as severance in the event of his "constructive termination" or termination
without "cause" by the Company.
We conclude our report with the acknowledgment 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.
* COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section
162(m) of the Internal Revenue Code disallows a tax deduction to publicly held
companies for compensation paid to certain of their executive officers, to the
extent that compensation exceeds $1 million per covered officer in any fiscal
year. The limitation applies only to compensation which is not considered to
be performance-based. Non- performance based compensation paid to the
Company's executive officers for the 1997 fiscal year did not exceed the $1
million limit per officer, and the Committee does not anticipate that the
non-performance based compensation to be paid to the Company's executive
officers for fiscal 1998 will exceed that limit. The Company's Option Plan has
been structured so that any compensation deemed paid in connection with the
exercise of option grants made under that plan with an exercise price equal to
the fair market value of the option shares on the grant date will qualify as
performance-based compensation which will not be subject to the $1 million
limitation. Because it is very unlikely that the cash compensation payable to
any of the Company's executive officers in the foreseeable future will approach
the $1 million limit, the Committee has decided at this time not to take any
action to limit or restructure the elements of cash compensation payable to the
Company's executive officers. The Committee will reconsider this decision
should the individual cash compensation of any executive officer ever approach
the $1 million level.
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.
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<PAGE> 21
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 $100,000 ("Named Executive Officers"), for services rendered in all
capacities to the Company and its subsidiaries for each of the last three (3)
fiscal years:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
===========================================================================================================================
Long Term
Securities
Underlying Other
Name and Position Year Salary($)(1) Bonus($) Options(#) Compensation($)(2)
<S> <C> <C> <C> <C> <C>
===========================================================================================================================
David A. Laws, 1997 185,985 40,000 245,835 3,600
President and Chief Executive 1996 166,624 0 295,834 2,628
Officer(3) 1995 15,707 0 0 321
- ---------------------------------------------------------------------------------------------------------------------------
Barry M. Carrington, 1997 79,654 21,375 0 741
Former President and Chief 1996 182,906 12,825 0 2,304
Executive Officer(4) 1995 175,870 0 0 2,304
- ---------------------------------------------------------------------------------------------------------------------------
Russell Almand 1997 229,616 70,553 81,251 2,304
Senior Vice President Sales and 1996 232,001 44,272 -- 2,304
Marketing(5) 1995 96,013 23,300 -- 1,388
- ---------------------------------------------------------------------------------------------------------------------------
Jerry DaBell 1997 145,848 22,915 0 2,304
Vice President, Marketing and 1996 152,588 10,575 0 1,620
Applications(6) 1995 149,981 -- 0 1,392
- ---------------------------------------------------------------------------------------------------------------------------
Moiz Khambaty 1997 138,386 21,000 0 5,616
Vice President, Technology 1996 138,638 10,500 0 5,616
1995 138,935 0 0 5,616
- ---------------------------------------------------------------------------------------------------------------------------
Charles S. Isherwood, 1997 125,049 22,650 0 3,122
Senior Vice President, 1996 166,118 11,325 0 5,266
Corporate Services, Chief 1995 156,053 0 0 1,416
Financial Officer and Secretary(7)
- ---------------------------------------------------------------------------------------------------------------------------
Greg Koskowich 1997 121,019 17,209 0 88
Vice President, Product 1996 61,989 -- -- 49
Development(8) 1995 -- -- -- --
===========================================================================================================================
</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.
-19-
<PAGE> 22
(2) Represents the premium paid on behalf of each executive officer for
supplemental life insurance.
(3) Mr. Laws joined the Company in February 1995. He served as President
and Chief Executive Officer from May 15, 1996 until June 19, 1997, at
which time he was succeeded by James Phillips Ferguson. Mr.
Ferguson's annual base salary has been set at $175,000 and he is
eligible to receive a performance bonus of up to 40% of this amount.
(4) Mr. Carrington resigned as President and Chief Executive Officer and
served as Chairman of the Board of the Company from May 15, 1996 until
June 19, 1997.
(5) Effective July 7, 1997, Mr. Almand resigned his position with the
Company and was succeeded on July 8, 1997 by Barry W. Wiley who was
appointed Vice President, Sales and Marketing.
(6) Effective May 19, 1997, Mr. DaBell was promoted to the position of
Senior Vice President, Product Development.
(7) Mr. Isherwood retired from his position as Senior Vice President,
Corporate Services, Chief Financial Officer and Secretary in October
1996.
(8) Effective May 23, 1997, Dr. Koskowich resigned his position with the
Company.
STOCK OPTIONS
No stock options or stock appreciation rights were granted to the Named
Executive Officers during the 1997 fiscal year.
-20-
<PAGE> 23
OPTION EXERCISES AND HOLDINGS
The table below sets forth information concerning the exercise of stock
options during the 1996 fiscal year by the Named Executive Officers and the
unexercised options held as of the end of the 1996 fiscal year by such
individuals. For purposes of the latter 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 28, 1997. No stock appreciation rights were
exercised by the Named Executive Officers during the 1997 fiscal year, and no
stock appreciation rights were held by those individuals at the end of such
year.
<TABLE>
<CAPTION>
====================================================================================================================
Value of
Number of Number of Unexercised
Shares Unexercised In-the-Money
Acquired Options at Options at
on Value FY-End(#) FY-End ($2.062)
- --------------------------------------------------------------------------------------------------------------------
Name Exercise Realized (1) Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
David A. Laws(2) 100,000 $1,769,584 54,165 245,835 $ 30,441 $ 137,668
- --------------------------------------------------------------------------------------------------------------------
Barry M. Carrington(3) 361,727 6,157,846 -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
Russell Almand(4) 15,000 249,300 23,749 81,251 4,275 5,625
- --------------------------------------------------------------------------------------------------------------------
Jerry DaBell 88,800 1,495,927 -- 45,000 -- --
- --------------------------------------------------------------------------------------------------------------------
Moiz Khambaty 2,917 45,563 -- 30,000 -- --
- --------------------------------------------------------------------------------------------------------------------
Charles S. Isherwood(5) 120,000 2,387,986 -- -- -- --
- --------------------------------------------------------------------------------------------------------------------
Greg Koskowich(6) -- -- 10,415 39,585 -- --
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
- -------------------
(1) Value realized is equal to the fair market value of the shares on the
date of exercise less the aggregate exercise price.
(2) Mr. Laws served as President and Chief Executive Officer of the
Company from May 15, 1996 until June 19, 1997, at which time he was
succeeded by James Phillips Ferguson. Mr. Ferguson was granted an
incentive stock option for 100,000 shares of the Company's Common
Stock as of such date and the option is subject to vesting over four
(4) years.
(3) Mr. Carrington resigned as President and Chief Executive Officer of
the Company on May 15, 1996.
(4) Effective July 7, 1997, Mr. Almand resigned his position with the
Company.
(5) Mr. Isherwood retired from his position with the Company in October
1996.
(6) Effective May 23, 1997, Dr. Koskowich resigned his position with the
Company.
-21-
<PAGE> 24
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AGREEMENTS
Except as indicated below, none of the Company's executive officers
have employment contracts or severance agreements with the Company, and their
employment may be terminated at any time at the discretion of the Board of
Directors.
In connection with the promotion of David Laws to President and Chief
Executive Officer, the Company entered into a letter agreement dated December
10, 1996 (the "Employment Agreement") confirming Mr. Laws' annual base salary
of $200,044 for fiscal year 1996, a retention bonus of $250,000 should he
continue to be employed by the Company as of June 1, 1997, and acceleration of
such bonus upon the completion of a specified milestone prior to June 1, 1997,
which was not accomplished. The Employment Agreement further provided that in
the event of Mr. Laws' constructive termination or termination without cause,
Mr. Laws' salary and benefits would be continued for a period of six (6) months
from the date of such termination.
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, 1992 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, 1992. This information
has been provided to the Company by the Nasdaq National Market.
[GRAPH]
<TABLE>
<CAPTION>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURNS
- -------------------------------------------------------------------------------------------------------------
3/31/92 3/31/93 3/31/94 3/31/95 3/29/96 3/31/97
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
IMP $100 $138 $108 $108 $431 $127
- -------------------------------------------------------------------------------------------------------------
Nasdaq $100 $115 $124 $138 $187 $208
- -------------------------------------------------------------------------------------------------------------
Nasdaq Component Stock $100 $165 $200 $261 $344 $603
- -------------------------------------------------------------------------------------------------------------
Stocks
</TABLE>
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.
-22-
<PAGE> 25
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On December 9, 1996, the Company entered into a Contract For Services
with James Phillips Ferguson pursuant to which Mr. Ferguson agreed to render
services to the Company as its Chief Operating Officer in exchange for the
payment of fees specified in the Contract For Services. Until Mr. Ferguson's
appointment as the Company's President and Chief Executive Officer and as a
member of the Board of Directors on June 19, 1997, he received total payments
from the Company of $130,000 for his consulting services.
During fiscal 1997, the Company billed H3D Entertainment, Inc.
$100,259 for shipments of component parts for integrated circuits. Peter D.
Olson, a member of the Company's Board of Directors, is the principal
stockholder, Chief Executive Officer and a member of the Board of Directors of
H3D Entertainment, Inc.
STOCKHOLDER PROPOSALS FOR 1997 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the
Company's annual meeting of stockholders to be held in 1998 must be received by
the Company no later than March 9, 1998 in order to be included in the proxy
statement and related proxy materials.
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
/s/ George Rassam
George Rassam
Secretary and Chief Financial Officer
Dated: July 11, 1997
-23-
<PAGE> 26
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
IMP, INC.
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 20, 1997
The undersigned stockholder of IMP, Inc., a Delaware corporation, hereby
acknowledges receipt of the Notice of Annual Meeting of Stockholders and Proxy
Statement, each dated July 11, 1997, and hereby appoints James Phillips Ferguson
and George Rassam or either of them, proxies and attorneys-in-fact, with full
power to each of substitution, on behalf and in the name of the undersigned, to
represent the undersigned at the Annual Meeting of Stockholders of IMP, Inc. to
be held on Wednesday, August 20, 1997 at 2:00 p.m., local time, at the executive
offices of IMP, Inc., 2830 North First Street, San Jose, California and at any
adjournment or postponement thereof, and to vote all shares of Common Stock
which the undersigned would be entitled to vote if then and there personally
present, on the matters set forth on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
1. ELECTION OF DIRECTORS:
Nominees: James Phillips Ferguson, Zvi Grinfas, David A. Laws,
Peter D. Olson, Bernard V. Vonderschmitt.
___ FOR
___ WITHHELD
___ FOR all nominees except as noted above
___ Mark here for address change and note below
2. PROPOSAL TO APPROVE THE AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES OF COMMON STOCK FOR ISSUANCE THEREUNDER BY
750,000 SHARES TO AN AGGREGATE OF 6,177,000 SHARES:
____FOR ____AGAINST ____ABSTAIN
3. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICE WATERHOUSE LLP AS
THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING
MARCH 29, 1998:
____FOR ____AGAINST ____ABSTAIN
and, in their discretion, upon such other matter or matters that may properly
come before the meeting and any postponement(s) or adjournment(s) thereof.
<PAGE> 27
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED AS FOLLOWS: (1) FOR THE ELECTION OF DIRECTORS; (2) FOR APPROVAL OF
THE AMENDMENT TO THE COMPANY'S STOCK OPTION PLAN TO INCREASE THE NUMBER OF
SHARES OF COMMON STOCK RESERVED FOR ISSUANCE THEREUNDER BY 750,000 SHARES TO AN
AGGREGATE OF 6,177,000 SHARES; (3) FOR RATIFICATION OF THE APPOINTMENT OF PRICE
WATERHOUSE LLP AS THE COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY COME BEFORE THE MEETING.
(This Proxy should be marked, dated, signed by the stockholder(s) exactly as his
or her name appears hereon, and returned promptly in the enclosed envelope.
Persons signing in a fiduciary capacity should so indicate. If shares are held
by joint tenants or as community property, both should sign.)
_______________________________________ Date:__________________________
Signature
_______________________________________ Date:__________________________
Signature
