Including a licensing agreement for the manufacture of a breakthrough semiconductor technology employing gallium arsenide on silicon substrates (the technology), which includes a limited period of exclusivity for wafers up to 6 inches in diameter.
IQE has for the past 12 months, been closely involved with Motorola in Motorola’s development of this new technology that combines the best properties of workhorse silicon with the speed and optical capabilities of high-performance compound semiconductors known as III-V materials. IQE plans to begin supplying evaluation wafers, under a further agreement, to potential customers in the first half of 2002. This evaluation program is intended to accelerate the learning curve for the industry on this breakthrough technology. It will enable potential customers to assess the technology and gather their own information as a pre-cursor to target new designs, re-map existing products and explore other new options. Under the customer evaluation agreement, IQE will be allowed to enter into evaluation programmes with customers of IQE and Motorola.
In order to support IQE’s efforts to commercialise the technology and subject to customary regulatory and other approvals, Motorola has committed to subscribe for 4,428,620 new ordinary shares at a price of 155p per share, representing an aggregate subscription of $10 million. In addition, Motorola will be granted warrants at the subscription price to subscribe a further $10 million over the next five years. The warrant price, subject to certain conditions, will escalate at a maximum of five percent per annum.
In order to secure the investment from Motorola and to ensure funding is available to rapidly exploit opportunities presented by the licensing agreements, a £14 million equity draw down facility has been set up with two institutional investors (The Equity Providers). The Equity Providers will make available to the company an equity draw down facility of up to £14,000,000. This, subject to certain restrictions, can be drawn down at the company’s discretion by the company issuing ordinary shares to The Equity Providers in return for funds over the next three years. The price to be paid by The Equity Providers for the new ordinary shares to be issued will be 93 percent of a price calculated over a period of time following notice of exercise of the company’s draw down option.
In addition, The Equity Providers will be granted 2,000,000 share warrants entitling them to subscribe in whole or in part at any time during the period of three years from the date of completion. The price for The Equity Providers share warrants will be 178.25p per warrant share.
