<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
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
IMP, Inc.
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 __________ __, 2000
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 __________ __, 2000 at _______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 and adopt the Phase Two Stock Purchase Agreement dated
as of December 15, 1999 (the "Stock Purchase Agreement") between
the Company and Teamasia Semiconductors PTE Ltd., a Singapore
corporation ("Teamasia"), pursuant to which, among other things,
the Company will issue and sell to Teamasia an aggregate of
4,793,235 shares of common stock of the Company;
3. To approve and adopt an amendment to the Company's Certificate of
Incorporation (the "Certificate of Incorporation Amendment") to
provide that stockholder approval be required to approve any
purchase of shares of stock of the Company resulting in Teamasia
and/or its affiliates holding more than 51% of the Company's
Common Stock on a fully diluted basis;
4. To approve and adopt the 1999 IMP, Inc. Stock Option Plan;
5. To approve and adopt the 2000 IMP, Inc. Stock Option Plan;
6. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending
March 26, 2000; and
7. To transact such other business as may properly come before the
meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS,
"FOR" THE APPROVAL AND ADOPTION OF THE STOCK PURCHASE AGREEMENT, "FOR" THE
APPROVAL AND ADOPTION OF THE CERTIFICATE OF INCORPORATION AMENDMENT, "FOR" THE
APPROVAL AND ADOPTION OF THE 1999 IMP, INC. STOCK OPTION PLAN, "FOR" THE
APPROVAL AND ADOPTION OF THE 2000 IMP, INC. STOCK OPTION PLAN, AND "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice, which is incorporated herein by this
reference. Any stockholders of record at the close of business on March __, 2000
will be entitled to vote at the Annual Meeting and 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 plan to
attend the Annual Meeting and vote by ballot, your proxy will be revoked
<PAGE> 3
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/ BRAD WHITNEY
-------------------------------------
Brad Whitney
Chief Executive Officer and President
San Jose
March 15, 2000
<PAGE> 4
IMP, INC.
2830 North First Street
San Jose, California 95134
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON _______________, 2000
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 ______________, 2000 (the "Annual Meeting") and
any adjournment or postponement thereof. The Annual Meeting will be held at ___
p.m. at the executive offices of IMP, Inc., 2830 North First Street, San Jose,
California 95134. Stockholders of record on March __, 2000 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 March ________, 2000.
VOTING
On January __, 2000, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were approximately 4,040,544
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, with respect to Proposal No. 3 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 use. 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 or 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. Except for the compensation to a third party solicitation firm
for certain services, 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.
SHARE OWNERSHIP
The following table sets forth certain information known to the Company
regarding the ownership of the Company's Common Stock as of January 12, 2000 for
(i) each director (ii) all persons who are beneficial owners of five percent
(5%) or more of the Company's Common Stock, (iii) the Company's Chief Executive
Officer and the Company's four most highly paid executive officers who earned in
excess of $100,000 during the fiscal year ended March 28, 1999, and (iv) all
current directors and executive officers of the Company as a group. Unless
otherwise
<PAGE> 5
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>
- ---------------------------------------------------------------------------
Percent of
Number of Total Shares
Name Shares Outstanding(1)
- ---------------------------------------------------------------------------
<S> <C> <C>
Teamasia Semiconductors PTE Ltd. 671,173(2) 16.6%
James Phillips Ferguson(3) 8,000 *
Barry Wiley 0
Zvi Grinfas(4) 37,919 *
David A. Laws(5) 309 *
Peter D. Olson 2,000 *
Bernard V. Vonderschmitt 3,949 *
Jerry DaBell(6) 8,746 *
Moiz Khambaty 6,373 *
Subbarao Pinamaneni(7) 0 *
Tarsaim Batra 8,627 *
Ron Laugesen 10,275
Brad Whitney(8) 1,000 *
Joy Leo 0 *
All current directors and
executive officers as a
group (9 persons) 76,889 1.9%
- ---------------------------------------------------------------------------
</TABLE>
* Less than one percent (1%).
(1) Percentage of beneficial ownership is calculated assuming 4,040,544 shares
of Common Stock were outstanding on March __, 2000. This percentage may
include Common Stock of which such individual or entity has the right to
acquire beneficial ownership within 60 days of March __, 2000, 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) This does not include the 4,793,235 Shares of Common Stock to be issued upon
the consummation of the transaction described in Proposal No. 2, below. The
address of Teamasia is PSA Building, P.O. Box 512, Singapore 911148.
(3) As of September 1999, Mr. Ferguson is no longer a director or officer of the
Company. 3,000 of Mr. Ferguson's shares are held in the Francis L. Ferguson
Trust.
(4) 1,298 of the shares beneficially owned by Mr. Grinfas are in the name of Zvi
and Eva Grinfas.
(5) Shares beneficially owned by Mr. Laws are in the name of the Laws Family
Trust. As of April, 1999, Mr. Laws is no longer an officer of the Company.
(6) Shares beneficially owned by Mr. DaBell are in the name of Jerry and Christy
DaBell.
(7) Mr. Pinamaneni is a Managing Director and stockholder of Teamasia
Semiconductors PTE Ltd. Mr. Pinamaneni disclaims beneficial ownership of the
Company's Common Stock owned by Teamasia Semiconductors PTE Ltd. (except to
the extent of his beneficial ownership therein).
(8) Shares beneficially owned by Mr. Whitney are in the name of Brad and Gail
Whitney.
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------------------------------------------------------------
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 the stockholders. The authorized number of
directors is currently four (4). The Board of Directors has selected four (4)
nominees, of which four are currently directors of the Company. Each person
nominated for election has agreed to serve if elected and management has no
reason to believe that any nominee will be unavailable to serve. Unless
otherwise instructed, the proxyholders will vote the proxies received by them
for the nominees named below. The four (4) candidates receiving the highest
number of affirmative votes of the shares entitled to vote at the Annual Meeting
will be elected directors of the Company.
NOMINEES
Set forth below is information regarding the nominees, including
information furnished by them, any arrangements pursuant to which they were
selected as directors or nominees and their ages as of December 31, 1999:
<TABLE>
<CAPTION>
NAME AGE FIRST YEAR ELECTED DIRECTOR
<S> <C> <C>
Brad Whitney 45 2000
Zvi Grinfas 59 1981
Subbarao Pinamaneni 46 1999
Bernard Vonderschmitt 76 1991
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
Mr. Whitney, 45, Chief Executive Officer and President, was appointed to
the Board of Directors in January 2000 to fill an existing vacancy. From 1998 to
1999 he served as Senior Vice President of New Business for Bourns, Inc. From
1992 until 1997 he served as President and Chief Operating Officer of Linfinity
Microelectronics, Inc.
Mr. Grinfas, 59, Chairman of the Board, is a co-founder of the Company
and 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 was then employed as a consultant, which included serving in the
function of General Manager, Microelectronic Operations for Elron Electronics
Industries, Ltd. from February 1989 through February 1990. Mr. Grinfas served as
Chief Executive Officer and President of the Company from August, 1999 until
January, 2000; after his service in these capacities, Mr. Grinfas has assumed a
reduced role in the management of the Company.
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Mr. Vonderschmitt, 76, was 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 it Chief Executive
Officer from August 1994 to January 1996 and is currently Chairman of the board
of directors of Xilinx. Mr. Vonderschmitt also serves as a director on the
boards of directors of Credence Systems Corporation and Sanmina Corporation, as
well as private companies. He has been a director of the Company since February
1991.
Mr. Subbarao Pinamaneni, 46, has over 20 years of experience in the
semiconductor industry. He has worked for major semiconductor companies,
including National Semiconductor and Altera Semiconductors, in the United States
and Asia. His responsibilities have included managing packaging and testing
operations. Mr. Pinamaneni is the nominee to the Company's Board of Directors of
Teamasia Semiconductors (India) Ltd. pursuant to the provisions of the Stock
Purchase Agreement, dated October 8, 1999, by and between the Company and
Teamasia, a copy of which is included as Exhibit B to this Proxy Statement. In
April 1995, Mr. Pinamaneni filed a voluntary petition for Chapter 11 Bankruptcy
which case was concluded in November 1997. Mr. Pinamaneni serves as Managing
Director of Teamasia.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
During the fiscal year ended March 28, 1999, the Board of Directors held
seven (7) meetings. As of March 28, 1999, 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 accountants and reviewing reports of the
Company's external accountants regarding the Company's accounting practices and
systems of internal accounting controls. This Committee, during the fiscal year
ended March 28, 1999, consisted of Messrs. Grinfas, Olson and Vonderschmitt.
This Committee held zero (0) 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, during the fiscal year ended March 28, 1999, consisted
of Messrs. Grinfas, Olson and Vonderschmitt. This Committee held one (1) meeting
during the last fiscal year and also acted by unanimous written consent zero (0)
times.
The Nominating Committee is responsible for recommending nominees for
members of the Company's Board of Directors. This Committee, during the fiscal
year ended March 28, 1999, consisted of Messrs. Olson and Vonderschmitt. This
Committee held zero (0) meetings during the last fiscal year.
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, during the
fiscal year ended March 28, 1999, consisted of Mr. Ferguson. This Committee held
zero (0) meetings during the last fiscal year and acted by unanimous written
consent fifteen (15) 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.
COMPENSATION OF DIRECTORS
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 $27,869 in
fiscal 1999. 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 2,000 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 2,000 shares of Common Stock, at successive four (4)-year intervals
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<PAGE> 8
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 2,000
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 canceled, and the non-employee Board
member will be entitled to a cash distribution from the Company based upon the
tender-offer price.
APPROVAL REQUIRED
Approval of Proposal No. 1 requires the approval of the holders of a
majority of the total votes of the shares present and entitled to vote on the
matter at the Annual Meeting, provided that the total votes cast on the matter
represent over 50% in interest of all shares entitled to vote on the matter.
RECOMMENDATION OF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES LISTED HEREIN.
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------------------------------------------------------------
PROPOSAL NO. 2
APPROVAL OF STOCK PURCHASE AGREEMENT
------------------------------------------------------------
At the Annual Meeting, stockholders are being asked to approve the Phase
Two Stock Purchase Agreement between the Company and Teamasia Semiconductors PTE
Ltd., a Singapore corporation (together with Teamasia Semiconductors (India)
Ltd., a limited liability company formed under the laws of India, "Teamasia"),
dated as of December 15, 1999 (the "Stock Purchase Agreement"). A copy of the
Stock Purchase Agreement is included as Exhibit A to this proxy statement.
Stockholders are urged to read the full text of the Stock Purchase Agreement
carefully.
BACKGROUND
The Company's revenue has continued to steadily decrease from its high
in the fiscal year ending March 31, 1996 to the present. The Company has
chronically been dependent on a small number of customers, most of whom
decreased their purchases from the Company during this period. The Company also
suffered from a general market slowdown in fiscal 1999. Consequently, its
manufacturing facilities have been underutilized and its fixed operating costs
relatively high.
Although the Company has taken measures to reduce costs in other areas,
it has continued to spend aggressively on research and development and sales to
position itself for the future. However, revenue from new products has not
materialized in time to offset negative cash flow. The unfavorable cash flow
from operations and development activities resulted in cash-on-hand decreasing
to less than one million dollars by the quarter ending June 27, 1999.
Beginning in July 1999, the Company began to experience severely limited
liquidity which had the potential over the near term to cause it to cease
operations. In response to this situation, the Board of Directors commenced a
review of the Company's strategic alternatives. Included among the possibilities
were the sale of the Company or the merger of the Company with another party.
The Company received a number of expressions of interest and proposals for a
variety of different types of transactions. The Board of Directors pursued each
such expression of interest or proposal received in order to fully understand
its terms and to determine whether the terms proposed could be materially
improved. During this process, the Board of Directors recognized that the
Company would be unable to continue operations without additional capital.
In September of 1999, there was considerable doubt whether the Company
could meet each upcoming payroll obligation, and as a result the Company was in
immediate need of a significant cash infusion. The Company narrowed the
proposals under serious consideration down to a few and pursued intense
negotiations with each party submitting a proposal in order to be able to
closely assess the relative benefits of each proposal to the Company and its
stockholders. At the end of this process, on September 24, 1999, the Company
entered into a letter of intent with Teamasia (the "Letter of Intent") pursuant
to which the Company and Teamasia agreed to pursue the negotiation of a
substantial equity investment in the Company by Teamasia and the other related
agreements described herein. The Prior Agreement (defined below) and the Stock
Purchase Agreement substantially reflect the transactions contemplated by the
Letter of Intent.
Teamasia is a manufacturer of small-signal discrete and power
semiconductors headquartered in India.
On October 8, 1999, the Company entered into a stock purchase agreement
(the "Prior Agreement") with Teamasia Semiconductors (India) Ltd., pursuant to
which the Company issued and sold to Teamasia, and Teamasia purchased from the
Company, an aggregate of 671,173 shares of Common Stock of the Company ("Common
Shares") for an aggregate purchase price equal to $2,050,000, or $3.05 per
share, representing 16.6% of the outstanding Common Stock of the Company. The
purchase of Common Shares by Teamasia under the Prior Agreement closed in stages
during the months of October, November and December 1999, with the final closing
having occurred on December 8, 1999. The Company agreed to use the proceeds from
the sale of Common Shares to Teamasia as follows: (a) to pay normal payroll
expenses to its employees, (b) to pay specified lease
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<PAGE> 10
obligations and (c) to pay other operating expenses approved by Teamasia. A copy
of the Prior Agreement is included as Exhibit B to this proxy statement.
As provided by the Prior Agreement, the Company added one member
designated by Teamasia to the Board of Directors of the Company. Teamasia
designated Subbarao Pinamaneni to serve on the Board of Directors, and on
November 4, 1999 he was elected by the Board of Directors to fill an existing
vacancy. In addition, under the Letter of Intent and the Prior Agreement,
Teamasia committed to purchase wafers from the Company commencing in the third
quarter of fiscal 2000 and continuing through the second quarter of fiscal 2001.
Teamasia agreed to purchase a minimum of 750 wafers per week during the third
fiscal quarter of 2000 and a minimum of 1,500 wafers per week during the fourth
fiscal quarter of 2000 and the first and second fiscal quarters of 2001.
Under the terms of the Prior Agreement, Teamasia has certain rights to
require that the Company register the Common Shares. Teamasia also has certain
rights of first refusal, so long as it has ownership of 15% or more of the
Company's fully diluted common equity and subject to certain exceptions, should
the Company sell any shares of Common Stock or other equity securities or any
securities which are convertible into or exercisable for Common Stock or other
equity securities. Teamasia is permitted to assign its rights under the Prior
Agreement, subject to specified conditions.
As provided in the Letter of Intent and the Prior Agreement, the Company
and Teamasia agreed to negotiate the terms of an additional investment in the
Company by Teamasia that would result in Teamasia owning a majority of the fully
diluted Common Stock of the Company. On December 15, 1999, upon completing such
negotiation, the Company and Teamasia entered into the Stock Purchase Agreement
which is now being presented to the stockholders of the Company for their
approval.
STOCK PURCHASE AGREEMENT TERMS
Under the terms of the Stock Purchase Agreement, the Company has agreed
to issue and sell to Teamasia, and Teamasia has agreed to purchase from the
Company, an aggregate of 4,793,235 shares of Common Stock of the Company for the
aggregate purchase price of $3,930,000, or $0.82 per share ("Purchase Price")
(Teamasia will then hold a total of 5,464,408 shares). The purchase will occur
at a closing not later than 14 business days after approval by the stockholders
of the Company (the "Closing"). With the purchase of these shares and the shares
previously acquired under the terms of the Prior Agreement, Teamasia will own
approximately 61.9% of the outstanding Common Stock of the Company, or
approximately 51% of the fully diluted Common Stock of the Company after taking
into account the IMP, Inc. Option Plan, the 1999 IMP, Inc. Option Plan (each
described below), the Company's employee stock purchase plan and outstanding
warrants. Teamasia's purchase of shares under the Stock Purchase Agreement will
result in a change of control of the Company, as Teamasia will have the power to
elect a majority of the Company's Board of Directors.
The Stock Purchase Agreement also provides that in the event that
Bernard Vonderschmitt ceases to serve as a member of the Board of Directors, Mr.
Grinfas may, in his sole discretion and provided he is then still serving as a
member of the Board of Directors, designate a person to replace Mr.
Vonderschmitt. The Stock Purchase Agreement also provides that a new chief
executive officer hired by the Company will also be designated to serve as a
member of the Board of Directors. Mr. Whitney became the Chief Executive Officer
on January 17, 2000 and has served on the Board of Directors since that date. In
addition, the Stock Purchase Agreement provides that, promptly after the
Closing, the Company's Board of Directors take the necessary steps to add one
additional person designated by Teamasia as a fifth member of the Company's
Board of Directors.
The Stock Purchase Agreement further provides that if Teamasia
(considered together with its affiliates) seeks to purchase or otherwise acquire
(directly or indirectly) additional Common Stock of the Company, and after such
purchase or other acquisition Teamasia (considered together with its affiliates)
would own more than 51% of the fully diluted Common Stock of the Company, such
purchase or other acquisition is required to be (i) unanimously approved by the
Board of Directors or (ii) approved by holders of at least 51% of the Common
Stock of the Company but will be so approved only if holders of no more than
twenty percent (20%) of the Common Stock of the Company vote against such
purchase or other acquisition. The foregoing special provision will terminate at
such time as Teamasia (considered together with its affiliates) owns Common
Stock representing 75% or more of the outstanding Common Stock. The Company has
agreed to use its reasonable best efforts to incorporate the foregoing provision
into the Company's
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Certificate of Incorporation. The incorporation of the foregoing provision into
the Company's Certificate of Incorporation is a condition to Teamasia's
obligations under the Stock Purchase Agreement and may be waived by Teamasia.
The Stock Purchase Agreement further provides that the Company's Board
of Directors will adopt a new option plan covering 1,000,000 shares of the
Company's Common Stock (or allocation of an additional 1,000,000 shares of
Common Stock to an existing option plan). On January 7, 2000, the Board of
Directors approved the allocation of an additional 1,000,000 Common Shares to
the IMP, Inc., Stock Option Plan. Such approval is subject to approval by the
Company's stockholders, and such additional allocation is being submitted to the
Company's stockholders for their approval in Proposal No. 5 below.
As a condition to the Closing of the Stock Purchase Agreement, the
Company is required to obtain the consents of certain creditors, including
creditors under capital leases and revolving credit agreements. Consents have
been obtained from all creditors.
During the period between December 15, 1999 and the date upon which the
Company has received the approval from its stockholders of the transaction with
Teamasia and all other required governmental approvals and has made certain
amendments to its Certificate of Incorporation (the "Approval Date"), if the
Company so requests, Teamasia is required to use reasonable efforts to provide
the Company with additional financing up to the amount of the Purchase Price
upon commercially reasonable terms, which amount shall be re-paid at the
Closing. During the period between the Approval Date and the date of the
Closing, if the Company so requests, Teamasia is required to provide the Company
with such additional financing, upon the same terms.
Under the terms of the Stock Purchase Agreement, Teamasia will have
certain rights to require that the Company register all shares of Common Stock
acquired by Teamasia under the Stock Purchase Agreement and the Prior Stock
Purchase Agreement. Upon the Closing, the percentage applicable to Teamasia's
rights of first refusal described above with respect to any sale by the Company
of shares of Common Stock or other equity securities or any securities which are
convertible into or exercisable for Common Stock or other equity securities
would increase by reason of Teamasia's acquisition of additional shares of
Common Stock. Teamasia is permitted to assign its rights under the Stock
Purchase Agreement, subject to specified conditions.
MANAGEMENT DISCUSSION
Management believes that the Stock Purchase Agreement with Teamasia
offers the Company significant benefits of both a financial and strategic
nature.
The proceeds of $3,930,000 from the sale of Common Stock to Teamasia
pursuant to the Stock Purchase Agreement will result in an improvement in the
Company's equity base and its liquidity. Upon Closing and receipt of such
proceeds together with the proceeds of operations, the Company expects to have
cash resources sufficient to meet its needs at least through December 2000.
The Company also expects to realize a number of significant strategic
benefits from its relationship with Teamasia. First, the Company will gain
access to certain Asian markets in which the Company is not presently active.
The Company, through its relationship with Teamasia, is expected to also have
opportunities to utilize Teamasia's assembly facility in Hyderabad, India which
management believes will be an efficient, low-cost facility. Management also
believes that Teamasia's pricing offers will be attractive to the Company. There
are no agreements presently in place under which the Company would use
Teamasia's facility.
In addition, the Company will receive significant production orders from
Teamasia. These orders should alleviate to some degree the current
underutilization of the Company's fabrication facilities. This will allow the
Company to operate its facilities more efficiently.
The Company, through its relationship with Teamasia, also expects to
benefit from additional product development and design capabilities. Teamasia is
in the process of establishing a product development and design center in India,
and the Company expects that its product development and design personnel work
closely with their
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counterparts at Teamasia, resulting in an increase in the Company's product
range and reduction of the product development cycle for power management
semiconductor devices.
Teamasia has advised the Company that completing the second phase of
Teamasia's equity investment in the Company, as contemplated by the Stock
Purchase Agreement, is a material element of its decision to place additional
production orders with the Company. There can be no assurance that replacement
customers can be located in the event that the second phase of Teamasia's equity
investment in the Company is not completed and Teamasia elects not to place
additional orders with the Company.
APPROVAL REQUIRED
Approval of Proposal No. 2 requires the approval of the holders of a
majority of the Common Stock present in person or represented by proxy. Teamasia
will be allowed to vote its shares (representing 16.6% of the outstanding Common
Stock of the Company) on this Proposal.
RECOMMENDATION OF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE
STOCK PURCHASE AGREEMENT BY AND BETWEEN THE COMPANY AND TEAMASIA SEMICONDUCTORS
PTE LTD.
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------------------------------------------------------------
PROPOSAL NO. 3
AMENDMENT TO CERTIFICATE OF INCORPORATION
------------------------------------------------------------
INTRODUCTION
Section 6.6 of the Stock Purchase Agreement with Teamasia (discussed in
Proposal No. 2, above) provides certain limitations on Teamasia and its
affiliates with respect to future additional share purchases of Common Stock of
the Company (such limitations take effect after the share purchase contemplated
in the Stock Purchase Agreement). Such additional purchases may take the form of
a purchase of stock, purchase of assets, merger or combination, or other form of
acquisition. If, in connection with any such additional purchase, Teamasia
and/or its affiliates would:
(1) increase their percentage ownership of the fully diluted Common
Stock of the Company, AND
(2) hold more than 51% of the fully diluted Common Stock of the Company
after such additional purchase,
THEN the transaction by which such additional purchase occurs must
EITHER:
(A) be unanimously approved by the Board of Directors of the Company; OR
(B) be approved by a vote of the stockholders of the Company in which at
least fifty-one percent (51%) of the stockholders vote in favor of the
transaction, and no more than twenty percent (20%) of the stockholders vote
against it (abstentions and broker non-votes will not be counted as votes
against such transaction).
Notwithstanding the foregoing, in the event that Teamasia or its
affiliates acquire equal to or greater than seventy five percent (75%) of the
outstanding Common Stock of the Company, this provision shall terminate. Section
4.1(g) of the Stock Purchase Agreement provides that, as a condition to the
obligations of Teamasia under the Stock Purchase Agreement, the Company will use
its reasonable efforts to amend and restate the Company's Certificate of
Incorporation to incorporate the provisions of Section 6.6 of the Stock Purchase
Agreement. The Company's stockholders are asked to approve this proposed
amendment.
MANAGEMENT DISCUSSION
The actions set forth in this Proposal will offer additional protections
to the Company's minority stockholders (those not affiliated in any way with
Teamasia). By amending the Certificate of Incorporation to impose certain
special limitations regarding stockholder approval for certain additional
purchases of Common Stock of Teamasia, the Company's minority stockholders will
receive additional assurance that such a transaction will not occur except with
the unanimous approval of the Board of Directors of the Company or on terms
which are not objectionable to a significant percentage of the Company's
minority stockholders. Whether or not this amendment is approved, however,
Teamasia will be subject to the contractual limitations contained in the Stock
Purchase Agreement.
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APPROVAL REQUIRED
Approval of Proposal No. 3 requires the affirmative vote of a majority
of the outstanding shares of Common Stock of the Company. Teamasia will be
allowed to vote its shares (representing 16.6% of the outstanding Common Stock
of the Company) on this Proposal.
RECOMMENDATION OF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION.
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------------------------------------------------------------
PROPOSAL NO. 4
APPROVAL AND ADOPTION OF 1999 IMP, INC. STOCK OPTION PLAN
------------------------------------------------------------
INTRODUCTION
The Company's stockholders are being asked to approve the 1999 IMP, Inc.
Stock Option Plan (the "1999 Option Plan"), under which 250,000 shares of Common
Stock will be authorized for issuance over the term of the 1999 Option Plan. The
purpose of the 1999 Option Plan is to is retain the services of key employees
who are essential to the Company's long-term growth and success. The 1999 Option
Plan was approved by the Board of Directors of the Company on October 14, 1999.
The Board of Directors approved the 1999 Option Plan specifically to deal with
the uncertainty about the Company's future caused by the Company's financial
problems during the months of July through September 1999 and to attempt to
preclude existing employees from seeking or accepting other opportunities during
the ongoing period of uncertainty.
The following is a summary of the principal features of the 1999 Option
Plan. Although the summary does not include a discussion of all the provisions
of the 1999 Option Plan, it is a complete discussion of all material provisions
thereof. Any stockholder of the Company who wishes to obtain a copy of the
actual plan document may do so upon written request to the Chief Executive
Officer of the Company at the Company's principal executive offices in San Jose,
California.
STRUCTURE
The 1999 Option Plan will provide for employees below the level of
officer and consultants to the Company (and the Company's subsidiaries or
affiliates as applicable) to have the opportunity to acquire shares of Common
Stock by granting non-statutory stock options which are not intended to qualify
as "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
ADMINISTRATION
At the Board of Directors' discretion, administration of the 1999 Option
Plan shall be vested in a Committee of one (1) or more Board members appointed
by the Board (the "Committee"), or the Board may retain the power to administer
the 1999 Option Plan. If the Board retains this authority, the Board shall be
the Committee for purposes of the 1999 Option Plan. Members of the Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Committee shall, within the scope of its
administrative functions under the 1999 Option Plan, have full power and
authority to establish such rules and regulations as it may deem appropriate for
proper administration of the 1999 Option Plan and to make such determinations
under, and issue such interpretations of, the 1999 Option Plan and any
outstanding options thereunder as it may deem necessary or advisable. Decisions
of the Committee within the scope of its administrative functions under the 1999
Option Plan shall be final and binding on all parties who have an interest under
its jurisdiction or any stock option issued under the 1999 Option Plan.
SHARE RESERVE
As of December 31, 1999 approximately 233,200 shares of Common Stock
were subject to outstanding options granted under the 1999 Option Plan and
16,800 shares were available for issuance under future option grants.
ELIGIBILITY
The persons eligible to receive options under the 1999 Option Plan shall
be limited to key employees and key consultants of the Company or its parent or
subsidiary corporations who are below the level of the Company's officers
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<PAGE> 16
as the Committee shall select from time to time. Under no circumstances shall
any individual who is a "Section 16 Insider" be eligible for the grant of an
option under the 1999 Option Plan. For this person, a "Section 16 Insider" shall
mean an officer or director of the Company subject to the short-swing profit
liabilities of Section 16 of the Securities Exchange Act of 1934, as amended.
The Committee shall, within the scope of its administrative jurisdiction
under the Plan, have full authority to determine the number of shares to be
covered by each grant made under the Plan, the time or times at which each such
option is to be granted and is to be become exercisable, and the maximum term
for which the option is to be outstanding.
PRICE AND EXERCISABILITY
The option price per share shall be fixed by the Committee and, to the
extent required under applicable law, shall in no event be less than eighty-five
percent (85%) of the fair market value per share of Common Stock on the date of
grant. To the extent required by applicable law, if any individual to whom an
option is to be granted is on the date of grant the owner of stock (as
determined under Section 424(d) of the Internal Revenue Code) possessing 10% or
more of the total combined voting power of all classes of stock of the Company
or any one of its parent or subsidiary corporations, then the option price per
share shall not be less than one hundred ten percent (110%) of the fair market
value per share of Common Stock on the date of grant. 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 Committee may also assist any
optionee in the exercise of outstanding options 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 of any loan or installment method of payment will
be established by the Committee in its sole discretion, and may include
provision for forgiveness of such indebtedness in whole or in part, but in no
event may the maximum credit extended to the optionee exceed the aggregate
option price payable for purchased shares (less the par value), plus any Federal
and State income and employment tax liability incurred by the optionee in
connection with such exercise.
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.
All options granted under the 1999 Option Plan shall vest on the earlier
to occur of a) September 30, 2000 or b) the termination of optionee's services
for any reason other than misconduct following a Corporate Transaction (as
defined below). The vesting period for such options is shorter than is typical
of most option plans (and shorter than for options granted under the IMP, Inc.,
Stock Option Plan, which is the Company's principal option plan) due to the
judgment of the Board of Directors that it was in the Company's best interest to
grant options having a relatively short vesting period in order to provide
important incentive over the near term for essential employees to remain
employed with the Company.
TERMINATION OF SERVICE
All options granted under the 1999 Option Plan must be exercised within
twelve months (or such shorter period determined by the Committee and specified
in the instrument evidencing the option) after the optionee ceases for any
reason to be in the employ or service of the Company or its parent or subsidiary
corporations. Under no circumstances shall any such option be exercisable after
the specified expiration date of the option term. Each option 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.
CORPORATE TRANSACTION
Each outstanding option will become immediately exercisable for all of
the shares of Common Stock subject to such option in the event of a Corporate
Transaction, unless (i) the outstanding options are, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof or (ii) the
acceleration of the options is subject to other applicable limitations imposed
by the Committee at the time of grant.
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Immediately following the consummation of the Corporate Transaction, all
outstanding options under the Option Plan shall, except to the extent assumed by
the successor corporation or its parent company, terminate and cease to be
outstanding. A Corporate Transaction includes one or more of the following
transactions:
1. 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;
2. the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
3. 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,
APPROVAL REQUIRED
Approval of Proposal No. 4 requires the approval of the holders of a
majority of the Common Stock present in person or represented by proxy.
RECOMMENDATION OF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION OF
THE 1999 IMP, INC. STOCK OPTION PLAN.
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------------------------------------------------------------
PROPOSAL NO. 5
APPROVAL AND ADOPTION OF 2000 IMP, INC. STOCK OPTION PLAN
------------------------------------------------------------
INTRODUCTION
The Company's stockholders are being asked to approve the 2000 IMP, Inc.
Stock Option Plan (the "2000 Option Plan"), the purpose of which is to attract
and retain the services of key individuals essential to the Company's long-term
growth and success. The 2000 Option Plan was adopted by the Board of Directors
on January 7, 2000, subject to stockholder approval at the Company's next Annual
Meeting.
The following is a summary of the principal features of the 2000 Option
Plan, together with the applicable tax and accounting implications for the
Company and the participants. Although the summary does not include a discussion
of all the provisions of the 2000 Option Plan, it is a complete discussion of
all material provisions thereof. 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.
STRUCTURE
The 2000 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
Program. Each Plan Administrator has complete discretion (subject to the
provisions of the 2000 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.
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SHARE RESERVE
A total of 1,000,000 shares of Common Stock have been reserved for
issuance over the term of the 2000 Option Plan. In no event may any one
participant in the 2000 Option Plan be granted stock options or separately
exercisable stock appreciation rights for more than 1,000,000 shares in the
aggregate under the 2000 Option Plan.
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 2000 Option Plan. Shares subject to
any option surrendered in accordance with the stock appreciation right
provisions of the 2000 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.
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.
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 2000 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 SmallCap Market. On March __, 2000 the fair market
value per share of Common Stock was [_______] 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,
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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;
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 canceled 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 canceled
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 2000 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
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<PAGE> 21
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 canceled option, measured on the cancellation date in
accordance with the valuation provisions of the 2000 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).
AUTOMATIC OPTION GRANT PROGRAM
Under the Automatic Option Grant Program, option grants will be made to
current or future non-employee Board members.
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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- 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 2000 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 canceled 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 canceled 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.
- No automatic option will be granted if the Board member receives an
automatic grant under another of the Company's option plans.
- 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 2000 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 2000 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 2000 Option Plan.
CHANGES IN CAPITALIZATION
In the event any change is made to the Common Stock issuable under the
2000 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 2000
Option Plan, appropriate adjustments will be made to (i) the maximum number
and/or class of securities available for issuance under the 2000 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 2000 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 OPTION GRANTS IN 1999
No stock options were granted to the executive officers named in the
Summary Compensation Table in fiscal 1999.
19
<PAGE> 23
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend or modify the 2000 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 2000
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 2000 Option Plan at any time, but in all
events the 2000 Option Plan will terminate upon the earlier of August 16, 2005
or the date all shares available for issuance under the 2000 Option Plan are
issued or canceled pursuant to the exercise or surrender of options granted
under the 2000 Option Plan. Any options outstanding at the time of the
termination of the 2000 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 2000 Option 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.
20
<PAGE> 24
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
deferred compensation expense 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 recognized by the Company over the vesting period of the
options. 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,
on a pro-forma basis in the Notes to the Company's financial statements, the
impact those options would have upon the Company's reported earnings were the
value of those options determined using a fair-value method. 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 may be recognized as a compensation expense.
APPROVAL REQUIRED
Approval of Proposal No. 5 requires the approval of the holders of a
majority of the Common Stock present in person or represented by proxy.
MANAGEMENT DISCUSSION
The approval of the 2000 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.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR APPROVAL OF THE
2000 OPTION PLAN.
NEW PLAN BENEFITS
No option grants made under the 2000 Option Plan shall be effective
until stockholder approval of the Option Plan is obtained.
21
<PAGE> 25
------------------------------------------------------------
PROPOSAL NO. 6
RATIFICATION OF INDEPENDENT ACCOUNTANTS
------------------------------------------------------------
INTRODUCTION
The Company is asking the stockholders to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for the
fiscal year ending March 27, 2000. 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 PricewaterhouseCoopers LLP.
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.
PricewaterhouseCoopers LLP 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.
APPROVAL REQUIRED
Approval of Proposal No. 6 requires the approval of the holders of a
majority of the Common Stock present in person or represented by proxy.
RECOMMENDATION OF BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR THE
RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP.
22
<PAGE> 26
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 28, 1999 were met in a timely manner by its executive
officers, Board members and greater than ten percent (10%) stockholders.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION COMMITTEE REPORT
It is the duty of the Compensation Committee of the Company's Board of
Directors 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,
the Compensation Committee approves the individual bonus programs for executive
officers each fiscal year and the base salaries of the Company's 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 1999 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 stockholder 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. Actual awards are subject to decrease or increase on the basis of the
Company's performance and at the discretion of the Chief Executive Officer. FOR
FISCAL YEAR 1999, THE COMPENSATION COMMITTEE ESTABLISHED THE FOLLOWING
PERFORMANCE GOALS: (I) SALES MUST EXCEED $50 MILLION, (II) SALES AND EARNINGS
MUST INCREASE EACH FISCAL QUARTER AND (III) THE COMPANY MUST REPORT A NET PROFIT
IN THE FOURTH QUARTER. UPON SUCCESSFUL COMPLETION OF EACH OF THESE GOALS, THE
COMPANY WOULD PAY EACH EXECUTIVE OFFICER A BONUS EQUAL TO 25% OF HIS OR HER BASE
SALARY. These goals were not met, and accordingly, the Company's executive
officers were not paid bonuses under the Company's annual incentive bonus
program for fiscal year 1999. See the "Summary
23
<PAGE> 27
Compensation Table" for a description of how certain executive officers were
paid additional compensation other than through the annual incentive bonus
program.
LONG-TERM INCENTIVE COMPENSATION. The Committee periodically approves
grants of stock options under the Option Plan to the Company's executive
officers. The grants are designed to align the interests of each executive
officer with those of the stockholders and provide each individual with a
significant incentive to manage the Company from the perspective of an owner
with an equity stake in the business. Each grant generally allows the officer to
acquire shares of Common Stock at a fixed price per share (the market price on
the grant date) over a specified period of time (up to 10 years), thus providing
a return to the executive officer only if the market price of the shares
appreciates over the option term. During the 1993 fiscal year, the Committee
approved an evergreen program under the Option Plan designed to provide for the
annual grant of options to ensure that top performing employees, including
executive officers, have a significant equity stake in the Company. The program
takes into account the individual's option holdings, as well as direct stock
holdings, at the time annual awards are made. The size of the option grant to
each executive officer, generally is set to achieve a potential percentage
ownership stake in the Company that the Committee deems appropriate in order to
create a meaningful opportunity for stock ownership based upon the individual's
current position with the Company, but also takes into account the individual's
potential for future responsibility and promotion over the option term and the
individual's personal performance in recent periods. Each such factor is given
equal weight. There were no option grants to executive officers in fiscal 1999.
CEO COMPENSATION. James Philips Ferguson, former President and Chief
Executive Officer, received a base salary of $190,000 per year with a potential
bonus of 40% of such base salary if certain sales and earnings goals of the
Company were met. These goals were not met, and accordingly, Mr. Ferguson was
not paid an incentive bonus for fiscal year 1999.
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. He
also served as Chief Executive Officer and President of the Company from August
1999 until January 2000.
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 1999 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
2000 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 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 $1 million level.
Compensation Committee
Zvi Grinfas
Peter D. Olson
Bernard V. Vonderschmitt
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate future filings, including this Proxy
Statement, in
24
<PAGE> 28
whole or in part, the foregoing report and the Performance Graph which follows
shall not be deemed to be incorporated by reference into any such filings.
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and the four other
most highly-compensated executive officers of the Company ("Named Executive
Officers"), for services rendered in all capacities to the Company and its
subsidiaries for each of the last three (3) fiscal years:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Long Term
Securities
Underlying Other
Name and Position Year Salary($)(1) Bonus ($) Options Compensation($)(2)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
James Philips Ferguson, 1999 209,248 -- -- 9,240
Former President and Chief 1998 148,439 -- 25,000 7,980
Executive Officer 1997 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Barry Wiley, 1999 173,933 -- -- 5,148
Former Vice President Sales 1998 114,912 -- 12,000 4,132
and Marketing 1997 -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
David A. Laws, 1999 163,394 -- -- 4,300
Former Chairman of the Board 1998 181,808 250,000 -- 3,600
1997 185,985 40,000 24,584 3,600
- ---------------------------------------------------------------------------------------------------------------------
Jerry DaBell, 1999 158,834 -- -- 2,797
Senior Vice President, Design 1998 155,855 -- 6,500 2,804
Engineering 1997 145,848 22,915 -- 2,304
- ---------------------------------------------------------------------------------------------------------------------
Moiz Khambaty, 1999 155,672 -- -- 6,192
Vice President Technology 1998 155,065 -- 7,000 5,616
1997 138,386 21,000 -- 5,616
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Salary includes amounts deferred pursuant to the Company's 401(k) plan. The
amounts shown under the Bonus column include cash bonuses earned for the
indicated fiscal years.
(2) Includes the premium paid on behalf of each executive officer for
supplemental life insurance plus any other amount as indicated for each
individual.
STOCK OPTION GRANTS IN 1999
No stock options were granted to the executive officers named in the
Summary Compensation Table in fiscal 1999.
OPTION EXERCISES AND HOLDINGS
The table below sets forth information concerning the exercise of stock
options during the 1999 fiscal year by the Named Executive Officers and those
who were formerly Executive Officers during fiscal year 1999 and the unexercised
options held as of the end of the 1999 fiscal year by such individuals. For
purposes of the latter calculation, the fiscal year-end market value of the
shares is deemed to be $3.31, the closing sale price of the Company's Common
25
<PAGE> 29
Stock as reported on the National Association of Securities Dealers Automated
Quotations System on Friday, March 29, 1999. No stock appreciation rights were
exercised by the Named Executive Officers and those who where formerly Executive
Officers in fiscal year 1999 during the 1999 fiscal year, and no stock
appreciation rights were held by those individuals at the end of such year.
All share information reflects the one-for-ten reverse stock split that took
place on January 13, 1999.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Value of Unexercised
Number of Number of Options at FY99- In-the-Money Options at
Shares end (#) FY99-end ($)
Acquired Value ---------------------------- ----------------------------
Name on Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
James Philips Ferguson -- -- 9,999 15,001 33,112 $ 49,683
- ---------------------------------------------------------------------------------------------------------------------------
Barry Wiley -- -- 4,602 7,398 15,242 24,502
- ---------------------------------------------------------------------------------------------------------------------------
David A. Laws -- -- 29,688 312 98,327 1,033
- ---------------------------------------------------------------------------------------------------------------------------
Jerry DaBell -- -- 4,664 6,336 15,442 20,985
- ---------------------------------------------------------------------------------------------------------------------------
Moiz Khambaty -- -- 4,040 5,960 13,380 19,740
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
TEN-YEAR OPTION REPRICING TABLE
The Company permitted certain holders of options to purchase the
Company's Common Stock to reprice their options on September 22, 1997 and on
February 27,1998. On September 22, 1997, the Company permitted employees,
excluding executive officers named in the Summary Compensation Table, to cancel
outstanding options that had been granted under the Company's Stock Option Plan
but that had not yet been exercised and that had an exercise price in excess of
the then-current fair market value of the Company's Common Stock and replace
them with new options for an equal number of shares with an exercise price equal
to $14.40 per share, the fair market value on September 22, 1997 (not adjusted
for the stock split). These repriced options were subsequently repriced on
February 27, 1998.
On February 27, 1998, the Company permitted employees, including
executive officers named in the Summary Compensation Table, to cancel
outstanding options that had been granted under the Company's Stock Option Plan
but that had not yet been exercised and that had an exercise price in excess of
the then-current fair market value of the Company's Common Stock (including the
options that were repriced on September 22, 1997) and replace them with new
options for an equal number of shares with an exercise price equal to $11.60 per
share, the fair market value on February 27, 1998 (not adjusted for the stock
split). Each repriced option granted was not exercisable until February 27, 1999
at which time each option became vested and exercisable as to the number of
shares subject to the canceled options that were vested as of February 27, 1998;
thereafter, the vesting schedules under the original option agreement continues
as to the unvested shares. There have been no repricings during the last fiscal
year. In accordance with the regulations promulgated by the Securities and
Exchange Commission, such repricing requires the Company to disclose all
repricings of the Company's options held by its executive officers that have
occurred during the last ten completed
26
<PAGE> 30
years (exclusive of years prior to the year in which the Company became a
reporting company under the Exchange Act), in the format set forth below:
TEN-YEAR OPTION REPRICING TABLE
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
NUMBER LENGTH OF
SHARES ORIGINAL
OF COMMON MARKET OPTION TERM
STOCK PRICE OF EXERCISE REMAINING AT
UNDERLYING STOCK AT PRICE AT NEW DATE OF
DATE OF OPTIONS TIME OF TIME OF EXERCISE REPRICING
NAME PRICING REPRICED REPRICING REPRICING PRICE (IN MONTHS)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
James Philips Ferguson(1) 2/27/98 10,000 $ 11.60 $ 19.40 $ 11.60 40
2/27/98 15,000 11.60 14.40 11.60 43
David A. Laws(2) 2/27/98 10,000 11.60 15.00 11.60 12
Jerry DaBell 2/27/98 2,000 11.60 12.90 11.60 47
2/27/98 4,500 11.60 14.40 11.60 43
9/22/97 4,500 14.40 25.70 14.40 40
2/13/91 6,000 8.10 30.00 8.10 27
Moiz Khambaty 2/27/98 2,000 11.60 12.90 11.60 47
2/27/98 3,000 11.60 13.80 11.60 35
2/27/98 5,000 11.60 14.40 11.60 31
9/22/97 3,000 14.40 25.70 14.40 40
2/13/91 1,750 8.10 30.00 8.10 --
2/13/91 1,840 8.10 42.50 8.10 --
Ron Laugesen 2/27/98 2,000 11.60 12.90 11.60 48
2/27/98 4,490 11.60 14.40 11.60 43
2/27/98 1,000 11.60 19.40 11.60 16
2/27/98 2,000 11.60 25.70 11.60 34
2/27/98 1,000 11.60 59.40 11.60 18
2/13/91 750 8.10 16.25 8.10 26
George Rassam 2/27/98 8,000 11.60 14.40 11.60 36
2/27/98 2,000 11.60 12.90 11.60 48
2/13/91 1,110 8.10 42.50 8.10 2
2/13/91 256 8.10 26.25 8.10 6
Taraim Batra 2/27/98 6,320 11.60 14.40 11.60 43
2/27/98 2,000 11.60 12.90 11.60 48
2/27/98 1,125 11.60 18.50 11.60 15
2/27/98 3,000 11.60 25.70 11.60 36
Barry Wiley 2/27/98 7,500 11.60 16.00 11.60 41
2/27/98 2,500 11.60 14.40 11.60 43
2/27/98 2,000 11.60 12.90 11.60 48
Barry Carrington(3) 2/13/91 90 8.10 30.00 8.10 --
2/13/91 5,379 8.10 30.00 8.10 --
2/13/91 9,400 8.10 42.50 8.10 --
2/13/91 14,620 8.10 36.00 8.10 --
2/13/91 14,130 8.10 42.50 8.10 --
Charles Isherwood(4) 2/15/91 10,000 8.10 42.50 8.10 --
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Mr. Ferguson served as the Company's Chief Executive Officer through
September 1999.
(2) Mr. Laws served as the Company's Chief Executive Officer through April
1999.
27
<PAGE> 31
(3) Mr. Carrington served as the Company's Chief Executive Officer through
1996.
(4) Mr. Isherwood served as the Company's Chief Financial Officer through
1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Certain Relationships and Related Transactions. As described in
Proposal No. 2, the Company has entered into certain transactions with Teamasia.
Mr. Pinamaneni, in addition to serving as a director of the Company, is a
Managing Director and stockholder of Teamasia.
(b) Employment Contracts.
Except as described 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.
By letter agreement between the Company and its new Chief Executive
Officer and President, Brad Whitney, dated January 13, 2000, the Company
confirmed, among other things, an annual salary of $200,000 along with a
severance package that includes twelve (12) months' salary in the event of an
involuntary termination of Mr. Whitney's employment without cause. Mr. Whitney
will also receive stock options and other employee benefits and can earn a
performance-based bonus if the Company meets certain financial results during
the 2001 fiscal year and following fiscal years.
By letter agreement between the Company and its new Chief Financial
Officer, Joy E. Leo, effective January 31, 2000, the Company confirmed, among
other things, an annual salary of $170,000 along with a severance package that
includes six (6) months' salary in the event of an involuntary termination of
Ms. Leo's employment without cause. Ms. Leo will also receive stock options and
other employee benefits and can earn a performance-based bonus if the Company
meets certain financial results during the 2001 fiscal year and following fiscal
years.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP 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.
STOCKHOLDER PROPOSALS FOR 2000 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the Company's
annual meeting of stockholders to be held in 2000 must be received by the
Company no later than [September __, 2000 (120 days before the date listed above
when these proxy materials were made available to stockholders, ] in order to be
included in the proxy statement and related proxy materials. Any stockholder
proposal received by the Company later than [December __, 2000 (75 days after
the proceeding date)] shall be considered untimely.
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, 1994 and the
reinvestment of dividends. Also depicted are the composite prices of companies
listed on the Nasdaq National Market Index and the Nasdaq Index of Electronic
Equipment Manufacturers--comprised of companies primarily engaged in the
manufacture of electronic components and accessories--also assuming $100
invested on March 31, 1994. This information has been provided to the Company by
Media General Financial Services.
28
<PAGE> 32
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG IMP, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
[PERFORMANCE GRAPH]
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
3/31/94 3/31/95 3/31/96 3/31/97 3/29/98 3/31/99
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
IMP, Inc. $ 100 $ 100 $ 400 $ 118 $ 84 $ 72
Nasdaq $ 100 $ 111 $ 151 $ 168 $ 258 $ 382
Nasdaq Electronic Equipment
Manufacturers $ 100 $ 131 $ 172 $ 302 $ 345 $ 506
</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.
29
<PAGE> 33
INCORPORATION BY REFERENCE
The Company incorporates by reference the documents listed below
containing certain financial and other information about the Company.
(1) The Company's Form 10-K/A No. 3 for the fiscal year ended March 28,
1999, filed March 15, 2000;
(2) The Company's Quarterly Report on Form 10-Q/A No. 2 for the fiscal
quarter ended June 27, 1999 filed March 15, 2000;
(3) The Company's Quarterly Report on Form 10-Q/A for the fiscal quarter
ended September 27, 1999 filed March 15, 2000; and
(4) The Company's Quarterly Report on Form 10-Q/A for the fiscal quarter
ended December 26, 1999 filed March 15, 2000.
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/ BRAD WHITNEY
----------------------------------
Brad Whitney
President and CEO
Dated: March 15, 2000
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<PAGE> 34
EXECUTION COPY
EXHIBIT A
IMP, Inc.
--------------------------------------------------------
PHASE 2 STOCK PURCHASE AGREEMENT
Dated as of December 15, 1999
<PAGE> 35
TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C> <C>
ARTICLE 1 PURCHASE AND SALE OF STOCK...........................................1
SECTION 1.1. Delivery.......................................................1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF COMPANY............................1
SECTION 2.1. Organization, Standing and Qualification.......................1
SECTION 2.2. Capitalization.................................................1
SECTION 2.3. Validity of Stock..............................................2
SECTION 2.4. Subsidiaries...................................................2
SECTION 2.5. Financial Statements...........................................2
SECTION 2.6. Authorization; Approvals.......................................3
SECTION 2.7. No Conflict with Other Instruments.............................3
SECTION 2.8. Absence of Undisclosed Liabilities; Changes....................3
SECTION 2.9. Patents, Trademarks and Other Intangible Assets................3
SECTION 2.10. Taxes..........................................................4
SECTION 2.11. Litigation.....................................................4
SECTION 2.13. Private Offering...............................................4
SECTION 2.14. Fees and Commissions...........................................4
SECTION 2.15. Compliance with Environmental Laws.............................5
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER...........5
SECTION 3.1. Authorization..................................................5
SECTION 3.2. Investment Representations.....................................5
SECTION 3.3. Investment Experience; Access to Information...................5
SECTION 3.4. Absence of Registration........................................6
SECTION 3.5. Restrictions on Transfer.......................................6
SECTION 3.6. Transfer Instructions..........................................6
SECTION 3.7. Economic Risk..................................................6
SECTION 3.8. Fees and Commissions...........................................7
SECTION 3.9. [Reserved].....................................................7
SECTION 3.10. Restructuring of Debt..........................................7
SECTION 3.11. Wafer Purchase Commitment......................................7
ARTICLE 4 CONDITIONS TO OBLIGATIONS OF THE PURCHASER...........................7
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
SECTION 4.1. Conditions to Obligations of the Purchaser....................7
ARTICLE 5 CONDITIONS TO OBLIGATIONS OF COMPANY.................................8
SECTION 5.1. Conditions to Obligations of the Company......................8
ARTICLE 6 AFFIRMATIVE COVENANTS................................................9
SECTION 6.1. Preparation of Proxy Statement: Stockholders' Meeting..........9
SECTION 6.2. Piggy-Back Registrations.......................................9
SECTION 6.3. Registrations on Form S-1 or Form S-3.........................10
SECTION 6.4. Effectiveness.................................................11
SECTION 6.5. Right of First Offer..........................................11
SECTION 6.6. Additional Purchases By Purchaser.............................12
SECTION 6.7. Employee Retention Plan.......................................13
SECTION 6.8. Purchaser's Board of Directors Designee.......................13
ARTICLE 7 MISCELLANEOUS.......................................................13
SECTION 7.1. Survival of Agreements........................................13
SECTION 7.2. Notices.......................................................13
SECTION 7.3. Modifications; Waiver.........................................14
SECTION 7.4. Exculpation...................................................14
SECTION 7.5. Entire Agreement..............................................14
SECTION 7.6. Successors and Assigns........................................14
SECTION 7.7. Enforcement...................................................15
SECTION 7.8. Execution and Counterparts....................................15
SECTION 7.9. Governing Law and Severability................................15
SECTION 7.10. Headings......................................................15
SECTION 7.11. Confidentiality...............................................16
SECTION 7.12. [Reserved.]...................................................16
SECTION 7.13. [Reserved.]...................................................16
SECTION 7.14. Indemnification...............................................16
SECTION 7.15. [Reserved]....................................................17
SECTION 7.16. Expenses......................................................17
ANNEX I - ADDITIONAL PURCHASER REPRESENTATIONS.......................................I-1
DISCLOSURE SCHEDULE..................................................................S-1
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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<S> <C> <C>
SCHEDULE 2.2(B) - WARRANTS..........................................................S2.2(B)-1
SCHEDULE 2.9 - PATENTS.................................................................S2.9-1
SCHEDULE 2.10 - TAXES ................................................................S2.10-1
SCHEDULE 2.12 - DEFAULT OF OBLIGATIONS ...............................................S2.12-1
SCHEDULE 3.11 - FOUNDRY SERVICES......................................................S3.11-1
EXHIBIT A - FORM OF LEGAL OPINION.........................................................A-1
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<PAGE> 38
PHASE 2 STOCK PURCHASE AGREEMENT
Agreement, dated as of December 15, 1999 between IMP, Inc., a Delaware
corporation (the "Company") and Teamasia Semiconductors PTE Ltd., a Singapore
corporation (the "Purchaser").
ARTICLE 1
PURCHASE AND SALE OF STOCK
SECTION 1.1. Delivery. Subject to the provisions of this Agreement, the
Purchaser agrees to purchase at the Closing (as defined below), and the Company
agrees to sell and issue to the Purchaser at the Closing, 4,793,235 shares of
common stock of the Company, (the "Purchased Shares") for the aggregate purchase
price of $3,930,000 ($0.82 per share) (the "Purchase Price"). The purchase and
sale of Purchased Shares shall take place at the offices of the Company at 10:00
a.m. West Coast time not later than 14 Business Days after the last condition of
Section 4.1 herein is satisfied, or at such other time and place as the Company
and Purchaser mutually agree upon in writing (which time and place are
designated as the "Closing" and which date is designated as the "Closing Date").
At the Closing, the Company shall deliver to the Purchaser a certificate
representing the Purchased Shares that the Purchaser is purchasing against
delivery to the Company by the Purchaser by wire transfer, certified check for
immediately available funds, or other manner approved by the Company, in the
amount of the purchase price therefor payable to the Company's order.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF COMPANY
As of the date of this Agreement and as of the Closing Date, the Company
represents and warrants that, except as set forth in the Disclosure Schedules:
SECTION 2.1. Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and corporate authority to
own, lease and operate its property and assets and to conduct its business as
presently conducted and as proposed to be conducted by it. The Company has full
corporate power and corporate authority to enter into and perform its
obligations under this Agreement, to carry out the transactions contemplated by
this Agreement. The nature of the Company's business and its ownership or
leasing of property do not require that the Company become qualified as a
foreign corporation in any state or jurisdiction where it is not qualified,
other than where the failure to so qualify will not have a material adverse
effect on the Company. Complete and correct copies of the articles and by-laws
of the Company, as amended to date, have been delivered to counsel for the
Purchaser.
SECTION 2.2. Capitalization.
(a) The capital stock of the Company consists of 50,000,000 shares of
authorized common stock, par value $0.01 per share ("Common Stock"), of which
4,040,544 shares are issued and outstanding as of the date of this Agreement and
619,533 shares are reserved for
<PAGE> 39
issuance pursuant to employee stock purchase and/or option ownership plans that
have been adopted by the Company for officers, directors, employees and
consultants.
(b) Except as set forth on Schedule 2.2, there are (i) no outstanding
warrants, options, convertible securities or rights to subscribe for or purchase
any capital stock or other securities from the Company, (ii) to the Company's
knowledge, no voting trusts or voting agreements among, or irrevocable proxies
executed by, stockholders of the Company, and (iii) no obligations (contingent
or otherwise) of the Company to purchase, redeem or otherwise acquire any shares
of its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof.
(c) The Company was notified on November 19, 1999 that the NASDAQ Stock
Market is conducting a review of the Company to determine its eligibility for
continued listing on the NASDAQ Small Cap Market. The Company is in the process
of providing financial information to NASDAQ Stock Market evidencing the
Company's current and on-going compliance and fully anticipates maintaining its
listing with the NASDAQ Small Cap Market.
SECTION 2.3. Validity of Stock. The Purchased Shares to be sold pursuant
to this Agreement, when issued, sold, and delivered in accordance with the terms
of this Agreement, will be duly and validly issued, fully paid and
non-assessable.
SECTION 2.4. Subsidiaries. The Company does not own any capital stock,
partnership interests or other equity interests of, or control, directly or
indirectly, any other corporation, partnership, association or business entity.
SECTION 2.5. Financial Statements.
(a) The Company has furnished the Purchaser with its audited financial
statements as of and for the year ended March 28, 1999, and an audited balance
sheet as of March 28, 1999 (the "Balance Sheet") (together, the "1999 Financial
Statements"). As amended on July 26, 1999, the 1999 Financial Statements and the
Balance Sheet are true and correct in all material respects, are in accordance
with the books and records of the Company, and have been prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied, and
fairly present the financial position of the Company as of such date and the
results of its operations for the periods then ended.
(b) The unaudited balance sheet of the Company as of September 26, 1999
(the "Current Balance Sheet") and the related unaudited statements of profit and
loss and cash flow, including the footnotes thereto (collectively, the "Current
Financial Statements"), for the three months then ended, a copy of which has
been made available to the Purchaser, fairly present, in conformity with
generally accepted accounting principles, applied on a basis consistent with the
financial statements referred to in subsection (a) of this Section, the
financial position of the Company as of such date and its results of operations
(subject to normal year-end adjustments). The 1999 Financial Statements and
Current Financial Statements are hereinafter referred to as the "Financial
Statements".
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<PAGE> 40
SECTION 2.6. Authorization; Approvals. All action on the part of the
Company and its stockholders necessary for the authorization, execution,
delivery, and performance of all its obligations under this Agreement and for
the authorization, issuance, and delivery of the Purchased Shares being sold
under this Agreement, has been taken or will be taken prior to the Closing Date.
The Board of Directors of the Company has approved this Agreement and the
transactions contemplated hereby in accordance with Section 203 of the Delaware
General Corporation Law. This Agreement constitutes the valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms. The Company has obtained or will obtain prior to the Closing
Date all necessary consents, authorizations, approvals and orders, and has made
all registrations, qualifications, designations, declarations or filings with
all federal, state, or other relevant governmental authorities required on the
part of the Company in connection with the consummation of the transactions
contemplated by this Agreement.
SECTION 2.7. No Conflict with Other Instruments. The execution, delivery
and performance of this Agreement does not and will not result in any violation
of, conflict with, or constitute a default under any terms or provision of (a)
the Company's articles of incorporation or bylaws; (b) any judgment, decree or
order to which the Company is a party or by which its property is bound; (c) any
agreement, contract, understanding, indenture or other instrument to which the
Company is a party, the effect of which would give rise to a material adverse
effect on the Company; or (d) any statute, rule or governmental regulation
applicable to the Company or any of its property.
SECTION 2.8. Absence of Undisclosed Liabilities; Changes. To its
knowledge, the Company has no liability or obligation, which would have a
material adverse effect on the Company, absolute or contingent, including,
without limiting the generality of the foregoing, any tax liabilities due or to
become due, not reflected in the Current Balance Sheet, except: (a) obligations
and liabilities incurred after the date of the Current Balance Sheet in the
ordinary course of business that are not individually or in the aggregate
material, (b) obligations under contracts made in the ordinary course of
business that would not be required to be reflected in financial statements
prepared in accordance with GAAP and (c) obligations under this Agreement.
Without limiting the generality of the foregoing, the Company does not know of,
and has no reasonable ground to believe that there is any basis for the
assertion against the Company of, any material liabilities of the Company.
SECTION 2.9. Patents, Trademarks and Other Intangible Assets.
(a) The Company has taken otherwise reasonable security measures to
protect the secrecy, confidentiality and value of all material intellectual
property of the Company.
(b) To the knowledge of the Company, the Company has title and ownership
(or licenses to use in various cases) of all patents, trademarks, service marks,
trade names, copyrights, trade secrets, and other intellectual property rights
necessary for its business as now conducted or as currently proposed to be
conducted without any known conflict with or infringement of the rights of
others. Except as disclosed in Schedule 2.9 hereto, the Company has not received
any communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade
3
<PAGE> 41
names, copyrights or other intellectual property rights of any other person or
entity where any such allegation, if true, would be reasonably likely to have a
material adverse effect on the Company.
SECTION 2.10. Taxes. The Company has accurately prepared and timely
filed all federal, state and local reports, returns, estimates, declarations,
information returns and statements with respect to taxes (together, "Tax
Returns") that are required to be filed by it and has paid or made provision for
the payment of all taxes due with respect to the periods covered by such Tax
Returns, in all material respects. Except as disclosed in Schedule 2.10, no
deficiency assessment or proposed adjustment of federal income taxes or state or
municipal taxes of the Company is pending and the Company has no knowledge of
any proposed liability for any tax to be imposed where any such assessment or
proposed adjustment, if adversely decided, would be reasonably likely to have a
material adverse effect on the Company. For the purpose of this Section 2.10,
"tax" or "taxes" shall mean all federal, state, local or foreign taxes,
including but not limited to income, gross receipts, windfall profits,
alternative minimum, value added, severance, property, production, sales, use,
license, excise, franchise, employment, withholding or similar taxes, together
with any interest, additions or penalties with respect thereto and any interest
in respect of such additions or penalties.
SECTION 2.11. Litigation. Except as otherwise set forth herein, no
action, proceeding or governmental inquiry or investigation is pending or to the
knowledge of the Company threatened against (a) the Company or any of its
officers, directors or employees (in their capacity as such), (b) any of the
Company's properties or (c) to the knowledge of the Company, any material
consultant to the Company, in any case before any court, arbitration board or
tribunal or administrative or other governmental agency, nor is the Company
aware that there is any basis for the foregoing, where any such action,
proceeding, inquiry or investigation, if adversely decided, would be reasonably
likely to have a material adverse effect on the Company.
SECTION 2.12. Relationship with Creditors. The Company is presently in
default of its obligations to, or has negotiated revised payment schedules with,
the parties listed in Schedule 2.12, as described therein.
SECTION 2.13. Private Offering. The Company agrees that neither the
Company nor anyone acting on its behalf has offered or will offer securities of
the Company or any part thereof or any similar securities for issuance or sale
to, or solicit any offer to acquire any of the same from, anyone so as to make
the issuance and sale of the Purchased Shares not exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended (the
"Securities Act"). None of the shares of the Company's capital stock issued and
outstanding has been offered or sold in such a manner as to make the issuance
and sale of such shares not exempt from such registration requirements, and all
such shares of capital stock have been offered and sold in compliance with all
applicable federal and state securities laws.
SECTION 2.14. Fees and Commissions. The Company has not retained, or
otherwise authorized to act, any finder, broker, agent, financial advisor or
other intermediary (collectively, "Intermediary") in connection with the
transactions contemplated by this Agreement and the Company shall indemnify and
hold harmless the Purchaser from liability
4
<PAGE> 42
for any compensation, to any Intermediary retained or otherwise authorized to
act by, or on behalf of, the Company and the fees and expenses of defending
against such liability or alleged liability.
SECTION 2.15. Compliance with Environmental Laws. To the knowledge of
the Company, it is not in violation of any agreement, instrument, judgment,
decree, or order, or federal, state, local or foreign statute, ordinance, rule
or regulation applicable to or binding upon it (including but not limited to any
environmental laws, rules and regulations), the violation of which would be
reasonably likely to have a material adverse effect on the Company. To the
knowledge of the Company, there is no contamination of any real property leased
or operated by the Company that could subject the Company to liability in excess
of $50,000 under any environmental laws or regulations.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
The Purchaser covenants, and as of the date of this Agreement and as of
the Closing Date, the Purchaser represents and warrants that:
SECTION 3.1. Authorization. The Purchaser has full power and authority
to enter into and to perform this Agreement in accordance with its terms. This
Agreement has been duly executed and delivered by the Purchaser and constitutes
a valid and legally binding obligation of the Purchaser.
SECTION 3.2. Investment Representations. The Purchaser is acquiring the
Purchased Shares for the Purchaser's own account, for investment purposes and
not with a view to, or for sale in connection with, any distribution of such
securities or any part thereof in violation of federal or state securities laws.
SECTION 3.3. Investment Experience; Access to Information. (a) The
Purchaser or a person acting in its capacity as "purchaser representative" (as
defined in Regulation D of the Securities Act) for the Purchaser, is an
"accredited investor" as that term is defined in Rule 501(a) promulgated under
the Securities Act, is a sophisticated investor; is able to fend for itself in
the transactions contemplated by this Agreement, has such knowledge and
experience in financial, business and investment matters as to be capable of
evaluating the merits and risks of this investment, has the ability to bear the
economic risks of this investment, has been furnished with or has had access to
such information as is specified in subparagraph (b)(2) of Rule 502 promulgated
under the Securities Act, was not organized or reorganized for the specific
purpose of acquiring the Purchased Shares purchased by it and has been afforded
the opportunity to ask questions of, and to receive answers from, the Company
and to obtain any additional information, to the extent the Company has or could
have acquired such information without unreasonable effort or expense, all as
necessary for the Purchaser or "purchaser representative" to make an informed
investment decision with respect to the purchase of the Purchased Shares. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Article 2 of this Agreement or the right of the Purchaser to
rely thereon.
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<PAGE> 43
(a) In addition to the foregoing, the Purchaser acknowledges, represents
and warrants, as applicable, as set forth in Annex I hereto.
SECTION 3.4. Absence of Registration. The Purchaser understands that the
Purchased Shares to be sold and issued hereunder may not be sold by the
Purchaser unless it is subsequently registered under the Securities Act, or an
exemption from such registration is available.
SECTION 3.5. Restrictions on Transfer. The Purchaser agrees that (a) it
will not offer, sell, pledge, hypothecate, or otherwise dispose of the Purchased
Shares other than to its "affiliates" unless such offer, sale, pledge,
hypothecation or other disposition is (i) registered under the Securities Act,
or (ii) in compliance with an opinion of counsel to the Purchaser, delivered to
the Company and reasonably acceptable to it, to the effect that such offer,
sale, pledge, hypothecation or other disposition thereof does not violate the
Securities Act, and (b) the certificate(s) representing the Purchased Shares
shall bear a legend stating in substance:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED OTHER THAN TO AFFILIATES (AS DEFINED) OF THE REGISTERED
HOLDER HEREOF UNLESS AND UNTIL REGISTERED UNDER SAID ACT OR, IN THE
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
DOES NOT VIOLATE THE PROVISIONS THEREOF.
For purposes of this Section 3.5, "affiliate" of any Purchaser means (i)
any entity more than 10% of the voting stock or other voting interest of which
is owned, directly or indirectly through one or more intermediaries, by the
Purchaser, (ii) any entity which owns, directly or indirectly through one or
more intermediaries, more than 10% of the voting stock of the Purchaser, (iii)
any entity of which 10% or more of the voting stock is owned by an affiliate of
the Purchaser, and (iv) with respect to a Purchaser that is a trust, a grantor
or beneficiary of such trust or other entity under the control of such grantor
or beneficiary. Upon request of a holder of Purchased Shares the Company shall
remove the legend set forth above from the certificates evidencing such
Purchased Shares or issue to such holder new certificates therefor free of such
legend, if with such request the Company shall have received an opinion of
counsel selected by the holder and reasonably satisfactory to the Company, in
form and substance reasonably satisfactory to the Company, to the effect that
such Purchased Shares are not required by the Securities Act to continue to bear
the legend.
SECTION 3.6. Transfer Instructions. The Purchaser agrees that the
Company may provide for appropriate transfer instructions to implement the
provisions of Section 3.5 hereof.
SECTION 3.7. Economic Risk. The Purchaser understands that it must bear
the economic risk of the investment represented by the purchase of Purchased
Shares for an indefinite period.
6
<PAGE> 44
SECTION 3.8. Fees and Commissions. The Purchaser represents and warrants
that it has retained, or otherwise authorized to act, no Intermediary in
connection with the transactions contemplated by this Agreement and agrees to
indemnify and hold harmless the Company from liability for any compensation to
any Intermediary retained or otherwise authorized to act by, or on behalf of,
the Purchaser and the fees and expenses of defending against such liability or
alleged liability.
SECTION 3.9. [Reserved].
SECTION 3.10. Restructuring of Debt. At the election of the Board of
Directors of the Company, the Purchaser shall (a) prior to the Closing Date, use
its reasonable efforts to; and (b) after the Closing Date, provide alternative
financing facilities to the Company's financing facilities that are in effect at
the time of such election by the Board of Directors.
SECTION 3.11. Wafer Purchase Commitment. The Purchaser hereby
acknowledges that it is obligated to purchase wafers from the Company in
accordance with Section 3.11 of the stock purchase agreement between the Company
and the Purchaser dated October 8, 1999.
ARTICLE 4
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
SECTION 4.1. Conditions to Obligations of the Purchaser. The obligation
of the Purchaser on the Closing Date to purchase the Purchased Shares under this
Agreement shall be subject to each of the following conditions precedent, any
one or more of which may be waived by the Purchaser:
(a) Representations and Warranties. The representations and warranties
made by the Company herein shall be true and accurate in all material respects
on and as of the Closing Date.
(b) Performance. The Company shall have performed and complied with all
agreements and conditions contained herein or in other ancillary documents
incident to the transactions contemplated by this Agreement required to be
performed or complied with by it prior to the Closing in all material respects.
(c) Consents, etc. The Company shall have secured all permits, consents
and authorizations that shall be necessary or required lawfully to consummate
this Agreement, to issue the Purchased Shares to be purchased by the Purchaser.
(d) Compliance Certificates. The Company shall have delivered to the
Purchaser or its representative at the Closing an Officer's Certificate to the
effect that, to such Officer's knowledge, all conditions specified in Sections
4.1(a) through (c), inclusive, have been fulfilled.
(e) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the
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<PAGE> 45
Purchaser and its counsel, and the Purchaser and its counsel shall have received
all such counterpart originals or certified or other copies of such documents as
the Purchaser or its counsel may reasonably request.
(f) Opinion of Company's Counsel. On the Closing Date, the Purchaser
shall have received from Orrick, Herrington & Sutcliffe LLP, counsel for the
Company, an opinion, dated the Closing Date, reasonably satisfactory in form and
substance to the Purchaser and its counsel, and in the form attached hereto as
Exhibit A.
(g) Shareholder and Governmental Approval. The Company agrees to use its
reasonable efforts to prepare a proxy statement, obtain the necessary approvals
from its stockholders, to obtain all applicable Governmental Approvals and to
amend and restate the Certificate of Incorporation to incorporate Section 6.6 of
this Agreement.
(h) Incumbency Certificate. The Company shall provide a certificate
dated the Closing Date of the Secretary or Assistant Secretary of the Company
certifying and attaching as exhibits thereto: (i) the Amended and Restated
Certificate of Incorporation; (ii) the By-laws; and (iii) the minutes of the
Board of Directors approving the execution, delivery and performance of this
Agreement.
ARTICLE 5
CONDITIONS TO OBLIGATIONS OF COMPANY
SECTION 5.1. Conditions to Obligations of the Company. The obligation of
the Company at the Closing to issue and sell the Purchased Shares to be
purchased under this Agreement shall be subject to the following conditions
precedent, which may be waived by the Company:
(a) Representations and Warranties. The representations and warranties
made by the Purchaser herein shall be true and accurate in all material respects
on and as of the Closing Date.
(b) Performance. The Purchaser shall have performed and complied with
all agreements and conditions contained herein or in other ancillary documents
incident to the transactions contemplated by this Agreement required to be
performed or complied with by it prior to or at the Closing in all material
respects.
(c) Compliance Certificates. The Purchaser shall have delivered to the
Company or its representative at the Closing an Officer's Certificate to the
effect that, to such Officer's knowledge, all conditions specified in Sections
5.1(a) and (b) have been fulfilled.
(d) Consents of Creditors. The Company shall have received consents from
Copelco Capital, Inc., Lyon Credit Corporation, and CIT Group/Credit Finance,
Inc. with respect to the Company executing, delivering and performing this
Agreement.
(e) Bridge Financing. Within 14 days of a request by the Company (which
request shall be made between the date hereof and the Closing Date), the
Purchaser, and/or its
8
<PAGE> 46
Affiliates (as defined below), shall lend the Company up to the amount of the
Purchase Price upon commercially reasonable terms, which amount shall be repaid
from the Purchase Price at Closing; provided, however, that (i) between the date
hereof and the date upon which the conditions of Section 4.1(g) are satisfied,
the Purchaser and/or its Affiliates shall be required to use their reasonable
efforts to fulfill their obligations under this Section 5.1(e) and (ii) after
the date on which the conditions of Section 4.1(g) are satisfied, the Purchaser
and/or its Affiliates shall be obligated to satisfy the conditions of this
Section 5.1(e).
For the purposes of this Agreement, "Affiliate" shall mean, with respect
to any natural person or entity ("Person"): (i) each Person that, directly or
indirectly, owns or controls, whether beneficially, or as a trustee, guardian or
other fiduciary, five percent (5%) or more of the capital stock having ordinary
voting power in the election of directors of such Person; (ii) each Person that
controls, is controlled by or is under common control with such Person or any
Affiliate of such Person; or (iii) each of such Person's officers, directors,
joint ventures and partners. For the purpose of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise.
ARTICLE 6
AFFIRMATIVE COVENANTS
SECTION 6.1. Preparation of Proxy Statement: Stockholders' Meeting.
Promptly following the date of this Agreement, the Company shall prepare and
file with the SEC a proxy statement relating to the meeting of the Company's
stockholders to be held in connection with this Agreement (the "Proxy
Statement"). Purchaser shall be entitled to review drafts of, and comment upon
the Proxy Statement, and the Company shall in good faith consider such comments.
The Company shall use its reasonable efforts to cause the Proxy Statement to be
mailed to the Company's stockholders as promptly as possible.
The Company, acting through its Board of Directors, shall, in accordance
with its Certificate of Incorporation and Bylaws promptly and duly call, give
notice of, convene and hold as soon as practicable, a meeting (the "Stockholders
Meeting") of the Company's stockholders for the purpose of voting to approve and
adopt this Agreement and the transactions contemplated hereby, and, subject to
the exercise of the Board of Director's fiduciary duties, (i) recommend approval
and adoption of this Agreement by the stockholders of the Company and include in
the Proxy Statement such recommendation; and (ii) take all reasonable and lawful
action to solicit and obtain such approval.
SECTION 6.2. Piggy-Back Registrations. If at any time the Company shall
determine to register for its own account or the account of others under the
Securities Act any of its equity securities, other than on Form S-8 or Form S-4
or their then equivalents (a "Piggy-Back Registration"), it shall send to the
Purchaser, written notice of such determination and, if within fifteen (15) days
after receipt of such notice, the Purchaser shall so request in writing, the
Company shall use its diligent efforts to include in such registration statement
all or any part of the Registrable Shares (as defined below) the Purchaser
requests to be registered, except that if, in connection with any offering
involving an underwriting of Common Stock to be issued by the Company, the
managing underwriter shall impose a
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<PAGE> 47
limitation on the number of shares of Common Stock which may be included in the
registration statement because, in its judgment, such limitation is necessary to
effect an orderly public distribution, then the Company shall be obligated to
include in such registration statement only such limited portion (or none, if so
required by the managing underwriter) of the Registrable Shares with respect to
which such Holder has requested inclusion hereunder. For the purposes of this
Section, "Registrable Shares" shall mean and include (i) Purchased Shares held
by the Purchaser; (ii) the shares of Common Stock of the Company purchased by
Purchaser under the terms of the Stock Purchase Agreement dated as of October 8,
1999 between the Purchaser and the Company, and (iii) any shares of Common Stock
issued to (or issuable upon exercise of warrants issued to) any bank or other
lender, or equipment lessor in connection with the Company obtaining a loan or
equipment financing, if the Company expressly accords to such shares the
registration rights contained in this Agreement; provided, however, that shares
of Common Stock which are Registrable Shares shall cease to be Registrable
Shares upon the consummation of any sale of such shares pursuant to a
registration statement or Rule 144 under the Securities Act.
SECTION 6.3. Registrations on Form S-1 or Form S-3. In addition to the
rights provided the Purchaser in Section 6.1 above, if the registration of
Registrable Shares under the Securities Act can be effected on Form S-1 or Form
S-3 (or any equivalent successor form promulgated by the Commission), then the
Company shall provide the Purchaser with the following rights:
(a) For the Purchaser. Upon the written request of the Purchaser, the
Company shall so notify Purchaser, and then shall, as expeditiously as possible,
use its diligent efforts to effect qualification and registration under the
Securities Act on Form S-1 or Form S-3 of all or such portion of the Registrable
Shares as the Purchaser shall specify; provided, however, the Company shall not
be required to effect a registration pursuant to this Section 6.3(a) unless the
market value of the Registrable Shares to be sold by the Purchaser in any such
registration shall be at least $2,000,000 at the time of filing such
registration statement, and further provided that the Company shall not be
required to effect (i) any registration during the first six (6) months
immediately following the Closing Date; (ii) a registration during the three (3)
months thereafter pursuant to this Section 6.3(a) unless the Registrable Shares
are less than twenty percent (20%) of the Purchased Shares; (iii) a registration
during each three(3) month period thereafter pursuant to Section 6.3(a) unless
the Registrable Shares are less than twenty percent (20%) of the then-remaining
Purchased Shares; and (iv) more than five registrations in the aggregate
pursuant to this Section 6.3(a).
(b) Conflicts. In the event that, in a registration under this Section
6.3 which is effected through an underwriter, the underwriter imposes a
limitation on the number of Registrable Shares which may be included in the
registration statement in order to effect an orderly public distribution, then
the Company shall exclude from such registration statement, first, all shares
which are not Registrable Shares, and second, Registrable Shares which are
requested to be included pursuant to Section 6.2.
SECTION 6.4. Effectiveness. The Company will use its diligent efforts to
maintain the effectiveness for up to one hundred twenty (120) days (or such
shorter period of time as the
10
<PAGE> 48
underwriters need to complete the distribution of the registered offering, or
ninety (90) days in the case of a "shelf" registration statement on Form S-1 or
Form S-3) of any registration statement pursuant to which any of the Registrable
Shares are being offered, and from time to time will amend or supplement such
registration statement and the prospectus contained therein to the extent
necessary to comply with the Securities Act and any applicable state securities
statute or regulation. The Company will also provide the Purchaser with as many
copies of the prospectus contained in any such registration statement as it may
reasonably request.
SECTION 6.5. Right of First Offer.
(a) Subject to this Section 6.5 and other than as disclosed in Section
2.2(b), if the Company shall decide to issue or sell, any (i) shares of Common
Stock, (ii) any other equity security of the Company, including without
limitation, shares of Preferred Stock, (iii) any debt security of the Company
which by its terms is convertible into or exchangeable for any equity security
of the Company, (iv) any security of the Company that is a combination of debt
and equity, or (v) any option, warrant or other right to subscribe for, purchase
or otherwise acquire any such equity security or any such debt security of the
Company, the Company shall, in each case, first offer to sell such securities
(the "Offered Securities") to the Purchaser and its Affiliates (the "Preemptive
Stockholders"), if they (collectively) hold at least 40% (forty percent) of the
then outstanding capital stock of the Company, as follows: the Company shall
offer to sell to the Preemptive Stockholders that portion of the Offered
Securities as the number of shares of Common Stock which the Preemptive
Stockholders then hold or have the right to acquire bears to the sum of the
total number of issued and outstanding shares of Common Stock and upon exercise
of warrants, options and rights outstanding, at a price and on such other terms
as shall have been specified by the Company in writing delivered to the
Preemptive Stockholders (the "Offer"), which Offer by its terms shall remain
open for a period of 14 days from the giving of the Offer.
(b) Notice of the Preemptive Stockholders' intention to accept, in whole
or in part, any Offer made pursuant to clause (a) shall be evidenced by a
writing signed by the Preemptive Stockholders and delivered to the Company prior
to the end of the 14-day period of such Offer, setting forth the number of
shares or securities the Preemptive Stockholders elect to purchase (the "Notice
of Acceptance"). Failure of the Preemptive Stockholders to deliver a Notice of
Acceptance within said 14 days will be deemed to be a rejection of the Offer.
(c) The Company shall have one hundred twenty (120) days from the end of
said 14-day period to sell any such Offered Securities as to which a Notice of
Acceptance has not been given (the "Refused Securities") to any Person or
Persons, substantially on the same terms and conditions as set forth in the
Offer.
(d) The rights of the Preemptive Stockholders under this Section 6.5
shall terminate for all future issuances of Offered Securities upon the earlier
of (i) two (2) years after the Closing Date; and (ii) any date on which
Purchaser and/or its Affiliates hold less than forty percent (40%) of the
then-outstanding capital stock of the Company.
(e) The rights of the Preemptive Stockholders under this Section 6.5
shall not apply to:
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(i) Common Stock issued as a stock dividend to holders of Common
Stock or upon any subdivision or combination of shares of Common Stock;
(ii) Preferred Stock issued as a dividend to holders of Preferred
Stock or upon any subdivision or combination of shares of Preferred Stock;
(iii) Common Stock issued upon exercise of options, warrants and
rights outstanding as of the date of this Agreement;
(iv) Common Stock and options of the Company issued after the
date hereof to directors, officers, employees or consultants of the Company and
any Subsidiary pursuant to any qualified or non-qualified stock option plan,
employee stock ownership plan, employee benefit plan, stock plan, or such other
options, arrangements, agreements or plans intended principally as a means of
providing compensation or incentive compensation for employment or services,
approved by the Board of Directors of the Company;
(v) Options, warrants or shares issued to banks or other lenders
or equipment lessors in connection with the Company obtaining loans or equipment
financing or to customers, prospective customers, vendors or strategic partners;
or
(vi) Securities issued in a merger or consolidation or as
consideration for the acquisition by the Company of any other corporation or
other business entity or of the assets and business thereof.
(f) For convenience in administration, the Company may offer and sell
Securities covered by the right in clause (a) without first offering such
Securities to the Preemptive Stockholders, so long as the Preemptive
Stockholders are given the opportunity to purchase their pro rata amount within
45 days after the close of the sale of Securities.
(g) The rights of the Preemptive Stockholders set forth herein are
nonassignable except (i) to any or all of the beneficial owners of the
Preemptive Stockholders; (ii) an Affiliate of the Preemptive Stockholders; and
(iii) to a purchaser who is not a competitor of the Company and who purchases
all of the Preemptive Stockholders' Securities of the Company. Any assignee
permitted under the preceding sentence shall assume the assignor's obligations
under this Agreement and become a party to this Agreement in a manner reasonably
satisfactory to the Company.
SECTION 6.6. Additional Purchases By Purchaser. Unless approved by the
Board of Directors unanimously, if, on any day other than the Closing Date, the
Purchaser and/or its Affiliates elect to purchase shares of Common Stock that
would result in the Purchaser or its affiliates holding more than 51% of the
fully diluted Common Stock pursuant to a purchase of stock, a purchase of
assets, a merger or a combination, or any other form of acquisition, such
additional purchase shall be subject to the vote of the stockholders of the
Company and shall be approved if at least fifty-one percent (51%) of the
stockholders vote in favor of the transaction and no more than twenty percent
(20%) of the stockholders vote against such transaction. Notwithstanding the
foregoing, the provisions of this Section 6.6 shall terminate at such time
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<PAGE> 50
as the Purchaser and/or its Affiliates have acquired equal to or greater than
75% of the outstanding Common Stock of the Company.
SECTION 6.7. Employee Retention Plan. The Company and the Purchaser
agree that after the Closing hereunder, the Company shall, subject to Board of
Directors approval, set aside an additional 1,000,000 shares of Common Stock of
the Company in order to grant options in the form of qualified or non-qualified
Common Stock option grants to certain Company employees pursuant to a key
employee retention plan.
SECTION 6.8. Purchaser's Board of Directors Designee. Promptly after the
Closing Date, the Company's Board of Directors shall take the necessary steps to
add one person designated by the Purchaser as a member of the Company's Board of
Directors. The parties agree to promptly designate any person whom the Company
names as CEO in the future as a member of the Board. The parties further agree
that in the event that Bernard Vonderschmitt ceases to serve as a member of the
Board, Zvi Grinfas may, in his sole discretion and as long as he is still
serving as a member of the Board, designate a person to replace Mr.
Vonderschmitt as a member of the Board.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Survival of Agreements. All agreements, representations and
warranties contained herein or made in writing by or on behalf of the Company in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement.
SECTION 7.2. Notices. All notices, requests, consents and other
communications herein (except as stated in the last sentence of this Section
7.2) shall be in writing and shall be mailed by first-class certified mail,
postage prepaid and return receipt requested, personally delivered, faxed, or
sent by recognized overnight courier service, as follows:
(a) If to the Company:
IMP, Inc.
2830 North First Street
San Jose, California U.S.A. 95143-2071
Attention: Chief Executive Officer
Fax: (408) 434-0335
With a copy to
Richard Grey, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111-3143
Fax: (415) 773-5759
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<PAGE> 51
(b) If to the Purchaser:
Teamasia Semiconductors PTE Ltd.
PSA Building, PO Box 512
Singapore 91148
With a copy to:
Robert T. Borawski, Inc.
4125 Blackford Ave., Suite 140
San Jose, California 95117
Fax: (408) 241-8895
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties.
SECTION 7.3. Modifications; Waiver. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally or in
writing, except that any provision of this Agreement may be amended and the
observance of any such provision may be waived (either generally or in a
particular instance and either retroactively or prospectively) with (but only
with) the written consent of the party to be charged.
SECTION 7.4. Exculpation. The Purchaser acknowledges that it is not
relying upon any statements or instruments made or issued by any person, firm or
corporation, other than those contained in this Agreement in making its decision
to invest in the Company.
SECTION 7.5. Entire Agreement. This Agreement, together with the
schedules and exhibits attached hereto and the officer's certificate and
financial statements delivered pursuant hereto and made a part hereof, contains
the entire agreement between the parties with respect to the transactions
contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties and commitments, whether in writing or oral, prior
to or contemporaneous with the Closing Date.
SECTION 7.6. Successors and Assigns. Except as otherwise expressly
provided in this Agreement, all of the terms of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto.
SECTION 7.7. Enforcement.
(a) Remedies at Law or in Equity. If the Company shall default in any of
its obligations under this Agreement or if any representation or warranty made
by or on behalf of the Company in this Agreement or in any certificate, report
or other instrument delivered under or pursuant to any term hereof shall be
untrue or misleading in any material respect as of the date of this Agreement or
as of the Closing or as of the date it was made, furnished or delivered, the
Purchaser may proceed to protect and enforce its rights, including by way of
suit in equity or action at law. In the event the Purchaser brings such an
action against the Company, the prevailing party in such dispute shall be
entitled to recover from the losing party
14
<PAGE> 52
all fees, costs and expenses of enforcing any right of such prevailing party
under or with respect to this Agreement, including without limitation such
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.
(b) Remedies Cumulative; Waiver. No remedy referred to herein is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to a party at law or in
equity. No express or implied waiver by Purchaser of any default shall be a
waiver of any future or subsequent default. The failure or delay of any party in
exercising any rights granted it hereunder shall not constitute a waiver of any
such right and any single or partial exercise of any particular right by a party
shall not exhaust the same or constitute a waiver of any other right provided
herein.
SECTION 7.8. Execution and Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and all such counterparts together shall constitute
one instrument. Each party shall receive a duplicate original of the counterpart
copy or copies executed by it and by the Company.
SECTION 7.9. Governing Law and Severability. (a) This agreement shall be
governed by the internal laws of the state of California, without regard to
principles of conflicts of law. Each of the parties hereto hereby submits to the
exclusive jurisdiction of the United States District Court in San Francisco,
California, for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. Each of the parties
hereto waives any objection which it may now or hereafter have to the laying of
the venue of any such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.
(b) In the event any provision of this agreement or the application of
any such provision to any party shall be held by a court of competent
jurisdiction to be contrary to law, the remaining provisions of this agreement
shall remain in full force and effect.
SECTION 7.10. Headings. The descriptive headings of the Articles and
Sections hereof and the Schedules and Exhibits hereto are inserted for
convenience only and do not constitute a part of this Agreement.
SECTION 7.11. Confidentiality. The Purchaser agrees that it will keep
confidential and will not disclose, or divulge any confidential, proprietary,
secret or non-public information which the Purchaser may obtain from the Company
and not use such information other than for the benefit of the Company or in
furtherance of the Purchaser's rights as a shareholder of the Company; provided,
that, no such information shall be deemed to be non-public if it (i) is or
becomes generally available to the public other than as a result of a disclosure
by the Purchaser or its respective agents, representatives or employees; (ii) is
or becomes available to the Purchaser on a non-confidential basis from a source
(other than the Company or one of its officers, directors, agents,
representatives or employees) that is not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation; or (iii) was known
to the Purchaser on a non-confidential basis prior to its disclosure to it by
the Company and provided
15
<PAGE> 53
further that, any other term of this Agreement to the contrary notwithstanding,
the Company shall not be obligated to disclose any information, the disclosure
of which it believes in good faith would be detrimental to the Company or its
stockholders.
SECTION 7.12. [Reserved.]
SECTION 7.13. [Reserved.]
SECTION 7.14. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Purchaser from
and against any and all liabilities, obligations, losses, out-of-pocket costs or
damages ("Loss") and reasonable attorneys' and accountants' fees and expenses,
court costs and all other reasonable out-of-pocket expenses ("Expense") incurred
by the Purchaser in connection with or arising from or attributable to any
breach by the Company, of any of its representations, warranties, obligations,
covenants or agreements contained in this Agreement; provided, however, that the
Purchaser shall not be entitled to indemnification for Losses or Expenses
pursuant to this Section unless and until the amount of Losses and Expenses
exceeds $100,000. Thereafter, the Company shall be liable for indemnification
for Losses and Expenses only to the extent the aggregate amount thereof exceeds
$100,000. Notwithstanding the foregoing, the terms "Loss" and "Expense" shall
not include incidental, consequential or punitive damages except in a third
party claim, action or suit.
(b) If the Purchaser believes that it has suffered or incurred any Loss
or Expense pursuant to this Section, it shall so notify the Company promptly in
writing describing such Loss or Expense, the amount thereof, if known, and the
method of computation of such Loss or Expense. Promptly after receipt by the
Purchaser of notice of the commencement of any action by any third party, such
indemnified party shall, if a claim in respect thereof is to be made against the
Company under this Section notify the Company in writing of the commencement
thereof (but the failure so to notify the Company shall not relieve the Company
from any liability which it may have under this Section except to the extent
that it has been prejudiced in any material respect by such failure or from any
liability which it might otherwise have). Unless the Company is contesting a
third party claim, the Company shall promptly pay such claim or reimburse the
Purchaser if the Purchaser has made payment.
(c) The Company shall have the right to conduct and control, through
counsel of its choosing, any third party claim, action or suit. The Company
shall permit the Purchaser to participate in the defense of any such action or
suit through counsel chosen by it, provided that the fees and expenses of such
counsel shall be borne by the Purchaser. The Company may agree to any compromise
or settlement with respect to a claim for money damages without the consent of
the Purchaser; provided, that the Company shall not effect any compromise or
settlement which will have a continuing effect on the business of the Purchaser
without the prior consent of the Purchaser, which consent shall not be
unreasonably withheld or delayed.
SECTION 7.15. [Reserved].
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<PAGE> 54
SECTION 7.16. Expenses. The parties shall each pay their own legal,
accounting and financial advisory fees and other out-of-pocket expenses related
to the negotiation, preparation and carrying out of this Agreement and the
transactions herein contemplated.
[The rest of this page left intentionally blank.]
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<PAGE> 55
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the date first above written.
IMP, INC.
By: /s/ ZVI GRINFAS
---------------------------------
Name: ZVI GRINFAS
---------------------------
Title: PRESIDENT & CEO
---------------------------
TEAMASIA SEMICONDUCTORS PTE LTD.
By: /s/ SUBBA RAO PINAMANENI
---------------------------------
Name: SUBBA RAO PINAMANENI
---------------------------
Title: MANAGING DIRECTOR
---------------------------
STOCK PURCHASE AGREEMENT SIGNATURE PAGE
<PAGE> 56
EXHIBIT B
IMP, Inc.
--------------------------------------------------------
STOCK PURCHASE AGREEMENT
Dated as of October 8, 1999
<PAGE> 57
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Article 1 PURCHASE AND SALE OF STOCK..............................................1
SECTION 1.1. Delivery.......................................................1
Article 2 REPRESENTATIONS AND WARRANTIES OF COMPANY...............................1
SECTION 2.1. Organization, Standing and Qualification.......................1
SECTION 2.2. Capitalization.................................................1
SECTION 2.3. Validity of Stock..............................................2
SECTION 2.4. Subsidiaries...................................................2
SECTION 2.5. Financial Statements...........................................2
SECTION 2.6. Authorization; Approvals.......................................2
SECTION 2.7. No Conflict with Other Instruments.............................3
SECTION 2.8. Absence of Undisclosed Liabilities; Changes....................3
SECTION 2.9. Patents. Trademarks and Other Intangible Assets...............3
SECTION 2.10. Taxes..........................................................3
SECTION 2.11. Litigation.....................................................4
SECTION 2.13. Private Offering...............................................4
SECTION 2.14. Fees and Commissions...........................................4
SECTION 2.15. Compliance with Environmental Laws.............................4
Article 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER..............5
SECTION 3.1. Authorization..................................................5
SECTION 3.2. Investment Representations.....................................5
SECTION 3.3. Investment Experience; Access to Information...................5
SECTION 3.4. Absence of Registration........................................5
SECTION 3.5. Restrictions on Transfer.......................................5
SECTION 3.6. Transfer Instructions..........................................6
SECTION 3.7. Economic Risk..................................................6
SECTION 3.8. Fees and Commissions...........................................6
SECTION 3.9. Purchaser's Board of Directors Designee........................6
SECTION 3.10. Payment of Certain Expenses....................................7
SECTION 3.11. Wafer Purchase Commitment......................................7
Article 4 CONDITIONS TO OBLIGATIONS OF THE PURCHASER..............................7
SECTION 4.1. Conditions to Obligations of the Purchaser....................7
</TABLE>
-i-
<PAGE> 58
TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Article 5 CONDITIONS TO OBLIGATIONS OF COMPANY....................................8
SECTION 5.1. Conditions to Obligations of the Company......................8
Article 6 AFFIRMATIVE COVENANTS...................................................8
SECTION 6.1. Use of Proceeds................................................8
SECTION 6.2. Piggy-Back Registrations.......................................8
SECTION 6.3. Officers of the Company........................................9
SECTION 6.4. Right of First Offer...........................................9
Article 7 MISCELLANEOUS..........................................................10
SECTION 7.1. Survival of Agreements........................................10
SECTION 7.2. Notices.......................................................11
SECTION 7.3. Modifications; Waiver.........................................11
SECTION 7.4. Exculpation...................................................12
SECTION 7.5. Entire Agreement..............................................12
SECTION 7.6. Successors and Assigns........................................12
SECTION 7.7. Enforcement...................................................12
SECTION 7.8. Execution and Counterparts....................................12
SECTION 7.9. Governing Law and Severability................................12
SECTION 7.10. Headings......................................................13
SECTION 7.11. Confidentiality...............................................13
SECTION 7.12. No Solicitation...............................................13
SECTION 7.13. Termination...................................................14
SECTION 7.14. Indemnification...............................................14
SECTION 7.15. Teamasia's Future Investments in the Company..................15
ANNEX I - ADDITIONAL PURCHASER REPRESENTATIONS.......................................I-1
DISCLOSURE SCHEDULE .................................................................S-1
SCHEDULE 1.1 - CLOSING DATES......................................................S1.1-1
SCHEDULE 2.2(b) - WARRANTS.....................................................S2.2(b)-1
SCHEDULE 2.9 - PATENTS............................................................S2.9-1
SCHEDULE 2.10 - TAXES............................................................S2.10-1
SCHEDULE 2.12 - DEFAULT OF OBLIGATIONS ..........................................S2.12-1
SCHEDULE 3.11 - FOUNDRY SERVICES.................................................S3.11-1
EXHIBIT A - FORM OF LEGAL OPINION....................................................A-1
</TABLE>
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<PAGE> 59
STOCK PURCHASE AGREEMENT
Agreement, dated as of October 8, 1999 between IMP, Inc., a Delaware
corporation (the "Company") and Teamasia Semiconductors (India) Ltd., a limited
Indian corporation (the "Purchaser").
ARTICLE 1
PURCHASE AND SALE OF STOCK
SECTION 1.1. Delivery. Subject to the provisions of this Agreement, the
Purchaser agrees to purchase at the Closings (as defined below), and the Company
agrees to sell and issue to the Purchaser at the Closings, 671,173 shares (the
"Shares") of Common Stock of the Company, for the aggregate purchase price of
$2,050,000 ($3.05 per share). The purchase and sale of Shares (in the amounts
specified on Schedule 1.1) shall take place at the offices of the Company at
10:00 a.m. West Coast time on the dates set forth on Schedule 1.1, or at such
other time and place as the Company and Purchaser mutually agree upon in writing
(which time and place are designated as the "Closings" and which date is
designated as the "Closing Dates"). At each Closing, commencing with the October
15 Closing (at which Closing the Company shall deliver certificates representing
the Shares purchased on both the October 8, 1999 and October 15, 1999 Closing
Date), the Company shall deliver to the Purchaser a certificate representing the
Common Stock which the Purchaser is purchasing against delivery to the Company
by the Purchaser by wire transfer, certified check for immediately available
funds, or other manner approved by the Company, in the amount of the purchase
price therefor payable to the Company's order.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF COMPANY
The Company represents and warrants that, except as set forth in the
Disclosure Schedules:
SECTION 2.1. Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and corporate authority to
own, lease and operate its property and assets and to conduct its business as
presently conducted and as proposed to be conducted by it. The Company has full
corporate power and corporate authority to enter into and perform its
obligations under this Agreement, to carry out the transactions contemplated by
this Agreement. The nature of the Company's business and its ownership or
leasing of property do not require that the Company become qualified as a
foreign corporation in any state or jurisdiction where it is not qualified,
other than where the failure to so qualify will not have a material adverse
effect on the Company. Complete and correct copies of the articles and by-laws
of the Company, as amended to date, have been delivered to counsel for the
Purchaser.
SECTION 2.2. Capitalization.
(a) The capital stock of the Company consists of 50,000,000 shares of
authorized common stock, par value $0.01 per share ("Common Stock"), of which
3,372,731 shares are
<PAGE> 60
issued and outstanding as of the date of this Agreement and 617,279 shares are
reserved for issuance pursuant to employee stock purchase and/or option
ownership plans that have been adopted by the Company for officers, directors,
employees and consultants.
(b) Except as set forth on Schedule 2.2, there are (i) no outstanding
warrants, options, convertible securities or rights to subscribe for or purchase
any capital stock or other securities from the Company, (ii) to the Company's
knowledge, no voting trusts or voting agreements among, or irrevocable proxies
executed by, shareholders of the Company, and (iii) no obligations (contingent
or otherwise) of the Company to purchase, redeem or otherwise acquire any shares
of its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof.
SECTION 2.3. Validity of Stock. The Common Stock to be sold pursuant to
this Agreement, when issued, sold, and delivered in accordance with the terms of
this Agreement, will be duly and validly issued, fully paid and non-assessable.
SECTION 2.4. Subsidiaries. The Company does not own any capital stock,
partnership interests or other equity interests of, or control, directly or
indirectly, any other corporation, partnership, association or business entity.
SECTION 2.5. Financial Statements. (a) The Company has furnished the
Purchaser with its audited financial statements as of and for the year ended
March 28, 1999, and an audited balance sheet as of March 28, 1999 (the "Balance
Sheet") (together, the "1999 Financial Statements"). The 1999 Financial
Statements and the Balance Sheet are true and correct in all material respects,
are in accordance with the books and records of the Company, and have been
prepared in accordance with generally accepted accounting principles ("GAAP")
consistently applied, and fairly present the financial position of the Company
as of such date and the results of its operations for the periods then ended.
(b) The unaudited balance sheet of the Company as of June 30, 1999 (the
"Current Balance Sheet") and the related unaudited statements of profit and loss
and cash flow, including the footnotes thereto (collectively, the "Current
Financial Statements"), for the three months then ended, a copy of which has
been made available to the Purchaser, fairly present, in conformity with
generally accepted accounting principles, applied on a basis consistent with the
financial statements referred to in subsection (a) of this Section, the
financial position of the Company as of such date and its results of operations
(subject to normal year-end adjustments). The 1999 Financial Statements and
Current Financial Statements are hereinafter referred to as the "Financial
Statements".
SECTION 2.6. Authorization; Approvals. All action on the part of the
Company and its shareholders necessary for the authorization, execution,
delivery, and performance of all its obligations under this Agreement and for
the authorization, issuance, and delivery of the Common Stock being sold under
this Agreement, has been taken. This Agreement constitutes the valid and legally
binding obligation of the Company, enforceable against the Company in accordance
with its terms. The Company has obtained or will obtain prior to the Closings
all necessary consents, authorizations, approvals and orders, and has made all
registrations, qualifications, designations, declarations or filings with all
federal, state, or other relevant
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governmental authorities required on the part of the Company in connection with
the consummation of the transactions contemplated by this Agreement.
SECTION 2.7. No Conflict with Other Instruments. The execution, delivery
and performance of this Agreement does not and will not result in any violation
of, conflict with, or constitute a default under any terms or provision of (i)
the Company's articles of incorporation or bylaws; (ii) any judgment, decree or
order to which the Company is a party or by which its property is bound; (iii)
any agreement, contract, understanding, indenture or other instrument to which
the Company is a party, the effect of which would give rise to a material
adverse effect on the Company; or (iv) any statute, rule or governmental
regulation applicable to the Company or any of its property.
SECTION 2.8. Absence of Undisclosed Liabilities; Changes. (a) To its
knowledge, the Company has no liability or obligation, which would have a
material adverse effect on the Company, absolute or contingent, including,
without limiting the generality of the foregoing, any tax liabilities due or to
become due, not reflected in the Current Balance Sheet, except (i) obligations
and liabilities incurred after the date of the Current Balance Sheet in the
ordinary course of business that are not individually or in the aggregate
material, (ii) obligations under contracts made in the ordinary course of
business that would not be required to be reflected in financial statements
prepared in accordance with GAAP and (iii) obligations under this Agreement.
Without limiting the generality of the foregoing, the Company does not know of,
and has no reasonable ground to believe that there is any basis for the
assertion against the Company of, any material liabilities of the Company.
SECTION 2.9. Patents. Trademarks and Other Intangible Assets.
(a) The Company has taken otherwise reasonable security measures to
protect the secrecy, confidentiality and value of all material intellectual
property of the Company.
(b) To the knowledge of the Company, the Company has title and ownership
(or licenses to use in various cases) of all patents, trademarks, service marks,
trade names, copyrights, trade secrets, and other intellectual property rights
necessary for its business as now conducted or as currently proposed to be
conducted without any known conflict with or infringement of the rights of
others. Except as disclosed in Schedule 2.9 hereto, the Company has not received
any communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or other intellectual property rights of any
other person or entity where any such allegation, if true, would be reasonably
likely to have a material adverse effect on the Company.
SECTION 2.10. Taxes. The Company has accurately prepared and timely
filed all federal, state and local reports, returns, estimates, declarations,
information returns and statements with respect to taxes (together, "Tax
Returns") that are required to be filed by it and has paid or made provision for
the payment of all taxes due with respect to the periods covered by such Tax
Returns, in all material respects. Except as disclosed in Schedule 2.10, no
deficiency assessment or proposed adjustment of federal income taxes or state or
municipal taxes of the Company is pending and the Company has no knowledge of
any proposed liability for any
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tax to be imposed where any such assessment or proposed adjustment, if adversely
decided, would be reasonably likely to have a material adverse effect on the
Company. For the purpose of this Section 2.10, "tax" or "taxes" shall mean all
federal, state, local or foreign taxes, including but not limited to income,
gross receipts, windfall profits, alternative minimum, value added, severance,
property, production, sales, use, license, excise, franchise, employment,
withholding or similar taxes, together with any interest, additions or penalties
with respect thereto and any interest in respect of such additions or penalties.
SECTION 2.11. Litigation. Except as otherwise set forth herein, no
action, proceeding or governmental inquiry or investigation is pending or to the
knowledge of the Company threatened against (i) the Company or any of its
officers, directors or employees (in their capacity as such), (ii) any of the
Company's properties or (iii) to the knowledge of the Company, any material
consultant to the Company, in any case before any court, arbitration board or
tribunal or administrative or other governmental agency, nor is the Company
aware that there is any basis for the foregoing, where any such action,
proceeding, inquiry or investigation, if adversely decided, would be reasonably
likely to have a material adverse effect on the Company.
SECTION 2.12. Relationship with Creditors. The Company is presently in
default of its monetary obligations to the parties listed in Schedule 2.12, as
described therein.
SECTION 2.13. Private Offering. The Company agrees that neither the
Company nor anyone acting on its behalf has offered or will offer securities of
the Company or any part thereof or any similar securities for issuance or sale
to, or solicit any offer to acquire any of the same from, anyone so as to make
the issuance and sale of the Common Stock not exempt from the registration
requirements of Section 5 of the Securities Act of 1933, as amended (the
"Securities Act"). None of the shares of the Company's capital stock issued and
outstanding has been offered or sold in such a manner as to make the issuance
and sale of such shares not exempt from such registration requirements, and all
such shares of capital stock have been offered and sold in compliance with all
applicable federal and state securities laws.
SECTION 2.14. Fees and Commissions. The Company has not retained, or
otherwise authorized to act, any finder, broker, agent, financial advisor or
other intermediary (collectively, "Intermediary") in connection with the
transactions contemplated by this Agreement and the Company shall indemnify and
hold harmless the Purchaser from liability for any compensation, to any
Intermediary retained or otherwise authorized to act by, or on behalf of, the
Company and the fees and expenses of defending against such liability or alleged
liability.
SECTION 2.15. Compliance with Environmental Laws. To the knowledge of
the Company, it is not in violation of any agreement, instrument, judgment,
decree, or order, or federal, state, local or foreign statute, ordinance, rule
or regulation applicable to or binding upon it (including but not limited to any
environmental laws, rules and regulations), the violation of which would be
reasonably likely to have a material adverse effect on the Company. To the
knowledge of the Company, there is no contamination of any real property leased
or operated by the Company that could subject the Company to liability in excess
of $50,000 under any environmental laws or regulations.
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ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER
The Purchaser represents and warrants that:
SECTION 3.1. Authorization. The Purchaser has full power and authority
to enter into and to perform this Agreement in accordance with its terms. This
Agreement has been duly executed and delivered by the Purchaser and constitutes
a valid and legally binding obligation of the Purchaser.
SECTION 3.2. Investment Representations. The Purchaser is acquiring the
Common Stock for the Purchaser's own account, for investment purposes and not
with a view to, or for sale in connection with, any distribution of such
securities or any part thereof in violation of federal or state securities laws.
SECTION 3.3. Investment Experience; Access to Information. (a) The
Purchaser or a person acting in its capacity as "purchaser representative" (as
defined in Regulation D of the Securities Act) for the Purchaser, is an
"accredited investor" as that term is defined in Rule 501(a) promulgated under
the Securities Act, is a sophisticated investor; is able to fend for itself in
the transactions contemplated by this Agreement, has such knowledge and
experience in financial, business and investment matters as to be capable of
evaluating the merits and risks of this investment, has the ability to bear the
economic risks of this investment, has been furnished with or has had access to
such information as is specified in subparagraph (b)(2) of Rule 502 promulgated
under the Securities Act, was not organized or reorganized for the specific
purpose of acquiring the Common Stock purchased by it and has been afforded the
opportunity to ask questions of, and to receive answers from, the Company and to
obtain any additional information, to the extent the Company has or could have
acquired such information without unreasonable effort or expense, all as
necessary for the Purchaser or "purchaser representative" to make an informed
investment decision with respect to the purchase of the Common Stock. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Article 2 of this Agreement or the right of the Purchaser to
rely thereon.
(b) In addition to the foregoing, the Purchaser acknowledges, represents
and warrants, as applicable, as set forth in Annex I hereto.
SECTION 3.4. Absence of Registration. The Purchaser understands that the
Common Stock to be sold and issued hereunder may not be sold by the Purchaser
unless it is subsequently registered under the Securities Act, or an exemption
from such registration is available.
SECTION 3.5. Restrictions on Transfer. The Purchaser agrees that (a) it
will not offer, sell, pledge, hypothecate, or otherwise dispose of the Common
Stock other than to its "affiliates" unless such offer, sale, pledge,
hypothecation or other disposition is (i) registered under the Securities Act,
or (ii) in compliance with an opinion of counsel to the Purchaser, delivered to
the Company and reasonably acceptable to it, to the effect that such offer,
sale, pledge, hypothecation or other disposition thereof does not violate the
Securities Act, and (b) the certificate(s) representing the Common Stock shall
bear a legend stating in substance:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED OTHER THAN TO AFFILIATES (AS DEFINED) OF THE REGISTERED
HOLDER HEREOF UNLESS AND UNTIL REGISTERED UNDER SAID ACT OR, IN THE
OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF
THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION
DOES NOT VIOLATE THE PROVISIONS THEREOF.
For purposes of this Section 3.5, "affiliate" of any Purchaser means (i)
any entity more than 10% of the voting stock or other voting interest of which
is owned, directly or indirectly through one or more intermediaries, by the
Purchaser, (ii) any entity which owns, directly or indirectly through one or
more intermediaries, more than 10% of the voting stock of the Purchaser, (iii)
any entity of which 10% or more of the voting stock is owned by an affiliate of
the Purchaser, and (iv) with respect to a Purchaser that is a trust, a grantor
or beneficiary of such trust or other entity under the control of such grantor
or beneficiary. Upon request of a holder of Common Stock the Company shall
remove the legend set forth above from the certificates evidencing such Common
Stock or issue to such holder new certificates therefor free of such legend, if
with such request the Company shall have received an opinion of counsel selected
by the holder and reasonably satisfactory to the Company, in form and substance
reasonably satisfactory to the Company, to the effect that such Preferred or
Common Stock is not required by the Securities Act to continue to bear the
legend.
SECTION 3.6. Transfer Instructions. The Purchaser agrees that the
Company may provide for appropriate transfer instructions to implement the
provisions of Section 3.5 hereof.
SECTION 3.7. Economic Risk. The Purchaser understands that it must bear
the economic risk of the investment represented by the purchase of Common Stock
for an indefinite period.
SECTION 3.8. Fees and Commissions. The Purchaser represents and warrants
that it has retained, or otherwise authorized to act, no Intermediary in
connection with the transactions contemplated by this Agreement and agrees to
indemnify and hold harmless the Company from liability for any compensation to
any Intermediary retained or otherwise authorized to act by, or on behalf of,
the Purchaser and the fees and expenses of defending against such liability or
alleged liability.
SECTION 3.9. Purchaser's Board of Directors Designee. Promptly after the
initial Closing Date on October 8, 1999, the Company's Board of Directors shall
take the necessary steps to add a person designated by the Purchaser as a member
of the Company's Board of Directors. In connection therewith, the Purchaser's
designee shall resign from the Board of Directors immediately upon any failure
by the Purchaser to complete the acquisition of any Shares in accordance with
the provisions hereof including, but not limited to, Schedule 1.1.
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SECTION 3.10. Payment of Certain Expenses. The Purchaser agrees to pay
all of the fees and expenses of Gerbsman Partners incurred in connection with
the restructuring of the Company's debt up to $250,000.
SECTION 3.11. Wafer Purchase Commitment. The Purchaser hereby agrees to
purchase wafers from the Company for the Company's third fiscal quarter 2000,
and in an amount not less than 25% of the Company's installed capacity for the
fourth fiscal quarter 2000 and the first and second fiscal quarters 2001. Such
wafer purchase commitment shall be for the price and upon the other terms and
conditions, set forth on Schedule 3.11 and in accordance with a wafer purchase
agreement to be negotiated in form and substance satisfactory to both parties.
ARTICLE 4
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
SECTION 4.1. Conditions to Obligations of the Purchaser. The obligation
of the Purchaser on each of the Closing Dates to purchase the Common Stock under
this Agreement and in accordance with Schedule 1.1 shall be subject to each of
the following conditions precedent, any one or more of which may be waived by
the Purchaser:
(a) Representations and Warranties. The representations and warranties
made by the Company herein shall be true and accurate in all material respects
on and as of each of the Closing Dates as if made on each of the Closing Dates
(unless otherwise provided below).
(b) Performance. The Company shall have performed and complied with all
agreements and conditions contained herein or in other ancillary documents
incident to the transactions contemplated by this Agreement required to be
performed or complied with by it prior to or at each of the Closings in all
material respects.
(c) Consents, etc. The Company shall have secured all permits, consents
and authorizations that shall be necessary or required lawfully to consummate
this Agreement, to issue the Common Stock to be purchased by the Purchaser.
(d) Compliance Certificates. The Company shall have delivered to the
Purchaser or its representative at each of the Closings an Officer's Certificate
to the effect that, to such Officer's knowledge, all conditions specified in
Sections 4.1(a) through (c), inclusive, have been fulfilled.
(e) Proceedings and Documents. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchaser and its counsel, and the
Purchaser and its counsel shall have received all such counterpart originals or
certified or other copies of such documents as the Purchaser or its counsel may
reasonably request.
(f) Opinion of Company's Counsel. On the initial Closing Date, October
8, 1999, the Purchaser shall have received from Orrick, Herrington & Sutcliffe
LLP, counsel for the
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Company, an opinion, dated the initial Closing Date and reasonably satisfactory
in form and substance to the Purchaser and its counsel, and in the form attached
hereto as Exhibit A.
ARTICLE 5
CONDITIONS TO OBLIGATIONS OF COMPANY
SECTION 5.1. Conditions to Obligations of the Company. The obligation of
the Company at each of the Closings to issue and sell the Common Stock to be
purchased under this Agreement shall be subject to the following conditions
precedent, which may be waived by the Company:
(a) Representations and Warranties. The representations and warranties
made by the Purchaser herein shall be true and accurate in all material respects
on and as of each of the Closing Dates as if made on each of the Closing Dates
(unless otherwise provided below).
(b) Performance. The Purchaser shall have performed and complied with
all agreements and conditions contained herein or in other ancillary documents
incident to the transactions contemplated by this Agreement required to be
performed or complied with by it prior to or at each of the Closings in all
material respects.
(c) Compliance Certificates. The Purchaser shall have delivered to the
Company or its representative at each of the Closings an Officer's Certificate
to the effect that, to such Officer's knowledge, all conditions specified in
Sections 5.1(a) and (b) have been fulfilled.
ARTICLE 6
AFFIRMATIVE COVENANTS
SECTION 6.1. Use of Proceeds. The Company shall use the proceeds from
the sale of the Common Stock only as follows: (a) to make compensation payments
to its employees; (b) to pay lease obligations for leases in effect on the date
hereof; or (c) to pay other operating expenses approved by Purchaser.
SECTION 6.2. Piggy-Back Registrations. If at any time the Company shall
determine to register for its own account or the account of others under the
Securities Act any of its equity securities, other than on Form S-8 or Form S-4
or their then equivalents (a "Piggy-Back Registration"), it shall send to the
Purchaser, written notice of such determination and, if within fifteen (15) days
after receipt of such notice, the Purchaser shall so request in writing, the
Company shall use its diligent efforts to include in such registration statement
all or any part of the Registrable Shares (as defined below) the Purchaser
requests to be registered, except that if, in connection with any offering
involving an underwriting of Common Stock to be issued by the Company, the
managing underwriter shall impose a limitation on the number of shares of Common
Stock which may be included in the registration statement because, in its
judgment, such limitation is necessary to effect an orderly public distribution,
then the Company shall be obligated to include in such registration statement
only such limited portion (or none, if so required by the managing underwriter)
of the Registrable Shares with respect to which such Holder has requested
inclusion hereunder. For the purposes of this Section, "Registrable Shares"
shall mean and include (i) shares of Common Stock held by the Purchaser; and
(ii) any shares of
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Common Stock issued to (or issuable upon exercise of warrants issued to) any
bank or other lender, or equipment lessor in connection with the Company
obtaining a loan or equipment financing, if the Company expressly accords to
such shares the registration rights contained in this Agreement; provided,
however, that shares of Common Stock which are Registrable Shares shall cease to
be Registrable Shares upon the consummation of any sale of such shares pursuant
to a registration statement or Rule 144 under the Securities Act.
SECTION 6.3. Officers of the Company. The Company shall use reasonable
efforts to hire executives for the officer positions in the Company that are
currently vacant and which positions are critical to the future success of the
Company and shall inform Purchaser of potential candidates identified by the
Company and shall give reasonable consideration to Purchaser's recommendation
and evaluation of potential candidates.
SECTION 6.4. Right of First Offer.
(a) Subject to this Section 6.4 and other than as disclosed in Section
2.1(b), if the Company shall decide to issue or sell, any (i) shares of Common
Stock, (ii) any other equity security of the Company, including without
limitation, shares of Preferred Stock, (iii) any debt security of the Company
which by its terms is convertible into or exchangeable for any equity security
of the Company, (iv) any security of the Company that is a combination of debt
and equity, or (v) any option, warrant or other right to subscribe for, purchase
or otherwise acquire any such equity security or any such debt security of the
Company, the Company shall, in each case, first offer to sell such securities
(the "Offered Securities") to the Purchaser (the "Preemptive Shareholder"), if
it holds at least 15% of the then outstanding capital stock of the Company as
follows: the Company shall offer to sell to the Preemptive Shareholder that
portion of the Offered Securities as the number of Common Shares which the
Preemptive Shareholder then holds or has the right to acquire bears to the sum
of the total number of issued and outstanding Common Shares and upon exercise of
warrants, options and rights outstanding, at a price and on such other terms as
shall have been specified by the Company in writing delivered to the Preemptive
Shareholder (the "Offer"), which Offer by its terms shall remain open for a
period of 14 days from the giving of the Offer.
(b) Notice of the Preemptive Shareholder's intention to accept, in whole
or in part, any Offer made pursuant to clause (a) shall be evidenced by a
writing signed by the Preemptive Shareholder and delivered to the Company prior
to the end of the 14-day period of such Offer, setting forth the number of
shares or securities the Preemptive Shareholder elects to purchase (the "Notice
of Acceptance"). Failure of the Preemptive Shareholder to deliver a Notice of
Acceptance within said 14 days will be deemed to be a rejection of the Offer.
(c) The Company shall have one hundred twenty (120) days from the end of
said 14-day period to sell any such Offered Securities as to which a Notice of
Acceptance has not been given (the "Refused Securities") to any Person or
Persons, substantially on the same terms and conditions as set forth in the
Offer.
(d) The rights of the Preemptive Shareholder under this Section 6.4
shall terminate for all future issuances of Offered Securities if the Preemptive
Shareholder does not purchase all of the Offered Securities which it was
entitled to purchase in this Section 6.4.
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(e) The rights of the Preemptive Shareholder under this Section 6.4
shall not apply to:
(i) Common Stock issued as a stock dividend to holders of Common
Stock or upon any subdivision or combination of shares of Common Stock;
(ii) Preferred Stock issued as a dividend to holders of Preferred
Stock or upon any subdivision or combination of shares of Preferred Stock;
(iii) Common Stock issued upon exercise of options, warrants and
rights outstanding as of the date of this Agreement;
(iv) Common Stock and options of the Company issued after the
date hereof to directors, officers, employees or consultants of the Company and
any Subsidiary pursuant to any qualified or non-qualified stock option plan,
employee stock ownership plan, employee benefit plan, stock plan, or such other
options, arrangements, agreements or plans intended principally as a means of
providing compensation or incentive compensation for employment or services,
approved by the Board of Directors of the Company;
(v) Options, warrants or shares issued to banks or other lenders
or equipment lessors in connection with the Company obtaining loans or equipment
financing or to customers, prospective customers, vendors or strategic partners;
or
(vi) Securities issued in a merger or consolidation or as
consideration for the acquisition by the Company of any other corporation or
other business entity or of the assets and business thereof.
(f) For convenience in administration, the Company may offer and sell
Securities covered by the right in clause (a) without first offering such
Securities to the Preemptive Shareholder, so long as the Preemptive Shareholder
is given the opportunity to purchase its pro rata amount within 45 days after
the close of the sale of Securities.
(g) The rights of the Preemptive Shareholder set forth herein are
nonassignable except (i) to any or all of the beneficial owners of the
Preemptive Shareholder; (ii) an affiliate of the Preemptive Shareholder; and
(iii) to a purchaser who is not a competitor of the Company and who purchases
all of the Preemptive Shareholder's Securities of the Company. Any assignee
permitted under the preceding sentence shall assume the assignor's obligations
under this Agreement and become a party to this Agreement in a manner reasonably
satisfactory to the Company.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Survival of Agreements. All agreements, representations and
warranties contained herein or made in writing by or on behalf of the Company in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement and any disposition of Common Stock issued upon
conversion thereof.
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SECTION 7.2. Notices. All notices, requests, consents and other
communications herein (except as stated in the last sentence of this Section
7.2) shall be in writing and shall be mailed by first-class certified mail,
postage prepaid and return receipt requested, personally delivered, faxed, or
sent by recognized overnight courier service, as follows:
(a) If to the Company:
IMP, Inc.
2830 North First Street
San Jose, California U.S.A. 95143-2071
Attention: Chief Executive Officer
Fax: (408) 434-0335
With a copy to
Richard Grey, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111-3143
Fax: (415) 773-5759
(b) If to the Purchaser:
Teamasia Semiconductors (India) Ltd.
IDA, Patancheru
Medak District
Pin, 502 319, A.P. INDIA
Attention: Managing Director
Fax: (011) 91-8455-42070
With a copy to:
Robert T. Borawski, Inc.
4125 Blackford Ave., Suite 140
San Jose, California 95117
Fax: (408) 241-8895
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties.
SECTION 7.3. Modifications; Waiver. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally or in
writing, except that any provision of this Agreement may be amended and the
observance of any such provision may be waived (either generally or in a
particular instance and either retroactively or prospectively) with (but only
with) the written consent of the party to be charged.
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SECTION 7.4. Exculpation. The Purchaser acknowledges that it is not
relying upon any statements or instruments made or issued by any person, firm or
corporation, other than those contained in this Agreement in making its decision
to invest in the Company.
SECTION 7.5. Entire Agreement. This Agreement, together with the
schedules and exhibits attached hereto and made a part hereof, contains the
entire agreement between the parties with respect to the transactions
contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties and commitments, whether in writing or oral, prior
to or contemporaneous with the date hereof.
SECTION 7.6. Successors and Assigns. Except as otherwise expressly
provided in this Agreement, all of the terms of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto.
SECTION 7.7. Enforcement.
(a) Remedies at Law or in Equity. If the Company shall default in any of
its obligations under this Agreement or if any representation or warranty made
by or on behalf of the Company in this Agreement or in any certificate, report
or other instrument delivered under or pursuant to any term hereof shall be
untrue or misleading in any material respect as of the date of this Agreement or
as of the Closings or as of the date it was made, furnished or delivered, the
Purchaser may proceed to protect and enforce its rights, including by way of
suit in equity or action at law. In the event the Purchaser brings such an
action against the Company, the prevailing party in such dispute shall be
entitled to recover from the losing party all fees, costs and expenses of
enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
(b) Remedies Cumulative; Waiver. No remedy referred to herein is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to a party at law or in
equity. No express or implied waiver by Purchaser of any default shall be a
waiver of any future or subsequent default. The failure or delay of any party in
exercising any rights granted it hereunder shall not constitute a waiver of any
such right and any single or partial exercise of any particular right by a party
shall not exhaust the same or constitute a waiver of any other right provided
herein.
SECTION 7.8. Execution and Counterparts. This Agreement may be executed
in any number of counterparts, each of which when so executed and delivered
shall be deemed an original, and all such counterparts together shall constitute
one instrument. Each party shall receive a duplicate original of the counterpart
copy or copies executed by it and by the Company.
SECTION 7.9. Governing Law and Severability. (a) This agreement shall be
governed by the internal laws of the state of California, without regard to
principles of conflicts of law. Each of the parties hereto hereby submits to the
exclusive jurisdiction of the United States District Court in San Francisco,
California, for purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. Each of the parties
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hereto waives any objection which it may now or hereafter have to the laying of
the venue of any such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.
(b) In the event any provision of this agreement or the application of
any such provision to any party shall be held by a court of competent
jurisdiction to be contrary to law, the remaining provisions of this agreement
shall remain in full force and effect.
SECTION 7.10. Headings. The descriptive headings of the Articles and
Sections hereof and the Schedules and Exhibits hereto are inserted for
convenience only and do not constitute a part of this Agreement.
SECTION 7.11. Confidentiality. The Purchaser agrees that it will keep
confidential and will not disclose, or divulge any confidential, proprietary,
secret or non-public information which the Purchaser may obtain from the Company
and not use such information other than for the benefit of the Company or in
furtherance of the Purchaser's rights as a shareholder of the Company; provided,
that, no such information shall be deemed to be non-public if it (i) is or
becomes generally available to the public other than as a result of a disclosure
by the Purchaser or its respective agents, representatives or employees; (ii) is
or becomes available to the Purchaser on a non-confidential basis from a source
(other than the Company or one of its officers, directors, agents,
representatives or employees) that is not prohibited from disclosing such
information by a legal, contractual or fiduciary obligation; or (iii) was known
to the Purchaser on a non-confidential basis prior to its disclosure to it by
the Company and provided further that, any other term of this Agreement to the
contrary notwithstanding, the Company shall not be obligated to disclose any
information, the disclosure of which it believes in good faith would be
detrimental to the Company or its shareholders.
SECTION 7.12. No Solicitation.
(a) Each of the Purchaser and the Company agrees that for a period of
two years from the last Closing Date, it shall not induce or encourage, directly
or indirectly, any current employee of the other party to leave such party's
employ, whether to accept a position with it or an entity related to it or
otherwise. The restrictions in the previous sentence shall not be deemed to be
violated by either party in the case of a general solicitation to hire,
including, without limitation, through the use of advertising or recruiting
(provided that a recruiter is not specifically instructed to solicit the other
party's employees). Each of the Purchaser and the Company hereby further agrees
that for a period of two years from the last Closing Date, it shall not take any
action which would interfere with the business of the other party, unless such
action is taken pursuant to the mutual agreement of both parties. The provisions
of this Section 7.12 shall survive the last Closing Date for a period of two
years.
(b) Without limiting the right of either party to pursue all other legal
and equitable rights available to them for violation of this Section 7.12, it is
agreed that other remedies cannot fully compensate either party for such a
violation and that each party shall be entitled to injunctive relief to prevent
the violation or the continuing violation thereof. It is the intent and
understanding of each party hereto that if, in any action before any
Governmental Authority legally empowered to enforce this Section 7.12, any term,
restriction, covenant or promise in this
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Section 7.12 is found to be unreasonable and for that reason unenforceable, then
such term, restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable by such Governmental Authority.
(c) For the purposes of the Section, "Governmental Authority" shall mean
any federal, state, local or other governmental or administrative body,
instrumentality, department, agency or any court, tribunal, administrative
hearing, arbitration panel, commission or other similar dispute resolving panel
or body.
SECTION 7.13. Termination. In the event that the Purchaser shall fail to
make any payment in full that it is obligated to make hereunder within three (3)
Business Days of the applicable Closing Date set forth on Schedule 1.1, this
Agreement shall terminate and the Company shall have no further obligation to
sell and issue Shares to the Purchaser in accordance with this Agreement.
Notwithstanding the foregoing, all provisions hereunder which the parties have
agreed to survive termination of this Agreement shall remain binding upon the
parties hereto. For the purpose of this Section, "Business Day" shall mean any
day other than Saturday, Sunday or a holiday in San Jose, California.
SECTION 7.14. Indemnification.
(a) The Company agrees to indemnify and hold harmless the Purchaser from
and against any and all liabilities, obligations, losses, out-of-pocket costs or
damages ("Loss") and reasonable attorneys' and accountants' fees and expenses,
court costs and all other reasonable out-of-pocket expenses ("Expense") incurred
by the Purchaser in connection with or arising from or attributable to any
breach by the Company, of any of its representations, warranties, obligations,
covenants or agreements contained in this Agreement; provided, however, that the
Purchaser shall not be entitled to indemnification for Losses or Expenses
pursuant to this Section unless and until the amount of Losses and Expenses
exceeds $100,000. Thereafter, the Company shall be liable for indemnification
for Losses and Expenses only to the extent the aggregate amount thereof exceeds
$100,000. Notwithstanding the foregoing, the terms "Loss" and "Expense" shall
not include incidental, consequential or punitive damages except in a third
party claim, action or suit.
(b) If the Purchaser believes that it has suffered or incurred any Loss
or Expense pursuant to this Section, it shall so notify the Company promptly in
writing describing such Loss or Expense, the amount thereof, if known, and the
method of computation of such Loss or Expense. Promptly after receipt by the
Purchaser of notice of the commencement of any action by any third party, such
indemnified party shall, if a claim in respect thereof is to be made against the
Company under this Section notify the Company in writing of the commencement
thereof (but the failure so to notify the Company shall not relieve the Company
from any liability which it may have under this Section except to the extent
that it has been prejudiced in any material respect by such failure or from any
liability which it might otherwise have). Unless the Company is contesting a
third party claim, the Company shall promptly pay such claim or reimburse the
Purchaser if the Purchaser has made payment.
(c) The Company shall have the right to conduct and control, through
counsel of its choosing, any third party claim, action or suit. The Company
shall permit the Purchaser to
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participate in the defense of any such action or suit through counsel chosen by
it, provided that the fees and expenses of such counsel shall be borne by the
Purchaser. The Company may agree to any compromise or settlement with respect to
a claim for money damages without the consent of the Purchaser; provided, that
the Company shall not effect any compromise or settlement which will have a
continuing effect on the business of the Purchaser without the prior consent of
the Purchaser, which consent shall not be unreasonably withheld or delayed.
SECTION 7.15. Purchaser's Future Investments in the Company. It is the
parties' intent that the Purchaser acquire not less than 51% of the fully
diluted Common Shares of the Company at a price equal to a total of $5,980,000
($5,980,000 - $2,050,000 (paid hereunder upon completion of purchase of 16.6%) =
$3,930,000 (paid upon completion of Purchaser's purchase of the remaining Common
Shares resulting in the Purchaser holding at least 51% of the fully diluted
Common Shares)) no later than February 28, 2000. To that end, the parties agree
that promptly upon the parties' execution of this Agreement, they will proceed
to negotiate, in good faith, the terms and conditions of a share purchase
agreement for the remaining Common Shares of the Company, which agreement will
result in the Purchaser owning and maintaining not less than 51% of the fully
diluted Common Shares. Further, the Company agrees to use its reasonable efforts
to obtain the necessary approvals from its shareholders and to obtain all
applicable Governmental Approvals in order to complete the Purchaser's purchase
of such Common Shares, as expeditiously as possible. The Purchaser agrees to
provide all reasonable assistance to the Company to obtain such approvals. Upon
the Purchaser acquiring not less than 51% of the fully diluted Common Shares,
the provisions of Section 7.12 shall no longer be obligations of either party.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the date first above written.
IMP, INC.
By: /s/ ZVI GRINFAS
---------------------------------
Name: ZVI GRINFAS
---------------------------
Title: PRESIDENT & CEO
---------------------------
TEAMASIA SEMICONDUCTORS (INDIA) LTD.
By: /s/ SUBBA RAO PINAMANENI
---------------------------------
Name: PINAMANENI SUBBA RAO
---------------------------
Title: MANAGING DIRECTOR
---------------------------
STOCK PURCHASE AGREEMENT SIGNATURE PAGE
<PAGE> 75
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
IMP, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ________________, 2000
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 ____________, 2000, and hereby appoints each of Zvi
Grinfas and Brad Whitney proxy and attorney-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned at the Annual Meeting
of Stockholders of IMP, Inc. to be held on ___________, 2000 at ______, 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. Proposal to elect the nominees herein to the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
To withhold a vote for a particular nominee, strike through the name or
names on the following list:
Brad Whitney Zvi Grinfas
Bernard Vonderschmitt Subbarao Pinamaneni
2. Proposal to approve Stock Purchase Agreement with Teamasia
Semiconductors PTE Ltd.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to amend the Certificate of Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to adopt the 1999 IMP, Inc. Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal to adopt the 2000 IMP, Inc. Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Proposal to ratify the appointment of the Independent Accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
7. To vote on such other business as may properly come before the
meeting or any adjournment thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED AS FOLLOWS: TO ELECT THE NOMINEES HEREIN TO THE BOARD
OF DIRECTORS, FOR APPROVAL OF A STOCK PURCHASE AGREEMENT WITH TEAMASIA
SEMICONDUCTORS PTE LTD., FOR APPROVAL OF AN AMENDMENT TO THE CERTIFICATE OF
INCORPORATION, TO APPROVE AND ADOPT THE 1999 IMP, INC. STOCK OPTION PLAN, FOR
APPROVAL AND ADOPTION OF TO THE 2000 IMP, INC. STOCK OPTION PLAN; FOR
RATIFICATION OF THE INDEPENDENT ACCOUNTANTS AND IN THE DISCRETION OF THE PROXY
HOLDER ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY
ADJOURNMENT THEREOF.
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(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
