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Exhibit 99.1
MEMORANDUM OF UNDERSTANDING RELATING TO
COMMON STOCK ISSUANCE AND RELATED TRANSACTIONS
MAY 10, 2001
This Memorandum of Understanding Relating to Common Stock Issuance and
Related Transactions (the "MOU") is entered into as of May 10, 2001 by and
between IMP, Inc., a Delaware corporation ("IMP"), and Subba Rao Pinamaneni on
behalf of himself and an investment group to be formed by him including K.Y.
Mok, Dilip Kumor V. Lakhi, John Chu, Sugriva Reddy, Tarsaim Batra and Moiz
Khambaty (the "New Investor").
The background of this MOU is that IMP presently requires a significant
cash infusion in order to avoid an insolvency that would require a filing for
protection under applicable bankruptcy laws. Cash infusions have been sought
from multiple parties, including the existing majority stockholder and its
affiliates, but no viable offer has been obtained. In order to avoid the
insolvency of IMP, IMP and the New Investor have reached an agreement on the
material terms of a cash infusion from the New Investor upon the terms and
subject to the conditions set forth in this MOU. The terms of this transaction
have been approved by the Board of Directors of IMP, including the independent
director, and the majority stockholder. These terms are set forth below:
TRANSACTION SUMMARY: IMP will issue and sell to the New Investor, and the
New Investor will purchase from IMP, shares of IMP's
common stock representing 75% of IMP's fully diluted
equity after giving effect to such issuance. The
calculation of IMP's fully diluted capitalization will
include the following: (1) all outstanding shares of
common stock and (2) all shares issuable upon exercise
of warrants outstanding on the date of this MOU. The
calculation will exclude any shares issuable upon (a)
exercise of outstanding stock options to purchase shares
of common stock, (b) conversion of outstanding
convertible debentures held by Teamasia Semiconductors
(India) Ltd. ("TSIL" and, collectively with its
affiliates, "Teamasia") and (c) exercise of warrants to
be issued to TSIL. The estimated capitalization of IMP
is set forth on Exhibit A hereto.
PURCHASE PRICE: The New Investor will pay a purchase price equal to $6.0
million in cash and/or through the issuance of one or
more irrevocable letters of credit by a reputable bank
for the benefit of IMP. The New Investor will provide
reasonable assurances to IMP of the New Investor's
ability to meet its funding obligations. All payments
made to IMP by the New Investor after 8:00 a.m. on
Monday, May 7, 2001 shall be deemed to be advances
towards, and shall count against, the $6.0 million
purchase price. The New Investor shall provide the
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Company with an accounting (including reasonable
backup documentation) of any and all amounts to be
applied toward such purchase price.
The payment of the purchase price by the New
Investor will be structured so as to assure that
IMP's material short-term cash requirements are met.
At a minimum, the $6.0 million will be funded as
follows: $2.6 million will be available on or before
June 8, 2001 and $3.4 million will be available on
or before July 9, 2001. No later than May 24, 2001,
the New Investor will provide IMP's Board of
Directors with written confirmation that IMP has
paid all amounts then due or owing with regard to
payroll expenses, rent, insurance premiums, health
plan premiums and statutory payments set forth on
Exhibit B hereto.
ISSUANCE OF SHARES: Upon the funding by the New Investor of a minimum of
$2.75 million of the purchase price, IMP shall issue
to the New Investor an aggregate of one-third of the
total shares to be issued to the New Investor. Upon
the funding by the New Investor of the $3.25 million
balance of the purchase price, IMP shall issue to
the New Investor the remaining two-thirds of the
total shares to be issued to the New Investor.
TREATMENT OF INDEBTEDNESS: To date, the New Investor has provided short-term
bridge financing in an aggregate amount of
approximately $1.4 million (the "Management
Advances"). The Management Advances shall not count
towards the $6.0 million purchase price to be paid
by the New Investor and shall remain an unsecured
obligation of IMP to the New Investor.
TERMINATION RIGHT: For a period of 30 days after the definitive terms
of the investment to be made by the New Investor
pursuant to this MOU is made public by a filing on
Form 8-K with the Securities and Exchange
Commission, IMP shall have the right to terminate
the transactions between it and the New Investor
described in this MOU in the event that IMP receives
an unsolicited offer (a "Competing Offer") from a
third party (other than HSBC (except in connection
with a co-investment by a third party with
semiconductor industry expertise), TSIL, Linfinity
Microelectronics or their respective affiliates,
each of which has previously indicated that it is
unwilling to make such an investment) with respect
to a transaction which the Board of Directors of IMP
determines to be a superior transaction for the
stockholders of IMP to the transaction described in
this MOU; provided, however, that in the event that
the Company receives a Competing Offer, the Company
will afford the New Investor the
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opportunity to submit a revised proposal for
consideration by IMP's Board of Directors which
matches the terms of the Competing Offer.
EFFECT OF TERMINATION: In the event that IMP exercises its termination
right, IMP will (1) redeem all securities previously
issued to the New Investor in accordance with this
MOU as well as the Management Advances for a cash
payment equal to the original cost of such
investments, and (2) make a cash payment to the New
Investor in an amount equal to the New Investor's
reasonable documented out of pocket expenses, plus
$500,000.
NO ACTIVE SOLICITATION: IMP will not actively seek a Competing Offer, but
shall be free, in the exercise of the fiduciary
duties of the Board of Directors, to pursue any
inquiries received. All inquiries received by
management or any director shall promptly be
communicated to the full Board of Directors.
REGISTRATION RIGHTS: IMP will grant to the New Investor customary demand
and piggyback registration rights.
APPROVALS: These transactions have been approved by the Board
of Directors of IMP, such approval consisting of the
unanimous approval of the independent director and,
based on that recommendation, the unanimous approval
of all directors. Such further corporate approvals
as deemed appropriate by IMP and the New Investor
will be sought and obtained.
CONFIDENTIALITY: Unless otherwise required by law or legal process,
IMP and the New Investor will maintain the
confidentiality of the proposed transaction until
the parties mutually agree to issue a press release.
Notwithstanding the foregoing, the parties will
cooperate fully in the continued compliance by IMP
with its obligations under the United States federal
securities laws.
CERTAIN ACKNOWLEDGMENTS: In the deliberations and negotiations that preceded
this MOU, the parties have made the following
disclosures of their respective interests in these
transactions:
(a) Mr. Pinamaneni is the Chairman of the
Board of IMP and is also a director of, and
minority stockholder in, Teamasia. However, in
making the proposal for the New Investor, Mr.
Pinamaneni is acting on behalf of himself and not
acting directly or indirectly for Teamasia.
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(b) Mr. Thompson is an employee of HSBC
Private Equity (Asia) Ltd. which advises The HSBC
Private Equity Fund 2 Ltd. which, in turn, is an
investor in TSIL.
(c) Mr. Reddy, IMP's Chief Executive Officer,
also intends to participate in the management group
that will in part fund the New Investor.
(d) Mr. Rajan is a minority stockholder in
Teamasia but has no other interest in the
transactions described in the MOU at this time.
(e) Mr. Brandi is employed by a significant
customer of IMP, but has no interest in the
transactions described in the MOU.
EXPENSES: Except as otherwise provided in this MOU, whether
or not the transactions contemplated by this MOU are
consummated each party hereto shall pay its own
respective legal, accounting, advisory and other
fees, and other out-of-pocket expenses incurred in
connection with the transactions contemplated herein
and will not look to the other party for any
contribution toward such expenses.
CONDITIONS: Completion of the transaction described in this
MOU is subject to the negotiation and execution of a
mutually acceptable definitive agreement containing,
in addition to the terms outlined above, terms,
conditions and other operative provisions customary
in transactions of this type, as well as all
appropriate ancillary documentation. Notwithstanding
the foregoing, the parties acknowledge and agree
that all material terms of these transactions are
included in this MOU, that the parties intend to be
legally bound, and that each covenants in good faith
to facilitate the drafting and execution of the
necessary definitive documents and public filings.
LEGAL COUNSEL: The parties agree that Latham & Watkins has to date
represented, and shall in the future continue to
represent, solely IMP in connection with the
transactions described herein.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties have caused this Memorandum of
Understanding Relating to Common Stock Issuance and Related Transactions to be
duly executed and delivered as of the effective date first set forth above.
IMP, INC.
By: /s/ Sugriva Reddy
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Name: Sugriva Reddy
Title: Chief Executive Officer
/s/ Subba Rao Pinamaneni
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Subba Rao Pinamaneni, on behalf
of himself and the New Investor
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