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EXHIBIT 3
[LATHAM & WATKINS LETTERHEAD]
May 31, 2000
VIA TELECOPIER
Board of Directors
IMP, Inc.
2830 North First Street
San Jose, California 95134
Re: Teamasia Semiconductors PTE
Dear Sirs:
As you know, we are counsel to Teamasia Semiconductors PTE Ltd.
("Teamasia") in respect to the Stock Purchase Agreement dated October 8, 1999
between Teamasia and IMP, Inc. ("IMP"), and the Phase 2 Stock Purchase Agreement
dated December 15, 1999 between the same parties.
We are writing because certain statements made by IMP and its counsel
recently, in themselves and taken in the context of the previous extraordinary
delay and stalling in proceeding toward the closing of Phase 2 of the parties'
contracts, have given rise to concern on Teamasia's part as to whether IMP
intends to perform its contractual obligations, and whether it has been acting
in the good faith required of it to date. We ask for your prompt assurance that
IMP will perform its obligations.
As you know (and as IMP's own proxy statement clearly reflects), the two
stock purchase agreements referenced above are part of a unitary agreement and
transaction between IMP and Teamasia, in which it was agreed and contemplated
that Teamasia would acquire 51% of the fully diluted common stock of IMP. This
was done in two phases because of the urgent need of IMP for an immediate cash
infusion, and accordingly the first phase was accomplished at a price per share
above the market value. Obviously Teamasia would never have agreed to such a
first
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Board of Directors
IMP, Inc.
May 31, 2000
Page 2
step without the assurance that it would receive the benefit of its bargain
through closing of Phase 2 at a price intended to yield the blended price the
parties agreed to in the first place.
Given recent events and statements, we are forced to wonder whether IMP was
acting in good faith, and truthfully representing its intentions, in taking the
benefit of the first half of the parties' agreements. The Phase 1 agreement
reflected the parties' agreement that the Phase 2 part of the deal was to be
completed by February 28, 2000. That has not happened, because IMP has in fact
dragged its feet, stalled, and delayed in the steps required of it to bring
about the Phase 2 closing. No other conclusion would seem to explain the full
six months it took IMP to mail the proxy statement. Similarly, IMP even resorted
to fabricated disputes involving Teamasia extraordinary efforts to support it by
buying wafers to delay the mailing of the proxy In light of subsequent
revelations it is an obvious inference that IMP may have intended all along to
evade its obligations under Phase 2, despite having accepted the benefits of
Phase 1.
IMP's actions to date are a clear breach of its contractual duties under
the parties' agreement. Without limitation, the duties thus breached include
IMP's obligations to negotiate in good faith concerning the Phase 2 part of the
transaction (section 7.15 of the Phase 1 Agreement); to use reasonable efforts
to obtain stockholder approval in order to complete the Phase 2 purchase as
expeditiously as possible (id.); to use reasonable efforts to prepare a proxy
statement and obtain stockholder approval (section 4.1(g) of the Phase 2
Agreement); to use reasonable efforts to cause the proxy statement to be mailed
as soon as possible (section 6.1 of the Phase 2 Agreement); to promptly call the
Stockholders Meeting (id.), to recommend approval and adoption by the
stockholders (id.); and to take all reasonable and lawful action to solicit and
obtain such approval (id.).
Further, absent any other credible explanation for IMP's actions and
inactions, it is to be inferred that IMP never intended to perform its
obligations under the parties' agreements, but instead intended to take the
benefit of the Phase 1 above-market stock purchase, but then seek to deprive
Teamasia of the correlative benefit of its bargain by avoiding the closing of
Phase 2. If, upon fuller factual development (by litigation discovery or
otherwise), it is shown that IMP had such an intention at the time of the
parties' original agreement, or at the time it accepted the benefits of the
Phase 1 purchase, then IMP (and its officers and agents) would be guilty of
fraud in the inducement of the transaction. Similar liability would attach to
any false reassurances or statements of intention that were conveyed, expressly
or by implication, at any later time. Further, regardless of the timing of IMP's
intentions, a conscious effort on its part to avoid performance of Phase 2 (or
to deprive Teamasia of the economic benefit of such performance) would be an
obvious breach of IMP's duties of good faith and fair dealing under its
contracts. Inquiry would also have to be made into the role of any third parties
in inducing such actions on IMP's part.
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Board of Directors
IMP, Inc.
May 31, 2000
Page 3
In recent communications Mr. Grinfas and your counsel Mr. Grey have
suggested that IMP's actions may be defended on the basis of the fiduciary duty
of its Board of Directors. Let us point out, however, that the IMP Board's
duties also include the duty to avoid allowing IMP to incur a substantial
liability for breach of contract or fraud.
Further, we wish to point out that while the Phase 2 contract calls for
obtaining stockholder approval of the purchase, that is not because such
approval is required by any law. The Phase 2 purchase can be lawfully carried
out without obtaining any such approval. Moreover, such approval is NOT a
condition to IMP's duty to close the transaction. On the contrary, IMP's duty to
issue and sell the Purchased Shares under section 1.1 of the Phase 2 Agreement
exists with or without shareholder approval. Thus, if IMP fails to perform its
contractual duty under section 1.1, it will be liable for breach of contract, no
matter what its intent or lack of intent may be for the nonperformance. This
would be true whether or not IMP sought, or obtained, or failed to obtain, any
stockholder approval. For example, let us hypothesize (as you have suggested)
that IMP's board might have a fiduciary duty to recommend against stockholder
under certain circumstances. On that hypothesis, while the board's negative
recommendation might not itself be a breach of IMP's contractual obligations,
the resulting nonperformance of IMP's obligation to issue and sell the Purchased
Shares (which obligation is not conditioned on stockholder approval) would
nevertheless constitute a breach of contract on IMP's part. That fact is itself
a major factor that the IMP board must take into consideration in deciding what
fiduciary course to take in making a recommendation to the stockholders.
Accordingly, while Teamasia does not waive or excuse IMP's contractual
duties to continue to use its best efforts to obtain stockholder approval (nor
does it waive any claims it may have for IMP's past breaches of that duty),
Teamasia does waive any closing condition concerning such efforts as a condition
on Teamasia's performance of the Phase 2 Agreement. In particular, Teamasia does
not waive IMP's duties and obligations under subsection 4.1(g) of that
Agreement, but does waive any closing condition based on that subsection or on
IMP's performance of such duties and obligations. Further, while we are waiving
the closing conditions contained in Section 4.1, we are not waiving any other
contractual right conveyed to our client under the Phase 2 Agreement, including
but without limitation, the survival of agreements provision (Section 7.1) and
the indemnification provision (Section 7.14).
In light of this waiver, the conditions of Section 4.1 of the Phase 2
Agreement are now fully satisfied. Accordingly, under Section 1.1 of the
Agreement, the Closing is required to occur no later than fourteen business days
from today. Please inform us of the day upon which such Closing will occur.
Given your duties as directors, we assume that you will desire to set the
closing date as soon as possible so that IMP may receive and be able to put to
use the funds for the benefit of the stockholders.
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Board of Directors
IMP, Inc.
May 31, 2000
Page 4
We continue to urge IMP to perform its obligations under sections 4.1(g)
and 6.1 of the Agreement, both because such obligations are owed to Teamasia
under the contract and because obtaining stockholder approval is otherwise in
the best interests of the company and the stockholders (for example by
permitting continued Nasdaq listing). Once again, however, we stress that
neither IMP's breach of those obligations, nor any failure of stockholder
approval, will excuse IMP's contractual duty to close the transaction, and to
issue and sell the Purchased Shares.
Finally, we wish to point out that there is no termination provision in the
Phase 2 Agreement. Thus, IMP's obligations to issue and sell the Purchased
Shares will remain in existence and force until they are fully performed. This
fact should be disclosed to any other parties with whom IMP is in communication.
Very truly yours,
/s/ ANTHONY J. RICHMOND
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Anthony J. Richmond
of LATHAM & WATKINS
cc: Richard Grey, Esq.
Teamasia Semiconductors PTE Ltd.
William C. Davisson III, Esq.
Charles S. Treat, Esq.
Marc W. Rappel, Esq.
