<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------------------------
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
IMP, INC.
------------------------------
(Name of Issuer)
Common Stock, $.01 Par Value
------------------------------
(Title of Class of Securities)
449693209
---------------------------
(CUSIP Number)
Subba Rao Pinamaneni
Teamasia Semiconductors PTE Ltd.
Industrial Development Area
Patancheru 502319, Medak Dist.
Andhra Pradesh, India
91-8455-42032
----------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
October 8, 1999
--------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box: [ ]
(Continued on following pages)
(Page 1 of 9 Pages)
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
SCHEDULE 13D
- ------------------------------- -------------------------------
CUSIP NO. 449693209 PAGE 2 OF 9
- ------------------------------- -------------------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
TEAMASIA SEMICONDUCTORS PTE LTD.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
OO
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
SINGAPORE
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
SHARES 671,173
BENEFICIALLY -------------------------------------------------------
OWNED BY EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH 0
-------------------------------------------------------
9 SOLE DISPOSITIVE POWER
671,173
-------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
671,173
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.6%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
<PAGE> 3
ITEM 1. SECURITY AND ISSUER.
This statement relates to the common stock, par value $.01 per share
("Common Stock"), of IMP, Inc., a Delaware corporation (the "Company"). The
principal executive offices of the Company are located at 2830 North First
Street, San Jose, California 95134.
ITEM 2. IDENTITY AND BACKGROUND.
(a) This statement is being filed by Teamasia Semiconductors PTE Ltd., a
Singapore corporation ("Teamasia").
(b) The address of the principal business and principal office of
Teamasia is Industrial Development Area, Patancheru 502319, Medak Dist., Andhra
Pradesh, India.
(c) The principal business of Teamasia is the manufacture of
semiconductors.
(d) During the last five years, Teamasia has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, Teamasia has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The consideration for the 671,173 shares of Common Stock acquired by
Teamasia was cash in the amount of $2,050,000. The consideration for the
additional shares of Common Stock to be acquired by Teamasia, subject to
stockholder approval, is cash in the amount of $3,930,000.
The source of funds for the 671,173 shares of Common Stock acquired by
Teamasia was $1,500,000 of equity contributions by shareholders of Teamasia and
a $550,000 unsecured loan from Magnus Investments, Singapore. The loan is
convertible into an equity interest in Teamasia. The source of funds for the
additional shares of Common Stock to be acquired by Teamasia, subject to
stockholder approval, is equity contributions by shareholders of Teamasia.
ITEM 4. PURPOSE OF TRANSACTION.
Teamasia acquired 671,173 shares and, subject to stockholder approval,
will acquire an additional 4,793,235 shares, of Common Stock for investment. On
October 8, 1999, the Company and Teamasia Semiconductors (India) Ltd., a limited
Indian corporation ("Teamasia India"), an affiliate of Teamasia, entered in to
Stock Purchase Agreement (the "October Stock Purchase Agreement") pursuant to
which Teamasia India agreed to acquire from the Company, and the Company agreed
to sell and issue to Teamasia India, an aggregate of 671,173 shares of Common
stock for an aggregate price equal to $2,050,000 pursuant to the following
schedule:
<TABLE>
<CAPTION>
Date of Purchase Number of Shares Purchase Price
- ----------------- ---------------- --------------
<S> <C> <C>
October 8, 1999 83,897 $250,000
October 18, 1999 83,897 $250,000
November 1, 1999 167,793 $500,000
November 19, 1999 167,793 $500,000
</TABLE>
(Page 3 Of 9)
<PAGE> 4
<TABLE>
<CAPTION>
Date of Purchase Number of Shares Purchase Price
- ----------------- ---------------- --------------
<S> <C> <C>
December 8, 1999 167,793 $550,000
</TABLE>
Teamasia India subsequently assigned all of its rights under the October Stock
Purchase Agreement to Teamasia. Pursuant to the October Stock Purchase
Agreement, Teamasia received customary registration rights and rights of first
offer and Mr. Subba Rao Pinamaneni, Managing Director and a stockholder of
Teamasia, was elected to the Company's Board of Directors. In addition, Teamasia
agreed to purchase from the Company on specified terms a number of wafers
representing not less than 25% of the Company's installed capacity for last two
quarters of fiscal 2000 and the first two quarters of fiscal 2001.
Pursuant to the October Stock Purchase Agreement, the Company and
Teamasia also agreed that it was their intent that Teamasia acquire not less
than 51% of the fully diluted Common Stock at a price equal to a total of
$5,980,000 (including the $2,050,000 purchase price for the 671,173 shares of
Common Stock acquired from October 8, 1999 to December 10, 1999) no later than
February 28, 2000. The parties agreed, promptly upon the execution of the
October Stock Purchase Agreement, to proceed to negotiate, in good faith, the
terms and conditions of a share purchase agreement for additional shares of
Common Stock, which agreement would result in Teamasia owning not less than 51%
of the fully diluted Common Stock. The Company agreed to use its reasonable
efforts to obtain the necessary approvals from its stockholders and to obtain
all applicable governmental approvals in order to consummate Teamasia's purchase
of such additional shares of Common Stock as expeditiously as possible.
On December 15, 1999, the Company and Teamasia entered into a Phase 2
Stock Purchase Agreement (the "December Stock Purchase Agreement") pursuant to
which Teamasia Semiconductors PTE Ltd. agreed to acquire from the Company, and
the Company agreed to sell and issue to Teamasia Semiconductors PTE Ltd., an
aggregate of 4,793,235 shares of Common Stock for an aggregate price equal to
$3,930,000, subject to stockholder approval. Because the issuance of these
additional shares is subject to the condition that stockholder approval be
obtained, Teamasia does not believe that it presently possesses beneficial
ownership thereof. Pursuant to the December Stock Purchase Agreement, Teamasia
received customary registration rights and rights of first offer and, upon
closing of the purchase and sale of additional shares of Common Stock
contemplated by the December Stock Purchase Agreement, the Company will add one
additional person designated by Teamasia to the Company's Board of Directors.
Pursuant to the December Stock Purchase Agreement, the Company and
Teamasia also agreed that, unless approved unanimously by the Company's Board of
Directors, any purchase of additional shares of Common Stock by Teamasia or its
affiliates that would result in Teamasia and its affiliates owning more than 51%
of the fully diluted Common Stock will require the approval of the stockholders
of the Company and will be deemed to be approved if (i) at least 51% of the
Company's stockholders vote in favor of such acquisition and (ii) no more than
20% of the Company's stockholders affirmatively vote against such acquisition.
Teamasia has advised the Company that completing the second phase of Teamasia's
equity investment in the Company, as contemplated by the December Stock Purchase
Agreement, is a material element of Teamasia's decision to place additional
production orders with the Company beyond those already placed.
Teamasia intends to review its investment in the Company from time to
time and, depending upon the price and availability of the Common Stock,
subsequent developments affecting the Company, the Company's business and
prospects, other investment and business opportunities available to the
Teamasia, general stock market and economic conditions, tax considerations and
other factors deemed relevant, may decide to increase or decrease the size of
its investment in the Company. Teamasia also intends to explore opportunities
for the Company and Teamasia to work together on transactions involving assets
(Page 4 Of 9)
<PAGE> 5
and/or business operations that Teamasia owns presently or may develop in the
future, including, without limitation, opportunities to share and mutually
benefit from production, design, quality control and other assets and/or
business operations applicable to the semiconductor industry. Teamasia may
investigate such transactions and opportunities, if any, from time to time and,
as it deems appropriate in its discretion, propose such transactions and/or
opportunities to the Company.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Teamasia owns 671,173 shares of the Common Stock (approximately
16.6% of the total number of outstanding shares of Common Stock as of December
15, 1999).
(b) Teamasia has the sole power to vote or direct the vote, and to
dispose or to direct the disposition of, the shares of Common Stock beneficially
owned by it.
(c) Except as described in Item 4 above, there have not been any
transactions in the Common Stock effected by or for the account of Teamasia
during the past 60 days.
(d) Except as stated in this Item 5, to the best knowledge of Teamasia,
no other person has the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of, the shares of Common Stock
owned by Teamasia.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
The following descriptions are qualified in their entirety by reference
to the agreements attached as exhibits hereto and incorporated herein by
reference.
OCTOBER STOCK PURCHASE AGREEMENT
Pursuant to the October Stock Purchase Agreement, the Company issued and
sold to Teamasia, and Teamasia purchased from the Company, an aggregate of
671,173 shares of Common Stock for an aggregate purchase price equal to
$2,050,000, or $3.05 per share, representing 16.6% of the fully diluted Common
Stock. The purchase of shares of Common Stock by Teamasia under the October
Stock Purchase 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 Stock to Teamasia
to make compensation payments to the Company's employees, to pay specified lease
obligations and to pay other operating expenses approved by Teamasia.
As provided by the October Stock Purchase Agreement, the Company added
one member designated by Teamasia to the Board of Directors of the Company.
Teamasia designated Subba Rao 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 October Stock Purchase 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 a week during the fourth fiscal
quarter of 2000 and the first and second fiscal quarters of 2001.
Under the terms of the October Stock Purchase Agreement, Teamasia has
certain rights to require that the Company register its shares of Common Stock
under the Securities Act of 1933 (the "Securities Act"). Teamasia also has
certain rights of first refusal, based on Teamasia's percentage ownership of
(Page 5 Of 9)
<PAGE> 6
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.
As provided in the October Stock Purchase 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.
DECEMBER STOCK PURCHASE AGREEMENT
Under the terms of the December 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"). Giving effect to this sale and purchase, Teamasia will own
an aggregate of 5,464,408 shares of Common Stock, representing 61.9% of the
outstanding Common Stock and 51% of the fully diluted Common Stock of the
Company after taking into account the Company's stock option plans and employee
stock purchase plan and any outstanding warrants. The purchase will occur at a
closing not later than 14 business days after approval by the stockholders of
the Company (the "Closing").
The December Stock Purchase Agreement also provides that, in the event
that Bernard Vonderschmidt ceases to serve as a member of the Board of
Directors, Zvi 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.
Vonderschmidt. The December 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. Teamasia understands that, in January 2000,
Mr. Brad Whitney was hired as the Company's Chief Executive Officer and
appointed to the Company's Board of Directors. The December Stock Purchase
Agreement also 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 member of the Company's Board of Directors.
The December 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
acquisition is required to be approved by (i) the Board of Directors unanimously
or (ii) holders of at least 51% of the Common Stock of the Company but will be
so approved only if holders of no more than 20% of the Common Stock
affirmatively vote against such acquisition. The foregoing provision will
terminate at such time as Teamasia (considered together with its affiliates)
owns 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 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 December Stock Purchase Agreement and may be
waived by Teamasia.
The December Stock Purchase Agreement further provides that the
Company's Board of Directors will adopt a new option plan covering 1,000,000
shares of Common Stock (or allocation of an additional 1,000,000 Common Stock to
an existing option plan). Teamasia understands that, 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.
(Page 6 Of 9)
<PAGE> 7
As a condition to the Closing of the December Stock Purchase Agreement,
the Company is required to obtain the consents of certain 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 December Stock Purchase Agreement, Teamasia will
have certain rights to require that the Company register under the Securities
Act all shares of Common Stock acquired by Teamasia under the December Stock
Purchase Agreement and the October 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.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
Exhibit 1. Stock Purchase Agreement, dated October 8, 1999, by and between IMP,
Inc. and Teamasia Semiconductors (India) Ltd.
Exhibit 2. Phase 2 Stock Purchase Agreement, dated December 15, 1999, by and
between IMP, Inc. and Teamasia Semiconductors PTE Ltd.
</TABLE>
(Page 7 Of 9)
<PAGE> 8
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: February 2, 2000 TEAMASIA SEMICONDUCTORS PTE LTD.
By: /s/ Subba Rao Pinamaneni
------------------------------------
Name: Subba Rao Pinamaneni
Title: Managing Director
(Page 8 Of 9)
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<S> <C>
Exhibit 1. Stock Purchase Agreement, dated October 8, 1999, by and between IMP,
Inc. and Teamasia Semiconductors (India) Ltd.
Exhibit 2. Phase 2 Stock Purchase Agreement, dated December 15, 1999, by and
between IMP, Inc. and Teamasia Semiconductors PTE Ltd.
</TABLE>
(Page 9 Of 9)
<PAGE> 10
EXHIBIT 1
IMP, Inc.
STOCK PURCHASE AGREEMENT
Dated as of October 8, 1999
<PAGE> 11
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <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> 12
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<S> <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>
- ii -
<PAGE> 13
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> 14
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.
(a) 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
2
<PAGE> 15
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. 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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<PAGE> 18
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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<PAGE> 20
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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<PAGE> 21
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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<PAGE> 22
(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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<PAGE> 24
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
hereto waives any objection which it may now or hereafter have to the laying of
the venue of any
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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 Section 7.12 is found to be
unreasonable and for that reason unenforceable, then such term,
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<PAGE> 26
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 participate in the defense of any such action or
suit through counsel chosen by it, provided that
14
<PAGE> 27
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.
[The rest of this page left intentionally blank.]
15
<PAGE> 28
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:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
TEAMASIA SEMICONDUCTORS (INDIA) LTD.
By:
--------------------------------------
Name:
-------------------------------
Title:
------------------------------
STOCK PURCHACE STOCK PURCHASE AGREEMENT SIGNATURE PAGE
<PAGE> 29
ANNEX I
ADDITIONAL PURCHASER REPRESENTATIONS
The Purchaser hereby acknowledges to the Company, as follows:
(a) That the Purchaser is aware of the following:
(1) The Shares are speculative investments which involve a
substantial degree of risk of loss by the Purchaser of the Purchaser's entire
investment in the Company and that the Purchaser understands and takes full
cognizance of the risk factors related to the purchase of the Shares;
(2) No federal or state agency has made any findings as to the
fairness of the terms of the offering; and
(3) Any projections or predictions that may have been made
available to the Purchaser are based on estimates, assumptions and forecasts
which may prove to be incorrect; and no assurance is given that actual results
will correspond with the results contemplated by the various projections;
(b) That at no time has it been explicitly or implicitly represented,
guaranteed or warranted to the Purchaser by the Company, the agents and
employees of the Company, or any other person:
(1) That the Purchaser will or will not have to remain as
owner of the Shares an exact or approximate length of time;
(2) That a percentage of profit and/or amount or type of
consideration will be realized as a result of this investment;
(3) That any cash dividends from Company operations or
otherwise will be made to shareholders by any specific date or will be made at
all; or
(4) That any specific tax benefits will accrue as a result of
an investment in the Company;
(c) That the Purchaser has relied only on the information contained in
this Agreement and that no written or oral representation or information that is
in any way inconsistent with this Agreement and has been made or furnished to
the Purchaser or to the Purchaser's "purchaser representative" in connection
with the offering of the Shares, and if so made, has not been relied upon.
(d) That the offer to sell Shares was communicated to the Purchaser by
the Company in such a manner that the Purchaser was able to ask questions of and
receive answer from the Company concerning the terms and conditions of this
transaction and that at no time was the Purchaser presented with or solicited by
any leaflet, public promotional meeting, newspaper or
I-1
<PAGE> 30
magazine article, radio or television advertisement or any other form of
advertising or general solicitation.
(e) That the Purchaser has had prior personal or business relationships
with the Company or its affiliates, or by reason of the Purchaser's business or
financial experience (either alone or with the aid of a purchaser
representative), the Purchaser has the capacity to protect the Purchaser's own
interest in connection with this transaction.
(f) That the Purchaser has been advised to consult with the Purchaser's
own attorney regarding legal matters concerning an investment in the Company and
has done so to the extent the Purchaser considers necessary.
I-2
<PAGE> 31
EXHIBIT 2
EXECUTION COPY
IMP, Inc.
PHASE 2 STOCK PURCHASE AGREEMENT
Dated as of December 15, 1999
<PAGE> 32
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <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>
-i-
<PAGE> 33
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <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
</TABLE>
-ii-
<PAGE> 34
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <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
</TABLE>
-iii-
<PAGE> 35
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> 36
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".
2
<PAGE> 37
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> 38
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> 39
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.
5
<PAGE> 40
(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
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
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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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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
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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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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 underwriters need to complete the distribution of
the registered offering, or ninety (90)
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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.
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(e) The rights of the Preemptive Stockholders under this Section 6.5
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 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
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<PAGE> 47
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 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 Vonderschmidt 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.
Vonderschmidt 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
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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 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.
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<PAGE> 49
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 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.
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<PAGE> 50
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 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.
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<PAGE> 51
(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].
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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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:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
TEAMASIA SEMICONDUCTORS PTE LTD.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
STOCK PURCHASE AGREEMENT SIGNATURE PAGE
<PAGE> 53
ANNEX I
ADDITIONAL PURCHASER REPRESENTATIONS
The Purchaser hereby acknowledges to the Company, as follows:
(a) That the Purchaser is aware of the following:
(1) The Purchased Shares are speculative investments which
involve a substantial degree of risk of loss by the Purchaser of the Purchaser's
entire investment in the Company and that the Purchaser understands and takes
full cognizance of the risk factors related to the purchase of the Purchased
Shares;
(2) No federal or state agency has made any findings as to the
fairness of the terms of the offering; and
(3) Any projections or predictions that may have been made
available to the Purchaser are based on estimates, assumptions and forecasts
which may prove to be incorrect; and no assurance is given that actual results
will correspond with the results contemplated by the various projections;
(b) That at no time has it been explicitly or implicitly represented,
guaranteed or warranted to the Purchaser by the Company, the agents and
employees of the Company, or any other person:
(1) That the Purchaser will or will not have to remain as
owner of the Purchased Shares an exact or approximate length of time;
(2) That a percentage of profit and/or amount or type of
consideration will be realized as a result of this investment;
(3) That any cash dividends from Company operations or
otherwise will be made to stockholders by any specific date or will be made at
all; or
(4) That any specific tax benefits will accrue as a result of
an investment in the Company;
(c) That the Purchaser has relied only on the information contained in
this Agreement and that no written or oral representation or information that is
in any way inconsistent with this Agreement and has been made or furnished to
the Purchaser or to the Purchaser's "purchaser representative" in connection
with the offering of the Purchased Shares, and if so made, has not been relied
upon.
(d) That the offer to sell Purchased Shares was communicated to the
Purchaser by the Company in such a manner that the Purchaser was able to ask
questions of and receive answer from the Company concerning the terms and
conditions of this transaction and that at no time was the Purchaser presented
with or solicited by any leaflet, public promotional meeting,
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<PAGE> 54
newspaper or magazine article, radio or television advertisement or any other
form of advertising or general solicitation.
(e) That the Purchaser has had prior personal or business relationships
with the Company or its affiliates, or by reason of the Purchaser's business or
financial experience (either alone or with the aid of a purchaser
representative), the Purchaser has the capacity to protect the Purchaser's own
interest in connection with this transaction.
(f) That the Purchaser has been advised to consult with the Purchaser's
own attorney regarding legal matters concerning an investment in the Company and
has done so to the extent the Purchaser considers necessary.
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