EXHIBIT 99.2
RIGHT OF FIRST REFUSAL AGREEMENT
THIS RIGHT OF FIRST REFUSAL AGREEMENT (the "Agreement") is made and entered
into as of this 29th day of April, 1999, by and between Integrated Packaging
Assembly Corporation, a Delaware corporation (the "Company"), and Orient
Semiconductor Electronics, Limited ("Buyer").
RECITALS
WHEREAS, Buyer is purchasing Four Million (4,000,000) shares of the
Company's Series A Preferred Stock (the "Series A Preferred") pursuant to that
certain Stock Purchase Agreement, of even date herewith, by and between the
Company and Buyer (the "Purchase Agreement"); and
WHEREAS, the Company and Buyer were induced to sell and purchase the Series
A Preferred pursuant to the Purchase Agreement in part by the Company's and
Buyer's agreement to enter into this Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree hereto as follows:
1. BUYER'S RIGHT OF FIRST REFUSAL.
1.1 Subsequent Offerings. Buyer shall have a right of first refusal to
purchase its pro rata share of all Equity Securities (as defined below) that the
Company may, from time to time, propose to sell and issue after the date of this
Agreement, other than the Equity Securities excluded by Section 1.5 hereof.
Buyer's pro rata share is equal to the ratio of (a) the number of shares of the
Company's common stock (including all shares of common stock issued or issuable
upon conversion of the Series A Preferred) which Buyer is deemed to be a holder
immediately prior to the issuance of such Equity Securities to (b) the total
number of shares of the Company's outstanding common stock (including all shares
of common stock issued or issuable upon conversion of the Series A Preferred or
upon the exercise of any outstanding warrants or options or upon the conversion
of any other outstanding securities convertible into shares of common stock)
immediately prior to the issuance of the Equity Securities. The term "Equity
Securities" shall mean (i) any common stock, preferred stock or other security
of the Company, (ii) any security convertible, with or without consideration,
into any common stock, preferred stock or other security (including any option
to purchase such a convertible security), (iii) any security carrying any
warrant or right to subscribe to or purchase any common stock, preferred stock
or other security or (iv) any such warrant or right.
1.2 Exercise of Rights. If the Company proposes to issue any Equity
Securities, it shall give Buyer written notice of its intention, describing the
Equity Securities, the price and the terms and conditions upon which the Company
proposes to issue the same. Buyer shall have thirty (30) days from the giving of
such notice to agree to purchase its pro rata share of the Equity Securities for
the price and upon the terms and conditions specified in the notice by giving
written notice to the Company and stating therein the quantity of Equity
Securities to be
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purchased. Notwithstanding the foregoing, in the event that the
Common Holders (as defined below) shall have a right to purchase their pro rata
shares of such Equity Securities pursuant to Section 2 below, Buyer shall
participate as a Common Holder in such issuance of Equity Securities in
accordance with the procedures set forth in, or taken pursuant to, Section 2.
1.3 Termination and Waiver of Rights of First Refusal. The rights of first
refusal established by this Section 1 shall terminate immediately prior to the
closing of a Change in Control (as defined below).
1.4 Transfer of Rights of First Refusal. The rights of first refusal of
Buyer under this Section 1 may be transferred with any shares of Series A
Preferred or common stock issued upon conversion thereof.
1.5 Excluded Securities. The rights of first refusal in favor of Buyer
established by this Section 1 and the rights of first refusal in favor of the
Common Holders established by Section 2 shall have no application to any of the
following Equity Securities:
(a) shares of common stock (and/or options, warrants or other common
stock purchase rights issued pursuant to such options, warrants or other
rights) issued or to be issued to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary of the Company,
pursuant to stock purchase or stock option plans or other arrangements that
are approved by the Company's Board of Directors, including the
representative or representatives on the Board designated by Buyer;
(b) any Equity Securities issued pursuant to any rights, agreements,
options or warrants outstanding as of the date of this Agreement; and
Equity Securities issued pursuant to any such rights, agreements, options
or warrants granted after the date of this Agreement; provided that the
rights of first refusal established by this Section 1 and Section 2 (if
still in effect) applied with respect to the initial sale or grant by the
Company of such rights, agreements, options or warrants;
(c) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination;
(d) any Equity Securities issued in connection with any stock split,
stock dividend or recapitalization by the Company;
(e) shares of common stock issued upon conversion of the Series A
Preferred;
(f) any Equity Securities issued pursuant to any equipment leasing
arrangement or debt financing from a bank or other financial institution; and
(g) any Equity Securities issued in connection with strategic
transactions involving the Company and other entities, including (i) joint
ventures, manufacturing, marketing or distribution arrangements or (ii)
technology transfer or development arrangements; provided that such strategic
transactions and the issuance of Equity Securities therein have been approved by
the Company's Board of Directors, including the representative or
representatives on the Board designated by Buyer.
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2. Common Holders' Rights of First Refusal.
2.1 Subsequent Offerings. Each holder of record of the Company's common
stock ("Common Holder") shall have a right of first refusal to purchase its pro
rata share of all Equity Securities that the Company may, from time to time,
propose to sell and issue after the date of this Agreement, other than the
Equity Securities excluded by Section 1.5 hereof. Each Common Holder's pro rata
share is equal to the ratio of (a) the number of shares of the Company's common
stock of which such Common Holder is deemed to be a holder on the record date
established by the Company's Board of Directors in respect of the proposed
issuance of such Equity Securities (the "Record Date") to (b) the total number
of shares of the Company's outstanding common stock (including all shares of
common stock issued or issuable upon conversion of the Series A Preferred or
upon the exercise of any outstanding warrants or options or upon the conversion
of any other outstanding securities convertible into shares of common stock) on
the Record Date.
2.2 Exercise of Rights. If the Company proposes to issue Equity Securities
prior to the termination of this Section 2, the Company shall take all such
actions as are required under the Company's charter documents and applicable law
(including U.S. federal and state securities laws) to permit each Common Holder
to participate, up to such Common Holder's pro rata share, in such issuance of
Equity Securities by exercising the rights of first refusal set forth in this
Section 2. Such actions may include, without limitation, the following:
(a) Providing any notices required by the Company's charter documents
or other agreements;
(b) Amending the Company's Certificate of Incorporation to authorize
the additional Equity Securities to be issued to the Common Holders;
(c) Preparing and filing with the Securities and Exchange Commission a
registration statement covering the Equity Securities to be offered and sold to
the Common Holders; and
(d) Upon the effectiveness of such registration statement, distributing
to the Common Holders a prospectus and related subscription documents
included in such registration statement.
Notwithstanding anything else contained herein to the contrary, the Common
Holders shall have no right to participate in any manner in the determination
of: (i) the terms of the Equity Securities to be issued pursuant to this Section
2, including price, (ii) the time period during which the Common Holders' rights
to purchase Equity Securities pursuant to this Section 2 shall be exercisable,
(iii) the transferability of such rights, (iv) the nature of any
oversubscription rights, (v) the manner of distribution of such rights, or (vi)
or any other terms pertaining to the offer and sale of Equity Securities to the
Common Holders pursuant to this Section 2.
2.3 Termination and Waiver of Rights of First Refusal. The rights of first
refusal established by this Section 2 shall terminate upon the earlier of (i)
October 29, 1999 or (ii) a Change in Control. The Common Holders' rights of
first refusal shall be transferable with, and shall not be separable from, the
shares of common stock held by such Common Holders.
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3. Miscellaneous.
(a) Conditions to Exercise of Rights. Exercise of the Buyer's and Common
Holders' rights under this Agreement shall be subject to and conditioned upon
compliance with applicable laws.
(b) Governing Law. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
(c) Amendment. Any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only by the written consent of (i)
as to the Company, only by the Company, (ii) as to Buyer, only by the Buyer, and
(iii) as to the Common Holders, only by the holders of a majority in interest of
the Common Holders (excluding Buyer). Any amendment or waiver effected in
accordance with clauses (i), (ii), and (iii) of this Section 3(c) shall be
binding upon Buyer, its successors and assigns, the Company and the Common
Holders.
(d) Assignment of Rights. This Agreement constitutes the entire agreement
among the parties relative to the specific subject matter hereof. Any previous
agreement among the parties relative to the specific subject matter hereof is
superseded by this Agreement. This Agreement and the rights and obligations of
the parties hereunder shall inure to the benefit of, and be binding upon, their
respective successors, assigns and legal representatives.
(e) Term. Other than Section 2 (which shall terminate as set forth in
Section 2.3.), this Agreement shall continue in full force and effect from the
date hereof through the earlier of the following dates, on which date it shall
terminate in its entirety:
(i) the date of any consolidation or merger of the Company with or into
any other company or other entity or person or any other
corporatereorganization, in which the stockholders of the Company immediately
prior to such consolidation, merger or reorganization (or affiliates of such
stockholders) own less than 50% of the Company's voting power immediately after
such consolidation, merger or reorganization, or any transaction or series of
related transactions to which the Company is a party in which in excess of fifty
percent (50%) of the Company's voting power is transferred to parties other than
affiliates of the stockholders of the Company owningin excess of fifty percent
(50%) of the Company's voting power immediately prior to such transaction or
series of transactions;
(ii) the date of any sale, lease or other disposition of all or
substantially all of the assets of the Company to parties other than affiliates
of stockholders of the Company owning in excess of fifty percent (50%) of the
Company's voting power immediately prior to such transaction or series of
related transactions (together with the events described in Section 3(e)(i)
above, a "Change in Control"); or
(iii) the date as of which the parties hereto terminate this Agreement
by written consent of Buyer and the Company and the Common Holders (unless
Section 2 hereof shall have terminated as set forth in Section 2.3 hereof in
which case the consent of the Common Holders shall not be required to terminate
this Agreement).
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(f) No Third Party Rights. Nothing expressed or referred to in this
Agreement will be construed to give any person or entity other than the parties
to this Agreement and the Common Holders any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and the Common
Holders and their successors and assigns.
(g) Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next day delivery,
with written verification of receipt. All communications shall be sent to the
party to be notified at the address as set forth on the signature page hereof or
in the case of the Common Holders at the address set forth in the records of the
Company's transfer agent or at such other address as such party may designate by
ten (10) days advance written notice to the Company and the Buyer.
(h) Severability. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall notaffect any other provisions of this Agreement, and this Agreement shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein.
(i) Entire Agreement. This Agreement, along with the Purchase Agreement and
each of the Exhibits thereto, constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof and
no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
(j) Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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The foregoing RIGHT OF FIRST REFUSAL AGREEMENT is hereby executed as of the
date first above written.
COMPANY: BUYER:
INTEGRATED PACKAGING ORIENT SEMICONDUCTOR
ASSEMBLY CORPORATION ELECTRONICS, LIMITED
By: /s/ X. Xxxxxxxxx By: /s/ Xxxxxx Xxx
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Title: CEO Title: President
RIGHT OF FIRST REFUSAL AGREEMENT
SIGNATURE PAGE
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