DEBT CONVERSION
AND
MUTUAL SETTLEMENT AND RELEASE AGREEMENT
THIS DEBT CONVERSION AND MUTUAL SETTLEMENT AND RELEASE
AGREEMENT ("Conversion Agreement") is entered into at San Diego, California,
effective as of April 29, 1999 ("Effective Date"), between Microelectronic
Packaging, Inc. ("MPI"), on behalf of itself and its predecessors,
successors, former and current subsidiaries, affiliates, shareholders,
directors, officers, agents, attorneys, representatives, insurers, employees
and assigns (collectively with MPI the "MPI Group"); and Transpac Capital Pte
Ltd ("Transpac Capital"), Transpac Industrial Holdings Ltd ("Transpac
Holdings"), Regional Investment Company Ltd ("Regional Investment"), and
Natsteel Equity III Pte Ltd ("Natsteel Equity"), and their respective
predecessors, successors, former and current subsidiaries, affiliates,
shareholders, directors, officers, agents, attorneys, representatives,
insurers, employees and assigns (collectively the "Investor Group").
WITNESSETH:
WHEREAS, MPI (as "Holding Company"); MPM Singapore Pte Ltd (as
"Company"), a wholly owned subsidiary of MPI that is in liquidation ("MPM");
the Investor Group (as "Investors"); and Transpac Capital (as "Agent"); are
parties to an agreement entitled Convertible Loan Agreement dated March 25,
1996 ("Loan Agreement").
WHEREAS, in connection with the Loan Agreement, MPI (as
"Guarantor") entered into a guaranty dated March 26, 1996, pursuant to which
MPI guaranteed the payment obligations of MPM pursuant to the Loan Agreement
("Guaranty").
WHEREAS, in connection with the Loan Agreement, MPI (as
"Company") and the Investor Group (as "Investors") entered into a
Subscription Agreement dated March 25, 1996, pursuant to which MPI sold and
issued to the Investor Group the aggregate number of Eight Hundred Forty Two
Thousand and Thirteen (842,013) shares of MPI's common stock for an aggregate
purchase price of Two Million Dollars ($2,000,000.00), which would be equal
to a price per share of Two Point Three Seven Five Two Six Zero Two Dollars
($2.3752602) per share ("Subscription Agreement").
WHEREAS, MPM has not been able to comply with its payment
obligations under the Loan Agreement, is in default thereunder, and is in
liquidation.
WHEREAS, in an effort to restructure and settle all of MPI's
obligations under the Loan Agreement and the Guaranty, MPI and the Investor
Group entered into a Restructuring, Settlement and Mutual Release Agreement
dated April 22, 1998, pursuant to which MPI agreed to make certain payments
and issue certain warrants to the Investor Group, in exchange for the
agreement of the Investor Group to reduce the amount of MPI's obligations
under the Loan Agreement and the Guaranty ("Restructuring Agreement").
Contingent upon MPI's performance of its obligations under the Restructuring
Agreement, the Restructuring Agreement provided that all obligations of MPI
under the Loan Agreement and Guaranty would be deemed settled and the
Investor Group would release MPI from any further obligations with respect
thereto.
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WHEREAS, MPI is not able to comply with its payment obligations
under the Restructuring Agreement.
WHEREAS, the MPI Group with respect to the Investor Group, and
the Investor Group with respect to the MPI Group, desire to finally settle
all of their respective rights and obligations under the Loan Agreement, the
Guaranty, the Restructuring Agreement and all amendments thereto, and all
other related agreements (collectively the "Former Agreements"), terminate
and release all of their respective rights and obligations under the Former
Agreements, and settle all other disputes of any kind that may or could exist
between the MPI Group and the Investor Group with respect to the Former
Agreements, all upon the terms and conditions set forth in this Conversion
Agreement.
NOW THEREFORE, in consideration of the mutual agreements
contained herein and for other good and sufficient consideration, the receipt
and sufficiency of which is hereby acknowledged, MPI and the Investor Group
agree as follows:
1. DEFINED TERMS. In addition to those terms that may be
defined elsewhere in this Conversion Agreement, the following terms shall
have the meanings defined in this Section 1.
1.1 "Conversion Date" means the date upon which the
Transpac Conversion occurs pursuant to the terms and conditions hereof.
1.2 "Performance Date" means June 30, 1999.
1.3 "Series A Preferred Stock" means the Series A
Preferred Stock of MPI, the rights, preferences privileges and restrictions
of which are set forth in the Certificate of Amendment to the Amended and
Restated Articles of Incorporation of MPI, in the form attached hereto as
Exhibit "A" and incorporated herein by reference.
1.4 "Transpac Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPM and
guaranteed by MPI in the aggregate to the Investor Group, accrued as of
December 31, 1997 (which is the entire amount MPI and the Investor Group have
agreed is due and payable pursuant to the Loan Agreement and the Guaranty),
into Four Million Thirty One Thousand Eight Hundred and Twenty Six
(4,031,826) shares of Series A Preferred Stock.
1.5 "DBS Bank Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPM and
Microelectronic Packaging (S) Pte. Ltd. ("MPS") and guaranteed by MPI to DBS
Bank, accrued as of December 31, 1997 (which is the entire amount MPI and DBS
Bank have agreed is due and payable), into One Million One Hundred Fifty Four
Thousand Three Hundred and Eleven (1,154,311) shares of Series A Preferred
Stock.
1.6 "Motorola Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPS and
guaranteed by MPI to Motorola, Inc., accrued as of December 31, 1997 (which
is the entire amount MPI and Motorola have agreed is
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due and payable), into Eight Hundred Sixty Nine Thousand Nine Hundred Thirty
Two (869,932.00) shares of Series A Preferred Stock.
1.7 "NS Electronics Conversion" means the conversion
of indebtedness in the amount of principal and interest owed by MPI to NS
Electronics Bangkok Ltd., accrued as of December 31, 1997 (which is the
entire amount MPI and NS Electronics have agreed is due and payable), into
Two Hundred Seventy One Thousand One Hundred Seventy Six (271,176) shares of
Series A Preferred Stock.
1.8 "Orix Leasing Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPM and MPS and
guaranteed by MPI to Orix Leasing Singapore Limited, accrued as of December
31, 1997 (which is the entire amount MPI and Orix Leasing have agreed is due
and payable) into Four Hundred Seventy Three Thousand Five Hundred Eighty
Four (473,584) shares of Series A Preferred Stock.
1.9 "Samsung Corning Conversion" means the conversion
of indebtedness in the amount of principal and interest owed by MPS and
guaranteed by MPI to Samsung Corning Co., Ltd., accrued as of December 31,
1997 (which is the entire amount MPI and Samsung Corning have agreed is due
and payable) into One Hundred Eighty Three Thousand Two Hundred Seventy Five
(183,275) shares of Series A Preferred Stock.
1.10 "STMicroelectronics Conversion" means the
conversion of indebtedness in the amount of principal and interest owed by
MPS and guaranteed by MPI to STMicroelectronics, Inc. (and/or any one or more
assignees and/or transferees of STMicroelectronics, Inc.), accrued as of
December 31, 1997 (which is the entire amount MPI and STMicroelectronics have
agreed is due and payable) into One Million Three Hundred Twenty Two Thousand
Six Hundred Forty One (1,322,641) shares of Series A Preferred Stock.
1.11 "Texas Instruments Conversion" means the
conversion of indebtedness in the amount of principal and interest owed by
MPS and guaranteed by MPI to Texas Instruments Incorporated, accrued as of
December 31, 1997 (which is the entire amount MPI and Texas Instruments have
agreed is due and payable) into One Million Fifty Six Thousand and Twenty
Seven (1,056,027) shares of Series A Preferred Stock.
1.12 "Other Creditor Conversions" means collectively
the DBS Bank Conversion, the Motorola Conversion, the NS Electronics
Conversion, the Orix Leasing Conversion, the Samsung Corning Conversion, the
STMicroelectronics Conversion and the Texas Instruments Conversion.
1.13 "Other Creditors" means collectively DBS Bank;
Motorola, Inc.; NS Electronics Bangkok Ltd.; Orix Leasing Singapore Limited;
Samsung Corning Co., Ltd.; STMicroelectronics, Inc.; and Texas Instruments
Incorporated.
1.14 "Insolvency Action" means the commencement of a
voluntary or involuntary case against MPI under the United States Bankruptcy
Code ("Code") or an assignment for the benefit of creditors by MPI, but shall
not include any involuntary case brought under the Code which is dismissed
within sixty (60) days of its commencement where no action is brought during
such time period to avoid any issuance of Series A Preferred Stock
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by MPI or the performance by MPI of any of its other obligations pursuant to
this Conversion Agreement.
2. DURATION OF CONVERSION AGREEMENT. This Conversion
Agreement shall remain in full force and effect until the Conversion Date,
subject to the following termination provisions: 2.1
Prior to the Performance Date, no party shall have any right to terminate
this Conversion Agreement in any respect, and all of the terms and conditions
hereof shall remain in full force and effect as set forth herein.
2.2 As of and after the Conversion Date, even if the
Conversion Date occurs after the Performance Date, no party shall have any
right to terminate this Conversion Agreement in any respect, and all of the
terms and conditions hereof shall remain in full force and effect as set
forth herein.
2.3 After the Performance Date, so long as the
Conversion Date has not occurred, Transpac Capital shall have sole discretion
on behalf of the Investor Group (but shall not be required) to terminate this
Conversion Agreement by giving a written termination notice to MPI
("Termination Notice"). In the event Transpac Capital gives MPI a
Termination Notice after the Performance Date and prior to any occurrence of
the Conversion Date, then this Conversion Agreement shall be deemed
terminated as of the date the Termination Notice is deemed given to MPI
pursuant to the provisions of Section 10.3 hereof. In the event this
Conversion Agreement is terminated by Transpac Capital pursuant to the
provisions of this Section 2.3, then this Conversion Agreement shall be
deemed completely void, and MPI and the Investor Group shall retain and
remain subject to whatever respective rights and obligations they may
otherwise have under the Former Agreements.
2.4 Regardless of any other provision of this Section
2, if an Insolvency Action is commenced prior to the Conversion Date, then
this Conversion Agreement and the respective rights and obligations of MPI
and the Investor Group hereunder shall be deemed immediately terminated
without notice, and MPI and the Investor Group shall retain and remain
subject to whatever respective rights and obligations they may have under the
Former Agreements.
2.5 Except as provided otherwise in Sections 7.1 or
7.3 of this Agreement, the Former Agreements shall remain in full force and
effect at all times after the Effective Date.
3. CONDITIONS TO TRANSPAC CONVERSION. The completion of the
Transpac Conversion pursuant to the terms and conditions of this Conversion
Agreement shall be subject to the performance and satisfaction of each of the
following conditions, either prior to or concurrently with the occurrence of
the Transpac Conversion ("Completion Conditions"):
3.1. The completion of the Other Creditor Conversions
pursuant to agreements entered into between MPI and the Other Creditors upon
terms and conditions that are not more favorable to any of such Other
Creditors than the terms and conditions contained in this Conversion
Agreement. In particular, but without limiting the generality of the
foregoing provisions of this section, the effective price per share of the
Series A Preferred Stock applicable
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to the Other Creditor Conversions shall not be less than One Dollar and Two
Cents ($1.02), and the terms and conditions of the settlement and release
provisions applicable to the Other Creditor Conversions shall not be
different in any material respect from the terms and conditions of the
settlement and release provisions contained in this Conversion Agreement.
Furthermore, in connection with the STMicroelectronics Conversion, MPI will
have agreed to amend the warrants to purchase MPI's common stock held by
STMicroelectronics, Inc., if at all, only upon terms and conditions no more
favorable to STMicroelectronics, Inc., than those in the Transpac Warrant
Amendments.
3.2 The material terms and conditions of the Transpac
Conversion and the Other Creditor Conversions shall have been approved by
MPI's Board of Directors, which approval shall be sought and obtained by MPI
in accordance with all applicable laws.
3.3 The material terms and conditions of the Transpac
Conversion and the Other Creditor Conversions shall have been approved by
MPI's Shareholders, which approval shall be sought and obtained by MPI in
accordance with all applicable laws.
3.4 The Certificate of Amendment of the Amended and
Restated Articles of Incorporation of MPI, in the form attached hereto as
Exhibit "A" and incorporated herein by reference ("Certificate of
Amendment"), shall have been duly adopted by all necessary corporate action
of the Board of Directors and shareholders of MPI, and shall have been duly
filed with and accepted by the California Secretary of State, upon which
filing and acceptance MPI shall be authorized to issue the Series A Preferred
Stock to the Investor Group and the Other Creditors as required pursuant to
the Transpac Conversion and the Other Creditor Conversions.
3.5 L.H. Friend, Weinress, Xxxxxxxx & Xxxxxxx, Inc.,
an investment banking firm who serves as financial adviser to MPI, shall have
executed and issued to MPI a written opinion, in form and substance
satisfactory to MPI in its sole discretion, concluding that the Transpac
Conversion and the Other Creditor Conversions are fair to MPI's Shareholders
("Fairness Opinion"), and a copy of such Fairness Opinion shall have been
provided to Transpac Capital.
3.6 MPI and the Investor Group shall have performed
each of their respective obligations and conditions that this Conversion
Agreement requires them to perform on or prior to the Conversion Date.
4. OBLIGATIONS OF MPI FOR TRANSPAC CONVERSION. MPI shall have
the following affirmative obligations under this Conversion Agreement until
such time as the Transpac Conversion has been completed, or this Conversion
Agreement has been terminated pursuant to the provisions of Section 2 hereof:
4.1 MPI shall use its best and most diligent efforts
to obtain the agreement of each of the Other Creditors to complete the Other
Creditor Conversions pursuant to agreements entered into between MPI and the
Other Creditors upon terms and conditions that are not more favorable to such
Other Creditors than the terms and conditions contained in this Conversion
Agreement. In particular, but without limiting the generality of the
foregoing provisions of this section, MPI shall use its best and most
diligent efforts to obtain the agreement
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of the Other Creditors that the effective price per share of the Series A
Preferred Stock applicable to the Other Creditor Conversions shall not be
less than One Dollar and Two Cents ($1.02), and the terms and conditions of
the settlement and release provisions applicable to the Other Creditor
Conversions shall not be different in any material respect from the terms and
conditions of the settlement and release provisions contained in this
Conversion Agreement.
4.2 MPI shall use its best and most diligent efforts
to obtain the approval of MPI's Board of Directors of the material terms and
conditions of the Transpac Conversion and the Other Creditor Conversions,
which approval shall be obtained in accordance with applicable laws.
4.3 MPI shall use its best and most diligent efforts
to obtain the approval of MPI's Shareholders of the material terms and
conditions of the Transpac Conversion and the Other Creditor Conversions,
which approval shall be obtained in accordance with applicable laws.
4.4 MPI shall use its best and most diligent efforts
to cause the Certificate of Amendment to be approved by MPI's Board of
Directors and shareholders, which approval shall be obtained in accordance
with applicable laws, and to cause the Certificate of Amendment to be filed
with and accepted by the California Secretary of State, upon which filing and
acceptance MPI shall be authorized to issue the Series A Preferred Stock to
the Investor Group and the Other Creditors as required pursuant to the
Transpac Conversion and the Other Creditor Conversions.
4.5 MPI shall use its best and most diligent efforts
to cause the Transpac Conversion to be completed as soon as reasonably
possible.
4.6 MPI shall use its best and most diligent efforts
at all times prior to the Conversion Date, to conduct its business in the
usual and ordinary course.
5. [This Section has been intentionally left blank.]
6. COMPLETION OF CONVERSION. At such time as all of the
Completion Conditions have been performed and satisfied by MPI, then MPI and
the Investor Group shall complete the Transpac Conversion concurrently with
the completion by MPI and the Other Creditors of the Other Creditor
Conversions, by concurrently taking the following actions:
6.1 ACTIONS BY MPI.
(a) MPI shall duly execute and deliver to
Transpac Capital a counterpart copy of the form of Registration Rights
Agreement attached to this Conversion Agreement as Exhibit "B" and
incorporated herein by reference ("Registration Agreement").
(b) MPI shall duly execute and deliver to
Transpac Capital four (4) counterpart copies of the form of First Amendment
to Warrant To Purchase Common Stock of MPI attached to this Conversion
Agreement as Exhibit "C" and incorporated herein by reference (collectively
the "Transpac Warrant Amendments"), one with respect to each of the Warrants
to Purchase Common Stock of MPI, dated April 24, 1998 (collectively the
"Transpac
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Warrants"), issued respectively to Transpac Capital, Transpac Holdings,
Regional Investment and Natsteel Equity.
(c) MPI shall duly execute and deliver to
Transpac Capital a counterpart copy of the form of IBM Proceeds Agreement
attached to this Conversion Agreement as Exhibit "D" and incorporated herein
by reference ("IBM Agreement").
(d) MPI's Chief Executive Officer shall duly
execute and deliver to Transpac the form of Certificate of Chief Executive
Officer attached to this Conversion Agreement as Exhibit "E" and incorporated
herein by reference ("Certificate of CEO"), certifying the following matters:
(i) Any approvals of MPI's shareholders
and directors that may be required under any applicable law, in connection
with the transactions contemplated by this Conversion Agreement, have been
duly obtained and are in full force and effect as of the Conversion Date.
(ii) All of the representations and
warranties of MPI set forth in this Conversion Agreement,. the Ancillary
Documents (as defined below) or in any other document delivered to the
Investor Group in connection herewith, are true, accurate, complete, and not
misleading in any material respect as of the Conversion Date.
(iii) MPI has performed all of the duties
and obligations required to be performed by MPI on or prior to the Conversion
Date, pursuant to the provisions of this Conversion Agreement, the Ancillary
Documents (as defined below) or in any other document delivered to the
Investor Group in connection herewith.
(e) MPI shall cause its legal counsel to duly
execute and deliver to Transpac the form of legal opinion letter attached to
his Conversion Agreement as Exhibit "F" and incorporated herein by reference
("Legal Opinion").
(f) MPI shall deliver to Transpac copies of
certificates of good standing for MPI issued by the California Secretary and
State and the California Franchise Tax Board, dated not more than five (5)
days prior to the Conversion Date.
(g) MPI shall deliver to Transpac stock
certificates representing shares of Series A Preferred Stock issued by MPI to
the Investor Group in the following names and numbers of shares:
(i) Transpac Capital Pte Ltd, One
Million Six Hundred Twenty Four Thousand Eight Hundred Twenty Two (1,624,822);
(ii) Transpac Industrial Holdings Ltd,
One Million Five Hundred Ninety Nine Thousand Six Hundred Thirty Two
(1,599,632);
(iii) Regional Investment Company Ltd,
Four Hundred Forty Thousand Eight Hundred Forty Three (440,843);
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(iv) Natsteel Equity III Pte Ltd, Three
Hundred Sixty Six Thousand Five Hundred Twenty Nine (366,529).
(h) MPI shall deliver to Transpac and its
legal counsel copies of the following documents:
(i) A copy of the Certificate of
Amendment and Bylaws of MPI (as amended through the Conversion Date),
certified by the Secretary of MPI as true and correct copies thereof as of
the Conversion Date.
(ii) A copy of the resolutions of the
Board of Directors and shareholders of MPI evidencing the amendment to MPI's
Amended and Restated Articles of Incorporation providing for the
authorization of the Series A Preferred Stock and the approval of this
Agreement and the other agreements, documents, and matters contemplated
hereby, certified by the Secretary of MPI to be true, complete and correct.
6.2 ACTIONS BY INVESTOR GROUP.
(a) Each member of the Investor Group shall
duly execute and deliver to MPI a counterpart copy of the Registration
Agreement.
(b) Each member of the Investor Group shall
duly execute and deliver to MPI the counterpart copy of the Transpac Warrant
Amendment that relates to the Transpac Warrant of the respective member of
the Investor Group.
(c) Each member of the Investor Group shall
duly execute and deliver to MPI a counterpart copy of the form of IBM
Agreement.
6.3 EFFECT OF CONVERSION. Upon the occurrence of the
Conversion Date, (a) the debts owed by MPI to all members of the Investor
Group shall be deemed to have been converted, respectively, into the number
of shares of MPI's Series A Preferred Stock issued to each respective member
of the Investor Group, as set forth in Section 6.1; and (b) as of and after
the Conversion Date, MPI shall not owe any debt of any kind to any of the
members of the Investor Group, as set forth in more detail pursuant to
Section 7 of this Conversion Agreement.
7. SETTLEMENT AND MUTUAL RELEASE. If and only if the
Conversion is completed pursuant to the terms and conditions of this
Conversion Agreement, then in that case only, effective as of the Conversion
Date, MPI and the Investor Group agree that the terms and conditions of this
Section 7 shall be in effect with respect to the Former Agreements and all of
the respective rights and obligations of MPI and the Investor Group pursuant
to the Former Agreements and all other related agreements:
7.1 The Former Agreements shall be deemed to have
been voluntarily terminated pursuant to the mutual agreement of MPI and the
Investor Group, without any remaining liability to either MPI or the Investor
Group. Without limiting the generality of the foregoing provisions of this
section, MPI and the Investor Group agree that MPI shall no longer have any
obligations of any kind under the Former Agreements to pay any amount to the
Investor Group, and the Investor Group shall no longer have any rights of any
kind under the
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Former Agreements to convert any amounts owed under the Former Agreements
into, or to otherwise obtain ownership of, shares of MPI's stock of any class
or series.
7.2 All rights of the Investor Group described in a
letter from Xxxx Xxx Hong to Xxxxx Xxxxxxxxxx, dated March 4, 1998, written
with reference to the Written Consent Solicitation of Shareholders, to the
effect that MPI will not issue any shares of preferred stock for an amount in
excess of Two Hundred Fifty Thousand Dollars ($250,000.00) without first
obtaining the agreement of Transpac Capital and/or the Investment Group,
shall be deemed to have been voluntarily terminated pursuant to the mutual
agreement of MPI and the Investor Group, without any remaining liability to
either MPI or the Investor Group. As of and at all times after the
Conversion Date, the Investor Group agrees that neither Transpac Capital nor
any other member of the Investor Group has any right of any kind to approve
or consent to any issuance by MPI of any shares of its stock of any class or
series, except as provided otherwise under MPI's articles of incorporation in
effect from time to time, or except as provided otherwise under applicable
law. Furthermore, by executing this Conversion Agreement, Transpac Capital
and the other members of the Investment Group agree to and approve all
issuances by MPI of Series A Preferred Stock that are to be issued in
connection with the Transpac Conversion and the Other Creditor Conversions,
so long as such transactions are carried out in compliance with the terms and
conditions of this Conversion Agreement and the debt conversion agreements
between MPI and the Other Creditors
7.3 The MPI Group with respect to the Investor Group,
and the Investor Group with respect to the MPI Group, shall be deemed to have
forever released and discharged each other from and against any and all
claims, damages and caused of action they may have against each other with
respect to and in connection with the Former Agreements and any matter
arising out of the terms and conditions thereof, including without
limitation, any breach of any representation or warranty or noncompliance or
nonfulfillment of any covenant or agreement contained in or arising out of
the Former Agreements; provided that such release and discharge shall not
extend to any claims, damages and causes of action any member of the Investor
Group may have against any member of the MPI Group (or any member of the MPI
Group may have against any member of the Investor Group) for fraud or willful
misconduct with respect to any of the Former Agreements or any of the
transactions contemplated by this Agreement. However, the foregoing release
provisions of this section do not apply to this Conversion Agreement, or the
Certificate of Amendment, the Registration Agreement, the Transpac Warrants
(as amended by the Transpac Warrant Amendments), or the IBM Agreement
(collectively the "Ancillary Agreements"), or any of the respective rights
and obligations of MPI and/or the Investor Group pursuant to the terms and
conditions of this Conversion Agreement or the Ancillary Agreements.
8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF MPI. In
addition to any representations and warranties MPI may make to the Investor
Group elsewhere in this Conversion Agreement, the Ancillary Documents or in
any other document delivered to the Investor Group in connection herewith,
MPI represents and warrants to the Investor Group that the statements
contained in this Section 8 are true, accurate, complete, and not misleading
in any material respect, and also shall be so as of the Conversion Date.
8.1 ORGANIZATION AND GOOD STANDING, AND OTHER STATUS.
MPI is a corporation, legally and validly incorporated, organized and
existing under the laws of the State
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of California. MPI is in good standing as certified by both the California
Secretary of State and the California Franchise Tax Board.
8.2 AUTHORITY TO CONDUCT BUSINESS. MPI possesses
full corporate power and lawful authority to own, lease and operate its
assets, and to carry on its business as presently conducted. MPI is duly and
legally qualified to do business and is in good standing in each country,
state, county, city or other jurisdiction in which the failure to so qualify
would have a material adverse impact on MPI's business.
8.3 AUTHORITY REGARDING THIS AGREEMENT.
8.3.1 MPI has the complete and unrestricted
right, power, authority and capacity to (a) execute and deliver this
Conversion Agreement, the Ancillary Documents and every other document
executed and delivered by MPI to the Investor Group in connection therewith
(collectively the "Transaction Documents"); and (b) carry out and perform
each of MPI's obligations pursuant to the Transaction Documents.
8.3.2 As of the Conversion Date, no further
corporate or shareholder authority, approvals, actions or proceedings will be
necessary on the part of MPI to authorize the Transaction Documents or any of
the transactions contemplated thereby.
8.3.3 This Conversion Agreement has been, and,
as of the Conversion Date all of the other Transaction Documents will have
been, duly and validly executed and delivered by MPI, and when so executed
and delivered, will constitute legal, valid and binding obligations of MPI,
enforceable in accordance with their terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws
of general application affecting enforcement of creditors' rights generally,
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies, and (iii) to the extent the
indemnification provisions contained in the Registration Agreement may be
limited by applicable federal or state securities laws.
8.3.4 The execution and delivery of this
Conversion Agreement does not, the execution and delivery of the other
Transaction Documents will not, and the consummation of the transactions
contemplated thereby will not, violate any provision of MPI's Amended and
Restated Articles of Incorporation or Bylaws (as amended), or any mortgage,
lien, lease, agreement, instrument, order, judgment or decree to which MPI is
a party or by which MPI or any of its assets is bound.
8.4 VALID ISSUANCE OF PREFERRED AND COMMON STOCK.
The Series A Preferred Stock, when issued and delivered in accordance with
the terms of this Conversion Agreement, will be duly and validly issued,
fully paid, and nonassessable, and will be free of restrictions on transfer
other than those stated in this Conversion Agreement and/or that may arise
under applicable state and federal securities laws. The common stock of MPI
issuable upon conversion of the Series A Preferred Stock has been duly and
validly reserved for issuance and, upon issuance in accordance with the terms
of the Certificate of Amendment, will be duly and validly issued, fully paid,
and nonassessable, and will be free of restrictions on transfer other than
those stated in this Conversion Agreement and/or that may arise under
applicable state and federal securities laws.
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8.5 CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority or any third
party on the part of MPI is required in connection with the consummation of
the transactions contemplated by this Conversion Agreement, except (i) the
filing of the Certificate of Amendment with the California Secretary of
State; (ii) the filing required pursuant to Section 25102(f) of the
California Corporate Securities Law of 1968, as amended, and the rules
thereunder, which filing will be effected within 15 days after the issuance
of the Series A Preferred Stock pursuant hereto.
8.6 OFFERING. Subject in part to the truth and
accuracy of the representations of the Investor Group set forth in Section 9
of this Agreement, the issuance of the Series A Preferred Stock as
contemplated by the Transaction Documents is exempt from the registration and
qualification requirements of any applicable state and federal securities
laws, and neither MPI nor any authorized agent acting on its behalf will take
any action hereafter that would cause the loss of such exemption.
8.7 DISCLOSURE. MPI has fully provided each member
of the Investor Group with all information each such party has requested for
deciding whether to enter into the transactions contemplated by the
Transaction Documents, including without limitation, the acquisition of the
Series A Preferred Stock.
8.8 BROKERS. MPI has not taken any actions in
connection with the negotiations relating to the Transaction Documents or the
transactions contemplated thereby that could give rise to an obligation on
the part of any member of the Investor Group to pay any brokerage or finder's
fee, commission or similar compensation to any party in connection therewith.
8.9 LITIGATION: Except as set forth in this Section
8.9, there is no action, suit, proceeding, claim, arbitration or
investigation ("Action") pending (or, to the best of MPI's knowledge,
currently threatened) against MPI, its activities, properties or assets or,
to the best of MPI's knowledge, against any officer, director or employee of
MPI in connection with such officer's, director's or employee's relationship
with, or actions taken on behalf of, MPI. To the best of MPI's knowledge,
there is no factual or legal basis for any such Action that might result,
individually or in the aggregate, in any material adverse change in the
business, properties, assets, financial condition, affairs or prospects of
MPI. MPI is not a party to or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality, and there is no Action by MPI currently pending or which MPI
intends to initiate (other than claims for monetary damages asserted by MPI
against International Business Machines Corporation ("IBM") under the
Purchase Option Agreement dated August 4, 1994, between IBM and MPI and the
Multilayer Technology Transfer and Licensing Agreement dated August 4, 1994,
between IBM and MPI). MPI is a defendant in a lawsuit filed on December 18,
1998, against MPI and Schlumberger Technologies, Inc., in the United States
District Court for the Southern District of New York ("Lawsuit"). The
plaintiffs in the Lawsuit are Xxxx Xxxxx and Xxxxx Xxxxxxx. Both Xx. Xxxxxxx
and Xx. Xxxxx are former directors of MPI. The Lawsuit alleges the following
claims against MPI:
11
(a) Failure to pay an amount alleged to be not
less than Thirty Thousand Dollars ($30,000.00) allegedly owed to Xxxxx
Xxxxxxx as compensation for services performed by him as the former Chairman
of MPI's Board of Directors;
(b) Failure to pay an amount alleged to be not
less than Seventy One Thousand Two Hundred Fifty Dollars ($71,250.00)
allegedly owed in the aggregate to Xx. Xxxxx and Xx. Xxxxxxx as compensation
under a consulting agreement;
(c) Wrongful termination of a consulting
agreement, for which wrongful termination Xx. Xxxxx and Xx. Xxxxxxx allege
damages in the aggregate of not less than Five Hundred Thousand Dollars
($500,000.00);
(d) Tortious interference with Xx. Xxxxx'x and
Xx. Xxxxxxx'x prospective economic relationships and business advantages as
consultants and directors of public corporations, presumably arising out of
MPI's termination of their consulting agreement, for which Xx. Xxxxx and Xx.
Xxxxxxx allege damages in the aggregate of not less than Five Million Dollars
($5,000,000.00);
(e) Costs and expenses incurred in the Lawsuit in
an unspecified amount.
MPI believes the claims made by Xx. Xxxxx and Xx.
Xxxxxxx against MPI in the lawsuit are completely without merit. MPI is
actively and vigorously defending the lawsuit, and has made substantial
counterclaims against Xx. Xxxxx and Xx. Xxxxxxx.
8.10 CAPITALIZATION. The capitalization of MPI
immediately prior to the Conversion Date will consist of the following:
(a) PREFERRED STOCK. A total of Nine Million
Three Hundred Sixty Two Thousand Seven Hundred Seventy Seven (9,362,777)
authorized shares of preferred stock, no par value per share, consisting of
Nine Million Three Hundred Sixty Two Thousand Seven Hundred Seventy Seven
(9,362,777) shares designated as Series A Preferred Stock, none of which will
be issued and outstanding. Upon the Transpac Conversion and Other Creditor
Conversions, the rights, preferences and privileges of the Series A Preferred
Stock will be as stated in MPI's Amended and Restated Articles of
Incorporation, as amended by the Certificate of Amendment, and as provided by
law.
(b) COMMON STOCK. A total of Fifty Million
(50,000,000) authorized shares of common stock, no par value per share (the
"Common Stock"), of which not more than Eleven Million (11,000,000) shares
will be issued and outstanding.
(c) OPTIONS, WARRANTS, RESERVED SHARES.
Except for: (i) the conversion privileges of the Series A Preferred Stock;
(ii) the rights of first refusal granted to Transpac Capital, Transpac
Holdings, Regional Investment and Natsteel Equity under Section 8.1 of the
Subscription Agreement; (iii) Four Million Six Hundred Ninety Thousand Six
Hundred Thirty Two (4,690,632) shares of Common Stock reserved for issuance
under MPI's 1993 Stock Option Plan under which options to purchase Two
Million Four Hundred Twenty Four Thousand Five Hundred (2,424,500) shares are
outstanding; and (iv) warrants to purchase
12
Seven Hundred Thousand (700,000) shares of Common Stock; there is no
outstanding, option, warrant, right (including conversion or preemptive
rights) or agreement for the purchase or acquisition from MPI of any shares
of its capital stock or any securities convertible into or ultimately
exchangeable or exercisable for any shares of MPI's capital stock. Apart
from the exceptions noted in this Section 8.10, and except for rights of
first refusal held by MPI to purchase shares of its stock issued under MPI's
1993 Stock Option Plan, no shares of MPI's outstanding capital stock , or
stock issuable upon exercise or exchange of any outstanding options, warrants
or rights, or other stock issuable by MPI, are subject to any preemptive
rights, rights of first refusal or other rights to purchase such stock
(whether in favor of MPI or any other person), pursuant to any agreement or
commitment of MPI.
9. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE
INVESTOR GROUP. In addition to any representations and warranties the
Investor Group may make to MPI elsewhere in this Conversion Agreement, the
Ancillary Documents or in any other document delivered to MPI in connection
herewith, the members of the Investor Group severally as to themselves, but
not jointly, represent and warrant to MPI that the statements contained in
this Section 9 are true, accurate, complete, and not misleading in any
material respect, and also shall be so as of the Conversion Date.
9.1 AUTHORITY REGARDING THIS AGREEMENT.
9.1.1 Each member of the Investor Group has the
complete and unrestricted right, power, authority and capacity to (a) execute
and deliver each Transaction Document to which it is a party; and (b) carry
out and perform each of their respective obligations pursuant to such
Transaction Documents.
9.1.2 As of the Conversion Date, no further
corporate or shareholder authority, approvals, actions or proceedings will be
necessary on the part of any member of the Investor Group to authorize the
Transaction Documents or any of the transactions contemplated thereby.
9.1.3 This Conversion Agreement has been, and,
as of the Conversion Date all of the other Transaction Documents will have
been, duly and validly executed and delivered by each member of the Investor
Group which is a party to such agreements or documents, and when so executed
and delivered, will constitute legal, valid and binding obligations of each
member of the Investor Group which is a party to such agreements or
documents, enforceable in accordance with their terms, except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium, and other
laws of general application affecting enforcement of creditors' rights
generally, (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies, and (iii) to the
extent the indemnification provisions contained in the Registration Agreement
may be limited by applicable federal or state securities laws.
9.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. MPI is
entering into the Transaction Documents in reliance on the representation
made by each member of the Investor Group, which representation is
respectively confirmed by each such member's execution of this Conversion
Agreement, and each such member hereby confirms, that the Series A Preferred
Stock to be received by each respective member of the Investor Group, and
MPI's common stock
13
issuable upon conversion thereof (collectively the "Securities") will be
acquired for investment and not with a view to the resale or distribution of
any part thereof, and that such member has no present intention of selling,
granting any participation in, or otherwise distributing the same. By
executing this Conversion Agreement, each member of the Investor Group
further represents that such member does not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of
the Securities. Notwithstanding the foregoing, MPI acknowledges and
understands that Transpac Capital may hold the Securities on behalf of, for
the benefit of or as the nominee for, certain affiliated or related entities,
and thus may distribute the Securities to such entities.
9.3 DISCLOSURE OF INFORMATION. Each respective
member of the Investor Group believes it has received all the information it
considers necessary or appropriate for deciding whether to acquire the
Securities. Each member of the Investor Group further represents that it has
had an opportunity to ask questions and receive answers from MPI regarding
the terms and conditions of the Transaction Documents and the business,
properties, prospects and financial condition of MPI.
9.4 INVESTMENT EXPERIENCE. Each member of the
Investor Group acknowledges that it is able to fend for itself, can bear the
economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Securities. Each member of the Investor Group
has carefully evaluated such member's financial resources and investment
position and the risks associated with an investment in the Securities, and
acknowledges that such member is able to bear the economic risks of this
investment. Each member of the Investor Group further acknowledges that such
member's financial condition is such that the member is not under any present
necessity or constraint to dispose of the securities to satisfy any existing
or contemplated debt or undertaking. If other than an individual, each
member of the Investor Group also represents it has not been organized for
the purpose of acquiring the Securities.
9.5 RESTRICTED SECURITIES. Each member of the
Investor Group understands that the Securities are characterized as
"restricted securities" under the federal securities laws of the United
States, inasmuch as they are being acquired from MPI in a transaction not
involving a public offering, and that under such laws and applicable
regulations the Securities may be resold without registration only in certain
limited circumstances. In this connection, each member of the Investor Group
represents that it is familiar with Securities and Exchange Commission
("SEC") Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and generally by the federal securities laws of
the United States. Each member of the Investor Group further understands
that the Securities have not been registered under the Securities Act of
1933, as amended ("33 Act") or qualified or otherwise registered under the
applicable securities laws of any state or other jurisdiction, that any
disposition of the Securities by such Buyer is subject to restrictions
imposed by federal and state laws, that the stock certificates representing
the Securities will bear a restrictive legend stating that such member cannot
dispose of the Securities absent such registration and qualification, except
pursuant to any available exemption from such registration and qualification.
9.6 FURTHER RESTRICTIONS ON TRANSFER. Without in any
way limiting the representations set forth above in this Section 9, each
member of the Investor Group further agrees not to make any disposition of
all or any portion of the Securities unless and until the
14
transferee has agreed in writing for the benefit of MPI to be bound by the
provisions of Sections 9.3 through 9.7 hereof, and the provisions of the
Registration Agreement, to the extent such sections and such agreement are
then applicable, and:
(a) There is then in effect a Registration
Statement under the 33 Act covering such proposed disposition and such
disposition is made in accordance with such Registration Statement; or
(b) The member of the Investor Group disposing of
the Securities shall have notified MPI of the proposed disposition and shall
have furnished MPI with a detailed statement of the circumstances surrounding
the proposed disposition, and if reasonably requested by MPI, such member
shall have furnished MPI with an opinion of counsel, reasonably satisfactory
to MPI, that such disposition will not require registration of the Securities
in question under the 33 Act.
Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be
required: (i) for any transfer of any Securities in compliance with SEC Rule
144 or Rule 144A; or (ii) for any transfer of any Securities by a holder
thereof that is a partnership or a corporation to: (1) a partner of such
partnership or a shareholder of such corporation; (2) a retired partner of
such partnership who retires after the date hereof; or (3) the estate of any
such partner or shareholder; PROVIDED, that in each of the foregoing cases
the transferee agrees in writing to be subject to the terms of this Section 9
to the same extent as if the transferee were an original purchaser of
Securities hereunder.
9.8 RESTRICTIVE LEGEND. Each certificate
representing the Series A Preferred Stock or any other securities issued in
respect of the Series A Preferred Stock or upon the conversion thereof, shall
be stamped or otherwise imprinted with a legend in the following form, in
addition to any legend required pursuant to applicable state securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (AS AMENDED), NOR QUALIFIED OR OTHERWISE
REGISTERED UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. THESE SECURITIES HAVE BEEN ACQUIRED ONLY FOR INVESTMENT AND
MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF OR
HYPOTHECATED (a) IN THE ABSENCE OF BOTH (i) AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 (AS AMENDED), AND (ii) AN
EFFECTIVE QUALIFICATION OR REGISTRATION UNDER THE APPLICABLE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION, OR (b) UNLESS AN EXEMPTION FROM ANY SUCH
REGISTRATIONS OR QUALIFICATIONS IS AVAILABLE AND THE ISSUER HAS RECEIVED AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH REGISTRATIONS OR
QUALIFICATIONS ARE NOT REQUIRED.
9.9 FOREIGN PERSONS. If a member of the Investor
Group is not a United States person, such member hereby represents that (a)
they have satisfied themselves as to the full observance of the laws of their
own jurisdiction in connection with any acquisition of the Securities,
including without limitation (i) the legal requirements within such
jurisdiction
15
applicable to the acquisition of the Securities; (ii) any foreign exchange
restrictions applicable to such acquisition; (iii) any governmental or other
consents that may need to be obtained; and (iv) the income tax and other tax
consequences, if any, that may be relevant to the acquisition, holding, sale
or transfer of the Securities; and (b) such member's acquisition and
continued ownership of the Securities will not violate any applicable
securities or other laws of such member's jurisdiction.
9.10 BROKERS OR FINDERS. The member of the Investor
Group have not taken any actions in connection with the negotiations relating
to this Conversion Agreement or the transactions contemplated hereby that
could give rise to an obligation on the part of MPI to pay any brokerage or
finder's fee, commission or similar compensation to any party in connection
therewith.
9.11 TRANSPAC CAPITAL AS AGENT. Each member of the
Investor Group hereby appoints Transpac Capital to act as its agent for
purposes of this Conversion Agreement. Each member of the Investor Group
hereby authorizes Transpac Capital to take such actions and exercise such
rights, powers and discretions as are specifically delegated to Transpac
Capital pursuant to this Conversion Agreement, and to take such other actions
and exercise such other rights, powers and discretions as are reasonably
incidental thereto. However, Transpac Capital shall not commence any legal
action or other legal proceeding in the name of any other member of the
Investor Group without such member's consent. The relationship between
Transpac Capital and the Other Investors for this purpose is that of agent
and principal only. Transpac Capital shall not, by virtue of any provision
of this Conversion Agreement, be deemed to be a trustee for any other member
of the Investor Group, nor an agent or trustee for MPI.
10. MISCELLANEOUS PROVISIONS.
10.1 EXHIBITS. All exhibits described in this
Conversion Agreement are incorporated by reference as if fully set forth
herein, and constitute a material part of this Conversion Agreement, whether
or not such exhibits are attached hereto.
10.2 GOVERNING LAW. This Conversion Agreement shall
in all respects be construed, interpreted and enforced in accordance with and
governed by the laws of the State of California, United States of America.
Any legal action between the parties regarding this Conversion Agreement
shall be brought in, and the parties hereby consent to the jurisdiction of
and venue in, either (a) the federal and state courts located in the County
of San Diego, State of California, United States of America; or (b) the
courts located in the country of Singapore.
10.3 NOTICES. Any notice, demand or other communication
required or permitted under this Conversion Agreement shall be deemed given and
delivered when in writing and (a) personally served upon the receiving party, or
(b) upon the third (3rd) calendar day after mailing to the receiving party by
either (i) United States registered or certified mail, postage prepaid, or (ii)
FedEx or other comparable overnight delivery service, delivery charges prepaid,
and addressed as follows:
16
To MPI: Microelectronic Packaging, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Chief Executive Officer
To any member of Transpac Capital Pte Ltd
the Investor Group 0 Xxxxxxx Xxx
#00-00 XXX Xxxxxxxx
Xxxxx Xxx
Xxxxxxxxx 000000
Attn: Xxxx Xxx Hong
Any party may change the address specified in this section by giving the
other party notice of such new address in the manner set forth herein.
10.4 SEVERABILITY. In the event that any provision of
this Conversion Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or invalid, then this Conversion
Agreement shall continue in full force and effect without said provision. If
this Conversion Agreement continues in full force and effect as provided
above, the parties shall replace the invalid provision with a valid provision
which corresponds as far as possible to the spirit and purpose of the invalid
provision.
10.5 COUNTERPARTS. This Conversion Agreement may be
executed in any number of counterparts, each of which may be executed by less
than all of the parties hereto, each of which shall be enforceable against
the parties actually executing such counterparts, and all of which together
shall constitute one document.
10.6 ENTIRE AGREEMENT. This Conversion Agreement, the
Ancillary Agreements, and the documents and agreements contemplated herein
and therein, constitute the entire agreement between the parties with respect
to the subject matter hereof, and supersede all prior oral or written
agreements, representations or warranties between the parties other than
those set forth herein or herein provided for.
10.7 SUCCESSORS AND ASSIGNS. Except as specifically
permitted pursuant to the terms and conditions hereof, no party shall be
permitted to assign their respective rights or obligations under this
Conversion Agreement without the prior written consent of the other parties.
The provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors and assigns, heirs, executors, and administrators of the
parties hereto.
10.8 AMENDMENT AND WAIVER. No modification or waiver
of any provision of this Conversion Agreement shall be binding upon the party
against whom it is sought to be enforced, unless specifically set forth in
writing signed by an authorized representative of that party. A waiver by
any party of any of the terms or conditions of this Conversion Agreement in
any one instance shall not be deemed or construed to be a waiver of such
terms or conditions for the future, or of any subsequent breach thereof. The
failure by any party hereto at any time to enforce any of the provisions of
this Conversion Agreement, or to require at any time performance of any of
the provisions hereof, shall in no way to be construed to be a waiver of such
provisions or to affect either the validity of this Conversion Agreement or
17
the right of any party to thereafter enforce each and every provision of this
Conversion Agreement.
10.9 SURVIVABILITY. All of the representations,
warranties, agreements and obligations of the parties pursuant to this
Conversion Agreement shall survive any issuance of the Shares and/or the
Option Shares by the Company to the Buyers.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Conversion Agreement as of the date first above written.
MICROELECTRONIC PACKAGING, INC. TRANSPAC CAPITAL PTE LTD
By:__________________________________ By:_________________________________
Signature Signature
Print Print
Name:________________________________ Name:______________________________
Print Print
Title:_________________________________ Title:_______________________________
[The remainder of this page has been intentionally left blank.]
18
CONTINUATION OF SIGNATURES FOR
DEBT CONVERSION
AND
MUTUAL SETTLEMENT AND RELEASE AGREEMENT
dated April 29, 1999
TRANSPAC INDUSTRIAL HOLDINGS LTD REGIONAL INVESTMENT COMPANY LTD
By:___________________________________ By:_________________________________
Signature Signature
Print Print
Name:________________________________ Name:______________________________
Print Print
Title:_________________________________ Title:_______________________________
NATSTEEL EQUITY III PTE LTD
By:__________________________________
Print
Name:________________________________
Print
Title:_______________________________
19
EXHIBIT "A"
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
MICROELECTRONIC PACKAGING, INC.
a California corporation
Xxxxxx Xxxxxx and Xxxxx Xxxxxxxxxx certify that:
1. They are the President and the Secretary, respectively, of
MICROELECTRONIC PACKAGING, INC., a California corporation.
2. Article III of the Restated Articles of Incorporation of
this corporation is amended to read as follows:
ARTICLE III
This corporation is authorized to issue two classes of shares to
be designated respectively "Common Stock" and "Preferred Stock." The number of
shares of Common Stock this corporation is authorized to issue is Fifty Million
(50,000,000), without par value. The number of shares of Preferred Stock this
corporation is authorized to issue is Nine Million Three Hundred Sixty Two
Thousand Seven Hundred Seventy Seven (9,362,777), without par value, all of
which are designated as "Series A Preferred Stock."
1. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF COMMON
STOCK. The rights, preferences, privileges and restrictions granted to and
imposed on this corporation's Common Stock are as follows:
A. DIVIDEND RIGHTS. Subject to any rights, preferences
and privileges that have been granted to the Series A Preferred Stock, the
holders of the Common Stock shall be entitled to receive, when and as declared
by the Board of Directors, out of any assets of the corporation legally
available therefor, such dividends as may be declared from time to time by the
Board of Directors.
B. LIQUIDATION RIGHTS. Subject to any rights,
preferences and privileges that have been granted to the Series A Preferred
Stock, in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the corporation, the holders of shares of the Common Stock shall
be entitled to receive all of the assets of the corporation available for
distribution to its shareholders, ratable in proportion to the number of shares
of the Common Stock held by them.
C. REDEMPTION. The Common Stock is not redeemable.
D. VOTING RIGHTS. Subject to any rights, preferences
and privileges that have been granted to the Series A Preferred Stock, the
holders of shares of Common Stock shall be entitled to vote on all matters at
all meetings of the shareholders of the corporation and shall be entitled to one
vote for each share of Common Stock entitled to vote at such meeting.
2. RIGHTS, PREFERENCES, PRIVILEGES AND RESTRICTIONS OF SERIES
A PREFERRED STOCK. The rights, preferences, privileges and restrictions granted
to and imposed on this corporation's Series A Preferred Stock are as follows:
A. DIVIDENDS.
1. FIXED AMOUNT. Out of any assets legally
available therefor, the Board shall have discretion (but shall not be required)
to declare a dividend on the outstanding Series A Preferred Stock at the fixed
rate of Three Point Five Seven Cents ($0.0357) per share per annum (subject to
adjustment to equitably account for any stock splits, stock dividends,
combinations, recapitalizations or the like, and not compounded from one year to
the next) ("Fixed Amount Dividends"). Fixed Amount Dividends shall be payable
only when, as, and if declared by the Board. Fixed Amount Dividends payable to
the holders of Series A Preferred Stock pursuant hereto, whether or not declared
by the Board, shall at all times be cumulative until paid in full, and shall be
paid in preference and priority to any Common Equivalent Dividends (as that term
is defined in Section A(2) below), and any dividend or other distribution being
paid or distributed to the holders of Common Stock.
2. COMMON EQUIVALENT. Subject to the priority of
the Fixed Amount Dividends, in the event the Board declares a dividend on or
other distribution with respect to the corporation's outstanding common stock
("Common Stock"), which is payable other than in Common Stock and/or other
securities or rights convertible into or entitling the holder thereof to
receive, directly or indirectly, additional shares of Common Stock, then out of
any assets legally available therefor, the holders of Series A Preferred Stock
shall concurrently receive dividends or other distributions in an amount equal
to (a) the amount of the dividend or other distribution payable on one share of
Common Stock; multiplied by (b) the number of shares of Common Stock, rounded to
the nearest whole number (with one half being rounded upward), into which the
total number of shares of Series A Preferred Stock held by such holder could be
converted on the record date for determining which holders of Common Stock are
entitled to receive the dividend or other distribution in question ("Common
Equivalent Dividends"). Common Equivalent Dividends payable to the holders of
Series A Preferred Stock pursuant hereto shall at all times be cumulative until
paid in full, and shall be paid in preference and priority to any dividend or
other distribution being paid or distributed to the holders of Common Stock.
3. TREATMENT UPON CONVERSION. Upon any conversion
of the Series A Preferred Stock pursuant to the provisions of Section D hereof
entitled CONVERSION ("Triggering Conversion"), any Fixed Amount Dividends and/or
Common Equivalent Dividends payable with respect to the shares of Series A
Preferred Stock being converted (collectively "Conversion Dividends"), shall
concurrently be converted into that number of shares of this corporation's fully
paid and nonassessable Common Stock determined by dividing the dollar amount of
the Conversion Dividends by the Conversion Price applicable to the Triggering
Conversion ("Dividend Conversion Shares"). Otherwise, the provisions of Section
D hereof entitled CONVERSION shall be applicable to the Dividend Conversion
Shares in the same manner as such provisions are applicable to any other shares
of Common Stock to be issued pursuant to the Triggering Conversion.
2
4. WAIVER. Pursuant to the affirmative vote,
written consent or agreement of the holders of a majority of the then
outstanding Series A Preferred Stock ("Approving Preferred Majority"), the
Approving Preferred Majority shall be entitled on behalf of all holders of
Series A Preferred Stock, to waive any dividend such holders would otherwise be
entitled to receive, including without limitation, any Fixed Amount Dividends
and/or Common Equivalent Dividends (collectively the "Preferred Dividends").
B. LIQUIDATION PREFERENCE. In the event of any
liquidation, dissolution or winding up of this corporation, either voluntary or
involuntary:
1. PRIORITY DISTRIBUTION. The holders of Series A
Preferred Stock shall be entitled to receive, prior and in preference to any
distribution of any of the assets or funds of this corporation to the holders of
Common Stock by reason of their ownership thereof, an amount per share equal to
the sum of (a) One Dollar and Two Cents ($1.02) for each outstanding share of
Series A Preferred Stock (subject to adjustment to equitably account for any
stock splits, stock dividends, combinations, recapitalizations or the like)
("Original Series A Issue Price"), plus (b) an amount equal to any declared but
unpaid dividends on such share, including without limitation, any accumulated
balance of Preferred Dividends ("Priority Distribution"). If the assets and
funds thus distributed among the holders of the Series A Preferred Stock shall
be insufficient to permit payment to such holders of the full amount of the
Priority Distribution, then the entire assets and funds of this corporation
legally available for distribution shall be distributed ratably among the
holders of the Series A Preferred Stock in proportion to the amount of such
stock owned by each such holder.
2. ACQUISITION OR SALE. For purposes of this
Section B entitled LIQUIDATION PREFERENCE, a liquidation, dissolution or winding
up of this corporation shall be deemed to be occasioned by, or to include
(unless an Approving Preferred Majority shall determine otherwise), (a) the
acquisition of this corporation by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation) that results in the transfer of fifty
percent (50%) or more of the outstanding voting power of this corporation; or
(b) a sale of all or substantially all of the assets of this corporation
(collectively "Acquisition or Sale"). In the event of any Acquisition or Sale,
if the consideration received by this corporation or its shareholders is other
than cash, the value of the non-cash consideration will be deemed to be equal to
its fair market value, except that the value of any securities received in any
Acquisition or Sale shall be determined as follows:
(a) For securities not subject to an
investment letter or other similar restriction on free marketability covered by
Section B(2)(b) below:
(i) If traded on a securities
exchange or through the Nasdaq National Market, the value shall be deemed to be
the average of the closing prices of the securities on such exchange or system
over the thirty (30) day period ending three (3) days prior to the closing of
the Acquisition or Sale;
(ii) If actively traded
over-the-counter, the value shall be deemed to be the average of the closing
bid or sale prices (whichever is applicable) over the thirty (30) day period
ending three (3) days prior to the closing of the Acquisition or Sale; or
3
(iii) If there is no active public
market, the value shall be the fair market value thereof, as mutually
determined by the Board and an Approving Preferred Majority.
(b) The method of valuation of securities
subject to an investment letter or other restriction on free marketability
(other than restrictions arising solely by virtue of a shareholder's status as
an affiliate or former affiliate) shall be to make an appropriate discount from
the market value determined above in Section B(2)(a), to reflect the approximate
fair market value thereof, as mutually determined by the Board and an Approving
Preferred Majority.
(c) In the event the requirements of this
Section B(2)(c) are not complied with, this corporation shall forthwith either:
(i) cause the closing of the Acquisition or Sale to be postponed until the time
such requirements have been complied with; or (ii) cancel the Acquisition or
Sale, in which event the rights, preferences, privileges and restrictions of the
holders of Series A Preferred Stock shall revert to and be the same as such
rights, preferences, privileges and restrictions existing immediately prior to
the date the first Transaction Notice (as hereafter defined) is given. This
corporation shall give each holder of record of Series A Preferred Stock written
notice of any impending Acquisition or Sale not later than (i) twenty (20) days
prior to the shareholders' meeting called to approve such Acquisition or Sale,
or (ii) twenty (20) days prior to the closing of such Acquisition or Sale,
whichever is earlier, and shall also notify such holders in writing of the final
approval of such Acquisition or Sale (any of the foregoing a "Transaction
Notice"). The first Transaction Notice to be given shall describe the material
terms and conditions of the impending Acquisition or Sale, and this corporation
shall thereafter give holders of record of the Series A Preferred Stock prompt
notice of any material changes in such material terms and conditions ("Material
Change Notice"). The Acquisition or Sale shall in no event take place sooner
than twenty (20) days after this corporation has given the first Transaction
Notice, or sooner than ten (10) days after this corporation has given any
Material Change Notice; provided, however, that such periods may be shortened by
an Approving Preferred Majority.
C. REDEMPTION. To the extent it may otherwise lawfully do
so, this corporation shall be entitled, in the sole discretion of the Board, to
redeem all or any part of the outstanding shares of Series A Preferred Stock, in
accordance and compliance with the following provisions:
1. NOTICE. Not less than twenty (20) and not more
than thirty (30) days prior to the date as of which the Board intends to give
effect to a redemption of some or all of the shares of Series A Preferred Stock
("Redemption Date"), a written notice shall be mailed, first class postage
prepaid, to each holder of record (at the close of business on the business day
next preceding the day on which notice is mailed) of the Series A Preferred
Stock to be redeemed, at the address last shown on the records of this
corporation for such holder, notifying such holder of the redemption to be
effected on the applicable Redemption Date, specifying each of the following:
(a) the number of shares to be redeemed from such holder ("Redemption Shares");
(b) the Redemption Date; (c) the Series A Redemption Price (as that term is
hereafter defined); (d) the then applicable Conversion Price (as that term is
hereafter defined); (e) the date of termination of the right to convert the
Redemption Shares into shares of Common Stock, which date shall not be earlier
than five (5) days prior to the Redemption Date ("Conversion Termination Date");
and (e) the place at which payment may be obtained; and shall call upon such
holder to surrender to this corporation, in the manner and at the place
designated, his, her or its certificate or certificates representing the shares
to be redeemed ("Redemption Notice").
4
2. PARTIAL REDEMPTIONS TO BE PRO-RATA. In the
event a Redemption Notice specifies that less than all of the outstanding shares
of Series A Preferred Stock are to be redeemed, then the number of shares of
Series A Preferred Stock to be redeemed shall be allocated pro-rata among all of
the holders thereof, based on the proportionate number of shares of Series A
Preferred Stock held by each such holder.
3. CONVERSION PRIOR TO REDEMPTION. Upon receiving
a Redemption Notice, at any time prior the to Conversion Termination Date stated
therein, each holder of Series A Preferred Stock shall be entitled to convert
some or all of the Redemption Shares into shares of Common Stock pursuant to the
provisions of Section D(1) below. Any such conversion shall be deemed to take
place on the Redemption Date. Any shares of Series A Preferred Stock not
converted to shares of Common Stock pursuant hereto shall remain subject to
redemption pursuant to the provisions of this Section C entitled REDEMPTION, and
as set forth in the Redemption Notice. If this corporation fails to carry out
the redemption of any Redemption Shares that are not converted to shares of
Common Stock pursuant to this Section C(3), then in such event, the redemption
described in the Redemption Notice shall be deemed null and void, and any
conversion of shares of Series A Preferred Stock into shares of Common Stock
pursuant hereto, shall also be deemed null and void.
4. REDEMPTION PRICE. The price per share required
to be paid by the corporation upon the redemption of any share of Series A
Preferred Stock pursuant hereto shall be equal to the sum of (a) the Original
Series A Issue Price (subject to adjustment to equitably account for any stock
splits, stock dividends, combinations, recapitalizations or the like), plus
(b) an amount equal to any declared but unpaid dividends on such share,
including without limitation, any accumulated balance of Preferred Dividends
("Series A Redemption Price").
5. CERTIFICATES. On or after the Redemption Date,
each holder of Redemption Shares that have not been converted into shares of
Common Stock pursuant to Section C(3) hereof, shall surrender to this
corporation the certificate or certificates representing such Redemption Shares
("Redemption Certificates"), in the manner and at the place designated in the
Redemption Notice, and thereupon the applicable Series A Redemption Price shall
be payable to the order of the person whose name appears on such certificate or
certificates as the owner thereof and each surrendered certificate shall be
canceled. In the event less than all the shares represented by any such
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares. If on the Redemption Date the funds necessary for the
redemption of the Redemption Shares shall be available therefor, then any
Redemption Shares so called for redemption for which Redemption Certificates are
not surrendered, shall nevertheless be considered redeemed, and all rights of
the holders thereof shall be terminated, except for only the right to receive
the Redemption Price without interest upon the surrender of the Redemption
Certificates.
6. PAYMENT. Concurrently with receiving the
Redemption Certificates, this corporation shall pay the Series A Redemption
Price to the person whose name appears on the Redemption Certificates, in cash
in one lump sum.
7. NO PREVIOUS REDEMPTION OF COMMON STOCK. At all
times while any shares of Series A Preferred Stock are outstanding, this
corporation shall not redeem any shares of Common Stock, unless such redemption
has been authorized by an Approving Preferred Majority.
5
D. CONVERSION. The holders of the Series A Preferred
Stock shall have conversion rights as follows ("Conversion Rights"):
1. VOLUNTARY CONVERSION. Each share of Series A
Preferred Stock shall be convertible, (i) at the sole option of the holder
thereof, at any time after the date of issuance of such share, or (ii) at the
sole option of the holder thereof, on or prior to the fifth (5th) day prior to
the Redemption Date, if any, as may have been fixed in any Redemption Notice
with respect to such share of the Series A Preferred Stock, at the office of
this corporation or any transfer agent for such stock and in the manner provided
in Section 2(D)(3) hereof ("Voluntary Conversion"), into such number of fully
paid and nonassessable shares of Common Stock as is determined by dividing the
Original Series A Issue Price by the Conversion Price applicable to such share,
determined as hereafter provided, in effect on the date the certificate is
surrendered for conversion. The initial Conversion Price per share for shares
of Series A Preferred Stock shall be Fifty One Cents ($0.51); provided, however,
that the Conversion Price for the Series A Preferred Stock shall be subject to
adjustment as set forth in Section D(4) below.
2. AUTOMATIC CONVERSION. In addition to the right
of Voluntary Conversion provided in Section 2(D)(1) hereof, each share of
Series A Preferred Stock shall automatically be converted into shares of Common
Stock at the Conversion Price in effect at that time for the Series A Preferred
Stock, immediately upon this corporation's receipt of the written consent of the
Approving Preferred Majority to the conversion of all then outstanding Series A
Preferred Stock under this Section D.
3. MECHANICS OF CONVERSION. Before any holder of
Series A Preferred Stock shall be entitled to convert the same into shares of
Common Stock, he or she shall surrender the certificate or certificates
therefor, duly endorsed, at the office of this corporation or of any transfer
agent for the Series A Preferred Stock, and shall give written notice to this
corporation at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. This corporation
shall, within two (2) days after receipt of such written notice, issue and
deliver at such office to such holder of Series A Preferred Stock, or to the
nominee or nominees of such holder, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid.
Such conversion shall be deemed to have been made immediately prior to the close
of business on the date of such surrender of the shares of Series A Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holder or holders of such shares of Common Stock as of such date.
Regardless of any of the foregoing provisions, this
corporation shall not be obligated to issue certificates evidencing the shares
of Common Stock issuable upon such conversion unless certificates evidencing the
shares of Series A Preferred Stock being converted are either delivered to the
corporation or any transfer agent as provided herein, or the holder notifies the
corporation or any transfer agent that such certificates have been lost, stolen,
or destroyed and executes an agreement reasonably satisfactory to the
corporation to indemnify the corporation from any loss reasonably incurred by it
in connection therewith.
4. CONVERSION PRICE ADJUSTMENTS OF PREFERRED STOCK
FOR CERTAIN DILUTIVE ISSUANCES, SPLITS AND COMBINATIONS. The Conversion Price
of the Series A Preferred Stock shall be subject to adjustment from time to time
as follows:
6
(a) If this corporation shall issue, after
the date upon which any shares of Series A Preferred Stock were first issued
("Purchase Date"), any Additional Stock (as hereafter defined) without
consideration or for a consideration per share less than the Conversion Price
for the Series A Preferred Stock in effect immediately prior to the issuance of
such Additional Stock, the Conversion Price for the Series A Preferred Stock in
effect immediately prior to each such issuance shall forthwith (except as
otherwise provided in this Section D(4)) be adjusted to a price determined by
multiplying such Conversion Price by a fraction, (i) the numerator of which
shall be the number of shares of Common Stock outstanding immediately prior to
the issuance of the Additional Stock in question (including shares of Common
Stock deemed to be issued pursuant to Section D(4)(f)(i) or (ii) hereof, but not
including shares excluded from the definition of Additional Stock by Section
D(4)(g)(ii) hereof), plus the number of shares of Common Stock that the
aggregate consideration received by this corporation for such issuance would
purchase at such Conversion Price; and (ii) the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance (including shares of Common Stock deemed to be issued pursuant to
Section D(4)(f)(i) or (ii) hereof, but not including shares excluded from the
definition of Additional Stock by Section D(4)(g)(ii) hereof), plus the number
of shares of Additional Stock in question.
(b) No adjustment of the Conversion Price
for the Series A Preferred Stock shall be made in an amount less than one cent
per share, provided that any adjustments that are not required to be made by
reason of this sentence shall be carried forward and shall be either taken into
account in any subsequent adjustment made prior to three (3) years from the date
of the event giving rise to the adjustment being carried forward, or shall be
made at the end of three (3) years from the date of the event giving rise to the
adjustment being carried forward.
(c) Except to the extent provided for in
Section D(4)(f)(iii) and (iv) hereof, and Section D(4)(i) hereof, no adjustment
of the Conversion Price pursuant to this Section D(4) shall have the effect of
increasing the Conversion Price above the Conversion Price in effect immediately
prior to such adjustment.
(d) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by this corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(e) In the case of the issuance of the
Common Stock for a consideration in whole or in part other than cash, the
consideration shall be deemed to be the fair market value thereof as determined
in good faith by the Board irrespective of any accounting treatment.
(f) In the case of the issuance (whether
before, on or after the applicable Purchase Date) of options to purchase or
rights to subscribe for Common Stock, securities by their terms ultimately
convertible into or exchangeable for Common Stock, or options to purchase or
rights to subscribe for such convertible or exchangeable securities, the
following provisions shall apply for all purposes of Sections D(4)(a) through
(g) hereof:
(i) The aggregate maximum number of
shares of Common Stock deliverable upon exercise (assuming the satisfaction of
any conditions to exercisability, including without limitation, the passage of
time, but without taking into account potential antidilution adjustments), to
the extent then exercisable, of such options to purchase or
7
rights to subscribe for Common Stock shall be deemed to have been issued at
the time such options or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in Section D(4)(d) and
(e) hereof), if any, received by this corporation upon the issuance of such
options or rights plus the minimum exercise price provided for in such
options or rights (without taking into account potential antidilution
adjustments) for the Common Stock covered thereby.
(ii) The aggregate maximum number of
shares of Common Stock deliverable upon conversion of, or in exchange for
(assuming the satisfaction of any conditions to convertibility or
exchangeability, including, without limitation, the passage of time, but without
taking into account potential antidilution adjustments), to the extent then
convertible or exchangeable, any such convertible or exchangeable securities, or
upon the exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and the subsequent conversion or exchange
thereof, shall be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a consideration equal to
(1) the consideration, if any, received by this corporation for any such
securities and related options or rights (excluding any cash received on account
of accrued interest or accrued dividends); plus (2) the minimum additional
consideration, if any, to be received by this corporation (without taking into
account potential antidilution adjustments) upon the conversion or exchange of
such securities or the exercise of any related options or rights (the
consideration in each case to be determined in the manner provided in Sections
D(4)(d) and (e) hereof).
(iii) In the event of any change in
the number of shares of Common Stock deliverable or in the consideration payable
to this corporation upon exercise of such options or rights or upon conversion
of or in exchange for such convertible or exchangeable securities, including,
but not limited to, a change resulting from the antidilution provisions thereof,
then the Conversion Price of the Series A Preferred Stock, to the extent in any
way affected by or computed using such options, rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options or rights or the conversion or exchange of such
securities. However, in no event shall (1) the amount of any increase in the
Conversion Price that may result from any recomputation pursuant to this Section
2.D.4(f)(iii) of this Article III, as a proportion of the Conversion Price in
effect at the time such recomputation takes place ("Proportionate Increase"); be
greater than (2) the amount of any decrease in the Conversion Price that
occurred as a result of the issuance of the options, rights, or convertible or
exchangeable securities in question, as a proportion of the Conversion Price in
effect at the time such decrease took place ("Proportionate Decrease").
(iv) Upon the expiration of any such
options or rights, the termination of any such rights to convert or exchange or
the expiration of any options or rights related to such convertible or
exchangeable securities, the Conversion Price of the Series A Preferred Stock,
to the extent in any way affected by or computed using such options, rights or
securities or options or rights related to such securities, shall be recomputed
to reflect the issuance of only the number of shares of Common Stock (and
convertible or exchangeable securities that remain in effect) actually issued
upon the exercise of such options or rights, upon the conversion or exchange of
such securities or upon the exercise of the options or rights related to such
securities. However, in no event shall (1) the amount of any increase in the
Conversion Price that may result from any recomputation pursuant to this Section
2.D.4(f)(iv) of this Article III, as a proportion of the Conversion Price in
effect at the time such recomputation takes place ("Proportionate Increase"); be
greater than (2) the amount of any decrease in the Conversion
8
Price that occurred as a result of the issuance of the options, rights, or
convertible or exchangeable securities in question, as a proportion of the
Conversion Price in effect at the time such decrease took place
("Proportionate Decrease").
(v) The number of shares of Common
Stock deemed issued and the consideration deemed paid therefor pursuant to
Sections D(4)(f)(i) and (ii) hereof, shall be appropriately adjusted to reflect
any change, termination or expiration of the type described in either Section
D(4)(f)(iii) and (iv) hereof.
(g) For purposes of this Section D(4), the
term "Additional Stock" shall mean any shares of Common Stock issued (or deemed
to have been issued pursuant to Section D(4)(f)) by this corporation after the
Purchase Date, except for any of the following:
(i) Common Stock issued pursuant to a
transaction described in Section D(4)(h) below; or
(ii) Common Stock issuable or issued
to (1) employees, consultants or directors of this corporation directly or
pursuant to a stock option plan or restricted stock plan, and such issuance has
been approved by the Board, or (2) vendors or joint venture partners of this
corporation, but only if such issuance is in a transaction with primarily a
non-financing purpose, and has been approved by the Board.
(h) In the event this corporation should at
any time or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (collectively
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Conversion Price of the Series A Preferred Stock shall be appropriately
decreased so that the number of shares of Common Stock issuable on conversion of
each share of such series shall be increased in proportion to such increase of
the aggregate of shares of Common Stock outstanding and those issuable with
respect to such Common Stock Equivalents (with the number of shares issuable
with respect to Common Stock Equivalents determined from time to time in the
manner provided for deemed issuances in Section D(4)(f) hereof).
(i) If the number of shares of Common Stock
outstanding at any time after the Purchase Date is decreased by a combination of
the outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Price for the Series A Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
5. OTHER DISTRIBUTIONS. In the event this
corporation shall declare a distribution payable in securities of other persons,
evidences of indebtedness issued by this corporation or other persons, assets
(excluding cash dividends) or options or rights not referred to in Section
D(4)(h) hereof, then, in each such case for the purpose of this Section D(5),
the holders of the Series A Preferred Stock shall be entitled to a proportionate
share of any such
9
distribution as though they were the holders of the number of
shares of Common Stock of this corporation into which their shares of Series A
Preferred Stock are convertible as of the record date fixed for the
determination of the holders of Common Stock of this corporation entitled to
receive such distribution.
6. RECAPITALIZATIONS. If at any time or from time
to time there shall be a recapitalization or reclassification of the Common
Stock (other than a subdivision, combination or merger or sale of assets
transaction provided for elsewhere in this Section D entitled CONVERSION, or in
Section B hereof entitled LIQUIDATION PREFERENCE, provision shall be made so
that the holders of the Series A Preferred Stock shall thereafter be entitled to
receive upon conversion of the Series A Preferred Stock the number of shares of
stock or other securities or property of this corporation or otherwise, to which
a holder of Common Stock deliverable upon conversion would have been entitled on
such recapitalization or reclassification. In any such case, appropriate
adjustment shall be made in the application of the provisions of this Section D
entitled CONVERSION, with respect to the rights of the holders of the Series A
Preferred Stock after the recapitalization or reclassification, to the end that
the provisions of this Section D entitled CONVERSION (including adjustment of
the Conversion Price then in effect and the number of shares purchasable upon
conversion of the Series A Preferred Stock) shall be applicable after that event
as nearly equivalent as may be practicable.
7. NO IMPAIRMENT. This corporation will not, by
amendment or restatement of its Articles of Incorporation or through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issuance or sale of securities or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by this corporation, but will at all times in
good faith assist in the carrying out of all the provisions of this Section D
entitled CONVERSION, and in the taking of all such action as may be necessary or
appropriate in order to protect the Conversion Rights of the holders of the
Series A Preferred Stock against impairment.
8. NO FRACTIONAL SHARES. No fractional shares
shall be issued upon the conversion of any share or shares of the Series A
Preferred Stock, and the number of shares of Common Stock to be issued shall be
rounded to the nearest whole share (with one half being rounded upward).
Whether or not fractional shares are issuable upon such conversion shall be
determined on the basis of the total number of shares of Series A Preferred
Stock the holder is at the time converting into Common Stock and the number of
shares of Common Stock issuable upon such aggregate conversion.
9. CERTIFICATE OF ADJUSTMENT. Upon the occurrence
of each adjustment or readjustment of the Conversion Price of Series A Preferred
Stock pursuant to this Section D entitled CONVERSION, this corporation, at its
expense, shall promptly compute such adjustment or readjustment in accordance
with the terms hereof and prepare and furnish to each holder of Series A
Preferred Stock a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
This corporation shall, upon the written request at any time of any holder of
Series A Preferred Stock, furnish or cause to be furnished to such holder a like
certificate setting forth (a) such adjustment and readjustment, (b) the
Conversion Price for such series of Preferred Stock at the time in effect, and
(c) the number of shares of Common Stock and the amount, if any, of other
property that at the time would be received upon the conversion of a share of
Series A Preferred Stock.
10. NOTICES OF RECORD DATE. In the event of any
taking by this corporation of a record of the holders of any class of securities
for the purpose of determining the
10
holders thereof who are entitled to receive any dividend (other than a cash
dividend) or other distribution, any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any other right, this corporation shall mail to each
holder of Series A Preferred Stock, at least twenty (20) days prior to the
date specified therein, a notice specifying the date on which any such record
is to be taken for the purpose of such dividend, distribution or right, and
the amount and character of such dividend, distribution or right.
11. RESERVATION OF STOCK ISSUABLE UPON CONVERSION.
This corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Common Stock, solely for the purpose of
effecting the conversion of the shares of the Series A Preferred Stock, such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Series A Preferred Stock;
and if at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of all then outstanding shares
of the Series A Preferred Stock, in addition to such other remedies as shall be
available to the holder of such Series A Preferred Stock, this corporation will
take such corporate action as may, in the opinion of its counsel, be necessary
to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in best efforts to obtain the requisite shareholder approval of any
necessary amendment to the corporation's articles of incorporation.
12. NOTICES. Any notice required by the provisions
of this Section D entitled CONVERSION, to be given to the holders of shares of
Series A Preferred Stock shall be deemed given if deposited in the United States
mail, postage prepaid, and addressed to each holder of record at his address
appearing on the books of this corporation.
E. VOTING RIGHTS.
1. GENERALLY. The holder of each share of
Series A Preferred Stock shall have the right to one vote for each share of
Common Stock into which such Series A Preferred Stock could then be converted,
and with respect to such vote, such holder shall have full voting rights and
powers equal to the voting rights and powers of the holders of Common Stock, and
shall be entitled, notwithstanding any provision hereof, to notice of any
shareholders' meeting in accordance with the bylaws of this corporation, and
shall be entitled to vote, together with holders of Common Stock, with respect
to any question upon which holders of Common Stock have the right to vote.
Fractional votes shall not, however, be permitted and any fractional voting
rights available on an as-converted basis (after aggregating all shares into
which shares of Series A Preferred Stock held by each holder could be converted)
shall be rounded to the nearest whole number (with one-half being rounded
upward).
2. BOARD OF DIRECTORS ELECTION AND REMOVAL.
(a) ELECTION. So long as any shares of
Series A Preferred Stock are outstanding: (i) the holders of the Series A
Preferred Stock, voting as a separate series (with cumulative voting rights as
among themselves in accordance with Section 708 of the California Corporations
Code), shall be entitled to elect one (1) director of this corporation; and (ii)
the holder of the Series A Preferred Stock and the Common Stock, voting together
as a single class (with cumulative voting rights as among themselves in
accordance with Section 708 of the California Corporations Code), shall be
entitled to elect the remaining directors of this corporation.
11
(b) QUORUM; REQUIRED VOTE.
(i) QUORUM. At any meeting held
for the purpose of electing directors, the presence in person or by proxy: (A)
of the holders of a majority of the shares of the Series A Preferred Stock shall
constitute a quorum of the Series A Preferred Stock for the election of
directors to be elected solely by the holders of the Series A Preferred Stock;
and (B) of holders of Series A Preferred Stock and Common Stock representing a
majority of the voting power of all the then-outstanding shares of the directors
to be elected jointly by the holders of the Series A Preferred Stock and the
Common Stock.
(ii) REQUIRED VOTE. With respect to
the election of any director or directors by the holders of the outstanding
shares of a specified series, series', class or classes of stock given the right
to elect such director or directors pursuant to Section E(2)(a) above (the
"Specified Stock"), that candidate or those candidates (as applicable), shall be
elected who either: (i) in the case of any such vote conducted at a meeting of
the holders of such Specified Stock, receive the highest number of affirmative
votes of the outstanding shares of such Specified Stock, up to the number of
directors to be elected by such Specified Stock; or (ii) in the case of any such
vote taken by written consent without a meeting, are elected by the unanimous
written consent of the holders of the shares of such Specified Stock, except
that, if such vote is to fill a vacancy on the Board other than a vacancy
created by removal of a director, such vacancy may be filled election by the
written consent of the holders of a majority of the outstanding shares of such
Specified Stock.
(c) VACANCY. If there shall be any
vacancy in the office of a director elected by the holders of any Specified
Stock pursuant to Section E(2)(a), then a successor to hold office for the
unexpired term of such director may be elected by either: (i) the remaining
director or directors (if any) in the office that were so elected by the holders
of such Specified Stock, by the affirmative vote of a majority of such directors
(or by the sole remaining director elected by the holders of such Specified
Stock if there be but one); or (ii) the required vote of holders of the shares
of such Specified Stock specified in Section E(2)(b)(ii) above that are entitled
to elect such director under Section E(2)(a).
(d) REMOVAL. Subject to Section 303 of
the California Corporations Code, any director who shall have been elected to
the Board by the holders of any Specified Stock pursuant to Section E(2)(a) or
by any director or directors elected by holder of any Specified Stock as
provided in Subsection E(2)(c), may be removed during his or her term of office,
either with or without cause, by, and only by, the affirmative vote of shares
representing a majority of the voting power of all the outstanding shares of
such Specified Stock entitled to vote given either at a meeting of such
shareholders duly called for that purpose or pursuant to a written consent of
shareholders without a meeting, and any vacancy created by such removal may be
filled only in the manner provided in Section E(2)(c).
(e) PROCEDURES. Any meeting of the
holders of any Specified Stock, and any action taken by the holders of any
Specified Stock written consent without a meeting, in order to elect or remove a
director under this Section E(2), shall be held in accordance with the
procedures and provisions of this corporation's bylaws, the California
Corporations Code and applicable law regarding shareholder meetings and
shareholder actions by written consent, as such are then in effect (including,
but not limited to, procedures for determining the record date for shares
entitled to vote).
12
F. PROTECTIVE PROVISIONS. So long as any shares of
Series A Preferred Stock are outstanding, this corporation shall not without
first obtaining the approval (by vote or written consent, as provided by law) of
the holders of at least two thirds (2/3) of the then outstanding shares of
Series A Preferred Stock:
1. Sell, convey, or otherwise dispose of all or
substantially all of its property or business or merge into or consolidate with
any other corporation (other than a wholly-owned subsidiary corporation) or
effect any transaction or series of related transactions in which more than
fifty percent (50%) of the voting power of this corporation is disposed of;
2. Alter or change the rights, preferences or
privileges of the shares of Series A Preferred Stock.
3. Increase or decrease (other than by redemption
or conversion) the total number of authorized shares of Series A Preferred
Stock;
4. Authorize or issue, or obligate itself to issue,
any other equity security, including any other security convertible into or
exercisable for any equity security senior to or on a parity with the Series A
Preferred Stock with respect to dividends, liquidation, redemption or voting;
5. Redeem, purchase or otherwise acquire (or pay
into or set aside for a sinking fund for such purpose) any share or shares of
the capital stock of this corporation; provided, however, that this restriction
shall not apply to (i) the repurchase of shares of Common Stock from employees,
officers, directors, consultants or other persons performing services for this
corporation or any subsidiary pursuant to agreements under which this
corporation has the option to repurchase such shares at cost, or at cost upon
the occurrence of certain events, such as the termination of employment, or
(ii) the redemption of any share or shares of Preferred Stock in accordance with
the provisions of Section C hereof entitled REDEMPTION;
6. Amend or otherwise modify this corporation's
articles of incorporation in such a manner as to alter or change the rights,
preferences or privileges of the shares of Series A Preferred Stock so as to
adversely affect such shares;
7. Declare or pay any dividends or other
distributions of any kind on or with respect to shares of Common Stock (other
than such a dividend payable solely in the form of shares of Common Stock);
8. Declare or pay any dividends or other
distributions of any kind on or with respect to shares of Series A Preferred
Stock, except for Fixed Amount Dividends.
9. Take any other action with respect to which the
holders of Series A Preferred Stock are entitled to vote and/or grant approval
as a separate class or series under the applicable laws of the State of
California.
10. Reclassify any outstanding shares of
securities of this corporation into shares having rights, preferences or
privileges senior to or on a parity with the Series A Preferred Stock.
G. STATUS OF REDEEMED OR CONVERTED STOCK. In the event
any shares of Series A Preferred Stock shall be redeemed or converted pursuant
to Section C hereof entitled
13
REDEMPTION, or Section D hereof entitled CONVERSION, the shares so redeemed
or converted shall be canceled.
3. The foregoing amendment of Amended and Restated Articles of
Incorporation has been duly approved by the Board of Directors.
4. The foregoing amendment of Amended and Restated Articles of
Incorporation has been duly approved by the required vote of shareholders in
accordance with Section 902 and Section 903 of the California Corporations Code.
The total number of outstanding shares of this corporation's Common Stock is Ten
Million Eight Hundred Fifty Six Thousand Eight Hundred Ninety (10,856,890).
There are no outstanding shares of this corporation's Preferred Stock. The
number of shares of this corporation's Common Stock voting in favor of the
Amendment equaled or exceeded the vote required. The percentage vote required
was more than fifty percent (50%).
The undersigned further declare under penalty of perjury under the
laws of the State of California that the matters set forth in this certificate
are true and correct of their own knowledge.
Date: July 30, 1999
------------------------------ -----------------------------
Xxxxxx Xxxxxx, President Xxxxx Xxxxxxxxxx, Secretary
14
EXHIBIT "B"
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Registration Agreement") is
entered into at San Diego, California, effective as of [INSERT DATE], 1999
("Effective Date"), between Microelectronic Packaging, Inc. ("Company"); and
Transpac Capital Pte Ltd ("Transpac Capital"), Transpac Industrial Holdings Ltd
("Transpac Holdings"), Regional Investment Company Ltd ("Regional Investment"),
and Natsteel Equity III Pte Ltd ("Natsteel Equity") (each an "Investor" or
"Holder," and collectively the "Investor Group" or the "Holders"). This
Registration Agreement is entered into between the Company and the Investor
Group pursuant to the provisions of Section 6.1 of the Debt Conversion and
Mutual Settlement and Release Agreement ("Conversion Agreement") entered into
between the Company and the Investor Group as of the Effective Date.
1. DEFINED TERMS. In addition to those terms defined elsewhere
in this Registration Agreement, the following terms shall have the meanings
defined for such terms in this Section 1:
(a) "33 Act" means the Securities Act of 1933, as
amended.
(b) "Form S-3" means such form under the 33 Act as in
effect on the date hereof or any registration form under the 33 Act subsequently
adopted by the Securities and Exchange Commission ("Commission") that permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the Commission.
(c) "Holder" means any person owning or having the right
to acquire Registrable Securities, or any assignee thereof in accordance with
Section 8 hereof.
(d) "34 Act" means the Securities Exchange Act of 1934,
as amended.
(e) "Register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the 33 Act, and the declaration or ordering
of effectiveness of such registration statement or document.
(f) "Registrable Securities" means (i) common stock of
the Company issuable or issued upon conversion of the Series A Preferred Stock;
and (ii) any common stock of the Company issued as (or issuable upon the
conversion or exercise of any warrant, right or other security that is issued
as) a dividend or other distribution with respect to, or in exchange for, or in
replacement of any Registrable Securities, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which rights under
this Registration Agreement are not assigned in accordance with this
Registration Agreement.
(g) The number of shares of "Registrable Securities"
outstanding shall be determined by the number of shares of Common Stock
outstanding that are, and the number of shares of Common Stock issuable pursuant
to then exercisable or convertible securities that are, Registrable Securities.
(h) "Common Stock" means common stock of the Company.
(i) "Series A Stock" means the Series A Preferred Stock of
the Company.
1. REGISTRATION. Subject to all of the provisions of this
Registration Agreement, commencing as of the Effective Date, the Company shall
use best efforts to cause be registered under the 33 Act, all, or as many as
reasonably possible of the Registrable Securities, by means of a Form S-3
registration statement, or if the use of Form S-3 is not then available, then by
means of such other Form(s) as may be available in connection with the
Registrable Securities (all subsequent references herein to Form S-3 shall be
deemed to include references to such other Form(s) unless expressly provided
otherwise); provided, however, that the Company shall not be obligated to effect
any such registration any of the following situations:
(a) If the Holders, together with the holders of any
other securities of the Company entitled to inclusion or otherwise included in
such registration, propose to sell securities of the Company on Form S-3 at an
aggregate price to the public of less than One Million Five Hundred Thousand
Dollars ($1,500,000.00), provided, however, that such One Million Five Hundred
Thousand Dollar ($1,500,000.00) minimum shall not apply if the Holders represent
in writing to the Company that they intend to dispose of at least Two Million
(2,000,000) shares of Registrable Securities; or
(b) Within one hundred and twenty (120) days after the
filing and/or effective date of any other registration filed pursuant hereto.
(c) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, unless the Company is already subject to service in
such jurisdiction and except as may be required under the 33 Act.
In addition, during such times as the Company is causing
Registrable Securities to be registered under the 33 Act pursuant to this
Registration Agreement, the Company shall not register or attempt to register
any other securities of the Company under the 33 Act for purposes of effecting a
public offering of such securities without the prior written consent of a
majority in interest of the holders of Series A Preferred Stock, except for (a)
registrations of Registrable Securities held by other holders of Series A
Preferred Stock pursuant to registration agreements substantially the same as
this Registration Agreement; and (b) registrations relating to an employee
benefit plan of the Company or a business combination involving the Company.
2. COMPANY'S DUTIES. In connection with any registration
effected by the Company pursuant hereto, the Company will keep each Holder
advised in writing as to the initiation of the registration and as to the
completion thereof. The Company shall:
2
(a) File a Form S-3 registration statement with the
Securities and Exchange Commission ("Commission") not later than six (6) months
after the Effective Date, and to the extent practicable, cause such registration
statement to be declared effective within 45 days of such filing. However, in
the event such registration statement is not on Form S-3, then the 45 day period
set forth in the immediately preceding sentence shall be extended to 90 days.
(b) Keep the registration statement effective for one
year after the effective date of such registration statement.
(c) Prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the 33 Act with respect to the disposition of all securities
covered by such registration statement.
(d) Furnish such number of prospectuses and other
documents incident to such registration statement, including any amendment of or
supplement to the prospectus, as a Holder from time to time may reasonably
request.
(e) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the 33 Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in the light of the circumstances then
existing, and shall promptly prepare and file with the Commission either a
supplement to such prospectus, or an amendment to such registration statement,
or a filing under the 34 Act, which is incorporated by reference into such
registration statement (and in the case of an amendment to such registration
statement use the Company's best efforts to cause such amendment to become
effective as soon as reasonably possible), as may be necessary so that, as
thereafter delivered to purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in light of the circumstances
then existing, and at the request of any Holder, shall furnish to such Holder a
reasonable number of copies of such supplement, amendment or filing under the 34
Act.
(f) Cause all Registrable Securities registered
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(g) Use reasonable, diligent efforts to register and
qualify the securities covered by such registration statement under such other
securities laws or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
3
(h) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter(s) of such offering.
(i) Furnish, at the request of any Holder of Registrable
Securities included in such registration, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective: (1) an opinion, dated as of such date, of
the counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in interest of the
Holders of Registrable Securities included in such registration, addressed to
the underwriters, if any, and to the Holders of Registrable Securities included
in such registration; and (2) a "comfort" letter dated as of such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders of Registrable Securities included in such
registration, addressed to the underwriters, if any, and to the Holders of
Registrable Securities included in such registration.
3. LIMITING PROVISIONS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required by reason of this Registration Agreement, to include any
of the Registrable Securities in such underwriting, unless the Holders accept
the terms of the underwriting as agreed upon between the Company and the
underwriters selected by it (or by other persons entitled to select the
underwriters), and then only in such quantity as the underwriters determine in
their sole discretion will not jeopardize the success of the offering or have a
material adverse effect on the price of or market for the Company's capital
stock. If the total amount of securities, including Registrable Securities, to
be included in such offering exceeds the amount of securities to be sold (other
than by the Company) that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of securities, including Registrable
Securities, which the underwriters determine in their sole discretion will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the selling shareholders possessing contractual
registration rights, according to the total amount of securities entitled to be
included therein that are owned by each selling shareholder, or in such other
proportions as shall mutually be agreed to by such selling shareholders);
PROVIDED, HOWEVER, that the number of shares of Registrable Securities to be
included in such underwriting and registration shall not be reduced unless all
other securities of the Company (including, without limitation, securities held
by officers, directors and employees of the Company and other shareholders of
the Company who do not have contractual registration rights), are first entirely
excluded from the underwriting and registration. Any Registrable Securities
excluded and withdrawn from such underwriting shall be withdrawn from the
registration.
4. INFORMATION FROM HOLDER. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this
Registration Agreement with
4
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such
Holder's Registrable Securities.
5. EXPENSES OF REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders, shall be borne by the
Company. Notwithstanding the foregoing, the Company shall not be required to
pay for any expenses of any registration begun pursuant to this Registration
Agreement if the registration request is subsequently withdrawn at the request
of the Holders of a majority of the Registrable Securities to be registered,
which request shall be binding on all Holders of the Registrable Securities (in
which case all participating Holders shall bear such expenses pro rata based on
the relative number of Registrable Securities held by each Holder that were to
be included in the withdrawn registration); provided, however, that if at the
time of such withdrawal, the Holders have learned of a material adverse change
in the condition, business, or prospects of the Company not known to the Holders
as of the Effective Date and have withdrawn their request for registration with
reasonable promptness after learning of such material adverse change, then the
Holders shall not be required to pay any of such expenses and shall retain their
rights hereunder.
6. DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any registration
as the result of any controversy that might arise with respect to the
interpretation or implementation of this Registration Agreement.
7. INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement pursuant to this Registration
Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners or officers, directors and
shareholders of each Holder, legal counsel and accountants for each Holder, any
underwriter (as defined in the 33 Act) for such Holder and each person, if any,
who controls such Holder or underwriter within the meaning of the 33 Act or the
34 Act, against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the 33 Act, the 34 Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (each a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the 33 Act, the 34 Act, any
state securities laws or any rule or regulation promulgated under the 33 Act,
the 34 Act or any state securities laws; and the Company will reimburse each
such Holder, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided,
5
however, that the indemnity agreement contained in this Section 7(a) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is based upon a
Violation that occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by any such Holder, underwriter or controlling person; provided further,
however, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Holder or
underwriter, or any person controlling such Holder or underwriter, from whom
the person asserting any such losses, claims, damages or liabilities
purchased shares in the offering, if a copy of the prospectus (as then
amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such Holder or
underwriter to such person, if required by law so to have been delivered, at
or prior to the written confirmation of the sale of the shares to such
person, and if the prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage or liability.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the 33 Act, legal counsel and
accountants for the Company, any underwriter, any other Holder selling
securities in such registration statement and any controlling person of any such
underwriter or other Holder, against any losses, claims, damages or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the 33 Act, the 34 Act or any state securities laws, insofar as such
losses, claims, damages or liabilities (or actions in respect thereto) arise out
of or are based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration; and each such Holder will reimburse any person intended
to be indemnified pursuant to this Section 7(b), for any legal or other expenses
reasonably incurred by such person in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 7(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), provided that in no event shall any indemnity
under this Section 7(b) exceed the net proceeds from the offering received by
such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 7, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees
6
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 7, but the omission so to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 7.
(d) If the indemnification provided for in this Section 7
is held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage or expense referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 7 shall survive the completion of any offering of Registrable Securities
in a registration statement filed by the Company.
8. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant hereto may be assigned (but
only with all related obligations) by a Holder to a transferee or assignee of
such securities that (i) is a subsidiary, parent, partner, limited partner,
retired partner or shareholder of a Holder, (ii) is a Holder's family member or
trust for the benefit of an individual Holder, or (iii) after such assignment or
transfer, holds at least Fifty Percent (50%) of the Holder's original number of
Registrable Securities (subject to appropriate adjustment for stock splits,
stock dividends, combinations and other recapitalizations), provided: (a) the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned, (b) such
transferee or assignee agrees in writing to be bound by and subject to all of
the terms and conditions of this Agreement, and (c) such assignment shall be
effective only if immediately
7
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the 33 Act.
9. "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees
that it will not, without the prior written consent of the managing underwriter,
during the period commencing on the date of the final prospectus relating to any
public offering of securities by the Company, and ending on the date specified
by the Company and the managing underwriter (such period not to exceed one
hundred eighty (180) days) (i) lend, offer, pledge, sell, contract to sell, sell
any option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock (whether such
shares or any such securities are then owned by the Holder or are thereafter
acquired), or (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such transaction described in clause (i) or (ii)
immediately above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The underwriters in connection with any
public offering of securities by the Company are intended third party
beneficiaries of this Section 9 and shall have the right, power and authority to
enforce the provisions hereof as though they were a party hereto.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
10. MISCELLANEOUS PROVISIONS.
10.1 EXHIBITS. All exhibits described in this
Registration Agreement are incorporated by reference as if fully set forth
herein, and constitute a material part of this Registration Agreement, whether
or not such exhibits are attached hereto.
10.2 GOVERNING LAW. This Registration Agreement shall in
all respects be construed, interpreted and enforced in accordance with and
governed by the laws of the State of California, United States of America. Any
legal action between the parties regarding this Registration Agreement shall be
brought in, and the parties hereby consent to the jurisdiction of and venue in,
the federal and state courts located in the County of Los Angeles, State of
California, United States of America.
10.3 NOTICES. Any notice, demand or other communication
required or permitted under this Registration Agreement shall be deemed given
and delivered when in writing and (a) personally served upon the receiving
party, or (b) upon the third (3rd) calendar day after mailing to the receiving
party by either (i) United States registered or certified mail, postage prepaid,
or (ii) FedEx or other comparable overnight delivery service, delivery charges
prepaid, and addressed as follows:
8
To Company: Microelectronic Packaging, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Chief Executive Officer
To any member of Transpac Capital Pte Ltd
the Investor Group 0 Xxxxxxx Xxx
#00-00 XXX Xxxxxxxx
Xxxxx Xxx
Xxxxxxxxx 000000
Attn: Xxxx Xxx Hong
Any party may change the address specified in this section by giving the other
party notice of such new address in the manner set forth herein.
10.4 SEVERABILITY. In the event that any provision of
this Registration Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or invalid, then this Registration
Agreement shall continue in full force and effect without said provision. If
this Registration Agreement continues in full force and effect as provided
above, the parties shall replace the invalid provision with a valid provision
which corresponds as far as possible to the spirit and purpose of the invalid
provision.
10.5 COUNTERPARTS. This Registration Agreement may be
executed in any number of counterparts, each of which may be executed by less
than all of the parties hereto, each of which shall be enforceable against the
parties actually executing such counterparts, and all of which together shall
constitute one document.
10.6 ENTIRE AGREEMENT. This Registration Agreement, the
Ancillary Agreements, and the documents and agreements contemplated herein and
therein, constitute the entire agreement between the parties with respect to the
subject matter hereof, and supersede all prior oral or written agreements,
representations or warranties between the parties other than those set forth
herein or herein provided for.
10.7 SUCCESSORS AND ASSIGNS. Except as specifically
permitted pursuant to the terms and conditions hereof, no party shall be
permitted to assign their respective rights or obligations under this
Registration Agreement without the prior written consent of the other parties.
The provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors and assigns, heirs, executors, and administrators of the
parties hereto.
10.8 AMENDMENT AND WAIVER. No modification or waiver of
any provision of this Registration Agreement shall be binding upon the party
against whom it is sought to be enforced, unless specifically set forth in
writing signed by an authorized representative of that party. A waiver by any
party of any of the terms or conditions of this Registration Agreement in any
one instance shall not be deemed or construed to be a waiver of such terms or
conditions for the future, or of any subsequent breach thereof. The failure by
any party hereto at any time to enforce any of the provisions of this
Registration Agreement, or to
9
require at any time performance of any of the provisions hereof, shall in no
way to be construed to be a waiver of such provisions or to affect either the
validity of this Registration Agreement or the right of any party to
thereafter enforce each and every provision of this Registration Agreement.
10.9 SURVIVABILITY. All of the representations,
warranties, agreements and obligations of the parties pursuant to this
Registration Agreement shall survive any registration of the Registrable Shares
pursuant hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Registration Agreement as of the date first above written.
MICROELECTRONIC PACKAGING, INC. TRANSPAC CAPITAL PTE LTD
By: By:
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Signature Signature
Print Print
Name: Name:
-------------------------------- -------------------------------
Print Print
Title: Title:
------------------------------- ------------------------------
TRANSPAC INDUSTRIAL HOLDINGS LTD REGIONAL INVESTMENT COMPANY LTD
By: By:
---------------------------------- ---------------------------------
Signature Signature
Print Print
Name: Name:
-------------------------------- -------------------------------
Print Print
Title: Title:
------------------------------- ------------------------------
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NATSTEEL EQUITY III PTE LTD
By:
--------------------------------
Signature
Print
Name:
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Print
Title:
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11
EXHIBIT "C"
FIRST AMENDMENT
TO
WARRANT TO PURCHASE COMMON STOCK
OF
MICROELECTRONIC PACKAGING, INC.
No. WCS-1
THIS FIRST AMENDMENT ("First Amendment") TO WARRANT TO PURCHASE
COMMON STOCK OF MICROELECTRONIC PACKAGING, INC. ("Warrant"), is entered into
effective as of June , 1999 ("Effective Date") between Microelectronic
Packaging, Inc., a California corporation ("MPI"), and Transpac Capital Pte.
Ltd. ("Holder"), with respect to the Warrant to Purchase Common Stock of MPI
No. WCS-1 dated April 24, 1998, between MPI and Holder ("Warrant").
This First Amendment is entered into pursuant to Section 6.1(b) of
the Debt Conversion and Mutual Settlement and Release Agreement dated April 29,
1999 ("Conversion Agreement"), entered into between (a) MPI on behalf of itself
and its predecessors, successors, former and current subsidiaries, affiliates,
shareholders, directors, officers, agents, attorneys, representatives, insurers,
employees and assigns; and (a) Transpac Capital Pte Ltd, Transpac Industrial
Holdings Ltd, Regional Investment Company Ltd, and Natsteel Equity III Pte Ltd,
and their respective predecessors, successors, former and current subsidiaries,
affiliates, shareholders, directors, officers, agents, attorneys,
representatives, insurers, employees and assigns.
1. AMENDMENT OF WARRANT. MPI and Holder hereby agree that
Section 2 of the Warrant shall be amended by deleting it in its entirety and
replacing it with the following new Section 2:
2. EXERCISE PRICE. The exercise price at which this
Warrant may be exercised shall be Fifty Cents ($0.50)
per share of Common Stock, as adjusted from time to time
pursuant to Section 11 hereof (the "Exercise Price"),
payable either by cash or check or by net exercise
pursuant to Section 4.d.
2. NO OTHER AMENDMENTS. Except for the amendment to the
Warrant described in Section 1 of this First Amendment, no other provisions
of the Warrant are amended or changed by virtue of this First Amendment, and
all other provisions of the Warrant remain in full force and effect without
any amendments or changes thereto.
3. CONSIDERATION. MPI and Holder agree that their respective
rights and obligations under the Conversion Agreement constitute sufficient
consideration to cause the provisions of this First Amendment to be
enforceable against MPI and Holder in accordance with its terms.
IN WITNESS WHEREOF, MPI and Holder have executed this First
Amendment as of the Effective Date.
MICROELECTRONIC PACKAGING, INC. TRANSPAC CAPITAL PTE. LTD.
a California corporation
By:__________________________________ By:__________________________________
Xxxxxx Xxxxxx, Chief Executive
Officer
Print
Name:________________________________
Print
Title:_______________________________
2
EXHIBIT "D"
IBM PROCEEDS AGREEMENT
THIS IBM PROCEEDS AGREEMENT ("IBM Agreement") is entered into
effective as of this day _____, 1999 ("Effective Date"), between
Microelectronic Packaging, Inc. ("MPI"), on behalf of itself and its
predecessors, successors, former and current subsidiaries, affiliates,
shareholders, directors, officers, agents, attorneys, representatives,
insurers, employees and assigns (collectively with MPI the "MPI Group"); and
Transpac Capital Pte Ltd ("Transpac Capital"), Transpac Industrial Holdings
Ltd ("Transpac Holdings"), Regional Investment Company Ltd ("Regional
Investment"), and Natsteel Equity III Pte Ltd ("Natsteel Equity"), and their
respective predecessors, successors, former and current subsidiaries,
affiliates, shareholders, directors, officers, agents, attorneys,
representatives, insurers, employees and assigns (collectively the "Investor
Group"). This IBM Agreement is being entered into between the MPI and the
Investor Group pursuant to the applicable terms and conditions of the Debt
Conversion and Mutual Settlement and Release Agreement dated as of the
Effective Date ("Conversion Agreement"), entered into between the MPI Group
and the Investor Group. Unless otherwise defined herein, capitalized terms
appearing in this IBM Agreement shall have the meanings defined for such
terms in the Conversion Agreement.
1. DEFINED TERMS. In addition to defined terms whose
meanings may be defined elsewhere in this IBM Agreement or in the Conversion
Agreement, the following terms shall have the meanings defined for such terms
in this Section 1:
1.1 "Covered Agreements" means one or both of the
following agreements entered into by and between MPI and International
Business Machines Corporation ("IBM"): (a) the Purchase Option Agreement
dated August 4, 1994 by and between IBM and MPI; and (b) the Multilayer
Technology Transfer and Licensing Agreement dated August 4, 1994 between IBM
and MPI.
1.2 "Covered Payments" means the gross monetary
proceeds MPI receives directly from IBM or any agent of IBM pursuant to any
cash settlement, monetary award granted pursuant to court-ordered arbitration
or mediation proceedings, or court order based upon claims for monetary
damages, in any manner arising under any one or both of the Covered
Agreements.
1.3 "Net MPI Proceeds" means the Covered Payments,
less (a) the first Three Million Three Hundred Thirty Three Thousand Dollars
and Thirty Three Cents ($3,333,333.33) of Covered Payments MPI receives, (b)
any portion of the Covered Payments that MPI is obligated to pay, and in fact
pays, to MPI's legal counsel and/or other parties other than the Investor
Group or the Development Bank of Singapore Limited ("DBS"), in exchange for
such legal counsel's and/or other parties' services in seeking enforcement of
the Covered Agreements and collection of the Covered Payments ("Compensation
Payments"), and (c) the total amount of all fees and expenses MPI has
incurred that are directly related to seeking enforcement of the Covered
Agreements and/or collection of the Covered Payments, including
without limitation, legal fees and expenses, but excluding any amount
included in Compensation Payments ("Enforcement Expenses"). In the event the
Covered Payments are to be paid in a series of installments ("Installment
Payments"), then the total amount of the Compensation Payments and the
Enforcement Expenses ("Covered Payment Deductions") shall be spread out and
applied to each of the Installment Payments on a pro-rata basis, meaning that
each of the Installment Payments shall be reduced by an amount calculated by
multiplying the total amount of the Covered Payment Deductions by a fraction,
the numerator of which is the amount of the Installment Payment in question,
and the denominator of which is the total amount of all of the Installment
Payments to be paid. The number resulting from this multiplication shall be
the Net MPI Proceeds with respect to the Installment Payment in question.
2. INVESTOR GROUP PERCENTAGES. Not later than thirty (30)
days after MPI receives any Net MPI Proceeds, MPI shall pay to the respective
members of the Investor Group a percentage of the Net MPI Proceeds ("Investor
Group Payments") equal to the percentage set forth opposite the name of such
member as follows ("Investor Group Percentage"):
NAME OF MEMBER OF INVESTOR GROUP PERCENTAGE OF NET MPI PROCEEDS
Transpac Capital 12.090%
Transpac Holdings 11.900%
Regional Investment 3.280%
Natsteel Equity 2.730%
______________________________________________________________
TOTAL for all members of the Investor Group 30.000%
In the event the Covered Payments are to be paid in a series of
installments, (a) then not later than thirty (30) days after MPI receives a
particular Installment Payment, MPI shall pay to the respective members of
the Investor Group an amount equal to the Installment Payment in question,
multiplied by the applicable Investor Group Percentage.
3. CONSIDERATION. MPI and the Investor Group agree that their
respective rights and obligations under the Conversion Agreement constitute
sufficient consideration to cause the provisions of this IBM Agreement to be
enforceable against the MPI Group and the Investor Group in accordance with
its terms.
4. MISCELLANEOUS PROVISIONS.
4.1 GOVERNING LAW. This IBM Agreement shall in all
respects be construed, interpreted and enforced in accordance with and
governed by the laws of the State of California, United States of America.
Any legal action between the parties regarding this IBM Agreement shall be
brought in, and the parties hereby consent to the jurisdiction of and venue
in, either (a) the federal and state courts located in the County of San
Diego, State of California, United States of America; or (b) the courts
located in the country of Singapore.
2
4.2 NOTICES. Any notice, demand or other
communication required or permitted under this IBM Agreement shall be deemed
given and delivered when in writing and (a) personally served upon the
receiving party, or (b) upon the third (3rd) calendar day after mailing to
the receiving party by either (i) United States registered or certified mail,
postage prepaid, or (ii) FedEx or other comparable overnight delivery
service, delivery charges prepaid, and addressed as follows:
To MPI: Microelectronic Packaging, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Attn: Chief Executive Officer
To any member of Transpac Capital Pte Ltd
the Investor Group 0 Xxxxxxx Xxx
#00-00 XXX Xxxxxxxx
Xxxxx Xxx
Xxxxxxxxx 000000
Attn: Xxxx Xxx Hong
Any party may change the address specified in this section by giving the
other party notice of such new address in the manner set forth herein.
4.3 SEVERABILITY. In the event that any provision of
this IBM Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or invalid, then this IBM Agreement
shall continue in full force and effect without said provision. If this IBM
Agreement continues in full force and effect as provided above, the parties
shall replace the invalid provision with a valid provision which corresponds
as far as possible to the spirit and purpose of the invalid provision.
4.4 COUNTERPARTS. This IBM Agreement may be executed
in any number of counterparts, each of which may be executed by less than all
of the parties hereto, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall
constitute one document.
4.5 ENTIRE AGREEMENT. This IBM Agreement, the
Conversion Agreement, the other Ancillary Agreements, and the documents and
agreements contemplated herein and therein, constitute the entire agreement
between the parties with respect to the subject matter hereof, and supersede
all prior oral or written agreements, representations or warranties between
the parties other than those set forth herein or herein provided for.
4.6 SUCCESSORS AND ASSIGNS. Except as specifically
permitted pursuant to the terms and conditions hereof, no party shall be
permitted to assign their respective rights or obligations under this IBM
Agreement without the prior written consent of the other parties. The
provisions hereof shall inure to the benefit of, and be binding upon, the
permitted successors and assigns, heirs, executors, and administrators of the
parties hereto.
3
4.7 AMENDMENT AND WAIVER. No modification or waiver
of any provision of this IBM Agreement shall be binding upon the party
against whom it is sought to be enforced, unless specifically set forth in
writing signed by an authorized representative of that party. A waiver by
any party of any of the terms or conditions of this IBM Agreement in any one
instance shall not be deemed or construed to be a waiver of such terms or
conditions for the future, or of any subsequent breach thereof. The failure
by any party hereto at any time to enforce any of the provisions of this IBM
Agreement, or to require at any time performance of any of the provisions
hereof, shall in no way to be construed to be a waiver of such provisions or
to affect either the validity of this IBM Agreement or the right of any party
to thereafter enforce each and every provision of this IBM Agreement.
4.8 SURVIVABILITY. All of the representations,
warranties, agreements and obligations of the parties pursuant to this IBM
Agreement shall survive any issuance of the Shares by MPI to the Investor
Group.
IN WITNESS WHEREOF, the parties hereto have duly executed this
IBM Agreement as of the date first above written.
MICROELECTRONIC PACKAGING, INC. TRANSPAC CAPITAL PTE LTD
By:__________________________________ By:__________________________________
Signature Signature
Print Print
Name:________________________________ Name:________________________________
Print Print
Title:_________________________________ Title:_______________________________
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4
CONTINUATION OF SIGNATURES FOR
IBM PROCEEDS AGREEMENT
dated _____, 1999
TRANSPAC INDUSTRIAL HOLDINGS LTD REGIONAL INVESTMENT COMPANY LTD
By:__________________________________ By:_________________________________
Signature Signature
Print Print
Name:________________________________ Name:________________________________
Print Print
Title:_________________________________ Title:_______________________________
NATSTEEL EQUITY III PTE LTD
By:__________________________________
Signature
Print
Name:________________________________
Print
Title:_______________________________
5
EXHIBIT "E"
COMPLIANCE CERTIFICATE OF CHIEF EXECUTIVE OFFICER
OF
MICROELECTRONIC PACKAGING, INC.
The undersigned, Xxxxxx Xxxxxx, does hereby certify that he has
been duly elected and qualified as, and at this date is, the Chief Executive
Officer of Microelectronic Packaging, Inc. (the "Company") and that:
1. All of the representations and warranties of the Company
set forth in the Debt Conversion and Mutual Settlement and Release Agreement
dated April 29, 1999, by and among the Company and Transpac Capital Pte Ltd
("Transpac Capital"), Transpac Industrial Holdings Ltd ("Transpac Holdings"),
Regional Investment Company Ltd ("Regional Investment"), and Natsteel Equity III
Pte Ltd ("Natsteel Equity"), and their respective predecessors, successors,
former and current subsidiaries, affiliates, shareholders, directors, officers,
agents, attorneys, representatives, insurers, employees and assigns
(collectively, "Transpac Capital") (the "Conversion Agreement"), in the
Ancillary Agreements (as that term is defined in the Conversion Agreement), or
in any other document delivered by the Company to Transpac Capital in connection
therewith, are true, accurate, complete, and not misleading in any material
respect, on and as of the Conversion Date (as that term is defined in the
Conversion Agreement) with the same effect as though such representations and
warranties had been made on and as of the Conversion Date.
2. The Company has performed and complied with all of the
agreements, duties, obligations and conditions that are required to be performed
or complied with by the Company on or before the Conversion Date (as that term
is defined in the Conversion Agreement), pursuant to the provisions of the
Conversion Agreement, the Ancillary Agreements (as that term is defined in the
Conversion Agreement), or any other document delivered by the Company to
Transpac Capital in connection therewith.
3. Any approvals of the Company's shareholders and directors
that may be required under any applicable law, in connection with the
transactions contemplated by the Conversion Agreement, have been duly obtained
and are in full force and effect as of the Conversion Date (as that term is
defined in the Conversion Agreement).
IN WITNESS WHEREOF, the undersigned has executed this certificate
this day of June, 1999.
_____________________________________
Xxxxxx Xxxxxx
Chairman, President and Chief
Executive Officer
EXHIBIT "F"
OPINION OF XXXX, XXXXX & XXXX, LLP
October 15, 1999
Transpac Capital Pte Ltd.
Transpac Industrial Holdings Ltd.
Regional Investment Company Ltd.
Natsteel Equity III Pte Ltd
In connection with the Debt Conversion and
Mutual Settlement and Release Agreement
dated April 29, 1999
Ladies and Gentlemen:
We have acted as counsel for Microelectronic Packaging, Inc., a
California corporation (the "Company"), in connection with Debt Conversion and
Mutual Settlement and Release Agreement (and related exhibits thereto) between
the Company and you ("Conversion Agreement"). This opinion is being rendered to
you pursuant to Section 6.1(e) of the Conversion Agreement. Capitalized terms
not otherwise defined in this opinion have the meaning given them in the
Conversion Agreement.
In connection with the opinions expressed herein we have made such
examination of matters of law and of fact as we considered appropriate or
advisable for purposes hereof. As to matters of fact material to the opinions
expressed herein, we have relied upon the representations and warranties as to
factual matters contained in and made by the Company pursuant to the Conversion
Agreement, and other certificates and statements of officers of the Company and
government officials. We have also examined originals or copies of such
corporate documents or records of the Company as we have considered appropriate
for the opinions expressed herein. We have assumed for the purposes of this
opinion that the signatures on documents and instruments examined by us are
authentic, that each document is what it purports to be, and that all documents
submitted to us as copies or facsimiles conform with the originals, which facts
we have not independently verified. We have not conducted a docket search in
any jurisdiction with respect to litigation that may be pending against the
Company or any of its officers or directors or undertaken any further inquiry
other than as stated herein.
In rendering this opinion we have also assumed: (i) that the
Conversion Agreement, the Certificate of Amendment, the Registration Agreement,
the IBM Agreement, the Transpac Warrant Amendments, and all exhibits and
schedules thereto (collectively, the "Transaction Documents"), to the extent
required, have been duly and validly executed and delivered by you or on your
behalf and constitute valid, binding and enforceable obligations upon you;
(ii) that the representations and warranties made in the Conversion Agreement by
you are true and correct; (iii) there are no facts or circumstances relating to
you that might prevent you from enforcing any of the rights to which our opinion
relates; and (iv) that there are no
-1-
extrinsic agreements or understandings among the parties to the Transaction
Documents that would modify or interpret the terms of the Transactions
Documents or the respective rights or obligations of the parties thereunder.
Our opinion in Section 2 below is based solely upon our review of
certificates of public officials in the relevant states.
As used in this opinion, the expression "we are not aware" or the
phrase "to our knowledge" means as to matters of fact that, based on the actual
knowledge of individual attorneys within the firm who have rendered legal
services to the Company and after an examination of documents referred to herein
and after inquiries of certain officers of the Company, we find no reason to
believe that the opinions expressed are factually incorrect, but beyond that we
have made no factual investigation for the purposes of rendering this opinion.
Specifically, but without limitation, we have made no inquiries of securities
holders or employees (other than obtaining representations from certain officers
of the Company as described above) of the Company.
This opinion relates solely to the laws of the State of California
and the federal law of the United States, and we express no opinion with respect
to the effect or application of any other laws. We have assumed, at your
request and with your consent, that for purposes of our opinion in Section 3
below, the Transaction Documents are governed by and construed under the laws of
the State of California as applied to agreements entered into solely between
residents of and to be performed entirely within such state.
Based upon our examination of and reliance upon the foregoing and
subject to the limitations, exceptions, qualifications and assumptions set forth
below and except as may be set forth in the Conversion Agreement, we are of the
opinion that as of the date hereof:
1. The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of California, with the
requisite corporate power and authority to own its properties and to conduct its
business as presently conducted.
2. The Company is qualified to do business in the State of
California and in every other state of the United States in which any failure to
be so qualified would have a material adverse impact on the Company's business.
3. The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Transaction Documents.
The execution, delivery and performance of the Transaction Documents have been
duly authorized by all necessary corporate action of the Company (including
without limitation, all necessary approvals of the Company's Board of Directors
and shareholders), and the Transaction Documents have been duly executed and
delivered by the Company. Each of the Conversion Agreement, the Certificate of
Amendment, The Registration Agreement, the IBM Agreement and the Transpac
Warrant Amendments constitutes a legally valid and binding obligation of the
Company, enforceable against the Company according to its terms; provided,
however, that no opinion is
-2-
expressed with respect to the enforceability of the indemnity obligations of
Section 7 of the Registration Agreement.
4. The shares of Series A Preferred Stock when issued in
compliance with the provisions of the Conversion Agreement, will be duly
authorized, validly issued, nonassessable and fully paid. The Common Stock
issuable upon conversion of the Series A Preferred Stock has been duly and
validly reserved for issuance and, when and if issued upon such conversion or
exercise in accordance with the Company's Amended and Restated Articles of
Incorporation (as amended by the Certificate of Amendment) will be validly
issued, fully paid and nonassessable. The issuance of the Series A Preferred
Stock and the Common Stock issuable upon conversion of the Series A Preferred
Stock, is not subject to any preemptive rights set forth in the Company's
Amended and Restated Articles of Incorporation (as amended by the Certificate of
Amendment) or, to our knowledge, any rights of first refusal or other similar
rights created by the Company, except for such rights as may exist in your favor
and are not being terminated pursuant to the provisions of the Conversion
Agreement.
5. The execution, delivery and performance of the obligations of
the Company under the Transaction Documents, do not (i) violate any provision of
any federal, California corporate or California law, rule or regulation
applicable to the Company, (ii) violate any provision of the Company's Amended
and Restated Articles of Incorporation or Bylaws, (iii) conflict with or
constitute a material default under the provisions of any judgments, writs,
decrees or orders, if any, applicable to the Company or its assets, or (iv)
conflict with or constitute a material default under any mortgage, lien, lease,
agreement or instrument to which the Company is a party or by which its assets
are bound.
6. The execution, delivery and performance of the obligations of
the Company under the Transaction Documents do not require any consents,
approvals, permits, orders or authorizations of, or any qualifications,
registrations, designations, declarations or filings with, any third party or
any federal, California corporate or California state governmental authority on
the part of the Company except (i) as have been obtained and are effective and
(ii) the filing required by Section 25102(f) of the California Corporate
Securities Law of 1968.
7. Based in part upon the representations made by you in the
Conversion Agreement, the offer and sale of the Series A Preferred Stock to you
pursuant to the terms of the Conversion Agreement are exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as
amended, and from the qualification requirements of the California Corporate
Securities Law of 1968, as amended, and, under such securities laws as they
presently exist, the issuance of Common Stock to you upon conversion of the
Series A Preferred Stock would also be exempt from such registration and
qualification requirements.
8. To our knowledge, there is no action, suit, proceeding or
investigation pending against the Company before any court or governmental
agency, nor, to our knowledge, has the Company received any written threat
thereof, (i) that questions the validity of the Transaction Documents or the
right of the Company to enter into the Transaction Documents or (ii) that, if
determined adversely, would be likely to result in a material adverse change in
the financial condition or business of the Company.
-3-
Our opinions expressed above are specifically subject to the
following limitations, exceptions, qualifications and assumptions:
A. We express no opinion as to the effect of bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting the relief of debtors or the rights and remedies of creditors
generally, including without limitation the effect of statutory or other laws
regarding fraudulent conveyances and preferential transfers.
B. We express no opinion as to the Company's compliance or
noncompliance with applicable federal or state antifraud or antitrust statutes,
laws, rules and regulations.
C. Limitations imposed by state law, federal law or
general equitable principles upon the specific enforceability of any of the
remedies, covenants or other provisions of any applicable agreement and upon the
availability of injunctive relief or other equitable remedies, regardless of
whether enforcement of any such agreement is considered a proceeding in equity
or at law.
D. The effect of court decisions, invoking statutes or
principles of equity, which have held that certain covenants and provisions of
agreements are unenforceable where enforcement of such covenants or provisions
under the circumstances would violate the enforcing party's implied covenant of
good faith and fair dealing.
E. The effect of Section 1670.5 of the California Civil
Code or any other California law, federal law or equitable principle which
provides that a court may refuse to enforce, or may limit the application of, a
contract or any clause thereof which the court finds to have been unconscionable
at the time it was made or contrary to public policy.
F. The unenforceability under certain circumstances of
provisions expressly or by implication waiving broadly or vaguely stated rights,
unknown future rights, or defenses to obligations or rights granted by law, when
such waivers are against public policy or prohibited by law.
G. The unenforceability under certain circumstances of
provisions to the effect that rights or remedies are not exclusive, that rights
or remedies may be exercised without notice, that every right or remedy is
cumulative and may be exercised in addition to or with any other right or
remedy, that election of a particular remedy or remedies does not preclude
recourse to one or more remedies, or that failure to exercise or delay in
exercising rights or remedies will not operate as a waiver of any such right or
remedy.
This opinion is rendered as of the date first written above solely
for your benefit in connection with the Transaction Documents and may not be
delivered to, quoted or relied upon by any person other than you, or for any
other purpose, without our prior written consent. Our opinion is expressly
limited to the matters set forth above and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company. We
assume no
-4-
obligation to advise you of facts, circumstances, events or developments which
hereafter may be brought to our attention and which may alter, affect or modify
the opinions expressed herein.
Very truly yours,
XXXX, XXXXX & XXXX, LLP
-5-
FIRST AMENDMENT
TO
DEBT CONVERSION
AND
MUTUAL SETTLEMENT AND RELEASE AGREEMENT
THIS FIRST AMENDMENT TO DEBT CONVERSION AND MUTUAL SETTLEMENT AND
RELEASE AGREEMENT ("First Amendment") is entered into at San Diego, California,
effective as of June 30, 1999 ("Effective Date"), between Microelectronic
Packaging, Inc. ("MPI") on behalf of itself and its predecessors, successors,
former and current subsidiaries, affiliates, shareholders, directors, officers,
agents, attorneys, representatives, insurers, employees and assigns
(collectively with MPI the "MPI Group"); and Transpac Capital Pte Ltd ("Transpac
Capital"), Transpac Industrial Holdings Ltd ("Transpac Holdings"), Regional
Investment Company Ltd ("Regional Investment"), and Natsteel Equity III Pte Ltd
("Natsteel Equity"), and their respective predecessors, successors, former and
current subsidiaries, affiliates, shareholders, directors, officers, agents,
attorneys, representatives, insurers, employees and assigns (collectively the
"Investor Group").
WITNESSETH:
WHEREAS, the MPI Group and the Investor Group entered into a Debt
Conversion and Mutual Settlement and Release Agreement dated [INSERT DATE],
pursuant to which the Investor Group agreed to convert certain debt owed by MPI
to the Investor Group into Four Million Thirty One Thousand Eight Hundred and
Twenty Six (4,031,826) shares of MPI's Series A Preferred Stock, and MPI agreed
to issue such shares of its Series A Preferred Stock to the Investor Group, all
upon and subject to the terms and conditions set forth therein ("Conversion
Agreement").
WHEREAS, the Conversion Agreement states that the transactions
contemplated thereby must be completed not later than June 30, 1999, and if they
are not completed by such date, Transpac Capital on behalf of the Investor Group
has the right to terminate the Conversion Agreement by giving a written
termination notice to MPI.
WHEREAS, both the MPI Group and the Investor Group desire to amend
the Conversion Agreement to extend the date as of which the transactions
contemplated thereby must be completed, to not later than August 31, 1999.
NOW THEREFORE, in consideration of the mutual agreements contained
herein and for other good and sufficient consideration, the receipt and
sufficiency of which is hereby acknowledged, the MPI Group and the Investor
Group agree as follows:
1. Section 1.2 of the Conversion Agreement is hereby amended by
deleting the date of June 30, 1999, and inserting in its place the date of
August 31, 1999.
2. Except as set forth in Section 1 of this First Amendment,
there are no other amendments or modifications to the Conversion Agreement, and
all of the other provisions of the Conversion Agreement shall remain in full
force and effect without any amendments or modifications of any kind.
IN WITNESS WHEREOF, the parties hereto have duly executed this
First Amendment as of the date first above written.
MICROELECTRONIC PACKAGING, INC. TRANSPAC CAPITAL PTE LTD
By: By:
------------------------------- ---------------------------------
Print Print
Name: Name:
----------------------------- -------------------------------
Print Print
Title: Title:
---------------------------- ------------------------------
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2
CONTINUATION OF SIGNATURES FOR
FIRST AMENDMENT
TO
DEBT CONVERSION
AND
MUTUAL SETTLEMENT AND RELEASE AGREEMENT
Dated June 30, 1999
TRANSPAC INDUSTRIAL HOLDINGS LTD REGIONAL INVESTMENT COMPANY LTD
By: By:
------------------------------- --------------------------------
Print Print
Name: Name:
----------------------------- ------------------------------
Print Print
Title: Title:
---------------------------- -----------------------------
NATSTEEL EQUITY III PTE LTD
By:
--------------------------------
Print
Name:
------------------------------
Print
Title:
-----------------------------
3
