<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant (7:00)
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule
14a-11(c) or Rule 14a-12
IMP, Inc.
Name of Person(s) Filing Proxy Statement (if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed
<PAGE> 2
IMP, INC.
2830 North First Street
San Jose, California 95134
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD __________ __, 2000
TO THE STOCKHOLDERS OF IMP, INC.:
The Annual Meeting of Stockholders of IMP, Inc. (the "Company")
will he held at the executive offices of IMP, Inc., 2830 North First
Street, San Jose, California on __________ __, 2000 at _______p.m. (the
"Annual Meeting") for the following purposes:
1. To elect the Board of Directors to serve until the next Annual
Meeting and until their successors are elected and qualified;
2. To approve and adopt the Phase Two Stock Purchase Agreement dated
as of December 15, 1999 (the "Stock Purchase Agreement") between
the Company and Teamasia Semiconductors PTE Ltd., a Singapore
corporation ("Teamasia"), pursuant to which, among other things,
the Company will issue and sell to Teamasia an aggregate of
4,793,235 shares of common stock of the Company;
3. To approve and adopt an amendment to the Company's Certificate of
Incorporation (the "Certificate of Incorporation Amendment") to
provide that stockholder approval be required to approve any
purchase of shares of stock of the Company resulting in Teamasia
and its affiliates holding more than 51% of the Company's Common
Stock on a fully diluted basis;
4. To approve and adopt the 1999 IMP, Inc. Stock Option Plan;
5. To approve and adopt an amendment to the IMP, Inc. Stock Option
Plan (the "Stock Option Plan Amendment") to increase by 1,000,000
the number of shares available thereunder for issuance; and
6. To transact such other business as may properly come before the
meeting or any adjournment thereof.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS THAT
STOCKHOLDERS VOTE "FOR" THE ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS,
"FOR" THE APPROVAL AND ADOPTION OF THE STOCK PURCHASE AGREEMENT, "FOR" THE
APPROVAL AND ADOPTION OF THE CERTIFICATE OF INCORPORATION AMENDMENT, "FOR" THE
ADOPTION OF THE 1999 IMP, INC. STOCK OPTION PLAN AND "FOR" THE APPROVAL AND
ADOPTION OF THE STOCK OPTION PLAN AMENDMENT.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice, which is incorporated herein by this
reference. Any stockholders of record at the close of business on January __,
2000 will be entitled to vote at the Annual Meeting and any adjournment thereof.
The transfer books will not be closed. A list of stockholders entitled to vote
at the Annual Meeting will be available for inspection at the offices of the
Company. If you do not plan to attend the Annual Meeting in person, please sign,
date and return the enclosed proxy in the envelope provided. If you plan to
attend the Annual Meeting and vote by ballot, your proxy will be revoked
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automatically and only your vote at the Annual Meeting will be counted. The
prompt return of your proxy will assist us in preparing for the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
Brad Whitney
Chief Executive Officer and President
San Jose
January ___, 2000
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IMP, INC.
2830 North First Street
San Jose, California 95134
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON _______________, 2000
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
IMP, Inc., a Delaware corporation (the "Company"), for use at the annual meeting
of stockholders to be held on ______________, 2000 (the "Annual Meeting") and
any adjournment or postponement therof. The Annual Meeting will be held at ___
p.m. at the executive offices of IMP, Inc., 2830 North First Street, San Jose,
California 95134. Stockholders of record on January __, 2000 will be entitled to
notice of and to vote at the Annual Meeting.
This Proxy Statement and accompanying proxy (the "Proxy") and Notice of
Annual Meeting were first mailed to all stockholders entitled to vote on or
about January ________, 2000.
VOTING
On January __, 2000, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were approximately 4,040,544
shares of Common Stock outstanding. No shares of the Company's preferred stock
are outstanding. Each stockholder is entitled to one vote for each share of
Common Stock held by such stockholder. All votes will be tabulated by the
inspector of election appointed for the meeting, who will separately tabulate
affirmative and negative votes, abstentions and broker non-votes. Abstentions
and broker non-votes are counted for purposes of determining the presence or
absence of a quorum for the transaction of business. Abstentions will be counted
towards the tabulations of votes cast on proposals presented to the stockholders
and, with respect to Proposal No. 3 will have the same effect as negative votes,
whereas broker non-votes will not be counted for purposes of determining whether
a proposal has been approved or not.
REVOCABILITY OF PROXIES
Any person giving a Proxy has the power to revoke it at any time before
its use. It may be revoked by filing with the Secretary of the Company at the
Company's principal executive offices, IMP, Inc., 2830 North First Street, San
Jose, California, 95134, a notice of revocation or another signed Proxy with a
later date or by attending the Annual Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
and any additional soliciting materials furnished to stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram, or other means by directors, officers, employees or agents
of the Company. Except for the compensation to a third party solicitation firm
for certain services, no compensation will be paid to these individuals for any
such services. Except as described above, the Company does not presently intend
to solicit proxies other than by mail.
SHARE OWNERSHIP
The following table sets forth certain information known to the Company
regarding the ownership of the Company's Common Stock as of January 12, 2000 for
(i) each director (ii) all persons who are beneficial owners of five percent
(5%) or more of the Company's Common Stock, (iii) the Company's Chief Executive
Officer and the Company's four most highly paid executive officers who earned in
excess of $100,000 during the fiscal year ended March 28, 1999, and (iv) all
current directors and executive officers of the Company as a group. Unless
otherwise
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indicated, each of the stockholders has sole voting and investment power
with respect to the shares beneficially owned, subject to community property
laws where applicable.
<TABLE>
<CAPTION>
Percent of Total
Shares
Name Number of Shares Outstanding(1)
---- ---------------- ----------------
<S> <C> <C>
Teamasia Semiconductors PTE Ltd. 671,173(2) 16.6%
James Phillips Ferguson(3) 8,000 *
Zvi Grinfas(4) 37,669 *
David A. Laws(5) 309 *
Peter D. Olson 2,000 *
Bernard V. Vonderschmitt 3,749 *
Jerry DaBell(6) 8,746 *
Moiz Khambaty 6,373 *
Subbarao Pinamaneni(7) 0 *
Tarsaim Batra 8,627 *
Ron Laugesen 7,575
Brad Whitney(8) 1,000 *
All directors and executive
officers as a group (9
persons) 84,049 2.1%
</TABLE>
- ----------
* Less than one percent (1%).
(1) Percentage of beneficial ownership is calculated assuming 4,040,544 shares
of Common Stock were outstanding on January 12, 2000. This percentage may
include Common Stock of which such individual or entity has the right to
acquire beneficial ownership within 60 days of January 12, 2000, including
but not limited to the exercise of an option; however, such Common Stock
shall not be deemed outstanding for the purpose of computing the percentage
owned by any other individual or entity. Such calculation is required by
General Rule 13d-3(d)(1)(i) under the Securities Exchange Act of 1934.
(2) This does not include the 4,799,235 Shares of Common Stock to be issued upon
the consummation of the transaction described in Proposal No. 2, below. The
address of Teamasia is PSA Building, P.O. Box 512, Singapore 91148.
(3) As of September 1999, Mr. Ferguson is no longer a director or officer of the
Company. 3,000 of Mr. Ferguson's shares are held in the Francis L. Ferguson
Trust.
(4) 1,298 of the shares beneficially owned by Mr. Grinfas are in the name of Zvi
and Eva Grinfas.
(5) Shares beneficially owned by Mr. Laws are in the name of the Laws Family
Trust. As of April, 1999, Mr. Laws is no longer an officer of the Company.
(6) Shares beneficially owned by Mr. DaBell are in the name of Jerry and Christy
DaBell.
(7) Mr. Pinamaneni is a Managing Director and shareholder of Teamasia
Semiconductors PTE Ltd. Mr. Pinamaneni disclaims beneficial ownership of the
Company's Common Stock owned by Teamasia Semiconductors PTE Ltd. (except to
the extent of his beneficial ownership therein).
(8) Shares beneficially owned by Mr. Whitney are in the name of Brad and Gail
Whitney.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The persons named below are nominees for director to serve until the
next annual meeting of stockholders and until their successors have been elected
and qualified. The Company's Bylaws provide that the authorized number of
directors shall be determined by resolution of the Board of Directors or by the
stockholders at the annual meeting of the stockholders. The authorized number of
directors is currently four (4). The Board of Directors has selected four (4)
nominees, of which 4 of them are currently directors of the Company. Each person
nominated for election has agreed to serve if elected and management has no
reason to believe that any nominee will be unavailable to serve. Unless
otherwise instructed, the proxyholders will vote the proxies received by them
for the nominees named below. The four (4) candidates receiving the highest
number of affirmative votes of the shares entitled to vote at the Annual Meeting
will be elected directors of the Company.
NOMINEES
Set forth below is information regarding the nominees, including
information furnished by them, any arrangements pursuant to which they were
selected as directors or nominees and their ages as of December 31, 1999
<TABLE>
<CAPTION>
Name Age First Year Elected Director
---- --- ---------------------------
<S> <C> <C>
Brad Whitney 45 2000
Zvi Grinfas 57 1981
Subbarao Pinamaneni 46 1999
Bernard Vonderschmitt 76 1991
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
Mr. Whitney, Chief Executive Officer and President, was appointed to the
Board of Directors in January 2000 to fill an existing vacancy. From 1998 to
1999 he served as Senior Vice President of New Business for Bourns, Inc. From
1992 until 1997 he served as President and Chief Operating Officer of Linfinity
Microelectronics, Inc.
Mr. Grinfas, 59, Chairman of the Board, is a co-founder of the Company
and has been a director of the Company since its organization in January 1981.
He served as Senior Vice President for the Company, managing the Business
Development Group, until December 1984. At that time he became Senior Vice
President, Engineering, a position he held until May 1986, when he became Vice
President, Business Development and Sales Director of Southern Europe of IMP
Europe Limited. Mr. Grinfas ceased working for IMP Europe Limited in December
1988, and was then employed as a consultant, which included serving in the
function of General Manager, Microelectronic Operations for Elron Electronics
Industries, Ltd. from February 1989 through February 1990. Mr. Grinfas served as
Chief Executive Officer and President of the Company from August, 1999 until
January, 2000; after his service in these capacities, Mr. Grinfas has assumed a
reduced role in the management of the Company.
Mr. Vonderschmitt, 76, was co-founder of Xilinx, Inc. ("Xilinx"), a
supplier of field programmable gate arrays. He served as the President of Xilinx
from its inception in February 1984 to August 1994 and as it Chief Executive
Officer from August 1994 to January 1996 and is currently Chairman of the board
of directors of Xilinx. Mr. Vonderschmitt also serves as a director on the
boards of directors of Credence Systems Corporation and Sanmina Corporation, as
well as private companies. He has been a director of the Company since February
1991.
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Mr. Subbarao Pinamaneni, 46, has over 20 years of experience in the
semiconductor industry. He has worked for major semiconductor companies
including, National Semiconductor, and Altera Semiconductors in the United
States and Asia. His responsibilities have included managing packaging and
testing operations. Mr. Pinamaneni serves as Managing Director of Teamasia.
BOARD OF DIRECTORS COMMITTEES AND MEETINGS
During the fiscal year ended March 28, 1999, the Board of Directors held
seven (7) meetings. As of March 28, 1999, the Company had four standing
Committees: an Audit Committee, a Compensation Committee, a Nominating Committee
and a Stock Option Committee.
The Audit Committee is primarily responsible for approving the services
performed by the Company's independent accountants and reviewing reports of the
Company's external accountants regarding the Company's accounting practices and
systems of internal accounting controls. This Committee, during the fiscal year
ended March 28, 1999, consisted of Messrs. Grinfas, Olson and Vonderschmitt.
This Committee held zero (0) meetings during the last fiscal year.
The Compensation Committee reviews and approves the Company's general
compensation policies and sets compensation levels for the Company's executive
officers. This Committee, during the fiscal year ended March 28, 1999, consisted
of Messrs. Grinfas, Olson and Vonderschmitt. This Committee held one (1) meeting
during the last fiscal year and also acted by unanimous written consent zero (0)
times.
The Nominating Committee is responsible for recommending nominees for
members of the Company's Board of Directors. This Committee, during the fiscal
year ended March 28, 1999,consisted of Messrs. Olson and Vonderschmitt. This
Committee held zero (0) meetings during the last fiscal year.
The Stock Option Committee has been granted separate but concurrent
jurisdiction to make option grants under the Company's Discretionary Option
Grant Program to individuals that are not subject to the short-swing trading
restrictions under the federal securities laws. This Committee, during the
fiscal year ended March 28, 1999, consisted of Mr. Ferguson. This Committee held
zero (0) meetings during the last fiscal year and acted by unanimous written
consent fifteen (15) times.
No incumbent director serving for the full fiscal year attended fewer
than 75% of the aggregate number of meetings of the Board of Directors and
meetings of Committees of the Board on which he serves.
COMPENSATION OF DIRECTORS
Each non-employee member of the Board of Directors receives $1,500 for
each full fiscal quarter that he serves as a member of the Board of Directors,
and $1,000 for each meeting he attends. Mr. Grinfas does not receive fees, but
instead receives reimbursement for his travel expenses incurred in attending
meetings of the Board of Directors, which totaled approximately $27,869 in
fiscal 1999. In addition, non-employee members of the Board are eligible to
receive options to purchase shares of the Company's Common Stock.
Each individual newly elected or appointed as a non-employee member of
the Board will be granted on such date of election or appointment an automatic
option grant for 2,000 shares of Common Stock under the Company's Stock Option
Plan (the "Option Plan"). Each individual who continues to serve as a
non-employee Board member will receive additional automatic option grants, each
for 2,000 shares of Common Stock, at successive four (4)-year intervals over his
or her period of continued Board service. The first such additional grant will
be made on the later of (A) the date of the 1994 Annual Stockholders Meeting or
(B) the date of the Annual Stockholders Meeting held in the calendar year in
which occurs the fourth anniversary of the grant date of the initial automatic
option grant made to such individual, provided he or she is re-elected to the
Board at that Annual Meeting. Additional automatic grants for 2,000 shares each
will be made to such individual at every fourth Annual Stockholders Meeting
thereafter over such individual's period of continued service as a non-employee
Board member.
Each such grant becomes exercisable for all of the shares upon the
optionee's completion of six (6) months of service on the Board and becomes
immediately exercisable for all of the option shares if the Company is acquired
by merger, asset sale or hostile take-over. The option shares are subject to
repurchase at the original exercise price if the
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optionee ceases Board service prior to vesting in the shares. The Board member
will vest in twenty-five percent (25%) of the option shares upon completion of
one (1) year of Board service, and the balance will vest in thirty-six (36)
successive equal monthly installments over the optionee's continued period of
Board service, subject to accelerated vesting upon the optionee's death or
disability or if the Company is acquired by merger, asset sale or hostile
take-over. Such options have a maximum term of ten (10) years, subject to
earlier termination upon the optionee's cessation of Board service. Upon the
successful completion of a hostile tender offer for more than fifty percent
(50%) of the Company's outstanding Common Stock, each automatic option grant
will be canceled, and the non-employee Board member will be entitled to a cash
distribution from the Company based upon the tender-offer price.
APPROVAL REQUIRED
Approval of Proposal No. 1 requires the approval of the holders of a
majority of the total votes of the shares present and entitled to vote on the
matter at the Annual Meeting, provided that the total votes cast on the matter
represent over 50% in interest of all shares entitled to vote on the matter.
RECOMMENDATION OF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE NOMINEES LISTED HEREIN.
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PROPOSAL NO. 2
APPROVAL OF STOCK PURCHASE AGREEMENT
At the Annual Meeting, stockholders are being asked to approve the Phase
Two Stock Purchase Agreement between the Company and Teamasia Semiconductors PTE
Ltd., a Singapore corporation (together with Teamasia Semiconductors (India)
Ltd., a limited liability company formed under the laws of India, "Teamasia"),
dated as of December 15, 1999 (the "Stock Purchase Agreement"). A copy of the
Stock Purchase Agreement is included as Exhibit A to this proxy statement.
Stockholders are urged to read the full text of the Stock Purchase Agreement
carefully.
BACKGROUND
Beginning in July 1999, the Company began to experience severely limited
liquidity which had the potential over the near term to cause it to cease
operations. In response to this situation, the Board of Directors commenced a
review of the Company's strategic alternatives. Included among the possibilities
were the sale of the Company or the merger of the Company with another party.
The Company received a number of expressions of interest and proposals for a
variety of different types of transactions. The Board of Directors pursued each
such expression of interest or proposal received in order to fully understand
its terms and to determine whether the terms proposed could be materially
improved. During this process, the Board of Directors recognized that the
Company would be unable to continue operations without additional capital.
In September 1999, the Company narrowed the proposals under serious
consideration down to a few and pursued intense negotiations with each party
submitting a proposal in order to be able to closely assess the relative
benefits of each proposal to the Company and its stockholders. At the end of
this process, on September 24, 1999, the Company entered into a letter of intent
with Teamasia (the "Letter of Intent") pursuant to which the Company and
Teamasia agreed to pursue the negotiation of a substantial equity investment in
the Company by Teamasia and the other related agreements described herein. The
Prior Agreement (defined below) and the Stock Purchase Agreement substantially
reflect the transactions contemplated by the Letter of Intent.
Teamasia is a manufacturer of small-signal discrete and power
semiconductors headquartered in India.
On October 8, 1999, the Company entered into a stock purchase agreement
(the "Prior Agreement") with Teamasia Semiconductors (India) Ltd., pursuant to
which the Company issued and sold to Teamasia, and Teamasia purchased from the
Company, an aggregate of 671,173 shares of Common Stock of the Company ("Common
Shares") for an aggregate purchase price equal to $2,050,000, or $3.05 per
share, representing 16.6% of the fully diluted Common Stock of the Company. The
purchase of Common Shares by Teamasia under the Prior Agreement closed in stages
during the months of October, November and December 1999, with the final closing
having occurred on December 8, 1999. The Company agreed to use the proceeds from
the sale of Common Shares to Teamasia as follows: (a) to make compensation
payments to its employees, (b) to pay specified lease obligations, and (c) to
pay other operating expenses approved by Teamasia. A copy of the Prior Agreement
is included as Exhibit B to this proxy statement.
As provided by the Prior Agreement, the Company added one member
designated by Teamasia to the Board of Directors of the Company. Teamasia
designated Subbarao Pinamaneni to serve on the Board of Directors, and on
November 4, 1999 he was elected by the Board of Directors to fill an existing
vacancy. In addition, under the Letter of Intent and the Prior Agreement,
Teamasia committed to purchase wafers from the Company commencing in the third
quarter of fiscal 2000 and continuing through the second quarter of fiscal 2001.
Teamasia agreed to purchase a minimum of 750 wafers per week during the third
fiscal quarter of 2000 and a minimum of 1,500 wafers a week during the fourth
fiscal quarter of 2000 and the first and second fiscal quarters of 2001.
Under the terms of the Prior Agreement, Teamasia has certain rights to
require that the Company register the Common Shares. Teamasia also has certain
rights of first refusal, based on Teamasia's percentage ownership of the
Company's fully diluted common equity and subject to certain exceptions, should
the Company sell any shares of
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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 Letter of Intent and the Prior Agreement, the Company
and Teamasia agreed to negotiate the terms of an additional investment in the
Company by Teamasia that would result in Teamasia owning a majority of the fully
diluted Common Stock of the Company. On December 15, 1999, upon completing such
negotiation, the Company and Teamasia entered into the Stock Purchase Agreement
which is now being presented to the stockholders of the Company for their
approval.
STOCK PURCHASE AGREEMENT TERMS
Under the terms of the Stock Purchase Agreement, the Company has agreed
to issue and sell to Teamasia, and Teamasia has agreed to purchase from the
Company, an aggregate of 4,793,235 shares of Common Stock of the Company for the
aggregate purchase price of $3,930,000, or $0.82 per share ("Purchase Price")
(Teamasia will then hold a total of 5,464,408 shares). The purchase will occur
at a closing not later than 14 business days after approval by the stockholders
of the Company (the "Closing"). With the purchase of these shares and the shares
previously acquired under the terms of the Prior Agreement, Teamasia will own
approximately 61.9% of the Common Stock of the Company, or approximately 51% of
the fully diluted Common Stock of the Company after taking into account the
IMP., Inc. Option Plan, the 1999 IMP, Inc. Option Plan (each described below),
the Company's employee stock purchase plan and any outstanding warrants.
The Stock Purchase Agreement also provides that in the event that
Bernard Vonderschmitt 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.
Vonderschmitt. The Stock Purchase Agreement also provides that a new chief
executive officer hired by the Company will also be designated to serve as a
member of the Board of Directors. In addition, the Stock Purchase Agreement
provides that, promptly after the Closing, the Company's Board of Directors take
the necessary steps to add one additional person designated by Teamasia as a
member of the Company's Board of Directors.
The Stock Purchase Agreement further provides that if Teamasia
(considered together with its affiliates) seeks to purchase or otherwise acquire
(directly or indirectly) additional Common Stock of the Company, and after such
purchase or other acquisition Teamasia (considered together with its affiliates)
would own more than 51% of the fully diluted Common Stock of the Company, such
purchase or other acquisition is required to be approved by holders of at least
51% of the Common Stock of the Company but will be so approved only if holders
of no more than twenty percent (20%) of the Common Stock of the Company vote
against such purchase or other acquisition. The foregoing special provision will
terminate at such time as Teamasia (considered together with its affiliates)
owns Common Stock representing 75% or more of the outstanding Common Stock. The
Company has agreed to use its reasonable best efforts to incorporate the
foregoing provision into the Company's Certificate of Incorporation. The
incorporation of the foregoing provision into the Company's certificate of
incorporation is a condition to Teamasia's obligations under the Stock Purchase
Agreement and may be waived by Teamasia.
The Stock Purchase Agreement further provides that the Company's Board
of Directors will adopt a new option plan covering 1,000,000 shares of the
Company's Common Stock (or allocation of an additional 1,000,000 Common Stock to
an existing option plan). On January 7, 2000, the Board of Directors approved
the allocation of an additional 1,000,000 Common Shares to the IMP, Inc., Stock
Option Plan. Such approval is subject to approval by the Company's stockholders,
and such additional allocation is being submitted to the Company's stockholders
for their approval in Proposal No. 5 below.
As a condition to the Closing of the Stock Purchase Agreement, the
Company is required to obtain the consents of certain creditors, including
creditors under capital leases and revolving credit agreements.
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
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between the Approval Date and the date of the Closing, if the Company so
requests, Teamasia is required to provide the Company with such additional
financing, upon the same terms.
Under the terms of the Stock Purchase Agreement, Teamasia will have
certain rights to require that the Company register all shares of Common Stock
acquired by Teamasia under the Stock Purchase Agreement and the Prior Stock
Purchase Agreement. Upon the Closing, the percentage applicable to Teamasia's
rights of first refusal described above with respect to any sale by the Company
of shares of Common Stock or other equity securities or any securities which are
convertible into or exercisable for Common Stock or other equity securities
would increase by reason of Teamasia's acquisition of additional shares of
Common Stock.
MANAGEMENT DISCUSSION
Management believes that the Stock Purchase Agreement with Teamasia
offers the Company significant benefits of both a financial and strategic
nature.
The proceeds of $3,930,000 from the sale of Common Stock to Teamasia
pursuant to the Stock Purchase Agreement will result in an improvement in the
Company's equity base and its liquidity. Upon Closing and receipt of such
proceeds together with the proceeds of operations, the Company expects to have
cash resources sufficient to meet its needs at least through December 2000.
The Company also expects to realize a number of significant strategic
benefits from its relationship with Teamasia. First, the Company will gain
access to certain Asian markets in which the Company is not presently active.
The Company, through its relationship with Teamasia, will also have access to an
efficient, low-cost assembly facility in Asia from which to compete more
efficiently in new Asian markets.
In addition, the Company will receive significant production orders from
Teamasia. These orders should alleviate to some degree the current
underutilization of the Companies fabrication facilities. This will allow the
Company to operate its facilities more efficiently and increase its
profitability.
The Company, through its relationship with Teamasia, also expects to
benefit from additional product development and design capabilities. Teamasia is
in the process of establishing a product development and design center in India,
and the Company expects that its product development and design personnel work
closely with their counterparts at Teamasia, resulting in an increase in the
Company's product range and reduction of the product development cycle for power
management semiconductor devices.
Teamasia has advised the Company that completing the second phase of
Teamasia's equity investment in the Company, as contemplated by the Stock
Purchase Agreement, is a material element of its decision to place additional
production orders with the Company. There can be no assurance that replacement
customers can be located in the event that the second phase of Teamasia's equity
investment in the Company is not completed and Teamasia elects not to place
additional orders with the Company.
APPROVAL REQUIRED
Approval of Proposal No. 2 requires the approval of the holders of a
majority of the Common Stock present in person or represented by proxy.
RECOMMENDATION OF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF THE
STOCK PURCHASE AGREEMENT BY AND BETWEEN THE COMPANY AND TEAMASIA SEMICONDUCTORS
PTE LTD.
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PROPOSAL NO. 3
AMENDMENT TO CERTIFICATE OF INCORPORATION
INTRODUCTION
The Board of Directors of the Company has approved the Stock Purchase
Agreement with Teamasia (see Proposal No. 2 above). Section 6.6 of the Stock
Purchase Agreement provides that, in the event that Teamasia or its affiliates
elects to purchase shares of Common Stock that would result in Teamasia or its
affiliates holding more than 51% of the fully diluted Common Stock of the
Company, and unless such purchase is approved unanimously by the Board of
Directors of the Company, such additional purchase will be subject to a vote of
the stockholders of the Company and shall be approved if at least fifty-one
percent (51%) of the stockholders vote in favor of the transaction and no more
than twenty percent (20%) of the stockholders vote against such transaction
(abstentions and broker non-votes will not be counted as votes against such
transaction). Such additional purchase may take the form of a purchase of stock,
purchase of assets, merger or combination, or other form of acquisition. In the
event that Teamasia or its affiliates acquire equal to or greater than seventy
five percent (75%) of the outstanding Common Stock of the Company, this
provision shall terminate. Section 4.1(g) of the Stock Purchase Agreement
provides that, as a condition to the obligation of Teamasia under the Stock
Purchase Agreement, the Company will use its best efforts to amend and restate
the Company's Certificate of Incorporation to incorporate the provisions of
Section 6.6 of the Stock Purchase Agreement. The Company's stockholders are
asked to approve this proposed amendment.
MANAGEMENT DISCUSSION
By amending the Certificate of Incorporation to impose certain special
limitations regarding shareholder approval for certain additional purchases of
Common Stock of Teamasia, the Company's stockholders not affiliated in any way
with Teamasia will receive additional assurance that such a transaction will not
occur except on terms which are not objectionable to a significant percentage of
the Company's stockholders not having any affiliation with Teamasia. Whether or
not this amendment is approved, however, Teamasia will be subject to the
contractual limitations contained in the Stock Purchase Agreement.
APPROVAL REQUIRED
Approval of Proposal No. 3 requires the affirmative vote of a majority
of the outstanding shares of Common Stock of the Company.
RECOMMENDATION OF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT TO THE CERTIFICATE OF INCORPORATION
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PROPOSAL NO. 4
APPROVAL AND ADOPTION OF 1999 IMP, INC. STOCK OPTION PLAN
INTRODUCTION
The Company's stockholders are being asked to approve the 1999 IMP, Inc.
Stock Option Plan (the "1999 Option Plan"), under which 250,000 shares of Common
Stock will be authorized for issuance over the term of the 1999 Option Plan. The
purpose of the 1999 Option Plan is to is retain the services of key employees
who are essential to the Company's long-term growth and success. The 1999 Option
Plan was approved by the Board of Directors of the Company on October 14, 1999.
The Board of Directors approved the 1999 Option Plan specifically to deal with
the uncertainty about the Company's future caused by the Company's financial
problems during the months of July through September 1999 and to attempt to
preclude existing employees from seeking or accepting other opportunities during
the ongoing period of uncertainty.
The following is a summary of the principal features of the 1999 Option
Plan. However, the summary does not purport to be a complete description of all
the provisions of the 1999 Option Plan. Any stockholder of the Company who
wishes to obtain a copy of the actual plan document may do so upon written
request to the Chief Executive Officer of the Company at the Company's principal
executive offices in San Jose, California.
STRUCTURE
The 1999 Option Plan will provide for employees below the level of
officer and consultants to the Company (and the Company's subsidiaries or
affiliates as applicable) to have the opportunity to acquire shares of Common
Stock by granting non-statutory stock options which are not intended to qualify
as "incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended.
ADMINISTRATION
At the Board of Directors' discretion, administration of the 1999 Option
Plan shall be vested in a Committee of one (1) or more Board members appointed
by the Board (the "Committee"), or the Board may retain the power to administer
the 1999 Option Plan. If the Board retains this authority, the Board shall be
the Committee for purposes of the 1999 Option Plan. Members of the Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Committee shall, within the scope of its
administrative functions under the 1999 Option Plan, have full power and
authority to establish such rules and regulations as it may deem appropriate for
proper administration of the 1999 Option Plan and to make such determinations
under, and issue such interpretations of, the 1999 Option Plan and any
outstanding options thereunder as it may deem necessary or advisable. Decisions
of the Committee within the scope of its administrative functions under the 1999
Option Plan shall be final and binding on all parties who have an interest under
its jurisdiction or any stock option issued under the 1999 Option Plan.
SHARE RESERVE
As of December 31, 1999 approximately 233,200 shares of Common Stock
were subject to outstanding options granted under the 1999 Option Plan and
16,800 shares were available for issuance under future option grants.
ELIGIBILITY
The persons eligible to receive options under the 1999 Option Plan shall
be limited to key employees and key consultants of the Company or its parent or
subsidiary corporations who are below the level of the Company's officers as the
Committee shall select from time to time. Under no circumstances shall any
individual who is a "Section 16
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Insider" be eligible for the grant of an option under the 1999 Option Plan. For
this person, a "Section 16 Insider" shall mean an officer or director of the
Company subject to the short-swing profit liabilities of Section 16 of the
Securities Exchange Act of 1934, as amended.
The Committee shall, within the scope of its administrative jurisdiction
under the Plan, have full authority to determine the number of shares to be
covered by each grant made under the Plan, the time or times at which each such
option is to be granted and is to be become exercisable, and the maximum term
for which the option is to be outstanding.
PRICE AND EXERCISABILITY
The option price per share shall be fixed by the Committee and, to the
extent required under applicable law, shall in no event be less than eighty-five
percent (85%) of the fair market value per share of Common Stock on the date of
grant. To the extent required by applicable law, if any individual to whom an
option is to be granted is on the date of grant the owner of stock (as
determined under Section 424(d) of the Internal Revenue Code) possessing 10% or
more of the total combined voting power of all classes of stock of the Company
or any one of its parent or subsidiary corporations, then the option price per
share shall not be less than one hundred ten percent (110%) of the fair market
value per share of Common Stock on the date of grant. The option price is
payable in cash or in shares of Common Stock. Outstanding options may also be
exercised through a cashless exercise procedure pursuant to which a designated
brokerage firm is to effect an immediate sale of the shares purchased under the
option and pay over to the Company, out of the sales proceeds available on the
settlement date, sufficient funds to cover the option price for the purchased
shares plus all applicable withholding taxes. The Committee may also assist any
optionee in the exercise of outstanding options by authorizing a loan from the
Company or permitting the optionee to pay the option price in installments over
a period of years. The terms of any loan or installment method of payment will
be established by the Committee in its sole discretion, and may include
provision for forgiveness of such indebtedness in whole or in part, but in no
event may the maximum credit extended to the optionee exceed the aggregate
option price payable for purchased shares (less the par value), plus any Federal
and State income and employment tax liability incurred by the optionee in
connection with such exercise.
No optionee is to have any stockholder rights with respect to the option
shares until such optionee has exercised the option, paid the option price for
the purchased shares and been issued a stock certificate for those shares.
All options granted under the 1999 Option Plan shall vest on the earlier
to occur of a) September 30, 2000 or b) the termination of optionee's services
for any reason other than misconduct following a Corporate Transaction (as
defined below). The vesting period for such options is shorter than is typical
of most option plans (and shorter than for options granted under the IMP, Inc.,
Stock Option Plan, which is the Company's principal option plan) due to the
judgment of the Board of Directors that it was in the Company's best interest to
grant options having a relatively short vesting period in order to provide
important incentive over the near term for essential employees to remain
employed with the Company.
TERMINATION OF SERVICE
All options granted under the 1999 Option Plan must be exercised within
twelve months (or such shorter period determined by the Committee and specified
in the instrument evidencing the option) after the optionee ceases for any
reason to be in the employ or service of the Company or its parent or subsidiary
corporations. Under no circumstances shall any such option be exercisable after
the specified expiration date of the option term. Each option will be
exercisable only to the extent of the number of shares for which that option is
exercisable at the time of the optionee's cessation of employment or service.
CORPORATE TRANSACTION
Each outstanding option will become immediately exercisable for all of
the shares of Common Stock subject to such option in the event of a Corporate
Transaction, unless (i) the outstanding options are, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof or (ii) the
acceleration of the options is subject to other applicable limitations imposed
by the Committee at the time of grant. Immediately following the consummation of
the Corporate Transaction, all outstanding options under the Option Plan
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shall, except to the extent assumed by the successor corporation or its parent
company, terminate and cease to be outstanding. A Corporate Transaction includes
one or more of the following transactions:
1. a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company's incorporation;
2. the sale, transfer or other disposition of all or
substantially all of the assets of the Company; or
3. any reverse merger in which the Company is the
surviving entity, but in which fifty percent (50%) or more of the Company's
outstanding voting stock is transferred to holders different from those who held
the stock immediately prior to such merger,
APPROVAL REQUIRED
Approval of Proposal No. 4 requires the approval of the holders of a
majority of the Common Stock present in person or represented by proxy.
RECOMMENDATION OF THE BOARD
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION OF
THE 1999 IMP, INC. STOCK OPTION PLAN.
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PROPOSAL NO. 5
APPROVAL AND RATIFICATION OF AMENDMENT
TO THE IMP, INC. STOCK OPTION PLAN
INTRODUCTION
The Company's stockholders are being asked to approve an amendment to
the IMP, Inc. Stock Option Plan (the "Option Plan") which will increase the
maximum number of shares of Common Stock authorized for issuance over the term
of the Option Plan by an additional 1,000,000 shares. The purpose of the new
amendment is to assure that the Company will continue to have a sufficient
reserve of Common Stock available under the Option Plan to attract and retain
the services of key individuals essential to the Company's long-term growth and
success. The amendment was adopted by the Board of Directors on January 7, 2000,
subject to stockholder approval at the 1999 Annual Meeting.
The following is a summary of the principal features of the Option Plan
as amended, together with the applicable tax and accounting implications for the
Company and the participants. However, the summary does not purport to be a
complete description of all the provisions of the Option Plan. Any stockholder
of the Company who wishes to obtain a copy of the actual plan document may do so
upon written request to the Secretary of the Company at the Company's principal
executive offices in San Jose, California.
The Option Plan was originally adopted by the Board in October 1981 and
subsequently approved by the stockholders. A restatement of the Option Plan was
adopted by the Board on December 16, 1986 and approved by the stockholders on
February 26, 1987. The Option Plan as so restated was subsequently amended on
several occasions, and those amendments were approved by the Company's
stockholders on August 3, 1988 and again on August 2, 1989, at which time an
automatic grant program for non-employee Board members was approved. On May 13,
1992, the Option Plan was further restated by the Board, and the 1992
restatement was approved by the Company's stockholders at the 1992 Annual
Meeting of Stockholders. On August 18, 1994, the Option Plan was again restated
to authorize additional automatic option grants to non-employee Directors at
successive four (4)-year intervals over such person's period of continued Board
service. Such restatement was approved by the Company's stockholders at the 1995
Annual Meeting of Stockholders. The Option Plan was subsequently amended by the
Board on May 15, 1996 and that amendment was subsequently approved by the
stockholders at the 1996 Annual Meeting of Stockholders. On May 14, 1997, the
Option Plan was amended to increase the number of shares authorized for issuance
under the Option Plan by 750,000 shares, which amendment was approved by the
Company's stockholders at the 1997 Annual Meeting of Stockholders. On May 13,
1998 the Option Plan was amended to increase the number of shares authorized for
issuance under the Option Plan by 500,000 shares, which amendment was approved
by the Company's stockholders at the 1998 Annual Meeting of Stockholders. The
share numbers in the previous two sentences do not reflect the one-for-ten
reverse stock split effected on January 12, 1999.
STRUCTURE
The Option Plan is divided into two separate components: the
Discretionary Option Grant Program and the Automatic Option Grant Program. Under
the Discretionary Option Grant Program, options may be issued to key employees
(including officers and directors) and key consultants in the service of the
Company (or its parent or subsidiary companies) who contribute to the
management, growth and financial success of the Company. Under the Automatic
Option Grant Program, non-employee Board members will receive a series of option
grants over their period of continued service on the Board.
ADMINISTRATION
The Compensation Committee of the Board administers the provisions of
Discretionary Option Grant Program with respect to all officers and directors of
the Company subject to the short-swing trading restrictions of the federal
securities laws. With respect to all other participants, the Discretionary
Option Grant Program may be administered by either the Compensation Committee or
a committee of one or more Board members appointed by the Board or by the
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entire Board itself. Currently, the Compensation Committee administers the
Discretionary Option Grant Program with respect to all participants. The Board
has also created a Stock Option Committee that has separate but concurrent
jurisdiction with the Compensation Committee to make option grants under the
Discretionary Option Grant Program to individuals who are not subject to the
short-swing trading restrictions of the federal securities laws. Each entity,
whether the Compensation Committee or the secondary committee or the Board, will
be referred to in this summary as Plan Administrator with respect to its
particular administrative functions under the Discretionary Option Grant
Program. Each Plan Administrator has complete discretion (subject to the
provisions of the Option Plan) to authorize grants under the Discretionary
Option Grant Program within the scope of its administrative jurisdiction.
Accordingly, the Plan Administrator will have full authority to
determine the eligible individuals who are to receive option grants, the time or
times when the option grants are to be made, the number of shares of Common
Stock subject to each such grant, the date or dates on which the option is to
become exercisable, and the maximum term for which the option is to be
outstanding. The Plan Administrator will also have the discretion to determine
whether the granted option is to be an incentive stock option under the Federal
tax laws or a nonstatutory option. In addition, the Plan Administrator will have
full authority to accelerate the exercisability of one or more outstanding
options at any time upon such terms and conditions as it deems appropriate.
Option grants under the Automatic Option Grant Program will be made in
strict compliance with the express provisions of that program, and no Plan
Administrator will have any discretionary authority with respect to those option
grants.
SHARE RESERVE
A total of 1,667,000 shares of Common Stock have been reserved for
issuance over the term of the Option Plan, including the 1,000,000-share
increase for which stockholder approval is sought under this Proposal. In no
event may any one participant in the Option Plan be granted stock options or
separately exercisable stock appreciation rights for more than 1,000,000 shares
in the aggregate under the Option Plan. For purposes of such limitation, stock
options and stock appreciation rights granted prior to July 31, 1994 will not be
taken into account.
As of December 31, 1999 approximately 191,212 shares of Common Stock had
been issued upon the exercise of options granted under the Option Plan, 280,127
shares of Common Stock were subject to outstanding options under the Option
Plan, and 34,127 shares of Common Stock were available for issuance under future
option grants.
Should an option expire or terminate for any reason prior to exercise in
full, the shares subject to the portion of the option not so exercised will be
available for subsequent issuance under the Option Plan. Shares subject to any
option surrendered in accordance with the stock appreciation right provisions of
the Option Plan will not be available for subsequent issuance.
ELIGIBILITY
Officers and other key employees of the Company and its parent or
subsidiary corporations (whether now existing or subsequently established), key
consultants in the service of the Company or such parent or subsidiary
corporations and non-employee Board members (other than those serving on the
Compensation Committee) will be eligible to participate in the Discretionary
Option Grant and Stock Issuance Programs. Non-employee Board members (including
those serving on the Compensation Committee) will also participate in the
Automatic Option Grant Program.
As of December 31, 1999, approximately on hundred seventy eight (178)
employees (including five (5) executive officers) were eligible to participate
in the Discretionary Option Grant Program, and two (2) non-employee Board
members were eligible to participate in the Automatic Option Grant Program.
PRICE AND EXERCISABILITY
The exercise price of shares issued under the Discretionary Option Grant
Program may not be less than 85% of the fair market value per share of Common
Stock on the grant date, and no option may be outstanding for more than a
10-year term. If the granted option is intended to be an incentive stock option
under the Federal tax laws, the option price must not be less than 100% of the
fair market value per share of Common Stock on the grant date. Options issued
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under the Discretionary Option Grant Program generally become exercisable in a
series of installments over the optionee's period of service with the Company.
The option price is payable in cash or in shares of Common Stock.
Outstanding options may also be exercised through a cashless exercise procedure
pursuant to which a designated brokerage firm is to effect an immediate sale of
the shares purchased under the option and pay over to the Company, out of the
sales proceeds available on the settlement date, sufficient funds to cover the
option price for the purchased shares plus all applicable withholding taxes. The
Plan Administrator may also assist any optionee (including an officer) in the
exercise of outstanding options under the Discretionary Option Grant Program by
authorizing a loan from the Company or permitting the optionee to pay the option
price in installments over a period of years. The terms and conditions of any
such loan or installment payment will be established by the Plan Administrator
in its sole discretion, and may include provision for forgiveness of such
indebtedness in whole or in part, but in no event may the maximum credit
extended to the optionee exceed the aggregate option price payable for the
purchased shares (less the par value), plus any Federal and state income or
employment taxes incurred in connection with the purchase.
No optionee is to have any stockholder rights with respect to the option
shares until such optionee has exercised the option, paid the option price for
the purchased shares and been issued a stock certificate for those shares.
Options are not assignable or transferable other than by will or the laws of
inheritance following the optionee's death and, during the optionee's lifetime,
the option may be exercised only by the optionee.
VALUATION
For purposes of establishing the option price and for all other
valuation purposes under the Option Plan, the fair market value per share of
Common Stock on any relevant date will be the closing selling price per share on
such date on the Nasdaq SmallCap Market. On January 12, 2000 the fair market
value per share of Common Stock was $3.56 on the basis of the closing selling
price on that date.
TERMINATION OF SERVICE
All options granted under the Discretionary Option Grant Program must be
exercised within twelve months (or such shorter period as the Plan Administrator
may establish at the time of grant) after the optionee ceases for any reason to
be in the employ or service of the Company or its parent or subsidiary
corporations. The Plan Administrator will, however, have complete discretion to
extend the period of time for which any option is to remain exercisable
following the optionee's cessation of employment or service, but under no
circumstances may an option be exercised after the specified expiration date of
the option term. If the optionee's employment is terminated for misconduct or
the optionee makes or attempts to make any unauthorized use of confidential
information of the Company or its parent or subsidiary corporations, then any
outstanding option held by the optionee will immediately terminate.
Each option under the Discretionary Option Grant Program will be
exercisable only to the extent of the number of shares for which that option is
exercisable at the time of the optionee's cessation of employment or service,
unless the Plan Administrator accelerates the exercisability of the option in
whole or in part. Such acceleration may be authorized at any time while the
option remains outstanding, whether before or after the optionee's actual
cessation of service.
CORPORATE TRANSACTION
Each outstanding option under the Discretionary Option Grant Program
will become immediately exercisable for all of the shares of Common Stock
subject to such option in the event of a Corporate Transaction (as defined
below), unless (i) that option is assumed by the successor corporation (or its
parent corporation) or replaced with a comparable option to purchase shares of
stock of the successor corporation (or its parent corporation) or (ii) the
acceleration of such option is precluded by other limitations imposed by the
Plan Administrator at the time of grant. A Corporate Transaction includes one or
more of the following transactions:
a. a merger or acquisition in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Company's incorporation;
b. the sale, transfer or other disposition of all or substantially
all of the assets of the Company; or
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c. any reverse merger in which the Company is the surviving entity,
but in which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred to holders different from those who held the stock
immediately prior to such merger.
Immediately following the consummation of the Corporate Transaction, all
outstanding options will terminate, except to the extent assumed by the
successor corporation (or its parent company).
STOCK APPRECIATION RIGHTS
At the discretion of the Plan Administrator, options may be granted with
stock appreciation rights. A stock appreciation right grants the holder the
right to surrender all or part of an unexercised option under the Discretionary
Option Grant Program in exchange for a distribution from the Company equal in
amount to the excess of (i) the fair market value (on the date of surrender) of
the shares of Common Stock in which the optionee is at the time vested under the
surrendered option over (ii) the aggregate option price payable for such shares.
The appreciation distribution may be made, at the discretion of the Plan
Administrator, either in shares of Common Stock valued at fair market value on
the date of surrender, in cash or in a combination of cash and Common Stock. No
surrender of an option will be effective unless it is approved by the Plan
Administrator.
One or more officers of the Company subject to the short-swing profit
restrictions of the Federal securities laws may, in the Plan Administrator's
discretion, be granted limited stock appreciation rights in tandem with their
outstanding options under the Discretionary Grant Program. Any option with such
a limited stock appreciation right in effect for at least six months will
automatically be canceled upon the occurrence of a Hostile Take-Over, and the
optionee will in return be entitled to a cash distribution from the Company in
an amount equal to the excess of (i) the Take-Over Price of the number of shares
of Common Stock in which the optionee is at the time vested under the canceled
option over (ii) the aggregate exercise price payable for such vested shares.
Neither the Plan Administrator's approval nor the Board's consent will be
required in connection with such cancellation and cash distribution.
For purposes of such option cancellation provisions, the following
definitions are in effect under the Option Plan:
1. HOSTILE TAKE-OVER means the acquisition by any person or related
group of persons (other than the Company or its affiliates) of securities
possessing more than 50% of the combined voting power of the Company's
outstanding securities pursuant to a tender or exchange offer which the Board
does not recommend the Company's stockholders to accept, provided at least 50%
of the securities so acquired in such tender or exchange offer are obtained from
holders other than the officers and directors of the Company.
2. TAKE-OVER PRICE means the greater of (A) the fair market value of the
shares subject to the canceled option, measured on the cancellation date in
accordance with the valuation provisions of the Option Plan described above or
(B) the highest reported price per share paid in effecting the Hostile
Take-Over.
The acceleration of options in the event of a Corporate Transaction and
the cash-out of options upon a Hostile Take-Over may be seen as anti-takeover
provisions and may have the effect of discouraging a merger proposal, takeover
attempt or other effort to gain control of the Company.
CANCELLATION AND NEW GRANT OF OPTIONS
The Plan Administrator has the authority to effect, at any time and from
time to time, with the consent of the affected optionees, the cancellation of
any or all options outstanding under the Discretionary Option Grant Program and
to grant in substitution therefor new options covering the same or different
numbers of shares of Common Stock but having an exercise price per share not
less than 85% of the fair market value per share of Common Stock on the new
grant date (or 100% of fair market value if the new option is to be an incentive
stock option).
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AUTOMATIC OPTION GRANT PROGRAM
Under the Automatic Option Grant Program, option grants have been made
to the current non-employee Board members, and option grants will be made to
individuals who join the Board as non-employee Board members in the future.
These special grants are summarized as follows(1):
1. Each individual who was serving as a non-employee Board member at
the time of the 1989 Annual Meeting was automatically granted on
such date a nonstatutory stock option to purchase 20,000 shares
of Common Stock at the fair market value of the Common Stock on
such date.
2. Each individual who first becomes a non-employee Board member at
any time after the 1989 Annual Meeting, whether through election
by the stockholders or appointment by the Board, will be
automatically granted, at the time of such initial election or
appointment, a nonstatutory stock option to purchase 20,000
shares of Common Stock.
3. Each individual who continues to serve as a non-employee Board
member will receive additional automatic option grants, each for
20,000 shares of Common Stock, at successive four (4)-year
intervals over his or her period of continued Board service. The
first such additional grant will be made upon the later of (A)
the date of the 1994 Annual Stockholders Meeting or (B) the date
of the Annual Stockholders Meeting held in the calendar year in
which occurs the fourth anniversary of the grant date of the
initial automatic option grant made to such individual, provided
he or she is re-elected to the Board at that Annual Meeting.
Additional automatic grants for 20,000 shares each will be made
to such individual at every fourth Annual Stockholders Meeting
thereafter over such individual's continued period of service as
a non-employee Board member.
Each option grant under the Automatic Option Grant Program is subject to
the following terms and conditions:
- The option price per share will be equal to 100% of the fair market
value per share of Common Stock on the automatic grant date, and each
option is to have a maximum term of ten years measured from the grant
date.
- Each automatic option grant will become exercisable for the option
shares six months after the grant date, provided the optionee
continues as a member of the Board.
- Shares purchased under the automatic option grant will be subject to
repurchase by the Company, at the option price paid per share, in the
event the optionee should cease to be a Board member prior to vesting
in those shares. The option shares will vest in a series of
installments over the optionee's period of Board service as follows:
25% of the option shares will vest upon optionee's completion of one
year of Board service measured from the automatic grant date, and the
balance of the option shares will vest in a series of 36 successive
equal monthly installments upon the optionee's completion of each
additional month of Board service thereafter. Full and immediate
vesting of the option shares will occur upon the optionee's death or
permanent disability while a Board member.
- Each automatic option will remain exercisable for a six-month period
following the optionee's termination of service as a Board member for
any reason other than death. Should the optionee die while serving as
a Board member or during the six-month period following his or her
cessation of Board service, then such option will remain exercisable
for a 12-month period following such optionee's death and may be
exercised by the personal representatives of the optionee's estate or
the person to whom the grant is transferred by the optionee's will or
the laws of inheritance. In no event, however, may the option be
exercised after the expiration date of the option term. During the
applicable exercise period, the option may not be exercised for more
than the number of shares (if any) in which the optionee is vested at
the time of his or her cessation of Board service.
- ----------
(1) The shares issuances discussed in the following paragraphs 1-3 are subject
to the one-for-ten reverse stock split effected on January 12, 1999.
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- The option will become immediately exercisable for all of the shares
of Common Stock at the time subject to such option in the event of a
Corporate Transaction (see "Corporate Transaction" above).
Immediately following the consummation of the Corporate Transaction,
the option will terminate, except to the extent assumed by the
successor corporation (or its parent company).
- The option will become immediately exercisable for all of the shares
of Common Stock at the time subject to such option in the event of a
Change in Control. A Change in Control will be deemed to occur under
the Option Plan in the event:
(A) any person or related group of persons (other than the
Company or any affiliate) acquires beneficial ownership of
securities possessing more than 50% of the combined voting
power of the Company's outstanding securities pursuant to
a tender or exchange offer which the Board does not
recommend the Company's stockholders to accept; or
(B) there is a change in the composition of the Board over a
period of 24 consecutive months or less such that a
majority of the Board members cease, by reason of one or
more proxy contests for the election of Board members, to
be comprised of individuals who are either (i) Board
members who have served continuously during such period
(continuing Board members) or (ii) Board members who were
elected or nominated during such period by continuing
Board members.
- Each automatic option in effect for at least six months will
automatically be canceled upon the occurrence of a Hostile Take-Over
(see "Stock Appreciation Rights" above), and the optionee will in
return be entitled to a cash distribution from the Company in an
amount equal to the excess of (A) the Take-Over Price of the shares
of Common Stock at the time subject to the canceled option (whether
or not the option is otherwise at the time exercisable for such
shares) over (B) the aggregate exercise price payable for such
shares.
- The remaining terms and conditions of the option grants under the
Automatic Option Grant Program will in general conform to the terms
described above for option grants made under the Discretionary Option
Grant Program and will be incorporated into the option agreement
evidencing the automatic grant.
EXCESS GRANTS
The Option Plan permits the grant of options to purchase shares of the
Company's Common Stock in excess of the number of shares then available for
issuance under the Option Plan. Any option so granted cannot be exercised prior
to stockholder approval of an amendment increasing the number of shares
available for issuance under the Option Plan.
CHANGES IN CAPITALIZATION
In the event any change is made to the Common Stock issuable under the
Option Plan by reason of (A) a Corporate Transaction or (B) any stock split,
stock dividend, combination of shares, recapitalization or other similar change
in the corporate structure of the Company effected without receipt of
consideration, then unless such change results in the termination of all
outstanding options pursuant to the Corporate Transaction provisions of the
Option Plan, appropriate adjustments will be made to (i) the maximum number
and/or class of securities available for issuance under the Option Plan, (ii)
the maximum number and class of securities for which any one participant may be
granted stock options and separately exercisable stock appreciation rights under
the Option Plan, (iii) the number and/or class of securities and price per share
in effect under each outstanding option under the Discretionary Option Grant
Program, (iv) the number and/or class of securities per non-employee Board
member for which automatic option grants are subsequently to be made under the
Automatic Option Grant Program, and (v) the number and/or class of securities
and price per share of the Common Stock in effect under each automatic grant
outstanding under the Automatic Option Grant Program. The purpose of such
adjustments to the outstanding options is to preclude the enlargement or
dilution of rights and benefits under such options.
21
<PAGE> 22
STOCK OPTION GRANTS IN 1999
No stock options were granted to the executive officers named in
the Summary Compensation Table in fiscal 1999.
AMENDMENT AND TERMINATION OF THE PLAN
The Board may amend or modify the Option Plan in any or all respects
whatsoever. However, the Board will not, without stockholder approval, increase
the maximum number of shares available for issuance under the Option Plan except
in the event of certain changes to the Company's capitalization, and certain
other amendments may require stockholder approval pursuant to applicable laws or
regulations.
The Board may terminate the Option Plan at any time, but in all events
the Option Plan will terminate upon the earlier of August 16, 2005 or the date
all shares available for issuance under the Option Plan are issued or canceled
pursuant to the exercise or surrender of options granted under the Option Plan.
Any options outstanding at the time of the termination of the Option Plan will
remain in force in accordance with the provisions of the instruments evidencing
such grants.
FEDERAL INCOME TAX CONSEQUENCES
OPTION GRANTS
Options granted under the Option Plan may be either incentive stock
options which satisfy the requirements of Section 422 of the Internal Revenue
Code or non-statutory options which are not intended to meet such requirements.
The Federal income tax treatment for the two types of options differs as
follows:
Incentive Options. No taxable income is recognized by the optionee at
the time of the option grant, and no taxable income is generally recognized at
the time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise made the
subject of a taxable disposition. For Federal tax purposes, dispositions are
divided into two categories: (i) qualifying and (ii) disqualifying. A qualifying
disposition occurs if the sale or other disposition is made after the optionee
has held the shares for more than two years after the option grant date and more
than one year after the exercise date. If either of these two holding periods is
not satisfied, then a disqualifying disposition will result.
If the optionee makes a disqualifying disposition of the purchased
shares, then the Company will be entitled to an income tax deduction for the
taxable year in which such disposition occurs, equal to the excess of (i) the
fair market value of such shares on the option exercise date over (ii) the
exercise price paid for the shares. In no other instance will the Company be
allowed a deduction with respect to the optionee's disposition of the purchased
shares.
Non-Statutory Options. No taxable income is recognized by an optionee
upon the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by the Company in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when the Company's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for such shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.
The Company will be entitled to an income tax deduction equal to the
amount of ordinary income recognized by the optionee with respect to the
exercised non-statutory option. The deduction will in general be allowed for the
taxable year of the Company in which such ordinary income is recognized by the
optionee.
22
<PAGE> 23
STOCK APPRECIATION RIGHTS
An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. The Company will be entitled to an income tax deduction equal to
such distribution for the taxable year in which the ordinary income is
recognized by the optionee.
DEDUCTIBILITY OF EXECUTIVE COMPENSATION
The Company anticipates that any compensation deemed paid by it in
connection with disqualifying dispositions of incentive stock option shares or
exercises of non-statutory options granted with exercise prices equal to the
fair market value of the shares on the grant date will qualify as
performance-based compensation for purposes of Code Section 162(m) and will not
have to be taken into account for purposes of the $1 million limitation per
covered individual on the deductibility of the compensation paid to certain
executive officers of the Company.
ACCOUNTING TREATMENT
Option grants or stock issuances with exercise or issue prices less than
the fair market value of the shares on the grant or issue date will result in a
deferred compensation expense equal to the difference between the exercise or
issue price and the fair market value of the shares on the grant or issue date.
Such expense will be recognized by the Company over the vesting period of the
options. Option grants or stock issuances at 100% of fair market value will not
result in any charge to the Company's earnings, but the Company must disclose,
on a pro-forma basis in the Notes to the Company's financial statements, the
impact those options would have upon the Company's reported earnings were the
value of those options determined using a fair-value method. The number of
outstanding options may be a factor in determining the Company's earnings per
share on a fully-diluted basis.
Should one or more optionees be granted stock appreciation rights which
have no conditions upon exercisability other than a service or employment
requirement, then such rights may be recognized as a compensation expense.
APPROVAL REQUIRED
Approval of Proposal No. 5 requires the approval of the holders of a
majority of the Common Stock present in person or represented by proxy.
MANAGEMENT DISCUSSION
The amendment to the Option Plan is necessary in order to continue to
provide equity incentives to attract and retain the services of key employees,
consultants and non-employee Board members.
Should such stockholder approval not be obtained, then the
1,000,000-share increase to the share reserve will not be implemented, and the
Option Plan will terminate as to future issuances once the existing share
reserve as last approved by the stockholders has been issued.
RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR AMENDMENT TO
THE OPTION PLAN.
NEW PLAN BENEFITS
There have been no option grants made on the basis of the 1,000,000
shares increase which forms part of the amendment to the Option Plan for which
stockholder approval is sought under this Proposal No. 5.
23
<PAGE> 24
ADDITIONAL INFORMATION
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and officers, and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities, to file with the
Commission initial reports of ownership and reports of changes in ownership of
Common Stock and other equity securities of the Company. Officers, directors and
greater than ten percent (10%) stockholders are required by SEC regulation to
furnish the Company with copies of all Section 16(a) reports they file.
Based solely upon review of the copies of such reports furnished to the
Company and written representations that no other reports were required, the
Company believes that all reporting requirements under Section 16(a) for the
fiscal year ended March 28, 1999 were met in a timely manner by its executive
officers, Board members and greater than ten percent (10%) stockholders.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
COMPENSATION COMMITTEE REPORT
It is the duty of the Compensation Committee of the Company's Board of
Directors to set the base salary of executive officers and to administer the
Option Plan and the Employee Stock Purchase Plan (the "Purchase Plan") under
which grants may be made to such officers and other key employees. In addition,
the Compensation Committee approves the individual bonus programs for executive
officers each fiscal year and the base salaries of the Company's executive
officers.
GENERAL COMPENSATION POLICY. Each executive officer's compensation
package is comprised of three elements: (i) base salary which reflects
individual performance and Company performance and is designed generally to be
competitive with salary levels in the industry, (ii) annual bonus awards payable
in cash and tied to the Company's achievement of performance goals, and (iii)
long-term stock-based incentive awards which strengthen the mutuality of
interests between the executive officers and the Company's stockholders.
FACTORS. The primary factors which were considered in establishing the
components of each executive officer's compensation package for the 1999 fiscal
year are summarized below. The Committee may in its discretion apply entirely
different factors, particularly different measures of financial performance, in
setting executive compensation for future fiscal years.
BASE SALARY. The base salary for each executive officer is set on
the basis of personal performance, the salary levels in effect for comparable
positions with the Company's principal competitors, and internal comparability
standards, however, the Committee does not take into account any specific salary
surveys in setting the base salary levels for the Company's executive officers.
The Committee believes that the Company's most direct competitors for executive
talent are not necessarily all of the companies that the Company would use in a
comparison for shareholder returns. Therefore, the compensation comparison group
is not necessarily the same as the industry group index in the Performance Graph
below.
ANNUAL INCENTIVE COMPENSATION. Targeted annual bonuses, set as a
targeted percentage of salary based on position, are earned by each executive
officer on the basis of the Company's achievement of certain sales and
profitability goals established by the Committee at the start of the fiscal
year. Actual awards are subject to decrease or increase on the basis of the
Company's performance and at the discretion of the Chief Executive Officer. FOR
FISCAL YEAR 1999, THE COMPENSATION COMMITTEE ESTABLISHED THE FOLLOWING
PERFORMANCE GOALS: (i) SALES MUST EXCEED $50 MILLION, (ii) SALES AND EARNINGS
MUST INCREASE EACH FISCAL QUARTER AND (iii) THE COMPANY MUST REPORT A NET PROFIT
IN THE FOURTH QUARTER. UPON SUCCESSFUL COMPLETION OF EACH OF THESE GOALS, THE
COMPANY WOULD PAY EACH EXECUTIVE OFFICER A BONUS EQUAL TO 25% OF HIS OR HER BASE
SALARY. These goals were not met, and accordingly, the Company's executive
officers were not paid bonuses under the Company's annual incentive bonus
program for fiscal year 1999. See the "Summary
24
<PAGE> 25
Compensation Table" for a description of how certain executive officers were
paid additional compensation other than through the annual incentive bonus
program.
LONG-TERM INCENTIVE COMPENSATION. The Committee periodically
approves grants of stock options under the Option Plan to the Company's
executive officers. The grants are designed to align the interests of each
executive officer with those of the stockholders and provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the business. Each grant generally allows the
officer to acquire shares of Common Stock at a fixed price per share (the market
price on the grant date) over a specified period of time (up to 10 years), thus
providing a return to the executive officer only if the market price of the
shares appreciates over the option term. During the 1993 fiscal year, the
Committee approved an evergreen program under the Option Plan designed to
provide for the annual grant of options to ensure that top performing employees,
including executive officers, have a significant equity stake in the Company.
The program takes into account the individual's option holdings, as well as
direct stock holdings, at the time annual awards are made. The size of the
option grant to each executive officer, generally is set to achieve a potential
percentage ownership stake in the Company that the Committee deems appropriate
in order to create a meaningful opportunity for stock ownership based upon the
individual's current position with the Company, but also takes into account the
individual's potential for future responsibility and promotion over the option
term and the individual's personal performance in recent periods. Each such
factor is given equal weight. There were no option grants to executive officers
in fiscal 1999.
CEO COMPENSATION. James Philips Ferguson, President and Chief Executive
Officer, received a base salary of $190,000 per year with a potential bonus of
40% of such base salary if certain sales and earnings goals of the Company were
met. These goals were not met, and accordingly, Mr. Ferguson was not paid an
incentive bonus for fiscal year 1999.
No member of the Compensation Committee is a former or current officer
or employee of the Company or any of its subsidiaries except as follows: Mr.
Grinfas was a co-founder of the Company and served as Senior Vice President for
the Company, managing the Business Development Group, until December 1984. At
that time he became Senior Vice President, Engineering, a position he held until
May 1986, when he became Vice President, Business Development and Sales Director
of Southern Europe of IMP Europe Limited, at the time a subsidiary of the
Company. Mr. Grinfas ceased working for IMP Europe Limited in December 1988. He
also served as Chief Executive Officer and President of the Company from August
1999 until January 2000.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(m). Section
162(m) of the Internal Revenue Code disallows a tax deduction to publicly held
companies for compensation paid to certain of their executive officers to the
extent that compensation exceeds $1 million per covered officer in any fiscal
year. The limitation applies only to compensation which is not considered to be
performance-based. Non-performance based compensation paid to the Company's
executive officers for the 1999 fiscal year did not exceed the $1 million limit
per officer, and the Committee does not anticipate that the non-performance
based compensation to be paid to the Company's executive officers for fiscal
2000 will exceed that limit. The Company's Option Plan has been structured so
that any compensation deemed paid in connection with the exercise of option
grants made under that plan with an exercise price equal to the fair market
value of the option shares on the grant date will qualify as performance-based
compensation which will not be subject to the $1 million limitation. Because it
is unlikely that the cash compensation payable to any of the Company's executive
officers in the foreseeable future will approach the $1 million limit, the
Committee has decided at this time not to take any action to limit or
restructure the elements of cash compensation payable to the Company's executive
officers. The Committee will reconsider this decision should the individual cash
compensation of any executive officer ever approach the $1 million level.
Compensation Committee
Zvi Grinfas
Peter D. Olson
Bernard V. Vonderschmitt
Notwithstanding anything to the contrary set forth in any of the
Company's previous filings under the Securities Act of 1933 or the Securities
Exchange Act of 1934 that might incorporate future filings, including this Proxy
Statement, in whole or in part, the foregoing report and the Performance Graph
which follows shall not be deemed to be incorporated by reference into any such
filings.
25
<PAGE> 26
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation earned by the Company's Chief Executive Officer and the four other
most highly-compensated executive officers of the Company ("Named Executive
Officers"), for services rendered in all capacities to the Company and its
subsidiaries for each of the last three (3) fiscal years:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
Long Term
Securities
Underlying Other
Name and Position Year Salary ($)(1) Bonus ($) Options Compensation ($)(2)
----------------- ---- ------------- --------- ---------- -------------------
<S> <C> <C> <C> <C> <C>
James Philips Ferguson, 1999 209,248 -- -- 9,240
President and Chief Executive 1998 148,439 -- 25,000 7,980
Officer 1997 -- -- -- --
Barry Wiley, 1999 173,933 -- -- 5,148
Vice President Sales and Marketing 1998 114,912 -- 12,000 4,132
1997 -- -- -- --
David A. Laws, 1999 163,394 -- -- 4,300
Former Chairman of the Board 1998 181,808 250,000 -- 3,600
1997 185,985 40,000 24,584 3,600
Jerry DaBell, 1999 158,834 -- -- 2,797
Senior Vice President, Design 1998 155,855 -- 6,500 2,804
Engineering 1997 145,848 22,915 -- 2,304
Moiz Khambaty, 1999 155,672 -- -- 6,192
Vice President Technology 1998 155,065 -- 7,000 5,616
1997 138,386 21,000 -- 5,616
</TABLE>
- ----------
(1) Salary includes amounts deferred pursuant to the Company's 401(k) plan. The
amounts shown under the Bonus column include cash bonuses earned for the
indicated fiscal years.
(2) Includes the premium paid on behalf of each executive officer for
supplemental life insurance plus any other amount as indicated for each
individual.
STOCK OPTION GRANTS IN 1999
No stock options were granted to the executive officers named in
the Summary Compensation Table in fiscal 1999.
OPTION EXERCISES AND HOLDINGS
The table below sets forth information concerning the exercise of
stock options during the 1999 fiscal year by the Named Executive Officers and
those who were formerly Executive Officers during fiscal year 1999 and the
unexercised options held as of the end of the 1999 fiscal year by such
individuals. For purposes of the latter calculation, the fiscal year-end market
value of the shares is deemed to be $3.31, the closing sale price of the
Company's Common Stock as reported on the National Association of Securities
Dealers Automated Quotations System on Friday, March 29, 1999. No stock
appreciation rights were exercised by the Named Executive Officers and those who
where formerly
26
<PAGE> 27
Executive Officers in fiscal year 1999 during the 1999 fiscal year, and no stock
appreciation rights were held by those individuals at the end of such year.
All share information reflects the reverse one-for-ten stock split that took
place on January 13, 1999
<TABLE>
<CAPTION>
Number of Value of Unexercised
Shares Number of Options at In-the-Money Options at
Acquired FY99-end (#) FY99-end ($)
on Value ------------------------------ ----------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
James Philips Ferguson -- -- 9,999 15,001 33,112 $49,683
Barry Wiley -- -- 4,602 7,398 15,242 24,502
David A. Laws -- -- 29,688 312 98,327 1,033
Jerry DaBell -- -- 4,664 6,336 15,442 20,985
Moiz Khambaty -- -- 4,040 5,960 13,380 19,740
</TABLE>
TEN-YEAR OPTION REPRICING TABLE
The Company permitted certain holders of options to purchase the
Company's Common Stock to reprice their options on September 22, 1997 and on
February 27,1998. On September 22, 1997, the Company permitted employees,
excluding executive officers named in the Summary Compensation Table, to cancel
outstanding options that had been granted under the Company's Stock Option Plan
but that had not yet been exercised and that had an exercise price in excess of
the then-current fair market value of the Company's Common Stock and replace
them with new options for an equal number of shares with an exercise price equal
to $14.40 per share, the fair market value on September 22, 1997 (not adjusted
for the stock split). These repriced options were subsequently repriced on
February 27, 1998.
On February 27, 1998, the Company permitted employees, including
executive officers named in the Summary Compensation Table, to cancel
outstanding options that had been granted under the Company's Stock Option Plan
but that had not yet been exercised and that had an exercise price in excess of
the then-current fair market value of the Company's Common Stock (including the
options that were repriced on September 22, 1997) and replace them with new
options for an equal number of shares with an exercise price equal to $11.60 per
share, the fair market value on February 27, 1998 (not adjusted for the stock
split). Each repriced option granted was not exercisable until February 27, 1999
at which time each option became vested and exercisable as to the number of
shares subject to the canceled options that were vested as of February 27, 1998;
thereafter, the vesting schedules under the original option agreement continues
as to the unvested shares. In accordance with the regulations promulgated by the
Securities and Exchange Commission, such repricing requires the Company to
disclose all repricings of the Company's options held by its executive officers
that have occurred during the last ten completed years (exclusive of years prior
to the year in which the Company became a reporting company under the Exchange
Act), in the format set forth below:
27
<PAGE> 28
TEN-YEAR OPTION REPRICING TABLE
<TABLE>
<CAPTION>
LENGTH OF
NUMBER SHARES EXERCISE ORIGINAL OPTION
OF COMMON MARKET PRICE OF PRICE AT NEW TERM REMAINING AT
DATE OF STOCK UNDERLYING STOCK AT TIME TIME OF EXERCISE DATE OF REPRICING
NAME PRICING OPTIONS REPRICED OF REPRICING REPRICING PRICE (IN MONTHS)
---- ------- ---------------- --------------- --------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
James Philips Ferguson(1) 2/27/98 10,000 $11.60 $19.40 $11.60 40
2/27/98 15,000 11.60 14.40 11.60 43
David A. Laws(2) 2/27/98 10,000 11.60 15.00 11.60 12
Jerry DaBell 2/27/98 2,000 11.60 12.90 11.60 47
2/27/98 4,500 11.60 14.40 11.60 43
9/22/97 4,500 14.40 25.70 14.40 40
2/13/91 6,000 8.10 30.00 8.10 27
Moiz Khambaty 2/27/98 2,000 11.60 12.90 11.60 47
2/27/98 3,000 11.60 13.80 11.60 35
2/27/98 5,000 11.60 14.40 11.60 31
9/22/97 3,000 14.40 25.70 14.40 40
2/13/91 1,750 8.10 30.00 8.10 --
2/13/91 1,840 8.10 42.50 8.10 --
Ron Laugesen 2/27/98 2,000 11.60 12.90 11.60 48
2/27/98 4,490 11.60 14.40 11.60 43
2/27/98 1,000 11.60 19.40 11.60 16
2/27/98 2,000 11.60 25.70 11.60 34
2/27/98 1,000 11.60 59.40 11.60 18
2/13/91 750 8.10 16.25 8.10 26
George Rassam 2/27/98 8,000 11.60 14.40 11.60 36
2/27/98 2,000 11.60 12.90 11.60 48
2/13/91 1,110 8.10 42.50 8.10 2
2/13/91 256 8.10 26.25 8.10 6
Taraim Batra 2/27/98 6,320 11.60 14.40 11.60 43
2/27/98 2,000 11.60 12.90 11.60 48
2/27/98 1,125 11.60 18.50 11.60 15
2/27/98 3,000 11.60 25.70 11.60 36
Barry Wiley 2/27/98 7,500 11.60 16.00 11.60 41
2/27/98 2,500 11.60 14.40 11.60 43
2/27/98 2,000 11.60 12.90 11.60 48
Barry Carrington(3) 2/13/91 90 8.10 30.00 8.10 --
2/13/91 5,379 8.10 30.00 8.10 --
2/13/91 9,400 8.10 42.50 8.10 --
2/13/91 14,620 8.10 36.00 8.10 --
2/13/91 14,130 8.10 42.50 8.10 --
Charles Isherwood(4) 2/15/91 10,000 8.10 42.50 8.10 --
</TABLE>
- ----------
(1) Mr. Ferguson served as the Company's Chief Executive Officer through
September 1999.
(2) Mr. Laws served as the Company's Chief Financial Officer through April
1999.
(3) Mr. Carrington served as the Company's Chief Executive Officer through
1996.
(4) Mr. Isherwood served as the Company's Chief Financial Officer through
1996.
28
<PAGE> 29
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(a) Certain Relationships and Related Transactions. As described in
Proposal No. 2, the Company has entered into certain transactions with Teamasia.
Mr. Pinamaneni, in addition to serving as a director of the Company, is a
Managing Director and shareholder of Teamasia.
(b) Employment Contracts.
Except as described below, none of the Company's executive
officers have employment contracts or severance agreements with the Company, and
their employment may be terminated at any time at the discretion of the Board of
Directors.
By letter agreement between the Company and its new Chief
Executive Officer and President, Brad Whitney, dated January 13, 2000, the
Company confirmed, among other things, an annual salary of $200,000 along with a
severance package that includes twelve (12) months' salary in the event of an
involuntary termination of Mr. Whitney's employment without cause. Mr. Whitney
will also receive stock options and other employee benefits and can earn a
performance-based bonus if the Company meets certain financial results during
the 2001 fiscal year and following fiscal years.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP has audited the Company's financial
statements annually beginning with the fiscal year ended March 27, 1994. Its
representatives are expected to be present at the Annual Meeting. They will have
the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions.
STOCKHOLDER PROPOSALS FOR 2000 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the
Company's annual meeting of stockholders to be held in 2000 must be received by
the Company no later than [September __, 2000 (120 days before the date listed
above when these proxy materials were made available to stockholders, ] in order
to be included in the proxy statement and related proxy materials. Any
stockholder proposal received by the Company later than [December __, 2000 (75
days after the proceeding date)] shall be considered untimely.
STOCK PERFORMANCE GRAPH
The graph depicted below shows the Company's stock price as an
index for the last five-year period, assuming $100 invested on March 31, 1994
and the reinvestment of dividends. Also depicted are the composite prices of
companies listed on the Nasdaq National Market Index and the Nasdaq Index of
Electronic Equipment Manufacturers--comprised of companies primarily engaged in
the manufacture of electronic components and accessories--also assuming $100
invested on March 31, 1994. This information has been provided to the Company by
Media General Financial Services.
29
<PAGE> 30
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
AMONG IMP, INC., THE NASDAQ STOCK MARKET (U.S.) INDEX
AND THE NASDAQ ELECTRONIC COMPONENTS INDEX
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL STOCKHOLDER RETURNS
<TABLE>
<CAPTION>
3/31/94 3/31/95 3/31/96 3/31/97 3/29/98 3/31/99
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
IMP, Inc. $100 $100 $400 $118 $ 84 $ 72
Nasdaq $100 $111 $151 $168 $258 $382
Nasdaq Electronic Equipment $100 $131 $172 $302 $345 $506
Manufacturers
</TABLE>
*$100 INVESTED ON 3/31/94 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS,
FISCAL YEAR ENDING MARCH 31.
This Section is not "Soliciting Material," is not deemed filed with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934.
30
<PAGE> 31
INCORPORATION BY REFERENCE
The Company incorporates by reference the documents listed below
containing certain financial and other information about the Company.
(1) The Company's Form 10-K/A No. 2 for the fiscal year ended March 28,
1999, filed January 7, 2000;
(2) The Company's Quarterly Report on Form 10-Q/A for the fiscal quarter
ended June 27, 1999 filed January 7, 2000
(3) The Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 27, 1999 filed November 10, 1999;
OTHER BUSINESS
The Board of Directors knows of no other business that will be
presented for consideration at the Annual Meeting. If other matters are properly
brought before the Annual Meeting, however, it is the intention of the persons
named in the accompanying proxy to vote the shares represented thereby on such
matters in accordance with their best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Brad Whitney
---------------------------------------
Brad Whitney
President and CEO
Dated: January __, 2000
31
<PAGE> 32
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF
IMP, INC. FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ________________, 2000
The undersigned stockholder of IMP, Inc., a Delaware corporation,
hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and
Proxy Statement, each dated ____________, 2000, and hereby appoints each of Zvi
Grinfas and Brad Whitney proxy and attorney-in-fact, with full power to each of
substitution, on behalf and in the name of the undersigned at the Annual Meeting
of Stockholders of IMP, Inc. to be held on ___________, 2000 at ______, local
time, at the executive offices of IMP, Inc. 2830 North First Street, San Jose,
California, and at any adjournment or postponement thereof, and to vote all
shares of Common Stock which the undersigned would be entitled to vote if then
and there personally present, on the matters set forth on the reverse side.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE
1. Proposal to approve Stock Purchase Agreement with Teamasia
Semiconductors PTE Ltd.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
2. Proposal to amend the Certificate of Incorporation.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to elect the nominees herein to the Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to adopt the 1999 IMP, Inc. Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. Proposal to amend the IMP, Inc. Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
and in, in his discretion, upon such other matter or matters that may
properly come before the meeting and any postponement (s) or adjournment(s)
thereof.
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED AS FOLLOWS: FOR APPROVAL OF A STOCK PURCHASE AGREEMENT
WITH TEAMASIA SEMICONDUCTORS PTE LTD. , FOR APPROVAL OF AN AMENDMENT TO THE
CERTIFICATE OF INCORPORATION, TO ELECT THE NOMINEES HEREIN TO THE BOARD OF
DIRECTORS, TO APPROVE THE 1999 IMP, INC. STOCK OPTION PLAN, FOR APPROVAL OF AN
AMENDMENT TO THE IMP, INC. STOCK OPTION PLAN.
(This Proxy should be marked, dated signed by the stockholder(s)
exactly as his or her name appears hereon, and returned promptly in the enclosed
envelope. Persons signing in a fiduciary capacity should so indicate. If shares
are held by joint tenants or as community property, both should sign.)
__________________________ Date: ____________________
Signature
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