<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
-------------
COMMISSION FILE NUMBER 0-23562
-------
MICROELECTRONIC PACKAGING, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 94-3142624
---------- ----------
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER IDENTIFICATION NO.)
OF INCORPORATION OR ORGANIZATION)
9577 CHESAPEAKE DRIVE, SAN DIEGO, CALIFORNIA 92123
- -------------------------------------------- -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (619) 292-7000
--------------
INDICATE BY CHECK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X] NO [_]
AT AUGUST 11, 1998, THERE WERE OUTSTANDING 10,836,890 SHARES OF THE
--------------- ----------
REGISTRANT'S COMMON STOCK, NO PAR VALUE PER SHARE.
================================================================================
<PAGE>
Index Page No.
- ----- --------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets..................... 3
Condensed Consolidated Statements of Operations........... 4
Condensed Consolidated Statements of Cash Flows........... 5
Condensed Consolidated Statement of
Changes in Shareholders' Deficit........................ 6
Notes to Condensed Consolidated Financial Statements...... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 15
PART II OTHER INFORMATION
Item 1. Legal Proceedings......................................... 29
Item 2. Changes in Securities and Use of Proceeds................. 29
Item 3. Defaults upon Senior Securities........................... 29
Item 4. Submission of Matters to a Vote of Security Holders....... 29
Item 5. Other Information......................................... 30
Item 6. Exhibits and Reports on Form 8-K.......................... 30
SIGNATURES........................................................... 31
EXHIBIT INDEX........................................................ 32
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
MICROELECTRONIC PACKAGING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
- -------------------------------------------------------------------------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 778,000 $ 1,296,000
Accounts receivable, net 1,981,000 2,504,000
Inventories 4,780,000 4,230,000
Other current assets 279,000 387,000
- -------------------------------------------------------------------------------
Total current assets 7,818,000 8,417,000
Property, plant and equipment, net 2,005,000 1,212,000
Other non-current assets 225,000 282,000
- -------------------------------------------------------------------------------
$ 10,048,000 $ 9,911,000
===============================================================================
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Current portion of long-term debt $ 33,000 $ 22,000
Accounts payable 6,814,000 7,450,000
Accrued liabilities 1,381,000 1,711,000
Deferred revenue 178,000 265,000
Debt and accrued interest of discontinued
operations in default, due on demand 30,343,000 27,151,000
Current liabilities of discontinued operations,
net -- 13,475,000
- -------------------------------------------------------------------------------
Total current liabilities 38,749,000 50,074,000
Long-term debt, less current portion 59,000 69,000
Commitments and Contingencies
Shareholders' Deficit
Common stock, no par value 40,079,000 40,016,000
Accumulated deficit (68,839,000) (80,248,000)
- -------------------------------------------------------------------------------
Total shareholders' deficit (28,760,000) (40,232,000)
- -------------------------------------------------------------------------------
$ 10,048,000 $ 9,911,000
===============================================================================
</TABLE>
3
<PAGE>
MICROELECTRONIC PACKAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------- ---------------------------
1998 1997 1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $5,825,000 $ 8,878,000 $13,159,000 $ 16,552,000
Cost of goods sold 4,559,000 8,292,000 9,940,000 15,083,000
- --------------------------------------------------------------------------------------------------------------
Gross profit 1,266,000 586,000 3,219,000 1,469,000
Selling, general and administrative 934,000 1,315,000 1,710,000 2,579,000
Engineering and product development 320,000 88,000 592,000 196,000
- --------------------------------------------------------------------------------------------------------------
Income (loss) from operations 12,000 (817,000) 917,000 (1,306,000)
Other income (expense):
Interest (expense), net (3,000) (5,000) (6,000) (25,000)
Other income, net 220,000 106,000 290,000 275,000
- --------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations
before provision for income taxes 229,000 (716,000) 1,201,000 (1,056,000)
Provision for income taxes - - (18,000) -
- --------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations 229,000 (716,000) 1,183,000 (1,056,000)
Discontinued Operations:
Loss from discontinued operations - (3,644,000) - (4,524,000)
Estimated loss on disposal - (7,351,000) - (7,351,000)
- --------------------------------------------------------------------------------------------------------------
Net income (loss) $229,000 $(11,711,000) $ 1,183,000 $(12,931,000)
==============================================================================================================
Earnings (loss) per common share:
Continuing operations $ 0.02 $ (0.07) $ 0.11 $ (0.10)
Discontinued operations - (1.02) - (1.20)
- --------------------------------------------------------------------------------------------------------------
Net income (loss) per common share $ 0.02 $ (1.09) $ 0.11 $ (1.30)
==============================================================================================================
Earnings (loss) per common share - assuming dilution:
Continuing operations $ 0.02 $ (0.07) $ 0.10 $ (0.10)
Discontinued operations - (1.02) - (1.20)
- --------------------------------------------------------------------------------------------------------------
Net income (loss) per common share $ 0.02 $ (1.09) $ 0.10 $ (1.30)
==============================================================================================================
</TABLE>
4
<PAGE>
MICROELECTRONIC PACKAGING, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
--------------------------
1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C>
Net cash provided by operating activities of:
Continuing operations 517,000 689,000
Discontinued operations - 1,955,000
- ---------------------------------------------------------------------------------
Net cash provided by operating activities 517,000 2,644,000
- ---------------------------------------------------------------------------------
Cash flows from investing activities:
Acquisition of fixed assets (1,024,000) (331,000)
Continuing operations 10,000 24,000
Discontinued operations - 236,000
- ---------------------------------------------------------------------------------
Net cash provided (used) by investing activities (1,014,000) (71,000)
- ---------------------------------------------------------------------------------
Decrease in short-term notes payable
Continuing operations (21,000) -
Discontinued operations - (3,612,000)
Borrowings under long-term debt and promissory notes
Continuing operations - 76,000
Principal payments on long-term debt and promissory
notes
Continuing operations - (291,000)
Discontinued operations - (508,000)
- ---------------------------------------------------------------------------------
Net cash provided (used) by financing activities (21,000) (4,335,000)
- ---------------------------------------------------------------------------------
Net increase (decrease) in cash (518,000) (1,762,000)
- ---------------------------------------------------------------------------------
Cash at end of period $ 778,000 $ 1,192,000
=================================================================================
</TABLE>
5
<PAGE>
MICROELECTRONIC PACKAGING, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' DEFICIT
(unaudited)
<TABLE>
<CAPTION>
Common Stock Accumulated
--------------------------
Shares Amount Deficit Total
---------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Balance at January 1, 1998 10,793,279 $40,016,000 ($80,248,000) ($40,232,000)
Non-employee stock-based
compensation - 63,000 - 63,000
De-Consolidation of
Discontinued Subsidiaries - - 10,226,000 10,226,000
Net income - - 1,183,000 1,183,000
---------- ----------- ------------ ------------
Balance at June 30, 1998 10,793,279 $40,079,000 ($68,839,000) ($28,760,000)
========== =========== ============ ============
</TABLE>
6
<PAGE>
Microelectronic Packaging, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Quarterly Financial Statements
The accompanying condensed consolidated financial statements and related
notes as of June 30, 1998 and for the three and six month periods ended June
30, 1998 and 1997 are unaudited but include all adjustments (consisting of
normal recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of financial position and results of
operations of the Company for the interim periods. Certain prior year
amounts have been reclassified to conform to the current year presentation.
The results of operations for the three and six month periods ended June 30,
1998 are not necessarily indicative of the operating results to be expected
for the full fiscal year. The information included in this report should be
read in conjunction with the Company's audited consolidated financial
statements and notes thereto and the other information, including risk
factors, set forth for the year ended December 31, 1997 in the Company's
Annual Report on Form 10-K. Readers of this Quarterly Report on Form 10-Q
are strongly encouraged to review the Company's Annual Report on Form 10-K.
Copies are available from the Chief Financial Officer of the Company at 9577
Chesapeake Drive, San Diego, California 92123.
2. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
(Unaudited)
<S> <C> <C>
Raw materials.................... $2,846,000 $2,445,000
Work-in-progress................. 1,804,000 1,654,000
Finished goods................... 130,000 131,000
---------- ----------
$4,780,000 $4,230,000
========== ==========
</TABLE>
3. Effects of Income Taxes
The Company believes that it has sufficient losses to offset any taxable
income that will be generated in the current year. However, the Company's
use of these losses may result in alternative minimum taxes for Federal
income tax purposes. As a result, the Company has recorded a provision for
income taxes for the six month period ended June 30, 1998 (for anticipated
alternative minimum taxes).
The Company believes that it has incurred an ownership change pursuant to
Section 382 of the Internal Revenue Code and, as a result, the Company
believes that its ability to utilize its current net operating loss and
credit carryforwards in subsequent periods will be subject to annual
limitations.
7
<PAGE>
Notes to Condensed Consolidated Financial Statements (unaudited)
- --------------------------------------------------------------------------------
4. Net Income (Loss) Per Share
<TABLE>
<CAPTION>
For the three months ended June 30, 1998
----------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
============= ============= ==========
<S> <C> <C> <C>
Income from continuing operations $229,000
Basic EPS
Income available to common shareholders 229,000 10,793,279 $0.02
=====
Effect of dilutive securities:
Stock options -- 1,408,323
Warrants -- --
-------- ---------- -----
Diluted EPS
Income available to common
shareholders + assumed conversions $229,000 12,201,602 $0.02
======== ========== =====
</TABLE>
Options to purchase 55,800 shares and warrants to purchase 1,227,693 shares of
common stock at prices ranging from $1.00 to $6.50 were outstanding during the
second quarter of 1998 but were not included in the computation of diluted EPS
because the options' and warrants' exercise prices were greater than the average
market price of the common shares for the quarter then ended. The options and
warrants, which expire between August 1998 and June 2008 were still outstanding
as of June 30, 1998.
<TABLE>
<CAPTION>
For the three months ended June 30, 1997
----------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
============ ============ ==========
<S> <C> <C> <C>
Loss from continuing operations $ (716,000) 10,793,279 $(0.07)
Loss from discontinued operations (10,995,000) (1.02)
------------ ---------- -------
Basic EPS
Income (loss) available to common
shareholders (11,711,000) 10,793,279 $(1.09)
Effect of dilutive securities: =======
Stock options
Warrants -- --
Diluted EPS -- --
Income (loss) available to common ============ ==========
shareholders + assumed conversions
$(11,711,000) 10,793,279 $(1.09)
</TABLE> ============ ==========
Options and warrants to purchase 2,289,927 shares of common stock which were
outstanding during the second quarter of 1997 were not included in the
computation of diluted EPS because the options' and warrants' effect on EPS
would be anti-dilutive.
8
<PAGE>
Notes to Condensed Consolidated Financial Statements (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the six months ended June 30, 1998
--------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Income from continuing operations $1,183,000
Basic EPS
Income available to common shareholders 1,183,000 10,793,279 $0.11
=====
Effect of dilutive securities:
Stock options -- 1,404,777
Warrants -- --
Diluted EPS ========== ==========
Income available to common
shareholders + assumed conversions $1,183,000 12,198,056 $0.10
========== ========== =====
</TABLE>
Options to purchase 55,800 shares and warrants to purchase 1,227,693 shares of
common stock at prices ranging from $1.00 to $6.50 were outstanding during the
first six months of 1998 but were not included in the computation of diluted EPS
because the options' and warrants' exercise prices were greater than the average
market price of the common shares for the six months then ended. The options and
warrants, which expire between August 1998 and June 2008 were still outstanding
as of June 30, 1998.
<TABLE>
<CAPTION>
For the six months ended June 30, 1997
--------------------------------------
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Loss from continuing operations $ (1,056,000) 9,921,235 $(0.10)
Loss from discontinued operations (11,875,000) (1.20)
------------ --------- ------
Basic EPS
Income (loss) available to common
shareholders (12,931,000) 9,921,235 $(1.30)
Effect of dilutive securities: ======
Stock options -- --
Warrants -- --
Diluted EPS ============ =========
Income (loss) available to common
shareholders + assumed conversions $(12,931,000) 9,921,235 $(1.30)
============ ========= ======
</TABLE>
Options and warrants to purchase 2,289,927 shares of common stock which were
outstanding during the first six months of 1997 were not included in the
computation of diluted EPS because the options' and warrants' effect on EPS
would be anti-dilutive.
5. Commitments and Contingencies
The Company is involved in various claims and litigation arising in and
outside of the ordinary course of business. In addition, given the current
state of the Company and its subsidiaries, numerous creditors and parties to
contracts have threatened or initiated litigation to recoup their loans and
investments. If these claims are not favorably resolved, they will have a
material adverse effect on the Company's financial condition, results of
operations and ability to continue as a going-concern.
9
<PAGE>
Notes to Condensed Consolidated Financial Statements (unaudited)
- --------------------------------------------------------------------------------
The Company entered into a lease for new manufacturing facilities and
corporate offices. This lease commenced September 1, 1997, and extends to
October 31, 2002. Minimum monthly rental payments of $16,000 began on
November 1, 1997, with scheduled annual increases of 6% to 7% per year
beginning November 1, 1998.
6. Customer Supplied Inventory
The Company's CTM Electronics, Inc. subsidiary has purchased certain chips
("die") used in the assembly of multichip modules ("MCM's") sold to one of
the Company's significant customers from that same customer. Effective July
25, 1997, this customer notified the Company that it will no longer sell die
to the Company and instead is providing the die on consignment. The pro
forma presentation below gives effect to this change in operations on
selected line items from the Company's Condensed Consolidated Statements of
Operations for the three and six month periods ended June 30, 1997, as if
this change had been put into effect on January 1, 1997.
<TABLE>
<CAPTION>
================================================================================================
Historical Pro Forma
Three Months Ended Pro Forma Three Months Ended
June 30, 1997 Adjustments June 30, 1997
===========================================================================
<S> <C> <C> <C>
Net sales $ 8,878,000 $(5,005,000)/(1)/ $ 3,873,000
Cost of goods sold 8,292,000 (5,164,000)/(2)/ 3,128,000
Gross profit 586,000 159,000 745,000
Net loss $(11,711,000) 159,000 $(11,562,000)
Net loss per =====================================================================
common share $ (1.09) $ 0.01 $ (1.08)
================================================================================================
</TABLE>
<TABLE>
<CAPTION>
================================================================================================
Historical Pro Forma
Six Months Ended Pro Forma Six Months Ended
June 30, 1997 Adjustments June 30, 1997
================================================================================================
<S> <C> <C> <C>
Net sales $ 16,552,000 $(9,661,000)/(1)/ $ 6,891,000
Cost of goods sold 15,083,000 (9,948,000)/(2)/ 5,135,000
Gross profit 1,469,000 287,000 1,756,000
Net loss $(12,931,000) 287,000 $(12,644,000)
Net loss per =====================================================================
common share $ (1.30) $ 0.02 $ (1.28)
================================================================================================
</TABLE>
/(1)/ The cost of the die to be provided on consignment will be removed from
the selling price of the MCM's. The amount of the 2% prompt payment
discount offered to the customer, which is included in revenues, will
be reduced by the lower selling prices for these MCM's.
/(2)/ The cost of the die to be provided on consignment will be removed from
the cost of goods sold, corresponding to the reduction in selling
prices of the MCM's.
7. Discontinued Operations
On July 10, 1997, The Development Bank of Singapore Limited, one of the
Company's Singapore subsidiaries largest creditors ("DBS"), appointed a
Receiver and Manager to liquidate the assets of
10
<PAGE>
Notes to Condensed Consolidated Financial Statements (unaudited)
- --------------------------------------------------------------------------------
Microelectronic Packaging (S) Pte. Ltd. ("MPS"), which is a wholly owned
subsidiary of the Company which manufactured primarily pressed ceramics
products. DBS exercised its option to appoint a Receiver and Manager under
the terms of Deed of Debenture dated November 27, 1984 (as amended) between
DBS and MPS. The Company anticipates that the Receiver and Manager will
complete the liquidation of MPS in 1998. The Company has Guaranteed all of
MPS's obligations to DBS of which approximately $2.6 million was outstanding
as of June 30, 1998. These loans are included in the caption "Debt and
accrued interest of discontinued operations, in default, due on demand" in
the Consolidated Balance Sheet. See Note 9 to the Condensed Consolidated
Financial Statements. There can be no assurance that such debt will be fully
paid through the liquidation of the assets of MPS. If insufficient, DBS could
demand repayment of the shortfall from the Company through the guarantee. The
Company does not have adequate resources to repay such debt if the guarantee
is called.
The Company recorded the effect of the receivership as of June 30, 1997, and
the results of operations of MPS have been classified as "Loss from
discontinued operations" in the Consolidated Statement of Operations. As a
result of the appointment of a Receiver and Manager, MPS is no longer able to
manufacture its pressed ceramic products and has ceased generating revenue
since July 10, 1997.
During the last several months, the Company (as guarantor) reached written
agreements with five of MPS' creditors. For four of those creditors (see
separate discussion regarding the settlement of the DBS Bank loans below),
the Company agreed to make payments aggregating $2,341,540 as full
satisfaction of the total of all obligations to these creditors. The
payments to these creditors are due between November 15, 1998 and May 1,
1999. In addition, for the remaining creditor guaranteed by the Company, a
verbal agreement has been reached (subject to the completion of a definitive
agreement) for the payment of $1,137,044 as full satisfaction of the total of
all obligations to this creditor. In addition, it is anticipated that
warrants for the purchase of 200,000 shares of the Company's common stock at
an exercise price of $1.00 per share will be issued to this creditor.
On March 18, 1997, a Receiver was appointed to handle the liquidation of the
multilayer ceramics operations of MPM (S) Pte. Ltd. As of December 31, 1997,
essentially all of the assets of MPM had been sold. Final resolution of the
remaining liabilities will come only after the liquidation of MPS, since MPS
has guaranteed the DBS bank loan and the equipment leases entered into by
MPM. The portion of these liabilities remaining after any reduction
available from the sale of MPS and MPM assets will then be transferred to
MPI, as MPI also guaranteed these loans and leases, which balance was
approximately $2.4 million as of June 30, 1998. As of April 14, 1998, the
Company (as guarantor) reached an agreement with MPM's lessor for the payment
of $483,056 as full satisfaction of the balance remaining after the sale of
the leased equipment; this payment is due on May 1, 1999.
The holders of the debentures issued to Transpac and related parties still
retain $9.0 million of debt securities issued by MPM which are guaranteed by
the Company. The Company and MPM are in default thereunder. On April 22,
1998, the Company (as guarantor) reached an agreement with Transpac for the
payment of $3,112,463 as full satisfaction of the total of all obligations to
Transpac; this payment is due on May 1, 1999. In addition, warrants for the
purchase of 500,000 shares of the Company's common stock at an exercise price
of $1.00 per share were issued to Transpac, and the Company agreed to a
payment of 30% of any monetary proceeds from the settlement of a specific
claim, and the Company guaranteed a minimum proceeds of $1,000,000 on or
prior to December 31, 1999.
11
<PAGE>
Notes to Condensed Consolidated Financial Statements (unaudited)
- --------------------------------------------------------------------------------
As indicated previously, both MPS and MPM are indebted to DBS, and the
Company has guaranteed those obligations. As of July 20, 1998, the Company
(as guarantor) reached an agreement with DBS for the payment of $1,177,397 as
full satisfaction of all obligations to DBS; this payment is due on January
20, 1999. In addition, the Company agreed to a payment of 5% of any monetary
proceeds from the settlement of a specific claim, and there were further
considerations given to DBS that are not considered material by the Company.
The Company's MPC subsidiary was informed in April 1997 that Carborundum
Corporation ("Carborundum"), its sole customer, was immediately canceling the
manufacturing and related agreements with MPC as a result of Carborundum's
sale of its assets to a third party.
On April 5, 1997, a fire at the Company's MPC facility caused damage to the
building and certain equipment. The Company is insured against the fire, and
believes that it will incur no losses from the fire. The Company has closed
the MPC operation and has terminated all of its MPC employees. The Company
expects that there will be minimal impact from the disposition of the assets
of MPC. Most costs of closure of the MPC operations will be borne by the
former customer or the Company's business interruption insurance. The
Company has recorded the effect of the closure of this business as of June
30, 1997, and the results of operations of MPC have been classified as "Loss
from discontinued operations" in the Consolidated Statement of Operations.
Discontinued operations include management's best estimates of the amounts
expected to be realized on the sale of its assets associated with these
discontinued operations and the expenses to be incurred through the disposal
date. The amounts the Company will ultimately realize and incur could differ
materially in the near term from the amounts assumed in arriving at the loss
on disposal of the discontinued operation. Management anticipates that the
foreign operations will be fully dissolved in 1998. However, Management
cannot predict how long it may take the High Court of the Republic of
Singapore to complete the Winding Up of these companies.
Consistent with the presentation in Form 10-K for the year ended December 31,
1997, all debt obligations originating in Singapore have been reclassified to
the caption "Debt and accrued interest of discontinued operations, in
default, due on demand."
8. Going Concern
The accompanying financial statements have been prepared assuming the Company
(MPI along with its only operating subsidiary - CTM) will continue as a going
concern. A number of factors, including the Company's history of significant
losses, the debt service costs associated with the Company's high level of
existing indebtedness, the need to restructure debt which is currently in
default, various claims and lawsuits, and the Company's Singapore operations
in receivership and liquidation raise substantial doubts about the Company's
ability to continue as a going concern. As of June 30, 1998, the Company has
an accumulated deficiency of $68.8 million and a working capital deficiency
of $30.9 million, which includes $30.3 million of debt of discontinued
operations due on demand and accrued interest from discontinued operations
debt net of the remaining assets from those discontinued operations. The
Company does not possess sufficient cash resources to repay these
obligations, and thus is in default on all of these obligations. The Company
would be unable to repay these loans in the event that such demand was made
by the Company's creditors. See Note 7 for further information regarding the
Company's efforts to restructure this debt and accrued interest from
discontinued operations.
The Company is currently renegotiating the terms of the debt obligations of
its discontinued Singapore operations. Certain obligations with principal
balances totaling approximately $25.2
12
<PAGE>
Notes to Condensed Consolidated Financial Statements (unaudited)
- --------------------------------------------------------------------------------
million have been guaranteed by MPI. Creditors holding over 85% of such debt
have signed definitive, binding agreements, including the Company's largest
creditor, and one remaining creditor holding the remainder of such debt has
verbally agreed to a settlement of the obligations owed to them. The
agreements reached with creditors principally involve MPI paying 30% to 40%
of the principal and accrued but unpaid interest owed to each creditor as of
December 31, 1997, within six months of formal documents being agreed between
the parties. The remaining 60% to 70% would be forgiven by the creditors at
the time of the payment of the 30% to 40% portion. There are also other non-
cash considerations being provided to certain creditors. The Company has not
yet recorded the benefit of such debt forgiveness. The Company intends to
attempt to obtain financing for the 30% to 40% portion to be paid by the
Company. There can be no assurance that the Company will be successful in its
effort to reduce the non-binding agreements reached with the one remaining
creditor to a binding written agreement. There can also be no assurance that
the Company will be successful in its efforts to obtain the financing needed,
on acceptable terms, or at all, in order to fulfill its obligations under the
agreements reached with creditors. This failure would materially adversely
affect the Company's financial condition and ability to continue as a going
concern, and could, as is the case with other debt defaults and failure to
repay, require that the Company seek bankruptcy protection under Chapter 11
or Chapter 7 of Title 11 of the United States Code for MPI and its U.S.
subsidiaries.
9. Restatement of Current Liabilities of Discontinued Operations, Net to
Shareholders' Deficit
During the quarter ended June 30, 1998, the High Court of the Republic of
Singapore ordered the Winding up of MPM Singapore Pte. Ltd. ("MPM"), a wholly
owned subsidiary of the Company. As a result of this decision, MPM cannot
continue an operating business, and it cannot be allowed to dispose of its
assets or incur further liabilities. In addition, the Company does not have
any control over the management of MPM. This function is undertaken by the
Receiver and Manager appointed by DBS Bank.
In September 1997, the High Court of the Republic of Singapore ordered the
Winding Up of Microelectronic Packaging (S) Pte. Ltd. ("MPS"), also a wholly
owned subsidiary of the Company. As with MPM, MPS cannot continue as an
operating business, and the Company does not have any control over the
management of MPS. This function is undertaken by the Receiver and Manager
appointed by DBS Bank.
The Company has been informed by DBS and the Receiver and Manager for MPM and
MPS that there will not be any funds remaining (after the liquidation of
assets) to satisfy any claims of unsecured creditors for MPM and MPS.
Due to the circumstances as described above, management, effective with the
quarter ended June 30, 1998, will not consolidate the assets and the
liabilities not guaranteed of MPM and MPS, into the consolidated financial
statements for MPI and subsidiaries. For MPM, the decision was based upon
the Singapore High Court's decision to Wind Up this company. For MPS, the
Singapore High Court had already ordered the Winding Up in September 1997,
however, due to the material amount of assets remaining to be liquidated and
also due to requests made by the MPS' Receiver and Manager for the Company to
assist them in the realization and disposal of MPS' remaining assets,
Management elected to consolidate until there was a clearer determination of
the control of the subsidiary and realization of its assets. In July 1998,
Management was informed of the sale of the two buildings owned by MPS. In
addition, it became more evident during the current quarter that any
remaining realization of Accounts Receivable on the books of MPS was highly
questionable. Accordingly the decision was made to not consolidate the
assets and the liabilities not guaranteed by the Company.
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Notes to Condensed Consolidated Financial Statements (unaudited)
- --------------------------------------------------------------------------------
The effect of this decision was to reduce the Current Liabilities of
Discontinued Operations, net and improve the Shareholders' Deficit by $10.2
million as of June 30, 1998.
10. Forward Looking Statements
These Condensed Consolidated Financial Statements contain forward-looking
statements which involve substantial risks and uncertainties. The Company's
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including the
effects of debt restructuring.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of
Operations contains forward-looking statements which involve substantial risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth in this section and elsewhere in this
Quarterly Report on Form 10-Q.
RESULTS OF OPERATIONS
NET SALES
For the three months ended June 30, 1998, net sales were $5,825,000 as compared
to $8,788,000 for second quarter of 1997. The Company's CTM Electronics, Inc.
subsidiary has purchased certain chips ("die") used in the assembly of multichip
modules ("MCMs") sold to one of the Company's significant customers from that
same customer (see Note 6 of Notes to Condensed Consolidated Financial
Statements). Effective July 25, 1997, this customer notified the Company that
it will no longer sell die to the Company and instead is providing the die on
consignment. This change ("consigned die") has resulted in a reduction in
selling prices for products sold to this customer. Had the consignment policy
been in effect as of January 1, 1997, net sales in the second quarter of 1997
would have been $3,873,000 ("proforma net sales"). Thus, net sales actually
increased $1,952,000 or 50%. The increase in net sales is primarily due to a
144% increase in MCM units shipped, partially offset by a decrease in average
selling prices (after removing die cost as discussed above). The primary reason
for the decrease in average selling prices resulted from a re-negotiated pricing
structure by CTM's largest customer as well as a change in product mix.
For the six months ended June 30, 1998, net sales were $13,159,000, representing
a decrease of $3,393,000 or 20% over net sales of $16,552,000 for the
corresponding period of 1997. Had the consignment policy described above been
in effect as of January 1, 1997, net sales for the six months ended June 30,
1997 would have been $6,891,000 ("proforma net sales"). Thus, net sales
actually increased by $6,268,000 or 90%. The increase is due to a 185% increase
in units shipped, partially offset by a decrease in average selling prices
described above.
Net sales for the three and six months ended June 30, 1997 includes $90,000 of
revenues derived under an agreement with a government factory in Yixing, China.
Such revenues have been included in "Other Sales" in the Condensed Consolidated
Statement of Operations. The contract was completed in the second quarter of
1997 and the final revenues under the contract were recorded at that time.
COST OF GOODS SOLD
For the three months ended June 30, 1998, the cost of goods sold was $4,559,000
as compared to $8,292,000 for the second quarter of 1997. After eliminating the
die cost from cost of goods sold for the second quarter of 1997 (see "Net Sales"
above and Note 6 of Notes to Condensed Consolidated Financial Statements), cost
of goods sold would have been $3,128,000. This represents a permanent change to
the cost structure of CTM. Thus, cost of goods sold increased $1,431,000 or
46%. The increase in cost of goods sold is due to the 144% increase in MCM
units shipped. However, cost of goods sold for the second quarter of 1998
includes a $200,000 reversal of a previously-recorded inventory reserve.
Without
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such reversal, cost of goods sold as percentage of sales would have been
approximately the same for both second quarters.
For the six months ended June 30, 1998, the cost of goods sold was $9,940,000,
representing a decrease of $4,943,000 or 34% over cost of goods sold of
$15,083,000 for the corresponding period of 1997. After eliminating die cost
from cost of goods sold for the six months ended June 30, 1997, cost of goods
sold would have been $5,135,000. Thus cost of goods sold increased by
$4,805,000 or 94%. The increase in cost of goods sold is due to the 185%
increase in MCM units shipped. Cost of goods sold as a percentage of revenue
(on a proforma basis) increased by 2% due to declines in average selling prices
of certain products sold to CTM's most significant customer being greater than
declines in cost of goods sold for those products, principally material costs.
Cost of goods sold for the three and six months ended June 30, 1997 includes
$43,000 of expenses incurred under an agreement with a government factory in
Yixing, China. Such expenses have been included in "Other Sales" under "Cost of
Goods Sold" in the Condensed Consolidated Statement of Operations. The contract
was completed in the second quarter of 1997 and the final expenses under the
contract were recorded at that time.
GROSS PROFIT
Gross profit was $1,266,000 (21.7% of net sales) for the second quarter of 1998
as compared to $586,000 for the second quarter of 1997. Gross profit increased
due to increased sales revenue described above. Gross margin for the second
quarter of 1997 on a proforma basis is 19.2% of proforma sales. If the effect
of a $200,000 reversal of a previously-recorded inventory reserve were excluded
from the calculation of the 1998 second quarter gross margin, gross profit as a
percentage of net sales would have been 18.3%. Thus, comparative gross margin
declined by less than 1% between quarters, primarily due to reduced selling
prices and a change in product mix.
For the six months ended June 30, 1998, gross profit was $3,219,000 (24.5% of
net sales) as compared to $1,469,000 for the second quarter of 1997. Gross
profit increased due to increased sales revenue described above. Gross margin
for the six months ended June 30, 1997 on a proforma basis is 25.4% of proforma
sales. The decline in gross margin from the 1997 period to the 1998 period is
again primarily due to reduced selling prices and a change in product mix.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expenses were $934,000 for the second
quarter and $1,710,000 for the six months ended June 30, 1998, representing
decreases of $381,000 or 41% and $869,000 or 34%, respectively, from the
comparative periods of 1997. These decreases are primarily the result of the
Company's reduction of the additional legal and consulting fees which had been
incurred in connection with the restructuring of the Company's U.S. operations
and the winding up of its Singapore operations. The Company anticipates that
selling, general and administrative expenses, in absolute dollars, will remain
the same or decline for the balance of 1998 at the level of the second quarter
of 1998.
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ENGINEERING AND PRODUCT DEVELOPMENT
Engineering and product development expenses were $320,000 for the second
quarter and $592,000 for the six months ended June 30, 1998, representing
increases of $232,000 or 73% and $396,000 or 202%, respectively, from the
comparative periods of 1997. The increases result primarily from the increase
in the engineering staff employed by the Company, which is part of the Company's
commitment to improvement in quality and processes in its manufacturing
facility. The Company anticipates that engineering and product development
expenses, in absolute dollars, will remain the same or decline for the balance
of 1998 at the level of the second quarter of 1998.
INTEREST EXPENSE
Interest expense was $3,000 for the second quarter and $7,000 for the six months
ended June 30, 1998, representing decreases of $2,000 and $18,000, respectively,
from the comparative periods of 1997. Interest expense for 1997 included
interest on the $2.8 million of convertible debentures issued in October 1996.
These debentures were converted into common stock by the end of February 1997,
thus no such interest was incurred in 1998. Interest on customer loans that are
related to the discontinued operations in Singapore have been included in
"Discontinued operations: Income (loss) from operations" line of the Condensed
Consolidated Statements of Operations.
OTHER INCOME
Other income was $220,000 for the second quarter and $290,000 for the six months
ended June 30, 1998, representing increases of $114,000 and $15,000,
respectively, from the comparative periods of 1997. Other income for the second
quarter of 1998 includes $204,000 relating to the partial settlement of an
insurance claim for a fire at the Company's MPC facility in April 1997. Other
income for the first quarter of 1997 included $190,000 received in settlement of
a note receivable which had been previously written-off.
EFFECTS OF INCOME TAXES
The Company believes that it has sufficient losses to offset any taxable income
that will be generated in the current year. However, the Company's use of these
losses may result in alternative minimum taxes for Federal income tax purposes.
As a result, the Company has recorded a provision for income taxes for the six
month period ended June 30, 1998.
The Company believes that it has incurred an ownership change pursuant to
Section 382 of the Internal Revenue Code, and, as a result, the Company believes
that its ability to utilize its current net operating loss and credit
carryforwards in subsequent periods will be subject to annual limitations.
DISCONTINUED OPERATIONS
The net operating results of the activities of MPM, MPS, MPC and Furnace Tech
("FT") for each of the three and six month periods ended June 30, 1997 have been
included as income or loss from discontinued operations on the Condensed
Consolidated Statement of Operations. Amounts recorded as estimated losses on
disposal of assets of the discontinued operations reflect management's best
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estimates of the amounts expected to be realized on the sale of the assets
associated with these discontinued operations and the expenses to be incurred
through the disposal date. Such expenses include $3.5 million of interest
expense relating to the indebtedness of the discontinued operations through the
expected completion of the liquidation process for those debts guaranteed by
MPI.
In the second quarter of 1998, the Company has discontinued the consolidation of
the assets and liabilities of MPM, MPS, MPC and FT. Those liabilities and
accrued interest guaranteed by MPI have continued to be included in the
Consolidated Balance Sheets of the Company. The effect of the deconsolidation
of these entities was to reduce current liabilities and improve shareholders'
deficit by $10.2 million as of June 30, 1998.
During the quarter ended June 30, 1998, the High Court of the Republic of
Singapore ordered the Winding up of MPM Singapore Pte. Ltd. ("MPM"), a wholly
owned subsidiary of the Company. As a result of this decision, MPM cannot
continue an operating business, and it cannot be allowed to dispose of its
assets or incur further liabilities. In addition, the Company does not have any
control over the management of MPM. This function is undertaken by the Receiver
and Manager appointed by DBS Bank.
In September 1997, the High Court of the Republic of Singapore ordered the
Winding Up of "Microelectronic Packaging (S) Pte. Ltd. ("MPS"), also a wholly
owned subsidiary of the Company. As with MPM, MPS cannot continue as an
operating business, and the Company does not have any control over the
management of MPS. This function is undertaken by the Receiver and Manager
appointed by DBS Bank.
Due to the circumstances as described in the previous two paragraphs,
management, effective with the quarter ended June 30, 1998, will not consolidate
the assets and the liabilities not guaranteed of MPS and MPM, into the
consolidated financial statements for MPI and subsidiaries. For MPM, the
decision was based upon the Singapore High Court's decision to Wind Up this
company. For MPS, the Singapore High Court had already ordered the Winding Up
in September 1997, however, due to the material amount of assets remaining to be
liquidated and also due to requests made by the MPS' Receiver and Manager for
the Company to assist them in the realization and disposal of MPS' remaining
assets, Management elected to consolidate until there was a clearer
determination of the control of the subsidiary and realization of its assets.
In July 1998, Management was informed of the sale of the two buildings owned by
MPS. In addition, it became more evident during the current quarter that any
remaining realization of Accounts Receivable on the books of MPS was highly
questionable. Accordingly the decision was made to not consolidate the assets
and the liabilities not guaranteed by the Company.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended June 30, 1998, the Company financed its operations
from operating cash flow. During this period, operating activities of
continuing operations provided $517,000. Investing activities, consisting
principally of the acquisition of assets of continuing operations, used
$1,014,000. At June 30, 1998, the Company had a working capital deficiency of
$30,931,000 and an accumulated deficit of $68,839,000. At June 30, 1998, the
Company had outstanding approximately $25,211,000 of principal amount of debt
from its discontinued operations, which debt has been guaranteed by MPI, the
parent company.
The Company's sources of liquidity at June 30, 1998 consisted of inventories of
$4,780,000, trade accounts receivable of $1,981,000 and its U.S. cash balance of
$778,000. The Company has no borrowing arrangements available to it.
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On July 10, 1997, The Development Bank of Singapore Limited, one of the
Company's Singapore subsidiaries largest creditors ("DBS"), appointed a Receiver
and Manager to liquidate the assets of Microelectronic Packaging (S) Pte. Ltd.
("MPS"), which is a wholly owned subsidiary of the Company which manufactured
primarily pressed ceramics products. DBS exercised its option to appoint a
Receiver and Manager under the terms of a Deed of Debenture dated November 27,
1984 (as amended) between DBS and MPS. The Company anticipates that the
Receiver and Manager will complete the liquidation of MPS in 1998. The Company
has guaranteed all of MPS's obligations to DBS of which approximately $2.6
million was outstanding as of December 31, 1997. These loans are included in
the caption "Debt of discontinued operations, in default, due on demand" in the
Consolidated Balance Sheet. There can be no assurance that such debt will be
fully paid through the liquidation of the assets of MPS. If insufficient , DBS
could demand repayment of the shortfall from the Company through the guarantee.
The Company does not have adequate resources to repay such debt if the guarantee
is called.
The Company recorded the effect of the receivership as of June 30, 1997, and the
results of operations of MPS have been classified as "Loss from discontinued
operations" in the Consolidated Statement of Operations. As a result of the
appointment of a Receiver and Manager, MPS is no longer able to manufacture its
pressed ceramic products and has ceased generating revenue since July 10, 1997.
During the last several months, the Company (as guarantor) reached written
agreements with five of MPS' creditors. For four of those creditors (see
separate discussion regarding the settlement of the DBS Bank loans below), the
Company agreed to make payments aggregating $2,341,540 as full satisfaction of
the total of all obligations to these creditors. The payments to these
creditors are due between November 15, 1998 and May 1, 1999. In addition, for
the remaining creditor guaranteed by the Company, a verbal agreement has been
reached (subject to the completion of a definitive agreement) for the payment of
$1,137,044 as full satisfaction of the total of all obligations to this
creditor. In addition, it is anticipated that warrants for the purchase of
200,000 shares of the Company's common stock at an exercise price of $1.00 per
share will be issued to this creditor.
On March 18, 1997, a Receiver was appointed to handle the liquidation of the
multilayer ceramics operations of MPM (S) Pte. Ltd. As of December 31, 1997,
essentially all of the assets of MPM had been sold. Final resolution of the
remaining liabilities will come only after the liquidation of MPS, since MPS has
guaranteed the DBS bank loan and the equipment leases entered into by MPM. The
portion of these liabilities remaining after any reduction available from the
sale of MPS and MPM assets will then be transferred to MPI, as MPI also
guaranteed these loans and leases. As of April 14, 1998, the Company (as
guarantor) reached an agreement with MPM's lessor for the payment of $483,056 as
full satisfaction of the balance remaining after the sale of the leased
equipment; this payment is due on May 1, 1999.
The holders of the debentures issued to Transpac and related parties still
retain $9.0 million of debt securities issued by MPM which are guaranteed by the
Company. The Company and MPM are in default thereunder. On April 22, 1998, the
Company (as guarantor) reached an agreement with Transpac for the payment of
$3,112,463 as full satisfaction of the total of all obligations to Transpac;
this payment is due on May 1, 1999. In addition, warrants for the purchase of
500,000 shares of the Company's common stock at an exercise price of $1.00 per
share were issued to Transpac, and the Company agreed to a payment of 30% of any
monetary proceeds from the settlement of a specific claim, and the Company
guaranteed a minimum proceeds of $1,000,000 on or prior to December 31, 1999.
As indicated previously, both MPS and MPM are indebted to DBS, and the Company
has guaranteed those obligations. As of July 20, 1998, the Company (as
guarantor) reached an agreement with DBS for the payment of $1,177,397 as full
satisfaction of total of all obligations to DBS; this payment is due on January
20, 1999. In addition, the Company agreed to a payment of 5% of any monetary
proceeds from
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the settlement of a specific claim, and there were further considerations with
DBS that are not considered material by the Company.
Management anticipates that the foreign operations will be fully dissolved in
1998. However, Management cannot predict how long it may take the High Court of
the Republic of Singapore to complete the Winding Up of these companies.
The Company also has various capitalized leases for equipment utilized in the US
operations, with a total balance of approximately $88,000 as June 30, 1998.
These lease obligations are being serviced currently by CTM.
The Company previously purchased raw materials from its principal customer. As
of July 25, 1997, the material was supplied by the customer on consignment. As
of June 30, 1998, the Company owes to that customer approximately $3.7 million
from purchases previously made before the change to consignment. The Company is
making regular payments to that customer under an informal repayment plan.
The Company has outstanding indebtedness at June 30, 1998 to DBS denominated in
Singapore dollars of approximately Singapore $3,400,000 (U.S. equivalent
$2,144,000). Further, the Company has two buildings, also located in Singapore,
which are mortgaged as security for the Singapore loans, and for which deposits
have been received from purchasers for the sale of such buildings. All of the
Company's other indebtedness is denominated in U.S. dollars, and all other
Singapore-based assets have been liquidated by the receiver of MPM or MPS and
used to retire outstanding indebtedness. The sales price of the buildings
located in Singapore is somewhat more than the amount of the Company's debt
which is denominated in Singapore dollars. Accordingly, the Company believes
its exposure to foreign currency rate movements is extremely limited since it
has matched the maturity and approximate amount of assets and liabilities
denominated in the Singapore dollar.
FUTURE OPERATING RESULTS
Status as a Going Concern. The Company's independent certified public
accountants have included an explanatory paragraph in their audit report with
respect to the Company's 1997, 1996 and 1995 consolidated financial statements
related to a substantial doubt with respect to the Company's ability to continue
as a going concern. Absent outside debt or equity financing, and excluding
significant expenditures required for the Company's major projects and repayment
of debts, and assuming the Company is successful in restructuring its debt, the
Company currently anticipates that cash on hand and anticipated cash flow from
operations may be adequate to fund its operations in the ordinary course
throughout 1998. Any significant increase in planned capital expenditures or
other costs or any decrease in or elimination of anticipated sources of revenue
or the inability of the Company to restructure its debt could cause the Company
to restrict its business and product development efforts. There can be no
assurance that the Company will be successful in restructuring its debt on
acceptable terms, or at all. If adequate revenues are not available, the
Company will be unable to execute its business development efforts and may be
unable to continue as a going concern. There can be no assurance that the
Company's future consolidated financial statements will not include another
going concern explanatory paragraph if the Company is unable to restructure its
debt and become profitable. The factors leading to and the existence of the
explanatory paragraph will have a material adverse effect on the Company's
ability to obtain additional financing.
Risk of Bankruptcy. The Company may need to be reorganized under Chapter 11 of
Title 11 of the United States Code or liquidated under Chapter 7 of Title 11 of
the United States Code. There can be no assurance that if the Company decides
to reorganize under the applicable laws of the United States that such
reorganizational efforts would be successful or that shareholders would receive
any distribution on account of their ownership of shares of the Company's stock.
Similarly, there can be no assurances that if the Company decides to liquidate
under the applicable laws of the United States that
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such liquidation would result in the shareholders receiving any distribution on
account of their ownership of shares of the Company's stock. In fact, if the
Company were to be reorganized or liquidated under the applicable laws of the
United States, the bankruptcy laws would require (with limited exceptions) that
the creditors of the Company be paid before any distribution is made to the
shareholders.
Future Capital Needs; Need for Additional Financing. The Company's future
capital requirements will depend upon many factors, including the extent and
timing of acceptance of the Company's products in the market, requirements to
restructure and retire its substantial debt, requirements to construct,
transition and maintain existing or new manufacturing facilities, commitments to
third parties to develop, manufacture, license and sell products, the progress
of the Company's research and development efforts, the Company's operating
results and the status of competitive products. If the Company is successful in
restructuring its debt obligations, absent debt or equity financing and
excluding significant expenditures required for the Company's major projects and
repayments of debts, the Company anticipates that cash on hand and anticipated
cash flow from operations may be adequate to fund its operations through 1998.
There can be no assurance, however, that the Company will not require additional
financing prior to such date to fund its operations. In addition, the Company
may require substantial additional financing to fund its operations in the
ordinary course, particularly if the Company is unable to restructure its debt
obligations. Furthermore, the Company may require additional financing to fund
the acquisition of selected assets needed in its production facilities. There
can be no assurance that the Company will be able to obtain such additional
financing on terms acceptable to the Company, or at all.
The Company is in breach of substantially all of its debt obligations and is in
default under each of such agreements. If the Company cannot consummate its
agreements with its creditors to repay its obligations, the Company will not be
able to continue as a going concern. The Company's high level of outstanding
indebtedness and the numerous restrictive covenants set forth in the agreements
covering this indebtedness and its default position prohibit the Company from
obtaining additional bank lines of credit and from raising funds through the
issuance of debt or other securities without the prior consent of DBS and
Transpac and other creditors. The Company is currently in default on its
guarantee and loan obligations to DBS as a result of the Company's decision to
cease its multilayer and pressed ceramics operations, and to liquidate the
assets of MPM and MPS. The liquidation of MPM and MPS have also resulted in the
Company's default under a number of other agreements. There can be no assurance
that other creditors of the Company will not choose to accelerate the Company's
debt obligations and the Company will not able to repay such accelerated
obligations as they become due and immediately payable. If either a sufficient
number of creditors or any of the substantial creditors choose to accelerate
payments or to place MPI or one or more of its subsidiaries under judicial
reorganization, the Company may be forced to seek protection under Chapter 11 of
Title 11 of the United States Code or similar bankruptcy laws of Singapore. If
the Company were to seek additional financing, such additional financing may not
be available to the Company on acceptable terms, or at all. If additional funds
are raised by issuing equity or convertible or debt securities, further dilution
to the existing shareholders will result. Since adequate funds are not
currently available, the Company has been required to delay, scale back or
eliminate programs which could continue to have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
In addition, the Company has been forced to delay, downsize or eliminate other
research and development, manufacturing, construction or transitioning programs
or alliances or obtain funds through arrangements with third parties pursuant to
which the Company has been forced to relinquish rights to certain of its
technologies or to other assets that the Company would not otherwise relinquish.
The delay, scaling back or elimination of any such programs or the
relinquishment of any such rights could have a material adverse effect on the
Company's business, prospects, financial condition and results of operations.
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Future Operating Results. The Company's operating results have fluctuated
significantly in the past and will continue to fluctuate significantly in the
future depending upon a variety of factors, including foreign currency losses,
corporate and debt restructurings, creditor relationships, conversions of
significant amounts of debt into a significant amount of equity, downward
pressure in gross margins, losses due to low shipping volume, delayed market
acceptance, if any, of new and enhanced versions of the Company's products,
delays, cancellations or reschedulings of orders, delays in product development,
defects in products, integration of acquired businesses, political and economic
instability, natural disasters, outbreaks of hostilities, variations in
manufacturing yields, changes in manufacturing capacity and variations in the
utilization of such capacity, changes in the length of the design-to-production
cycle, relationships with and conditions of customers, subcontractors, and
suppliers, receipt of raw materials, including consigned materials, customer
concentration, price competition, cyclicality in the semiconductor industry and
conditions in the personal computer industries. In addition, operating results
will fluctuate significantly based upon several other factors, including the
Company's ability to attract new customers, changes in pricing by the Company,
its competitors, subcontractors, customers or suppliers, and fluctuations in
manufacturing yields. The absence of significant backlog for an extended period
of time will also limit the Company's ability to plan production and inventory
levels, which could lead to substantial fluctuations in operating results.
Accordingly, the failure to receive anticipated orders or delays in shipments
due, for example, to unanticipated shipment reschedulings or defects or to
cancellations by customers, or to unexpected manufacturing problems may cause
net sales in a particular quarter to fall significantly below the Company's
expectations, which would materially adversely affect the Company's operating
results for such quarter. The impact of these and other factors on the
Company's net sales and operating results in any future period cannot be
forecasted with certainty. In addition, the significant fixed overhead costs at
the Company's facilities, the need for continued expenditures for research and
development, capital equipment and other commitments of the Company, among other
factors, will make it difficult for the Company to reduce its expenses in a
particular period if the Company's sales goals for such period are not met. A
large portion of the Company's operating expenses are fixed and are difficult to
reduce or modify should revenues not meet the Company's expectations, thus
magnifying the material adverse impact of any such revenue shortfall.
Accordingly, there can be no assurance that the Company will not incur losses in
the future or that such losses will not have a material adverse effect on the
Company's business, financial condition and results of operations.
Repayment of Debt Obligations by MPM and MPS. As of June 30, 1998, MPM and MPS
had combined outstanding borrowings of approximately $25,211,000. Most of the
assets of MPM and MPS have been liquidated by receivers appointed by DBS. The
Company currently anticipates that the remaining proceeds from the liquidation
of assets will be insufficient to fully repay its outstanding debt. Since the
borrowings have been guaranteed by MPI, the Company has renegotiated terms for
the repayment of the remaining indebtedness. The failure of the Company to
consummate the renegotiated debt obligations would materially adversely affect
the Company's financial condition and the ability of the Company to continue as
a going concern.
Adverse Impact of MPM and MPS Liquidations on MPI. MPM and MPS are currently
being liquidated under the laws of Singapore. The liquidation of the assets of
MPM and MPS are expected to generate proceeds that total less than the
outstanding obligations of those entities guaranteed by MPI. If such shortfall
occurs, MPI may be forced to repay any outstanding debt because of its role as
guarantor of such debts. If MPI were unable to repay these debts, the Company
may be forced to seek bankruptcy protection under Chapter 11 or Chapter 7 of
Title 11 of the United States Code or similar bankruptcy laws of Singapore for
MPI and its subsidiaries.
Certain Obligations of MPS. At June 30, 1998, MPS had outstanding borrowings of
approximately $3,955,000 with DBS and had borrowed an aggregate of approximately
$11,354,000 from a consortium of customers to fund its purchase of certain
CERDIP manufacturing and alumina powder equipment
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from Samsung Corning. All such amounts are in default. If any lender were to
accelerate the principal due as one of their remedies, such accelerations will
materially adversely affect the Company's ability to continue as an ongoing
concern and may force the Company to seek bankruptcy protection under Chapter 7
or Chapter 11 of Title 11 of the United States Code or similar bankruptcy laws
of Singapore. As a part of the Consortium, Motorola guaranteed MPS' repayment of
$2.0 million in borrowings from a certain bank lender. Under the terms of the
agreement relating to Motorola's guarantee, MPI granted Motorola a security
interest in all of the issued and outstanding capital stock of MPS, CTM and MPA.
While in default, Motorola may have the right to vote and give consents with
respect to all of the issued and outstanding capital of MPS, CTM and MPA. As a
result, during the continuation of any such event of default, MPI may be unable
to control at the shareholder level the direction of the subsidiaries that
generate substantially all of the Company's revenues and hold substantially all
of the Company's assets. Any such loss of control would have a material adverse
effect on the Company's business, prospects, financial condition, results of
operations and status as an ongoing concern and could force the Company to seek
protection under Chapter 7 or Chapter 11 of Title 11 of the United States Code
or similar bankruptcy laws of Singapore. The agreements covering the Transpac
Financing, including the convertible debenture and MPI's guarantee of such MPM
indebtedness, contain numerous restrictions and events of default that have been
triggered by the aforementioned actions and would, if they became effective and
operative, materially adversely affect the Company's business, prospects,
results of operations, condition and status as an ongoing concern and could
force the Company to seek protection under Chapter 7 or Chapter 11 of Title 11
of the United States Code or similar bankruptcy laws of Singapore.
High Leverage. The Company is highly leveraged and has substantial debt service
requirements. The Company has $38,808,000 in liabilities as of June 30, 1998.
On June 30, 1998, the Company had a total shareholders' deficit of approximately
$28,760,000. The Company's ability to meet its debt service requirements will
be dependent upon the Company's future performance, which will be subject to
financial, business and other factors affecting the operation of the Company,
many of which are beyond its control and on the willingness of the Company's
creditors to participate in restructuring the Company's debt. There can be no
assurance that the Company will be able to meet the capital requirements
described above or, if the Company is able to meet such requirements, that the
terms available will be favorable to the Company. See "Liquidity and Capital
Resources".
Highly Competitive Industry; Significant Price Competition. The electronic
interconnection technology industry is intensely competitive. The Company
experiences intense competition worldwide from a number of manufacturers,
including Maxtek Components Corporation, VLSI Packaging, Raytheon Electronic
Systems, Hewlett-Packard Company, Advanced Packaging Technology of America and
MicroModule Systems, all of which have substantially greater financial resources
and production, marketing and other capabilities than the Company with which to
develop, manufacture, market and sell their products. The Company faces
competition from certain of its customers that have the internal capability to
produce products competitive with the Company's products and may face
competition from new market entrants in the future. In addition, corporations
with which the Company has agreements are conducting independent research and
development efforts in areas which are or may be competitive with the Company.
The Company expects its competitors to continue to improve the performance of
their current products and to introduce new products or new technologies that
provide improved performance characteristics. New product introductions by the
Company's competitors could cause a significant decline in sales or loss of
market acceptance of the Company's existing products which could materially
adversely affect the Company's business, financial condition and results of
operations. The Company is also experiencing significant price competition,
which may materially adversely affect the Company's business, financial
condition and results of operations. The Company believes that to remain
competitive in the future it will need to continue to develop new products and
to invest significant financial resources in new product development. There can
be no assurance that such new products will be developed or that
23
<PAGE>
sales of such new products will be achieved. There can be no assurance that the
Company will be able to compete successfully in the future.
Reliance on Principal Customer. Sales to one principal customer, accounted for
85% of the Company's net sales in the second quarter of 1998 and is expected to
continue to account for most of the Company's net sales. Under the agreement
between the principal customer and the Company entered into in January 1998, the
Company is obligated to provide the principal customer with its requirements for
MCM product. Given the Company's anticipated continued reliance on its MCM
business as a large percentage of overall net sales, the failure to meet the
principal customer's requirements will materially adversely affect the Company's
ability to continue as an ongoing concern. In addition, under the terms of the
agreement, the principal customer is entitled to request repricing of the
Company's products. The principal customer has requested repricing for the
third quarter of 1998. Such repricing in the future may result in the Company
being unable to produce the products made for the principal customer with an
adequate operating profit, and the Company may be unable to compete with the
prices of other vendors who supply the same or similar products to the principal
customer. The failure to satisfy the terms of the agreement, or the failure of
the Company to achieve an operating profit under the contract, would have a
material adverse impact on the Company's business, financial condition, and
results of operation.
Significant Customer Concentration. Historically, the Company has sold its
products to a very limited number of customers. Any reduction in orders by any
of these customers, including reductions due to market, economic or competitive
conditions in the semiconductor, personal computer or electronic industries or
in other industries that manufacture products utilizing semiconductors or MCMs,
could materially adversely affect the Company's business, financial condition
and results of operations. The supply agreements with certain of the Company's
customers do not obligate them to purchase products from the Company. The
Company's ability to increase its sales in the future will also depend in part
upon its ability to obtain orders from new customers. There can be no assurance
that the Company's sales will increase in the future or that the Company will be
able to retain existing customers or to attract new ones. Failure to develop
new customer relationships could materially adversely affect each such
subsidiary's results of operations and would materially adversely affect the
Company's business, financial condition and results of operations.
Dependence on Semiconductor and Personal Computer Industries. The financial
performance of the Company is dependent in large part upon the current and
anticipated market demand for semiconductors and products such as personal
computers that incorporate semiconductors. The semiconductor industry is highly
cyclical and historically has experienced recurring periods of oversupply The
Company believes that the markets for new generations of semiconductors will
also be subject to similar fluctuations. The semiconductor industry has
demonstrated a significant prolonged slowdown in demand. There can be no
assurance that growth will return and that the slowdown will not continue. A
reduced rate of growth in the demand for semiconductor component parts due, for
example, to competitive factors, technological change or otherwise, may
materially adversely affect the markets for the Company's products. From time
to time, the personal computer industry, like the semiconductor industry, has
experienced significant downturns, often in connection with, or in anticipation
of, declines in general economic conditions. Accordingly, any factor adversely
affecting the semiconductor or the personal computer industry or particular
segments within the semiconductor or personal computer industry may materially
adversely affect the Company's business, financial condition and results of
operations. There can be no assurance that the Company's net sales and results
of operations will not be materially adversely affected if downturns or
slowdowns in the semiconductor, personal computer industry or other industries
utilizing the Company's products continue or again occur in the future.
Technological Change; Importance of Timely Product Introduction; Uncertainty of
Market Acceptance and Emerging Markets. The markets for the Company's products
are subject to technological change and new product introductions and
enhancements. Customers in the Company's markets require products embodying
increasingly advanced electronics interconnection technology. Accordingly, the
Company must anticipate
24
<PAGE>
changes in technology and define, develop and manufacture or acquire new
products that meet its customers' needs on a timely basis. The Company
anticipates that technological changes could cause the Company's net sales to
decline in the future. There can be no assurance that the Company will be able
to identify, develop, manufacture, market, support or acquire new products
successfully, that any such new products will gain market acceptance, or that
the Company will be able to respond effectively to technological changes. If the
Company is unable for technological or other reasons to develop products in a
timely manner in response to changes in technology, the Company's business,
financial condition and results of operations will be materially adversely
affected. There can be no assurance that the Company will not encounter
technical or other difficulties that could in the future delay the introduction
of new products or product enhancements. In addition, new product introductions
by the Company's competitors could cause a decline in sales or loss of market
acceptance of the Company's products, which could materially adversely affect
the Company's business, financial condition and results of operations. Even if
the Company develops and introduces new products, such products must gain market
acceptance and significant sales in order for the Company to achieve its growth
objectives. Furthermore, it is essential that the Company develop business
relationships with and supply products to customers whose end-user products
achieve and sustain market penetration. There can be no assurance that the
Company's products will achieve widespread market acceptance or that the Company
will successfully develop such customer relationships Failure by the Company to
develop products that gain widespread market acceptance and significant sales or
to develop relationships with customers whose end-user products achieve and
sustain market penetration will materially adversely affect the Company's
business, financial condition and results of operations. The Company's financial
performance will depend in significant part on the continued development of new
and emerging markets such as the market for MCMs. The Company is unable to
predict with any certainty any growth rate and potential size of emerging
markets. Accordingly, there can be no assurance that emerging markets targeted
by the Company, such as the market for MCMs, will develop or that the Company's
products will achieve market acceptance in such markets. The failure of emerging
markets targeted by the Company to develop or the failure by the Company's
products to achieve acceptance in such markets could materially adversely affect
the Company's business, financial condition and results of operations.
Sole or Limited Sources of Supply. Certain raw materials essential for the
manufacture of the Company's products are obtained from a sole supplier or a
limited group of suppliers. There are a limited number of qualified suppliers
of laminate substrates and die which are of critical importance to the
production of the Company's MCM products. In the manufacturing process, the
Company also utilizes consigned materials supplied by certain of its customers.
Such material supplied by customers has historically been in short supply, and
has impacted the Company's ability to produce its goods on a timely basis. The
Company's reliance on sole or a limited group of suppliers and certain customers
for consigned materials involves several risks, including a potential inability
to obtain an adequate supply of required materials and reduced control over the
price, timely delivery, and quality of raw materials. There can be no assurance
that problems with respect to yield and quality of such materials and timeliness
of deliveries will not continue to occur. Disruption or termination of these
sources could delay shipments of the Company's products and could have a
material adverse effect on the Company's business, financial condition and
operating results. Such delays could also damage relationships with current and
prospective customers, including customers that supply consigned materials.
Product Quality and Reliability; Need to Increase Production. The Company's
customers establish demanding and time-consuming specifications for quality and
reliability that must be met by the Company's products. From initial customer
contact to actual qualification for production, which may take as long as three
years, the Company typically expends significant resources. Although the
Company has generally met its customers' quality and reliability product
specifications, the Company has in the past experienced and is currently
experiencing difficulties in meeting some of these standards. Although the
Company has addressed past concerns and has resolved a number of quality and
reliability problems, there can be no assurance that such problems will not
continue or recur in the future. If such problems did continue or recur, the
Company could experience delays in shipments,
25
<PAGE>
increased costs, delays in or cancellation of orders and product returns, any of
which would have a material adverse effect on the Company's business, financial
condition or results of operations. The manufacture of the Company's products is
complex and subject to a wide variety of factors, including the level of
contaminants in the manufacturing environment and the materials used and the
performance of personnel and equipment. The Company has in the past experienced
lower than anticipated production yields and written off defective inventory as
a result of such factors. The Company must also successfully increase production
to support anticipated sales volumes. There can be no assurance that the Company
will be able to do so or that it will not experience problems in increasing
production in the future. The Company's failure to adequately increase
production or to maintain high quality production standards would have a
material adverse effect on the Company's business, financial condition and
results of operations.
Expansion of Operations. In order to be competitive, the Company must implement
a variety of systems, procedures and controls. The Company expects its
operating expenses to continue to increase. If orders received by the Company
do not result in sales or if the Company is unable to sustain net sales at
anticipated levels, the Company's operating results will be materially adversely
affected until operating expenses can be reduced. The Company's expansion will
also continue to cause a significant strain on the Company's management,
financial and other resources. If the Company is to grow, it must expand its
accounting and other internal management systems, and there can be no assurance
that the Company will be successful in effecting such expansion. Any failure to
expand these areas in an efficient manner at a pace consistent with the
Company's business could have a material adverse effect on the Company's results
of operations. Moreover, there can be no assurance that net sales will increase
or remain at or above recent levels or that the Company's systems, procedures
and controls will be adequate to support the Company's operations. The
Company's financial performance will depend in part on its ability to continue
to improve its systems, procedures and controls.
Intellectual Property Matters. Although the Company attempts to protect its
intellectual property rights through patents, trade secrets and other measures,
it believes that its financial performance will depend more upon the innovation,
technological expertise, manufacturing efficiency and marketing and sales
abilities of its employees. There can be no assurance that others will not
independently develop similar proprietary information and techniques or gain
access to the Company's intellectual property rights or disclose such technology
or that the Company can meaningfully protect its intellectual property rights.
There can be no assurance that any patent owned by the Company will not be
invalidated, circumvented or challenged, that the rights granted thereunder will
provide competitive advantages to the Company or that any of the Company's
pending or future patent applications will be issued with the scope of the
claims sought by the Company, if at all. Furthermore, there can be no assurance
that others will not develop similar products, duplicate the Company's products
or design around the patents owned by the Company, or that third parties will
not assert intellectual property infringement claims against the Company. In
addition there can be no assurance that foreign intellectual property laws will
protect the Company's intellectual property rights.
Environmental Regulations. The Company is subject to a variety of local, state,
federal and foreign governmental regulations relating to the storage, discharge,
handling, emission, generation, manufacture and disposal of toxic or other
hazardous substances used to manufacture the Company's products. The Company
believes that it is currently in compliance in all material respects with such
regulations and that it has obtained all necessary environmental permits to
conduct its business. Nevertheless, the failure to comply with current or
future regulations could result in the imposition of substantial fines on the
Company, suspension of production, alteration of its manufacturing processes or
cessation of operations. Compliance with such regulations could require the
Company to acquire expensive remediation equipment or to incur substantial
expenses. Any failure by the Company to control the use, disposal, removal or
storage of, or to adequately restrict the discharge of, or assist in the cleanup
of, hazardous or toxic substances, could subject the Company to significant
liabilities,
26
<PAGE>
including joint and several liability under certain statutes. The imposition of
such liabilities could materially adversely affect the Company's business,
financial condition or results of operations. The Company has been notified by
the United States Environmental Protection Agency that it considers the Company
to be a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986.
Growth Strategy Through Acquisitions. As part of its growth strategy, the
Company has in the past sought and may in the future continue to seek to
increase sales and achieve growth through the acquisition of comparable or
complementary businesses or technologies. The implementation of this strategy
will depend on many factors, including the availability of acquisitions at
attractive prices and the ability of the Company to make acquisitions, the
integration of acquired businesses into existing operations, the expansion of
the Company's customer base and the availability of required capital.
Acquisitions by the Company may result in dilutive issuances of equity
securities, and in the incurrence of debt and the amortization of goodwill and
other intangible assets that could adversely affect the Company's profitability.
Any inability to control and manage growth effectively could have a material
adverse effect on the Company's business, financial condition and results of
operations. There can be no assurance that the Company will successfully expand
or that growth and expansion will result in profitability or that the Company's
growth plans through acquisitions will not be inhibited by the Company's current
lack of resources.
Dependence on Key Personnel. The Company's financial performance depends in
part upon its ability to attract and retain qualified management, technical, and
sales and support personnel for its operations. Competition for such personnel
is intense, and there can be no assurance that the Company will be successful in
attracting or retaining such personnel. The loss of any key employee, the
failure of any key employee to perform in his current position or the Company's
inability to attract and retain skilled employees, as needed, could materially
adversely affect the Company's business, financial condition and results of
operations.
Volatility of Stock Price. The Company believes that factors such as
announcements of developments related to the Company's business, fluctuations in
the Company's financial results, general conditions or developments in the
semiconductor and personal computer industry and the general economy, sales of
the Company's Common Stock into the marketplace, the ability of the Company to
sell its stock on an exchange or over-the-counter, an outbreak of hostilities,
natural disasters, announcements of technological innovations or new products or
enhancements by the Company or its competitors, developments in the Company's
relationships with its customers and suppliers, or a shortfall or changes in
revenue, gross margins or earnings or other financial results from analysts'
expectations could cause the price of the Company's Common Stock to fluctuate,
perhaps substantially. In recent years the stock market in general, and the
market for shares of small capitalization stocks in particular, including the
Company, have experienced extreme price fluctuations, which have often been
unrelated to the operating performance of affected companies. There can be no
assurance that the market price of the Company's Common Stock will not continue
to experience significant fluctuations in the future, including fluctuations
that are unrelated to the Company's performance.
Recurring Net Operating Losses. The Company's decision to discontinue its
multilayer ceramic operations was the primary factor contributing to its 1996
net loss of $41,842,000. The decision by the principal secured creditors of the
Company's pressed ceramic operations to liquidate that operation's assets was
the primary factor contributing to the 1997 net loss of $11,496,000, as well as
additional loss provisions made in 1997 relating to the discontinuance of the
multilayer ceramic operations. At June 30, 1998, the Company had a working
capital deficiency of $30,931,000 and an accumulated deficit of $68,839,000.
The Company had outstanding at June 30, 1998 approximately $25,211,000 of
principal amount of debt from its discontinued operations, which debt has been
guaranteed by MPI, the parent company, and most of which debt is in default and
due on demand.
27
<PAGE>
Year 2000 Compliance. Many currently installed computer systems and software
products are coded to accept only two digit entries in the date code field.
These date code fields will need to accept four digit entries to distinguish
21st century dates from 20th century dates. As a result, in less than two
years, computer systems and/or software used by many companies may need to be
upgraded to comply with such "Year 2000" requirements. Significant uncertainty
exists in the software industry and in other industries concerning the potential
effects associated with such compliance. Although the Company currently offers
products that are designed to be Year 2000 compliant, there can be no assurance
that the Company's products and the software products used by the Company
contain all necessary date code changes. In addition, the Company has not
comprehensively tested all of its internal software systems, or the third-party
software it uses in its business, for Year 2000 problems. Year 2000 problems in
the Company's internal software, or in the software of third parties that the
Company uses in its business, could have a material adverse effect on the
Company's business, operating results and financial condition.
The Company believes that the purchasing patterns of customers and potential
customers and the performance of vendors may be affected by Year 2000 issues in
a variety of ways. Many companies are expending significant resources to
correct or patch their current software systems for Year 2000 compliance. These
expenditures may result in reduced funds available to purchase products such as
those offered by the Company or the inability to render services or provide
supplies to the Company. Year 2000 issues may cause other companies to
accelerate purchases, thereby causing an increase in short-term demand and a
consequent decrease in long-term demand for software products, and disruption of
supply patterns. Additionally, Year 2000 issues could cause a significant
number of companies, including current Company customers and vendors, to spend
significant resources upgrading their internal systems, and as a result consider
switching to other systems or suppliers. Any of the foregoing could result in a
material adverse effect on the Company's business, operating results and
financial condition.
28
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Due to the closure of the Company's Singapore operations, various
creditors have instituted legal actions against the Company and its
subsidiaries in order to recover amounts due. In addition, numerous
other creditors and parties to contracts have threatened or initiated
litigation to recoup their loans and/or investments. These claims will
not be fully satisfied through the liquidation of assets in Singapore.
If these claims are not favorably resolved, they will have a material
adverse effect on the Company's financial condition, results of
operations and ability to continue as a going concern because the
Company has guaranteed substantially all of these debts.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
As of June 30, 1998, the Company and its subsidiaries were in default
on most of their debt obligations, which total $30.3 million due to
non-payment of principal or interest payments due. The amount above
includes MPM's $9.0 million in debentures owing to Transpac, which are
in default under the terms of the debentures in part due to non-payment
of interest which was due on December 31, 1996. The repayment of the
debentures and other debt in default have been guaranteed by MPI.
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Shareholders of the Company was held on June 17,
1998. The following items were voted upon by the shareholders with all
items being approved.
<TABLE>
<CAPTION>
Votes
Against or Votes
Votes For Withheld Abstained
<S> <C> <C> <C>
(1) Election of the following persons, who were
the only nominees, as Directors to hold office
until the next Annual Meeting or until their
successors are elected and qualified:
Lewis Solomon 9,041,185 37,329
Frank L. Howland 9,042,199 36,315
Gary S. Stein 9,042,199 36,315
Anthony J. A. Bryan 9,042,199 36,315
Andrew K. Wrobel 9,042,199 36,315
(4) Ratification of BDO Seidman, LLP as the
Company's independent accountants for the
fiscal year ending December 31, 1998. 9,052,387 12,025 14,102
</TABLE>
29
<PAGE>
Item 5. Other Information
On July 1, 1998, Waldemar Heeb was appointed as a Director of the
Company.
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K.
None
The Exhibits filed as part of this report are listed below.
Exhibit No. Description
----------- -----------
10.76 Restructuring, Settlement and Mutual Release Agreement
between ORIX Leasing Singapore Limited and the Company
dated April 14, 1998.
10.77 Restructuring, Settlement and Mutual Release Agreement
between Texas Instruments Singapore (Pte.) Ltd. and the
Company dated April 24, 1998.
10.78 Restructuring, Settlement and Mutual Release Agreement
between Samsung-Corning Co., Ltd. and the Company dated
May 19, 1998.
10.79 Restructuring, Settlement and Mutual Release Agreement
between Transpac Capital Pte. Ltd., Transpac Industrial
Holdings Ltd., Regional Investment Company, Ltd. and
Natsteel Equity III Pte. Ltd., and the Company dated
April 22, 1998.
10.80 Forbearance, Restructure and Mutual Release Agreement
between Motorola, Inc. and the Company dated July 1,
1998.
10.81 Restructuring, Settlement and Mutual Release Agreement
between NS Electronics Bangkok (1993) Ltd. and the
Company dated May 29, 1998.
10.82 Restructuring, Settlement and Mutual Release Agreement
between the Development Bank of Singapore Limited and
the Company dated July 10, 1998.
10.83 Form of Warrant to Purchase Common Stock dated April 24,
1998 issued to Transpac Capital Pte. Ltd., Transpac
Industrial Holdings Ltd., Regional Investment Company,
Ltd. and Natsteel Equity III Pte. Ltd.
27.1 Financial Data Schedule
30
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MICROELECTRONIC PACKAGING, INC.
-------------------------------
(Registrant)
Date: August 11, 1998 By: /s/ DENIS J. TRAFECANTY
----------------- ---------------------------
Denis J. Trafecanty
Senior Vice President,
Chief Financial Officer and Secretary
31
<PAGE>
EXHIBIT INDEX
Number Description
- ---------- -----------
10.76 Restructuring, Settlement and Mutual Release Agreement between
ORIX Leasing Singapore Limited and the Company dated April 14,
1998.
10.77 Restructuring, Settlement and Mutual Release Agreement between
Texas Instruments Singapore (Pte.) Ltd. and the Company dated
April 24, 1998.
10.78 Restructuring, Settlement and Mutual Release Agreement between
Samsung-Corning Co., Ltd. and the Company dated May 19, 1998.
10.79 Restructuring, Settlement and Mutual Release Agreement between
Transpac Capital Pte. Ltd., Transpac Industrial Holdings Ltd.,
Regional Investment Company, Ltd. and Natsteel Equity III Pte.
Ltd., and the Company dated April 22, 1998.
10.80 Forbearance, Restructure and Mutual Release Agreement between
Motorola, Inc. and the Company dated July 1, 1998.
10.81 Restructuring, Settlement and Mutual Release Agreement between NS
Electronics Bangkok (1993) Ltd. and the Company dated May 29,
1998.
10.82 Restructuring, Settlement and Mutual Release Agreement between the
Development Bank of Singapore Limited and the Company dated July
10, 1998.
10.83 Form of Warrant to Purchase Common Stock dated April 24, 1998
issued to Transpac Capital Pte. Ltd., Transpac Industrial Holdings
Ltd., Regional Investment Company, Ltd. and Natsteel Equity III
Pte. Ltd.
27.1 Financial Data Schedule
32
<PAGE>
Exhibit 10.76
RESTRUCTURING SETTLEMENT
AND MUTUAL RELEASE AGREEMENT
This Restructuring, Settlement and Mutual Release Agreement (this "Agreement")
is entered into as of this 14th day of April, 1998, by and among Microelectronic
Packaging, Inc. ("MPI"), on behalf of itself and its predecessors, successors,
former or current subsidiaries, affiliates, officers, directors, shareholders,
agents, attorneys representatives, insurers, employees and assigns (collectively
with MPI, the "MPI Releasees"), and ORIX Leasing Singapore Limited ("ORIX"), and
its predecessors, successors, subsidiaries, affiliates, officers, directors,
stockholders, agents, attorneys, representatives, insurers, employees and
assigns (collectively with ORIX, the "ORIX Releasees").
W I T N E S S E T H:
WHEREAS, pursuant to Hire Purchase Agreement Nos. H/1875/95-9264, H-1874/95-
9263, H/1986/95-9265, H/2212/95-9668, H/0459/96-1061, H/0957/96-1329, H/0959/96-
1331, H/0958/96-1330, H/0069/96-0179 and H/1751/96-2298 by and between MPM
Singapore Pte. Ltd. ("MPM") and ORIX and pursuant to Hire Purchase Agreement No.
H/0956-96-1328 by and between Microelectronic Packaging (S) Pte Ltd ("MPS") and
ORIX (collectively, the "Agreements"), ORIX leased equipment to MPM and MPS,
respectively, each a subsidiary of MPI currently in liquidation, which
Agreements call for certain lease payments and interest amounts were thereafter
due and payable periodically;
WHEREAS, MPI entered into a Guarantee and Indemnity with ORIX in connection
with each of the Agreements (collectively, the "Guarantees"), pursuant to which
MPI agreed to guaranty the obligations of MPM and MPS under the Agreements;
WHEREAS, MPM and MPS have defaulted on their obligations under the Agreements,
such that US$1,610,187 is due and owing to ORIX, and giving rise to MPI's
obligations under the Guarantees; and
WHEREAS, the parties wish to settle all obligations under the Agreements and
the Guarantees, and terminate and release all rights and obligations under such
documents and all other related agreements, and settle all other disputes that
may exist between MPI and each of the other MPI Releasees and ORIX and each of
the other ORIX Releasees.
NOW, THEREFORE, in consideration of the mutual promises contained herein and
for other good and sufficient consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
<PAGE>
1. Definitions.
-----------
a. "Payment Date" shall mean the calendar date after MPI completes the full
performance of its obligations under subsection 2 of this Agreement that the
payment to ORIX called for is such subsection have been received.
b. "Release Date" shall be the calendar date that is ninety (90) days after
the Payment Date.
c. "Insolvency Action" shall mean the commencement of a voluntary or
involuntary case against MPI under the United States Bankruptcy Code or an
assignment for the benefit of creditors by MPI that is not dismissed within
sixty (60) days of its commencement.
d. Other defined terms shall have the meanings assigned to them herein.
2. Settlement. In order to settle the defaults, amounts owed, debts,
----------
liabilities and other obligations pursuant to, in connection with, or arising
out of the Agreements and the Guarantees and each of their respective related
agreements, letters, documents and instruments (collectively, the "Loan
Documents"), MPI agrees that, within six (6) calendar months of the Effective
Date, it will pay to ORIX the amount of US$483,056.10, by wire transfer in
accordance with the wire transfer instructions provided by ORIX.
3. Release Procedure. If and only if no Insolvency Action has occurred, then
-----------------
effective the Release Date:
a. ORIX, on behalf of itself and the other ORIX Releasees, agrees as
follows:
i. ORIX, on behalf of itself and each other ORIX Releasee, fully and
forever releases and discharges each of the MPI Releasees from and against any
and all claims, damages and causes of action they may have against each such
person or entity with respect to any matter under the provisions of, arising out
or in connection with, the Loan Documents, including any breach of any
representation or warranty or noncompliance or nonfulfillment of any covenant or
agreement set forth in such documents; provided that such release and discharge
shall not extend to any claims, damages and causes of actions any ORIX Releasee
may have against any MPI Releasee for fraud or wilful misconduct with respect to
any of the Loan Documents or any of the transactions contemplated by this
Agreement.
ii. ORIX agrees that each of the Loan Documents, regardless of whether
they are in default, are fully and completely terminated and rendered devoid of
legal effect and unenforceable, such that even provisions of the Loan Documents
that, according to their terms, survive termination, are terminated and
nullified. Further, ORIX acknowledges and agrees that any loan, debt, liability
or other obligation created pursuant to or arising out of the Loan
-2-
<PAGE>
Documents, as well as any writings, agreements, notes or certificates
representing such loan, debt, liability or obligations, are canceled and
rendered devoid of force and effect.
b. MPI, on behalf of itself and the other MPI Releasees, agrees as follows:
i. MPI, on behalf of itself and each other MPI Releasee, fully and
forever releases and discharges each of the ORIX Releasees from any claims,
damages, and causes of action it or they may have against any of them with
respect to any matter under the provisions of, arising out or in connection with
the Loan Documents; provided that such release and discharge shall not extend to
any claims, damages and causes of action any MPI Releasee may have against any
ORIX Releasee for fraud or willful misconduct with respect to any of the Loan
Documents or any of the transactions contemplated by this Agreement.
ii. MPI acknowledges and agrees that each of the Loan Documents are
fully and completely terminated and rendered devoid of force and effect, such
that even provisions of the Loan Documents and each of their respective related
agreements, letters, documents and instruments that, according to their terms,
survive termination, are terminated and nullified.
4. Confidentiality. No party to this Agreement shall, except as may be
---------------
mandated by statutory or regulatory requirements, as may be required by legal
process in the course of actual litigation or in the case of a subpoena, as may
be necessary for MPI to negotiate with its creditors, disclose to others the
fact or terms of this settlement, the amounts referred to in this Agreement or
the fact of the payment of said amounts, except that each such party may
disclose to each such party's attorneys, accountant or other advisors to whom
the disclosure is necessary to effectuate the purposes for which such party has
consulted with such professional advisors and except that MPI may file this
Agreement with any governmental or regulatory body, describe it and refer to it
in any filing it makes pursuant to federal and state securities laws or to its
Board of Directors or shareholders.
5. Representations and Warranties.
------------------------------
a. MPI. MPI represents and warrants that:
---
i. It has all requisite corporate power and authority to execute and
deliver, and fulfill its obligations under this Agreement. This Agreement
(notwithstanding the lack of approval of MPM and MPS), upon execution and
delivery by MPI and assuming due and proper execution and delivery by the other
parties, will constitute a valid and binding obligation of MPI, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium and other laws of general application
affecting the enforcement of creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the
-3-
<PAGE>
part of MPI is required in connection with the execution, delivery and
performance of this Agreement by MPI, other than state securities law filings.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document to which
MPI is a party or by which it is bound is necessary for the execution, delivery
and performance of this Agreement by MPI.
b. ORIX. ORIX represents and warrants that:
----
i. It has all requisite corporate power and authority to execute and
deliver, and fulfill its obligations under this Agreement. This Agreement
(notwithstanding the lack of approval of MPM and MPS), upon execution and
delivery by ORIX, and assuming due and proper execution and delivery by MPI,
will constitute a valid and binding obligation of ORIX, enforceable in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium and other laws of general application
affecting the enforcement of creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any foreign, federal,
state or local governmental or other authority or third party on the part of
ORIX is required in connection with the execution, delivery and performance of
this Agreement.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document or law,
ordinance, statute, rule or regulation to which ORIX is a party or by which it
or its property is bound is necessary for the execution, delivery and
performance of this Agreement.
6. Miscellaneous. MPI and ORIX hereby agree as follows:
-------------
a. Severability. If any provision of this Agreement is found to be
------------
unenforceable, it shall not affect the enforceability of the remaining
provisions and the court shall enforce all remaining provisions to the extent
permitted by law. All parties agree that, notwithstanding the lack of execution
of this Agreement by MPM and MPS, this Agreement is valid, binding and
enforceable on all parties.
b. Prior Agreements. This Agreement shall supersede and render null and
----------------
void any and all prior agreements between MPI, MPM and/or MPS, on one hand, and
ORIX and/or any ORIX Releasee, on the other hand, concerning the subject matter
contained herein.
c. Successors and Assigns. This Agreement shall bind and benefit each of
----------------------
ORIX and its successors and assigns and shall also bind and benefit each MPI and
its successors and assigns. This Agreement may not be assigned by MPI, by
operation of law (e.g., merger) or
-4-
<PAGE>
otherwise (e.g., sale of substantially all assets), without the prior written
consent of ORIX.
d. Governing Law. This Agreement shall be deemed to have been entered into
-------------
in the State of California and shall be construed and interpreted in accordance
with the laws of California.
e. Jurisdiction. The parties to the Agreement hereby (i) irrevocably submit
------------
to the jurisdiction of the courts of the State of California, the Federal courts
of the United States sitting in the State of California and the courts of
Singapore for the purpose of any action or proceeding arising out of or relating
to this Agreement and any other documents and instruments relating hereto, (ii)
agree that all claims in respect of any such action or proceeding may be heard
and determined in such courts, (iii) irrevocably waive (to the extent permitted
by applicable law) any objection which any of them now or hereafter may have to
the laying of venue of any such action or proceeding brought in any of the
foregoing courts, and any objection on the ground that any such action or
proceeding in any such court has been brought in an inconvenient forum and (iv)
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner permitted by law.
f. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
g. Titles and Subtitles. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
h. Amendment. No amendment, modification or waiver of this Agreement or any
---------
part thereof shall be effective unless it is in writing and is signed by MPI and
ORIX. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
The rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or breach or nonfulfillment of or noncompliance
with any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
i. Termination. This Agreement may be terminated upon the mutual written
-----------
consent of MPI and ORIX. ORIX may terminate this Agreement upon three (3)
business days' written notice to MPI in the event (i) an Insolvency Action
occurs or (ii) MPI commits a material breach
-5-
<PAGE>
of this Agreement. Unless previously terminated pursuant to Section 3 of this
Agreement, the Loan Documents shall remain in full force and effect upon any
termination of this Agreement.
j. Survival of Representations, Warranties, Covenants and Agreements. The
-----------------------------------------------------------------
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
k. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid), mailed to the recipient by certified or registered mail, return,
receipt requested and postage prepaid, or transmitted by facsimile (with request
for immediate confirmation of receipt in a manner customary for communications
of such type and with physical delivery of the communication being made by one
of the other means specified in this Section as promptly as practicable
thereafter). Such notices, demands and other communications shall be addressed
as follows:
If to ORIX:
ORIX Leasing Singapore Limited
331 North Bridge Road #19-01/06
Odeon Towers, Singapore 188720
Attn: Managing Director
Telephone: 65 339 3622
Telecopy: 65 339 3966
If to MPI:
Attn: President
Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
-6-
<PAGE>
Telephone: (619) 292-7000
Telecopy: (619) 292-7881
with a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, California 94303-0913
Attention: Warren T. Lazarow, Esq.
Telephone: (650) 424-0160
Telecopy: (650) 496-2885
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party
(provided that notice of a change of address shall be effective only upon
receipt thereof).
l. Strict Construction. This Agreement is the result of arms-length
-------------------
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
MICROELECTRONIC PACKAGING, INC.
By: /s/ Denis J. Trafecanty
----------------------------
Dennis J. Trafecanty
Chief Financial Officer
ORIX LEASING SINGAPORE LIMITED
By: /s/ Kwek Chye Teck
----------------------------
Kwek Chye Teck
Managing Director
-8-
<PAGE>
EXHIBIT 10.77
RESTRUCTURING, SETTLEMENT
AND MUTUAL RELEASE AGREEMENT
----------------------------
This Restructuring, Settlement and Mutual Release Agreement (this "Agreement")
is entered into as of this 24th day of April, 1998, by and among Microelectronic
Packaging, Inc. ("MPI"), on behalf of itself and its predecessors, successors,
former or current subsidiaries, affiliates, officers, directors, shareholders,
agents, attorneys, representatives, insurers, employees and assigns
(collectively with MPI, the "MPI Releasees"), and Texas Instruments Singapore
(Pte) Ltd ("TI"), and its predecessors, successors, subsidiaries, affiliates,
officers, directors, stockholders, agents, attorneys, representatives, insurers,
employees and assigns (collectively with TI, the "TI Releasees").
W I T N E S S E T H:
WHEREAS, pursuant to a Loan and Security Agreement dated May 16, 1995 by and
among MPI, Microelectronic Packaging (S) Pte Ltd ("MPS") and TI (including the
Form of Promissory Note executed by MPS pursuant thereto, collectively, the
"Initial Loan Agreement"), TI made a lump sum advance in the amount of US$3.5
million to MPS, a subsidiary of MPI currently in liquidation, upon which certain
interest amounts were thereafter due and payable periodically under the Initial
Loan Agreement as amended by Addendum One to the Loan and Security Agreement,
which was last signed on July 15, 1996, and Addendum Two to the Loan and
Security Agreement dated April 2, 1997 (collectively with the Initial Loan
Agreement, the "Loan Agreement");
WHEREAS, MPI entered into a Form of Corporate Guarantee dated May 16, 1995
with TI (the "Guarantee"), pursuant to which MPI agreed to guaranty the
obligations of MPS under the Loan Agreement;
WHEREAS, MPI entered into a Loan and Security Agreement dated May 13, 1997
with TI (the "Loan and Security Agreement"), pursuant to which TI loaned MPI
funds with which MPI purchased the debt of MPS under the Loan Agreement;
WHEREAS, MPI has defaulted on its obligations under the Loan and Security
Agreement; and
WHEREAS, the parties wish to settle all obligations under the Loan Agreement,
the Guarantee and the Loan and Security Agreement, and terminate and release all
rights and obligations under such documents and all other related agreements,
and settle all other disputes that may exist between MPI and each of the other
MPI Releasees, and TI and each of the other TI Releasees.
NOW, THEREFORE, in consideration of the mutual promises contained herein and
for other good and sufficient consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
<PAGE>
1. Definitions.
-----------
a. "Payment Date" shall mean the calendar date after MPI completes the full
performance of its obligations under subsection 2 of this Agreement that the
payment to TI called for is such subsection have been received.
b. "Release Date" shall be the calendar date that is ninety (90) days after
the Payment Date.
c. "Insolvency Action" shall mean the commencement of a voluntary or
involuntary case against MPI under the United States Bankruptcy Code or an
assignment for the benefit of creditors by MPI that is not dismissed within
sixty (60) days of its commencement.
d. "Non-TI Creditor" shall mean any creditor of MPI other than TI, to which
MPI owes a Non-TI Debt.
e. "Non-TI Creditor Debt" shall mean any liability, debt or monetary
obligation (including without limitation a contingent, unliquidated or disputed
liability) of MPI in excess of US$500,000 as of the Effective Date (as defined
below) for which MPI is not liable to TI, where for purposes of such
determination, any liability, debt or monetary obligation involving multiple
future payments (e.g., installment loan or license royalty payments) shall be
treated as a single lump sum liability, debt or monetary obligation based on the
estimated or actual aggregate amount of projected payments; provided, however,
that "Non-TI Creditor Debt" shall not include any liability, debt or monetary
obligation owed by MPI (1) to Schlumberger Technologies, Inc. and its affiliates
or Details, Inc., (2) in connection with any real property or equipment lease,
or (3) otherwise in the ordinary course of MPI's business.
f. "Non-TI Creditor Settlement" shall mean any past, present or future
agreement, contract or arrangement between MPI and any Non-TI Creditor which
addresses the modification, settlement, discharge, release, resolution, accord
or satisfaction of such Non-TI Creditor's Non-TI Creditor Debt(s).
g. "Effective Date" shall mean the date which first appears above.
h. Other defined terms shall have the meanings assigned to them herein.
2. Settlement. In order to settle the defaults, amounts owed, debts,
----------
liabilities and other obligations pursuant to, in connection with, or arising
out of the Loan Agreement, the Guarantee, the Loan and Security Agreement and
each of their respective related agreements, letters, documents and instruments
(collectively, the "Loan Documents"), MPI agrees that, within six (6) calendar
months of the Effective Date, it will pay to TI the amount of US$1,077,147, by
wire transfer in accordance with the wire transfer instructions provided by TI.
3. Release Procedure. If and only if no Insolvency Action has occurred, then
-----------------
effective the Release Date:
a. TI, on behalf of itself and the other TI Releasees, agrees as follows:
<PAGE>
i. TI, on behalf of itself and each other TI Releasee, fully and
forever releases and discharges each of the MPI Releasees from and against any
and all claims, damages and causes of action they may have against each such
person or entity with respect to any matter under the provisions of, arising out
of or in connection with, the Loan Documents, including any breach of any
representation or warranty or noncompliance or nonfulfillment of any covenant or
agreement set forth in such documents; provided that such release and discharge
shall not extend to any claims, damages and causes of action any TI Releasee may
have against any MPI Releasee for fraud or willful misconduct with respect to
any of the Loan Documents or any of the transactions contemplated by this
Agreement.
ii. TI agrees that each of the Loan Documents, regardless of whether
they are in default, are fully and completely terminated and rendered devoid of
legal effect and unenforceable, such that even provisions of the Loan Documents
that, according to their terms, survive termination, are terminated and
nullified. Further, TI acknowledges and agrees that any loan, debt, liability or
other obligation created pursuant to or arising out of the Loan Documents, as
well as any writings, agreements, notes or certificates representing such loan,
debt, liability or obligations, are canceled and rendered devoid of force and
effect.
b. MPI, on behalf of itself and the other MPI Releasees, agrees as follows:
i. MPI, on behalf of itself and each other MPI Releasee, fully and
forever releases and discharges each of the TI Releasees from any claims,
damages, and causes of action it or they may have against any of them with
respect to any matter under the provisions of, arising out of or in connection
with the Loan Documents; provided that such release and discharge shall not
extend to any claims, damages and causes of action any MPI Releasee may have
against any TI Releasee for fraud or willful misconduct with respect to any of
the Loan Documents or any of the transactions contemplated by this Agreement.
ii. MPI acknowledges and agrees that each of the Loan Documents are
fully and completely terminated and rendered devoid of force and effect, such
that even provisions of the Loan Documents and each of their respective related
agreements, letters, documents and instruments that, according to their terms,
survive termination, are terminated and nullified.
4. Confidentiality. No party to this Agreement shall, except as may be
---------------
mandated by statutory or regulatory requirements, as may be required by legal
process in the course of actual litigation or in the case of a subpoena, as may
be necessary for MPI to negotiate with its creditors, disclose to others the
fact or terms of this settlement, the amounts referred to in this Agreement or
the fact of the payment of said amounts, except that each such party may
disclose to each such party's attorneys, accountant or other advisors to whom
the disclosure is necessary to effectuate the purposes for which such party has
consulted with such professional advisors and except that MPI may file this
Agreement with any governmental or regulatory body, describe it and refer to it
in any filing it makes pursuant to federal and state securities laws or to its
Board of Directors or shareholders; provided, however, that (i) TI may discuss
the terms of this Agreement with any Non-TI Creditor that is party to a Non-TI
Creditor Settlement to the extent required to enforce its rights under Section
5, and (ii) MPI may issue a press release describing the general terms of this
Agreement in connection with any public filing it makes with any governmental or
regulatory body.
<PAGE>
5. Arrangements With Other Creditors. MPI hereby agrees that, if a Non-TI
---------------------------------
Creditor is a party to a Non-TI Creditor Settlement that provides such Non-TI
Creditor with the benefit of rights that are, in the aggregate, materially more
favorable than the same rights contained in this Agreement, including without
limitation terms regarding the amount of repayment (as a percentage of the total
Non-TI Creditor Debt(s) in question), with respect to such Non-TI Creditor's
claims related solely to its Non-TI Creditor Debt(s), then MPI will work with TI
to amend this Agreement so that TI is, in the aggregate, in generally the same
position as such Non-TI Creditor. TI acknowledges that certain Non-TI Creditors
of MPI have claims against MPI other than Non-TI Creditor Debt(s), and agrees
that it has no rights under this Section 5 with respect to settlements of such
other claims, which settlements may include without limitation the granting of
warrants to a Non-TI Creditor who is also a shareholder of MPI to compensate
such Non-TI Creditor for dilution of its equity holdings as well as certain
agreements, guarantees and cash payments related to an interest held by the Non-
TI Creditor in pending litigation. TI acknowledges that certain Non-TI
Creditors of MPI have structured their settlements differently, including
without limitation accepting a warrant for MPI's shares instead of a percentage
payment for part of its Non-TI Creditor Debt, and agrees that it has no rights
under this Section 5 with respect to such arrangements. Further, TI
acknowledges that this Agreement and the Non-TI Creditor Settlements each have
been separately negotiated, such that Non-TI Creditor Settlements may contain
different terms, rights and procedures from this Agreement, and agrees that, to
the extent that such different terms, rights and procedures do not render such
Non-TI Creditor Settlement materially more favorable to such Non-TI Creditor
than this Agreement is to TI, such differences do not give rise to rights under
this Section 5.
6. Representations and Warranties.
------------------------------
a. MPI. MPI represents and warrants that:
---
i. It has all requisite corporate power and authority to execute
and deliver, and fulfill its obligations under this Agreement. This Agreement
(notwithstanding the lack of approval of MPS), upon execution and delivery by
MPI and assuming due and proper execution and delivery by the other parties,
will constitute a valid and binding obligation of MPI, enforceable in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, moratorium and other laws of general application affecting the
enforcement of creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of MPI is required in connection with
the execution, delivery and performance of this Agreement by MPI, other than
state securities law filings.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document to which
MPI is a party or by which it is bound is necessary for the execution, delivery
and performance of this Agreement by MPI.
b. TI. TI represents and warrants that:
--
i. It has all requisite corporate power and authority to execute
and deliver,
<PAGE>
and fulfill its obligations under this Agreement. This Agreement
(notwithstanding the lack of approval of MPS), upon execution and delivery by
TI, and assuming due and proper execution and delivery by MPI, will constitute a
valid and binding obligation of TI, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency, moratorium
and other laws of general application affecting the enforcement of creditors'
rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any foreign, federal,
state or local governmental or other authority or third party on the part of TI
is required in connection with the execution, delivery and performance of this
Agreement.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document or law,
ordinance, statute, rule or regulation to which TI is a party or by which it or
its property is bound is necessary for the execution, delivery and performance
of this Agreement.
7. Miscellaneous. MPI and TI hereby agree as follows:
-------------
a. Severability. If any provision of this Agreement is found to be
------------
unenforceable, it shall not affect the enforceability of the remaining
provisions and the court shall enforce all remaining provisions to the extent
permitted by law. All parties agree that, notwithstanding the lack of execution
of this Agreement by MPS, this Agreement is valid, binding and enforceable on
all parties.
b. Prior Agreements. This Agreement shall supersede and render null and
----------------
void any and all prior agreements between MPI and/or MPS, on one hand, and TI
and/or any TI Releasee, on the other hand, concerning the subject matter
contained herein.
c. Successors and Assigns. This Agreement shall bind and benefit each of TI
----------------------
and its successors and assigns and shall also bind and benefit each MPI and its
successors and assigns. This Agreement may not be assigned by MPI, by operation
of law (e.g., merger) or otherwise (e.g., sale of substantially all assets),
without the prior written consent of TI.
d. Governing Law. This Agreement shall be deemed to have been entered into
-------------
in the State of California and shall be construed and interpreted in accordance
with the laws of California.
e. Jurisdiction. The parties to the Agreement hereby (i) irrevocably submit
------------
to the jurisdiction of the courts of the State of California and the Federal
courts of the United States sitting in the State of California for the purpose
of any action or proceeding arising out of or relating to this Agreement and any
other documents and instruments relating hereto, (ii) agree that all claims in
respect of any such action or proceeding may be heard and determined in such
courts, (iii) irrevocably waive (to the extent permitted by applicable law) any
objection which any of them now or hereafter may have to the laying of venue of
any such action or proceeding brought in any of the foregoing courts, and any
objection on the ground that any such action or proceeding in any such court has
been brought in an inconvenient forum and (iv) agree that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner permitted by law.
<PAGE>
f. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
g. Titles and Subtitles. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
h. Amendment. No amendment, modification or waiver of this Agreement or any
---------
part thereof shall be effective unless it is in writing and is signed by MPI and
TI. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
The rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or breach or nonfulfillment of or noncompliance
with any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
i. Termination. This Agreement may be terminated upon the mutual written
-----------
consent of MPI and TI. TI may terminate this Agreement upon three (3) business
days' written notice to MPI in the event (i) an Insolvency Action occurs or (ii)
MPI commits a material breach of this Agreement. Unless previously terminated
pursuant to Section 3 of this Agreement, the Loan Documents shall remain in full
force and effect upon any termination of this Agreement.
j. Survival of Representations, Warranties, Covenants and Agreements. The
-----------------------------------------------------------------
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
k. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid), mailed to the recipient by certified or registered mail, return,
receipt requested and postage prepaid, or transmitted by facsimile (with request
for immediate confirmation of receipt in a manner customary for communications
of such type and with physical delivery of the communication being made by one
of the other means specified in this Section as promptly as practicable
thereafter). Such notices, demands and other communications shall be addressed
as follows:
<PAGE>
If to TI:
c/o Texas Instruments Incorporated
7839 Churchill Way
Dallas, TX 75251
Attn: Thomas J. Gentry
Telephone: (972) 917-6938
Telecopy: (972) 917-6945
If to MPI:
Attn: President
Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
Telephone: (619) 292-7000
Telecopy: (619) 292-7881
with a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, California 94303-0913
Attention: Warren T. Lazarow, Esq.
Telephone: (650) 424-0160
Telecopy: (650) 496-2885
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party
(provided that notice of a change of address shall be effective only upon
receipt thereof).
m. Strict Construction. This Agreement is the result of arms-length
-------------------
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
MICROELECTRONIC PACKAGING, INC.
By: /s Denis J. Trafecanty
------------------------------
Denis J. Trafecanty
Chief Financial Officer
TEXAS INSTRUMENTS SINGAPORE (PTE) LTD
By: /s/ John Culbreth
------------------------
Dr. John Culbreth
Finance Director
<PAGE>
EXHIBIT 10.78
RESTRUCTURING, SETTLEMENT
AND MUTUAL RELEASE AGREEMENT
----------------------------
This Restructuring, Settlement and Mutual Release Agreement (this
"Agreement") is entered into as of this 19th day of May, 1998 (the "Effective
Date"), by and among Microelectronic Packaging, Inc. ("MPI"), on behalf of
itself and its predecessors, successors, former or current subsidiaries,
affiliates, officers, directors, shareholders, agents, attorneys,
representatives, insurers, employees and assigns (collectively with MPI, the
"MPI Releasees"), and Samsung Corning Co., Ltd. ("SSC"), and its predecessors,
successors, subsidiaries, affiliates, officers, directors, stockholders, agents,
attorneys, representatives, insurers, employees and assigns (collectively with
SSC, the "SSC Releasees").
W I T N E S S E T H:
WHEREAS, pursuant to the Supplemental Deed by and between Micro-
electronic Packaging (S) Pte Ltd ("MPS") and the Development Bank of Singapore
Limited ("DBS") (the "Loan Agreement"), DBS loaned $1,000,000 to MPS, a
subsidiary of MPI currently in liquidation, which Agreement calls for certain
payments and interest amounts were thereafter due and payable periodically;
WHEREAS, MPI and SSC entered into a Guarantee and Indemnity with DBS in
connection with the Loan Agreement (the "Guarantee"), pursuant to which MPI and
SSC agreed to guaranty the obligations of MPS under the Loan Agreement;
WHEREAS, the parties wish to settle all obligations under the Loan
Agreement and the Guarantee, and terminate and release all rights and
obligations under such documents and all other related agreements, and settle
all other disputes that may exist between MPI and each of the other MPI
Releasees and SSC and each of the other SSC Releasees.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and sufficient consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Definitions.
-----------
a. "Payment Date" shall mean the calendar date after MPI completes the full
performance of its obligations under subsection 2 of this Agreement that the
payment to SSC called for in such subsection have been received.
b. "Release Date" shall be the calendar date that is ninety (90) days after
the Payment Date.
c. "Insolvency Action" shall mean the commencement of a voluntary or
involuntary case against MPI under the United States Bankruptcy Code or an
assignment for the benefit of creditors by MPI that is not dismissed within
sixty (60) days of its commencement.
<PAGE>
d. Other defined terms shall have the meanings assigned to them herein.
2. Settlement. In order to settle the defaults, amounts owed, debts,
----------
liabilities and other obligations pursuant to, in connection with, or arising
out of the Loan Agreement and the Guarantee and each of their respective related
agreements, letters, documents and instruments (collectively, the "Loan
Documents"), MPI agrees that, within six (6) calendar months of the Effective
Date, it shall pay to SSC the amount of US$150,000.00, by wire transfer in
accordance with the wire transfer instructions provided by SSC. If such payment
is not made within six (6) calendar months of the Effective Date, MPI agrees
that the amount of US$500,000.00 shall be paid to SSC immediately.
3. Release Procedure. If and only if no Insolvency Action has occurred, then
-----------------
effective on the Release Date:
a. SSC, on behalf of itself and the other SSC Releasees, agrees as follows:
i. SSC, on behalf of itself and each other SSC Releasee, fully and
forever releases and discharges each of the MPI Releasees from and against any
and all claims, damages and causes of action they may have against each such
person or entity with respect to any matter under the provisions of, arising out
of or in connection with, the Loan Documents, including any breach of any
representation or warranty or noncompliance or nonfulfillment of any covenant or
agreement set forth in such documents; provided that such release and discharge
shall not extend to any claims, damages and causes of action any SSC Releasee
may have against any MPI Releasee for fraud or willful misconduct with respect
to any of the Loan Documents or any of the transactions contemplated by this
Agreement.
ii. SSC agrees that each of the Loan Documents, regardless of whether
they are in default, are fully and completely terminated and rendered devoid of
legal effect and unenforceable, such that even provisions of the Loan Documents
that, according to their terms, survive termination, are terminated and
nullified. Further, SSC acknowledges and agrees that any loan, debt, liability
or other obligation created pursuant to or arising out of the Loan Documents, as
well as any writings, agreements, notes or certificates representing such loan,
debt, liability or obligations, are canceled and rendered devoid of force and
effect.
b. MPI, on behalf of itself and the other MPI Releasees, agrees as follows:
i. MPI, on behalf of itself and each other MPI Releasee, fully and
forever releases and discharges each of the SSC Releasees from any claims,
damages, and causes of action it or they may have against any of them with
respect to any matter under the provisions of, arising out of or in connection
with the Loan Documents; provided that such release and discharge shall not
extend to any claims, damages and causes of action any MPI Releasee may have
against any SSC Releasee for fraud or willful misconduct with respect to any of
the Loan Documents or any of the transactions contemplated by this Agreement.
ii. MPI acknowledges and agrees that each of the Loan Documents are
fully and completely terminated and rendered devoid of force and effect, such
that even provisions of the Loan Documents and each of their respective related
agreements, letters, documents and
<PAGE>
instruments that, according to their terms, survive termination, are terminated
and nullified.
4. Confidentiality. No party to this Agreement shall, except as may be
---------------
mandated by statutory or regulatory requirements, as may be required by legal
process in the course of actual litigation or in the case of a subpoena, as may
be necessary for MPI to negotiate with its creditors, disclose to others the
fact or terms of this settlement, the amounts referred to in this Agreement or
the fact of the payment of said amounts, except that each such party may
disclose to each such party's attorneys, accountant or other advisors to whom
the disclosure is necessary to effectuate the purposes for which such party has
consulted with such professional advisors and except that (i) MPI may file this
Agreement with any governmental or regulatory body, describe it and refer to it
in any filing it makes pursuant to federal and state securities laws or to its
Board of Directors or shareholders, and (ii) MPI may issue a press release
describing the general terms of this Agreement in connection with any public
filing it makes with any governmental or regulatory body.
5. Representations and Warranties.
------------------------------
a. MPI. MPI represents and warrants that:
---
i. It has all requisite corporate power and authority to execute and
deliver, and fulfill its obligations under this Agreement. This Agreement
(notwithstanding the lack of approval of MPS), upon execution and delivery by
MPI and assuming due and proper execution and delivery by the other parties,
will constitute a valid and binding obligation of MPI, enforceable in accordance
with its terms, except as such enforcement may be limited by bankruptcy,
insolvency, moratorium and other laws of general application affecting the
enforcement of creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of MPI is required in connection with
the execution, delivery and performance of this Agreement by MPI, other than
state securities law filings.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document to which
MPI is a party or by which it is bound is necessary for the execution, delivery
and performance of this Agreement by MPI.
b. SSC. SSC represents and warrants that:
---
i. It has all requisite corporate power and authority to execute and
deliver, and fulfill its obligations under this Agreement. This Agreement
(notwithstanding the lack of approval of MPS), upon execution and delivery by
SSC, and assuming due and proper execution and delivery by MPI, will constitute
a valid and binding obligation of SSC, enforceable in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency, moratorium
and other laws of general application affecting the enforcement of creditors'
rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any foreign, federal,
state or local governmental or other
<PAGE>
authority or third party on the part of SSC is required in connection with the
execution, delivery and performance of this Agreement.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document or law,
ordinance, statute, rule or regulation to which SSC is a party or by which it or
its property is bound is necessary for the execution, delivery and performance
of this Agreement.
6. Miscellaneous. MPI and SSC hereby agree as follows:
-------------
a. Severability. If any provision of this Agreement is found to be
------------
unenforceable, it shall not affect the enforceability of the remaining
provisions and the court shall enforce all remaining provisions to the extent
permitted by law. All parties agree that, notwithstanding the lack of execution
of this Agreement by MPS, this Agreement is valid, binding and enforceable on
all parties.
b. Prior Agreements. This Agreement shall supersede and render null and
----------------
void any and all prior agreements between MPI and/or MPS, on one hand, and SSC
and/or any SSC Releasee, on the other hand, concerning the subject matter
contained herein.
c. Successors and Assigns. This Agreement shall bind and benefit each of
----------------------
SSC and its successors and assigns and shall also bind and benefit each MPI and
its successors and assigns. This Agreement may not be assigned by MPI, by
operation of law (e.g., merger) or otherwise (e.g., sale of substantially all
assets), without the prior written consent of SSC, except that no such consent
shall be required after the Release Date.
d. Governing Law. This Agreement shall be deemed to have been entered into
-------------
in the State of California and shall be construed and interpreted in accordance
with the laws of California.
e. Jurisdiction. The parties to the Agreement hereby (i) irrevocably
------------
submit to the jurisdiction of the courts of the State of California, the Federal
courts of the United States sitting in the State of California and the courts of
Singapore for the purpose of any action or proceeding arising out of or relating
to this Agreement and any other documents and instruments relating hereto, (ii)
agree that all claims in respect of any such action or proceeding may be heard
and determined in such courts, (iii) irrevocably waive (to the extent permitted
by applicable law) any objection which any of them now or hereafter may have to
the laying of venue of any such action or proceeding brought in any of the
foregoing courts, and any objection on the ground that any such action or
proceeding in any such court has been brought in an inconvenient forum and (iv)
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner permitted by law.
f. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
g. Titles and Subtitles. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
<PAGE>
h. Amendment. No amendment, modification or waiver of this Agreement or
---------
any part thereof shall be effective unless it is in writing and is signed by MPI
and SSC. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
The rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or breach or nonfulfillment of or noncompliance
with any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
i. Termination. This Agreement may be terminated upon the mutual written
-----------
consent of MPI and SSC. SSC may terminate this Agreement upon three (3)
business days' written notice to MPI in the event (i) an Insolvency Action
occurs or (ii) MPI commits a material breach of this Agreement. Unless
previously terminated pursuant to Section 3 of this Agreement, the Loan
Documents including the Guarantees shall remain in full force and effect upon
any termination of this Agreement.
j. Survival of Representations, Warranties, Covenants and Agreements. The
-----------------------------------------------------------------
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
k. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid), mailed to the recipient by certified or registered mail, return,
receipt requested and postage prepaid, or transmitted by facsimile (with request
for immediate confirmation of receipt in a manner customary for communications
of such type and with physical delivery of the communication being made by one
of the other means specified in this Section as promptly as practicable
thereafter). Such notices, demands and other communications shall be addressed
as follows:
<PAGE>
If to SSC:
Attn: Mr. Sung-Woog Lee
Legal Team
Samsung, Corning Co., Ltd.
27th Floor, Glass Tower Building
946-1, Daechi-Dong, Kangnam-Ku
Seoul, Korea 135 280
If to MPI:
Attn: President
Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
Telephone: (619) 292-7000
Telecopy: (619) 292-7881
with a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, California 94303-0913
Attention: Warren T. Lazarow, Esq.
Telephone: (650) 424-0160
Telecopy: (650) 496-2885
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party
(provided that notice of a change of address shall be effective only upon
receipt thereof).
m. Strict Construction. This Agreement is the result of arms-length
-------------------
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
MICROELECTRONIC PACKAGING, INC.
By: /s/ Denis J. Trafecanty
-----------------------
Denis J. Trafecanty
Chief Financial Officer
SAMSUNG, CORNING CO., LTD.
By: /s/ K. H. Choi
----------------------
Name: Kyung Wha, Choi
Its: Corporate Planning Team
General Manager
<PAGE>
Exhibit 10.79
RESTRUCTURING, SETTLEMENT
AND MUTUAL RELEASE AGREEMENT
----------------------------
This Restructuring, Settlement and Mutual Release Agreement (this
"Agreement") is entered into as of April 22, 1998 (the "Effective Date"), by and
--------- --------------
among Microelectronic Packaging, Inc. ("MPI"), on behalf of itself and its
---
predecessors, successors, former or current subsidiaries, affiliates, officers,
directors, shareholders, agents, attorneys, representatives, insurers, employees
and assigns (collectively with MPI, the "MPI Releasees"), and Transpac Capital
-------------
Pte Ltd ("Transpac"), Transpac Industrial Holdings Ltd, Regional Investment
--------
Company Ltd and Natsteel Equity III Pte Ltd (collectively with Transpac, the
"Investors"), and their respective predecessors, successors, subsidiaries,
- ----------
affiliates, officers, directors, stockholders, agents, attorneys,
representatives, insurers, employees and assigns (collectively with the
Investors, the "Investor Releasees").
------------------
WITNESSETH:
WHEREAS, pursuant to a Convertible Loan Agreement dated March 25, 1996 by
and among MPI, MPM Singapore Pte Ltd ("MPM") and the Investors (including the
---
convertible debentures issued pursuant thereto, collectively, the "Loan
----
Agreement"), the Investors made a lump sum advance in the amount of US$9 million
- ---------
to MPM, a subsidiary of MPI currently in liquidation, upon which certain
interest amounts were thereafter due and payable periodically under the Loan
Agreement;
WHEREAS, MPI entered into a Guarantee dated March 25, 1996 with Transpac,
as agent for the Investors (the "Guarantee"), pursuant to which MPI agreed to
---------
guaranty the obligations of MPM under the Loan Agreement;
WHEREAS, MPM has defaulted on its obligations under the Loan Agreement and
has sought protection from its creditors in the courts of the country of
Singapore, giving rise to MPI's obligations under the Guarantee; and
WHEREAS, the parties wish to settle all obligations under the Loan
Agreement, the Guarantee and the Subscription Agreement dated March 25, 1996 by
and among MPI, MPM and the Investors (the "Subscription Agreement"), and
----------------------
terminate and release all rights and obligations under such documents and all
other related agreements, and settle all other disputes that may exist between
MPI and each of the other MPI Releasees, and the Investors and each of the other
Investor Releasees on the terms and conditions described herein;
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and sufficient consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Definitions.
-----------
a. "First Partial Satisfaction" shall mean that MPI has fully performed
--------------------------
its obligations
<PAGE>
under subsection 2.b. of this Agreement.
b. "First Payment Date" shall mean the calendar date after MPI completes
------------------
the full performance of its obligations under subsection 2.b. of this Agreement
that all payments to Transpac, as agent for the Investors, called for in such
subsection are received and credited to the account(s) designated by Transpac in
the wire transfer instructions contained in Exhibit 1 attached hereto or such
----------
other written wire transfer instructions provided by Transpac to MPI.
c. "First Release Date" shall be the calendar date that is ninety-five
------------------
(95) days after the First Payment Date.
d. "Full Satisfaction" shall mean that the Preliminary Partial
-----------------
Satisfaction, the First Partial Satisfaction and the Second Partial Satisfaction
have each occurred.
e. "Insolvency Action" shall mean the commencement of a voluntary or
-----------------
involuntary case against MPI under the United States Bankruptcy Code (the
"Code") or an assignment for the benefit of creditors by MPI, excluding any
----
involuntary case brought under the Code which is dismissed within sixty (60)
days of its commencement where no action is brought to avoid any payment or
transfer of funds made by MPI hereunder during such time period from
commencement to dismissal.
f. "Non-Investor Creditor" shall mean any creditor of MPI other than an
---------------------
Investor, to which MPI owes a Non-Investor Creditor Debt.
g. "Non-Investor Creditor Debt" shall mean any liability, debt or monetary
--------------------------
obligation (including without limitation a contingent, unliquidated or disputed
liability) of MPI in excess of US$500,000 as of the Effective Date for which MPI
is not liable to an Investor, where for purposes of such determination, any
liability, debt or monetary obligation involving multiple future payments (e.g.,
installment loan or license royalty payments) shall be treated as a single lump
sum liability, debt or monetary obligation based on the estimated or actual
aggregate amount of projected payments. "Non-Investor Creditor Debt" shall not
include any liability, debt or monetary obligation of MPI to Schlumberger
Technologies, Inc. or Details, Inc. or any real property or equipment lease
liability, debt or monetary obligation of MPI.
h. "Non-Investor Creditor Settlement" shall mean any past, present or
--------------------------------
future agreement, contract or arrangement between MPI and any Non-Investor
Creditor which addresses the modification, settlement, discharge, release,
resolution, accord or satisfaction of such Non-Investor Creditor's Non-Investor
Creditor Debt(s).
i. "Outstanding Guarantee Indebtedness" shall mean the aggregate monetary
----------------------------------
liability of MPI to the Investors under the Guarantee at any particular date.
As of December 31, 1997, the Outstanding Guarantee Indebtedness was
US$10,374,875.
j. "Preliminary Partial Satisfaction" shall mean that MPI has fully
--------------------------------
performed its obligations under subsection 2.a. of this Agreement.
2
<PAGE>
k. "Second Partial Satisfaction" shall mean that MPI has fully performed
---------------------------
those obligations under subsections 2.c. and 2.d. of this Agreement necessary
for the payment to Transpac, as agent for the Investors, on or before December
31, 1999, of the greater of (i) US$1 million or (ii) thirty percent (30%) of the
aggregate net monetary proceeds of the Settlement (as defined in subsection
2.c.).
l. "Second Payment Date" shall mean the calendar date after MPI completes
-------------------
the full performance of those obligations under subsections 2.c. and 2.d. of
this Agreement necessary for the payment to Transpac, as agent for the
Investors, on or before December 31, 1999, of the greater of (i) US$1 million or
(ii) thirty percent (30%) of the aggregate net monetary proceeds of the
Settlement (as defined in subsection 2.c.) that all such payments are received
and credited to the account(s) designated by Transpac in the wire transfer
instructions contained in Exhibit 1 attached hereto or such other written wire
----------
transfer instructions provided by Transpac to MPI.
m. "Second Release Date" shall be the calendar date that is ninety-five
-------------------
(95) days after the Second Payment Date.
n. Other defined terms shall have the meanings assigned to them herein.
2. Settlement. In order to settle the defaults, amounts owed, debts,
----------
liabilities and other obligations pursuant to, in connection with, or arising
out of the Loan Agreement, the Guarantee, the Subscription Agreement and each of
their respective related agreements, letters, documents and instruments
(collectively, the "Loan Documents"), MPI agrees to undertake the following
--------------
obligations:
a. On the Effective Date, MPI will issue to the Investors warrants to
purchase an aggregate of 500,000 shares of MPI's common stock ("Common Shares")
-------------
at an exercise price of US$1.00 per share substantially in the form attached
hereto as Exhibit 2, which warrants will be immediately exercisable and will
---------
remain exercisable for five (5) years from the date of issuance (the
"Warrants").
--------
b. Within six (6) calendar months of the Effective Date, MPI will pay to
the Investors the amount of US$3,112,462.50, by wire transfer to Transpac, as
agent for the Investors, in accordance with the wire transfer instructions
contained in Exhibit 1 attached hereto or such other written wire transfer
---------
instructions provided by Transpac to MPI.
c. Within thirty (30) days of receiving any monetary proceeds from the
Settlement (as defined below), MPI will pay to Transpac, as agent for the
Investors, in accordance with the wire transfer instructions contained in
Exhibit 1 attached hereto or such other written wire transfer instructions
- ---------
provided by Transpac to MPI, thirty percent (30%) of such net monetary proceeds
MPI receives directly from International Business Machines Corporation ("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 asserted by MPI under the Purchase Option
Agreement dated August 4, 1994 by and between IBM and MPI and the Multilayer
Technology Transfer and Licensing Agreement dated August 4, 1994 between IBM and
MPI (the "Settlement"). Transpac, as agent for the Investors,
----------
3
<PAGE>
is entitled to thirty percent (30%) of the aggregate net monetary proceeds of
the Settlement. Such net monetary proceeds will be net of all expenses MPI
incurs in obtaining the Settlement, including without limitation, legal fees and
expenses. If the monetary proceeds of Settlement are to be paid in a series of
installments, Transpac, as agent for the Investors, shall be entitled to thirty
percent (30%) of the net monetary proceeds of each installment, where the
aggregate expenses MPI incurs in obtaining the Settlement shall be allocated to
each installment on a pro rata basis according to proportion of the aggregate
monetary proceeds of the Settlement represented by the monetary proceeds of such
installment.
d. MPI guarantees that Transpac, as agent for the Investors, will receive
payments of US$1 million as its share of the aggregate net monetary proceeds of
the Settlement on or prior to December 31, 1999. If Transpac, as agent for the
Investors, does not receive monetary payments pursuant to subsection 2.c. above
of at least US$1 million on or prior to December 31, 1999, MPI will pay to
Transpac, as agent for the Investors, in accordance with the wire transfer
instructions contained in Exhibit 1 attached hereto or such other written wire
---------
transfer instructions provided by Transpac to MPI, by December 31, 1999, the
difference between US$1 million and the net monetary proceeds received by
Transpac, as agent for the Investors, plus accrued interest as determined
herein. Interest on the balance of the US$1 million guarantee amount, as
reduced by partial payments by MPI to Transpac and net monetary proceeds
received by Transpac in amounts less than US$1 million pursuant to subsection
2.c., will accrue at 8.5% simple interest and begin accruing six (6) calendar
months from the Effective Date. If the Settlement is consummated after December
31, 1999, Transpac remains entitled to payment of thirty percent (30%) of the
net monetary proceeds pursuant to subsection 2.c. above; provided, however, that
such payment to Transpac will be reduced by US$1 million (together with accrued
and paid interest), but not below zero (i.e., in no event shall Transpac or any
Investor be deemed to owe MPI any money pursuant to this subsection 2.d.), to
reflect the guarantee payment made by MPI to Transpac pursuant to this
subsection 2.d.; provided further, that such reduction in such payment shall
only be made if MPI has made the guarantee payment to Transpac pursuant to this
subsection 2.d.
3. Release Procedure.
-----------------
a. If and only if the Preliminary Partial Satisfaction and First Partial
Satisfaction have occurred and no Insolvency Action has occurred, then effective
---------
the First Release Date, the Outstanding Guarantee Indebtedness shall be reduced
- ----------------------
to US$1 million. Except as expressly provided otherwise in this subsection 3.a.
or subsections 3.b. of this Agreement, the Loan Documents shall remain in full
force and effect at all times after the Effective Date.
b. If and only if a Full Satisfaction has occurred and no Insolvency
Action has occurred, then effective the Second Release Date:
---------------------------------
i. The Investors, on behalf of themselves and the other Investor
Releasees, agree as follows:
(1) The Investors, on behalf of themselves and each other Investor
Releasee, fully and forever release and discharge each of the MPI Releasees from
and against any
4
<PAGE>
and all claims, damages and causes of action they may have against each such
person or entity with respect to any matter under the provisions of, arising out
of or in connection with, the Loan Documents, including any breach of any
representation or warranty or noncompliance or nonfulfillment of any covenant or
agreement set forth in such documents; provided that such release and discharge
shall not extend to any claims, damages and causes of action any Investor may
have against (a) any MPI Releasee for fraud or willful misconduct with respect
to any of the Loan Documents or any of the transactions contemplated by this
Agreement or (b) MPI pursuant to this Agreement.
(2) The Investors agree that each of the Loan Documents, regardless
of whether they are in default, are fully and completely terminated and rendered
devoid of legal effect and unenforceable, such that even provisions of the Loan
Documents that, according to their terms, survive termination, are terminated
and nullified. Further, the Investors acknowledge and agree that any loan, debt,
liability or other obligation created pursuant to or arising out of the Loan
Agreement, the Guarantee or the Subscription Agreement, as well as any writings,
agreements, notes or certificates representing such loan, debt, liability or
obligations, are canceled and rendered devoid of force and effect.
ii. MPI, on behalf of itself and the other MPI Releasees, agrees as
follows:
(1) MPI, on behalf of itself and each other MPI Releasee, fully and
forever releases and discharges each of the Investor Releasees from any claims,
damages, and causes of action it or they may have against any of them with
respect to any matter under the provisions of, arising out of or in connection
with the Loan Documents; provided that such release and discharge shall not
extend to any claims, damages and causes of action any MPI Releasee may have
against (a) any Investor Releasee for fraud or willful misconduct with respect
to any of the Loan Documents or any of the transactions contemplated by this
Agreement or (b) any Investor pursuant to this Agreement.
(2) MPI acknowledges and agrees that each of the Loan Documents are
fully and completely terminated and rendered devoid of force and effect, such
that even provisions of the Loan Agreement, the Guarantee, the Subscription
Agreement and each of their respective related agreements, letters, documents
and instruments that, according to their terms, survive termination, are
terminated and nullified.
4. Confidentiality. No party to this Agreement shall, except as may be
---------------
mandated by statutory or regulatory requirements or as may be required by legal
process in the course of actual litigation or in the case of a subpoena,
disclose to others the fact or terms of this settlement, the amounts referred to
in this Agreement or the fact of the payment of said amounts, except that: (i)
each such party may disclose to each such party's attorneys, accountant or other
advisors to whom the disclosure is necessary to effectuate the purposes for
which such party has consulted with such professional advisors; (ii) MPI may
file this Agreement with any governmental or regulatory body, describe it and
refer to it in any filing it makes pursuant to federal and state securities laws
or to its Board of Directors or shareholders; (iii) MPI may issue a press
release describing the general terms of this Agreement in connection with any
public filing it makes with any governmental or regulatory body; and (iv) MPI
may disclose the general
5
<PAGE>
terms of this Agreement in connection with its accommodation or settlement
negotiations with Non-Investor Creditors.
5. Arrangements With Other Creditors. MPI represents and covenants that no
---------------------------------
Non-Investor Creditor is or will be a party to a Non-Investor Creditor
Settlement that provides such Non-Investor Creditor with the benefit of terms
materially more favorable than the terms contained in this Agreement, including
without limitation terms as to the amount of repayment (as a percentage of the
total Non-Investor Creditor Debt(s) in question) and timing of repayment, as
determined by Transpac, as agent for the Investors, in its sole discretion. MPI
shall provide Transpac with written notice at least ten (10) business days'
prior to entering into or executing any Non-Investor Creditor Settlement after
the Effective Date. Such notice shall, notwithstanding anything to the contrary
herein, be deemed effective upon receipt by Transpac and shall state the
material terms of the proposed Non-Investor Creditor Settlement. MPI shall also
obtain Transpac's written consent prior to entering into or executing any Non-
Investor Creditor Settlement after the Effective Date. Transpac shall have ten
(10) business days from its receipt of notice of a proposed Non-Investor
Creditor Settlement to consent or object to such Non-Investor Creditor
Settlement; if Transpac has not consented or objected within such ten (10)
business day period, it shall be deemed to have consented to the proposed Non-
Investor Creditor Settlement. Transpac's consent to a proposed Non-Investor
Creditor Settlement shall not be unreasonably withheld; provided that any
refusal by Transpac to grant such consent on the grounds that the proposed Non-
Investor Creditor Settlement contains terms materially more favorable than the
terms of this Agreement shall not be deemed unreasonable.
6. Representations and Warranties.
------------------------------
a. MPI. MPI represents and warrants that:
---
i. It has all requisite corporate power and authority to execute and
deliver, and fulfill its obligations under this Agreement and the Warrants.
This Agreement (notwithstanding the lack of approval of MPM), and the Warrants,
upon execution and delivery by MPI and assuming due and proper execution and
delivery by the other parties, will constitute valid and binding obligations of
MPI, enforceable in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, moratorium and other laws
of general application affecting the enforcement of creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of MPI is required in connection with
the execution, delivery and performance of this Agreement or the Warrants by
MPI, other than state securities law filings.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document to which
MPI is a party or by which it is bound is necessary for the execution, delivery
and performance of this Agreement or the Warrants by MPI.
iv. MPI has not issued, and has no intention of issuing in the future,
any
6
<PAGE>
warrant or other convertible security containing antidilution provisions (or
any substantially similar provisions) providing for adjustments to the
conversion prices or conversion ratios of such warrants or convertible
securities in the event of certain issuances of securities.
b. The Investors. Each of the Investors, severally but not jointly,
-------------
represents and warrants that:
i. Each has all requisite corporate power and authority to execute
and deliver, and fulfill its obligations under this Agreement and the Warrants
executed by such Investor. This Agreement (notwithstanding the lack of approval
of MPM), upon execution and delivery by such Investor and assuming due and
proper execution and delivery by MPI, will constitute a valid and binding
obligation of such Investor, enforceable in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, moratorium and other
laws of general application affecting the enforcement of creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any foreign, federal,
state or local governmental or other authority or third party on the part of
such Investor is required in connection with the execution, delivery and
performance of this Agreement and the Warrants executed by such Investor.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document or law,
ordinance, statute, rule or regulation to which such Investor is a party or by
which it or its property is bound is necessary for the execution, delivery and
performance of this Agreement and the Warrants executed by such Investor.
7. The Agent.
---------
a. Appointment of the Agent. Each of the Investors hereby irrevocably
------------------------
appoints Transpac to act as its agent for purposes of this Agreement. Each of
the Investors authorizes Transpac to take such actions and exercise such rights,
powers and discretions as are specifically delegated to Transpac in this
Agreement and take such other actions and exercise such other rights, powers and
discretions as are reasonably incidental. However, Transpac may not begin any
legal action or proceeding in the name of an Investor without such Investor's
consent. The relationship between Transpac and the Investors is that of agent
and principal only. Transpac shall not be a trustee for any Investor, nor an
agent or trustee for MPI under or in relation to this Agreement.
b. Remedies. Any right, remedy or power herein granted to or conferred
--------
upon Transpac under this Agreement shall be exercised by Transpac in its
capacity as agent for the Investors. All acts or obligations performed or
assumed to be performed by Transpac under this Agreement shall (unless otherwise
specified by Transpac hereafter or from time to time) be on behalf of the
Investors and, unless the other parties hereto have received written notice of
revocation of authority from any Investor or Transpac, Transpac shall be assumed
to have full authority as agent for and on behalf of each Investor, to exercise
all such rights or powers and discharge all such obligations under and in
accordance with this Agreement.
7
<PAGE>
8. Costs and Expenses. On the Effective Date, MPI shall pay, in connection
------------------
with the preparation, execution and delivery of this Agreement and the issuance
of the Warrants, the fees and out-of-pocket expenses of Fenwick & West LLP,
counsel to Transpac, with respect thereto, in the amount of US$25,000 by
delivery of a check or wire transfer payable to Fenwick & West LLP.
9. Miscellaneous. MPI and the Investors hereby agree as follows:
-------------
a. Severability. If any provision of this Agreement is found to be
------------
unenforceable, it shall not affect the enforceability of the remaining
provisions and the court shall enforce all remaining provisions to the extent
permitted by law. All parties agree that, notwithstanding the lack of execution
of this Agreement by MPM, this Agreement is valid, binding and enforceable on
all parties.
b. Prior Agreements. This Agreement shall supersede and render null and
----------------
void any and all prior agreements between MPI and/or MPM, on one hand, and any
or all of the Investors, on the other hand, concerning the subject matter
contained herein.
c. Successors and Assigns. This Agreement shall bind and benefit each of
----------------------
the Investors and their successors and assigns and shall also bind and benefit
each MPI and its successors and assigns. This Agreement may not be assigned by
MPI, by operation of law (e.g., merger) or otherwise (e.g., sale of
substantially all assets), without the prior written consent of Transpac, as
agent for the Investors.
d. Governing Law. This Agreement shall be deemed to have been entered
-------------
into in the State of California and shall be construed and interpreted in
accordance with the laws of California.
e. Jurisdiction. The parties to the Agreement hereby (i) irrevocably
------------
submit to the jurisdiction of the courts of the State of California , the
Federal courts of the United States sitting in the State of California and the
courts of Singapore for the purpose of any action or proceeding arising out of
or relating to this Agreement and any other documents and instruments relating
hereto, (ii) agree that all claims in respect of any such action or proceeding
may be heard and determined in such courts, (iii) irrevocably waive (to the
extent permitted by applicable law) any objection which any of them now or
hereafter may have to the laying of venue of any such action or proceeding
brought in any of the foregoing courts, and any objection on the ground that any
such action or proceeding in any such court has been brought in an inconvenient
forum and (iv) agree that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner permitted by law.
f. Remedies. The parties acknowledge and agree that, in the event of any
--------
dispute in which any party alleges and proves any non-performance or breach of
subsections 2.a., 3.b.i., 3.b.ii., 4 or 5, monetary damages will be an
inadequate remedy for the non-performance or breach of such provision(s), and
the non-performing or breaching party hereby consents in advance to be subject
to specific performance and any other appropriate equitable remedies. The
8
<PAGE>
parties acknowledge and agree that under no circumstances will punitive or
consequential damages be awarded in respect of any party's non-performance or
breach of any provision of this Agreement.
g. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
h. Titles and Subtitles. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
i. Amendment. No amendment, modification or waiver of this Agreement or
---------
any part thereof shall be effective unless it is in writing and is signed by MPI
and all of the Investors. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof. Nor
shall any waiver on the part of any party of any such right, power or privilege,
nor any single or partial exercise of any such right, power or privilege,
preclude any further exercise thereof or the exercise of any other such right,
power or privilege. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies that any party may otherwise have at
law or in equity. The rights and remedies of any party based upon, arising out
of or otherwise in respect of any inaccuracy in or breach or nonfulfillment of
or noncompliance with any representation, warranty, covenant or agreement
contained in this Agreement shall in no way be limited by the fact that the act,
omission, occurrence or other state of facts upon which any claim of any such
inaccuracy or breach is based may also be the subject matter of any other
representation, warranty, covenant or agreement contained in this Agreement (or
in any other agreement between the parties) as to which there is no inaccuracy
or breach.
j. Termination. This Agreement may be terminated upon the mutual written
-----------
consent of MPI and all of the Investors. Transpac, as agent for the Investors,
may terminate this Agreement upon three (3) business days' written notice to MPI
in the event (i) an Insolvency Action occurs or (ii) MPI commits a material
breach of this Agreement. Unless previously terminated pursuant to subsection
3.b. of this Agreement, the Loan Documents shall remain in full force and effect
upon any termination of this Agreement.
k. Survival of Representations, Warranties, Covenants and Agreements. The
-----------------------------------------------------------------
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
l. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid), mailed to the recipient by certified or registered mail, return,
receipt requested and postage prepaid, or transmitted by facsimile (with request
for immediate confirmation of receipt in a manner customary for communications
of such type and with physical delivery of the communication being made by one
of the other means specified in
9
<PAGE>
this Section as promptly as practicable thereafter). Such notices, demands and
other communications shall be addressed as follows:
If to the Investors:
Attn: Wong Lin Hong
c/o Transpac Capital Pte Ltd
6 Shenton Way
#20-09 DBS Building
Tower Two
Singapore 068809
Telephone: (65) 224-1211
Telecopy: (65) 225-5538
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Joel Kellman, Esq.
Telephone: (650) 858-7201
Telecopy: (650) 494-1417
If to MPI:
Attn: President
Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
Telephone: (619) 292-7000
Telecopy: (619) 292-7881
with a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, California 94303-0913
Attention: Warren T. Lazarow, Esq.
Telephone: (650) 424-0160
Telecopy: (650) 496-2885
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party
(provided that notice of a change of address
10
<PAGE>
shall be effective only upon receipt thereof).
m. Strict Construction. This Agreement is the result of arms-length
-------------------
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
MICROELECTRONIC PACKAGING, INC.
By: /s/ Denis J. Trafecanty
-----------------------
Denis J. Trafecanty
-------------------------------------
(Print Name of Signatory)
Title: Senior Vice President and CFO
-----------------------------
TRANSPAC CAPITAL PTE LTD
By: /s/ C. Chan
-----------
Caroline Chan
-------------------------------------
(Print Name of Signatory)
Title: Senior Vice President
-----------------------------
TRANSPAC INDUSTRIAL HOLDINGS LTD
By: /s/ C. Chan
-----------
Caroline Chan
-------------------------------------
(Print Name of Signatory)
Title: Company Secretary
-----------------------------
REGIONAL INVESTMENT COMPANY LTD
By: /s/ C. Chan
-----------
Caroline Chan
-------------------------------------
(Print Name of Signatory)
Title: Authorised Signatory
-----------------------------
12
<PAGE>
[Signature Page 1 to Restructuring, Settlement and Mutual Release Agreement]
13
<PAGE>
NATSTEEL EQUITY III PTE LTD
By: /s/ Kwa Lay Keng
----------------
Kwa Lay Keng
-------------------------------------
(Print Name of Signatory)
Title: Authorised Signatory
-----------------------------
TRANSPAC CAPITAL PTE LTD, as agent
By: C. Chan
-------
Caroline Chan
-------------------------------------
(Print Name of Signatory)
Title: Senior Vice President
-----------------------------
14
<PAGE>
[Signature Page 2 to Restructuring, Settlement and Mutual Release Agreement]
15
<PAGE>
Exhibit 1
Wire Transfer Instructions
The Bank of New York, New York
CHIPS UID : 034675
ABA No: 0001
Or Via FED ABA: 021000018, DDA No: 890-0298-189
For account of DBS Singapore Ltd, Singapore
For further credit to: Transpac Capital Pte Ltd -
Trust account - Account No: 0001-003395-01-0-022 (US$)
Remarks: MPI
16
<PAGE>
Exhibit 2
Form of Warrant
17
<PAGE>
EXHIBIT 10.80
FORBEARANCE, RESTRUCTURE
AND MUTUAL RELEASE AGREEMENT
----------------------------
This Forbearance, Restructure and Mutual Release Agreement (the
"Agreement") is entered into as of this 1st day of July, 1998, by and among
Microelectronic Packaging, Inc. ("MPI"), CTM Electronics, Inc. ("CTM") and
Microelectronic Packaging America ("MPA") and Motorola, Inc. ("Motorola").
R E C I T A L S:
WHEREAS, pursuant to two separate $1,000,000 Term Loan Facility
Agreements by and among Microelectronic Packaging (S) Pte Ltd ("MPS"), Motorola
and Citibank, N.A., Singapore Branch ("Citibank") dated November 8, 1995 and
February 1, 1996, respectively (the "Loan Agreements"), Citibank loaned
$2,000,000 to MPS, a subsidiary of MPI currently in liquidation, which loan
amounts Motorola guaranteed and which Agreement calls for certain payments and
interest amounts were thereafter due and payable periodically;
WHEREAS, MPI, Motorola, CTM and MPA entered into an Agreement Relating to
Guarantee in connection with Motorola's guarantee of MPS' obligations under the
Loan Agreements (the "Guarantee Agreement"), pursuant to which, among other
things, (i) MPI, MPA and CTM agreed to indemnify Motorola for any payments
Motorola may be required to make as guarantor under the Loan Agreements, (ii)
MPI delivered to Motorola stock certificates representing all of the outstanding
capital stock of each of MPA, CTM and MPS (the "Stock Certificates") and
irrevocable proxies to permit Motorola to vote the shares represented by the
Stock Certificates (the "Irrevocable Proxies"), and (iii) MPI, MPA and CTM
granted Motorola a security interest in all of the assets of each of MPI, MPA
and CTM;
WHEREAS, MPA and Citicorp USA, Inc. ("Citicorp") entered into a
Promissory Note dated May 13, 1997 ("1997 Note"), pursuant to which Citicorp
loaned $2,208,538.34 to MPA, which MPA used to repay in full the balance due to
Citibank under the Loan Agreements. The 1997 Note calls for certain payments
and interest amounts, which were thereafter due and payable periodically. The
1997 Note was amended by an Amendment dated July 11, 1997, a Second Amendment
dated September 9, 1997, a Third Amendment dated December 8, 1997, and a Fourth
Amendment dated January 30, 1998;
WHEREAS, MPS defaulted under the 1997 Note, as amended, and Motorola has
paid all amounts due to Citicorp under the 1997 Note. As a result, Motorola is
subrogated to all of Citicorp's rights against MPI, CTM and MPA and any
collateral therefor; and MPI, CTM and MPA are obligated to indemnify Motorola
under the Guarantee Agreement.
WHEREAS, the parties wish to resolve all obligations under the Loan
Agreements and the Guarantee Agreement, the 1997 Note and all other related
agreements (collectively the "Motorola Obligations"), and settle all other
disputes that may exist between MPI, MPA and CTM, on one hand, and Motorola, on
the other hand.
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and sufficient consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Definitions.
-----------
a. "Payment Date" shall mean the calendar day after MPI completes the
full performance of its obligations under subsection 2 of this Agreement that
the payment to Motorola called for in such subsection have been received.
b. "Release Date" shall be the calendar date that is ninety (90) days
after the Payment Date.
c. "Insolvency Action" shall mean the commencement of a voluntary or
involuntary case against MPI under the United States Bankruptcy Code or an
assignment for the benefit of creditors by MPI that is not dismissed within
sixty (60) days of its commencement.
d. "Execution Date" shall mean the date on which this Agreement is
executed by all parties hereto.
e. Other defined terms shall have the meanings assigned to them herein.
2. Acknowledgment of Debt. MPI, MPA and CTM hereby acknowledge and agree
----------------------
that as of March 25, 1998 they jointly and severally owed to Motorola the sum of
$2,219,918.40 plus interest from that date (collectively the "Motorola Debt").
3. Acknowledgment of Liens. MPI, MPA and CTM hereby reaffirm and acknowledge
-----------------------
that the Motorola Debt is secured by all of the present and future assets of
MPI, MPA and CTM.
4. Discounted Payment.
------------------
a. Within six (6) calendar months of the Execution Date ("Payment
Deadline") MPI will pay to Motorola the amount of US $887,331.00 ("Discounted
Payment Amount"), by wire transfer in accordance with the wire transfer
instructions provided by Motorola.
b. The Discounted Payment Amount will constitute payment in full of the
Motorola Debt on the following terms and conditions:
(i) Discounted Payment is made on or before the Payment Deadline.
(ii) No event of default has occurred hereunder by the Release
Date.
(iii) No Insolvency Action has been commenced by the Release Date.
-2-
<PAGE>
5. Release of Collateral. If the Motorola Debt is satisfied as provided in
---------------------
Paragraph 4.b.,
a. Motorola will return to MPI the Stock Certificates and the
Irrevocable Proxies (whereupon MPI will terminate such Irrevocable Proxies), and
will otherwise return any other assets of MPI, MPA or CTM which Motorola holds
as security under the Guarantee Agreement.
b. Further, Motorola (at no cost to Motorola) will take all steps
necessary or advisable, and provide any assistance to MPI, MPA and CTM necessary
or reasonable, to release any liens, security interests, claims or other rights
it has against any assets of MPI, MPA and CTM.
6. Forbearance. Subject to the conditions specified in this Agreement,
-----------
Motorola will forbear from taking action to collect the Motorola Obligations and
to foreclose under the Security Agreement until the Payment Deadline or such
earlier date as may result from the occurrence of an Event of Default under
paragraph 11 below. (The date of such termination shall be referred to as the
"Termination Date").
7. Further Forbearance. Motorola is not obligated to grant further
-------------------
extensions of any Termination Date referred to in this Agreement.
8. No Waiver. Motorola's execution of this Agreement and the terms herein
---------
shall not constitute a waiver of any existing default nor of any right or remedy
which Motorola may have.
9. Financial Covenant. During the period beginning on the date of this
------------------
Agreement and ending on the Payment Date, MPI at all times will maintain
inventory stated at the lower of cost or market in conformity with Generally
Accepted Accounting Principles of at least $3,000,000.
10. Financial Information. MPI, MPA and CTM shall provide to Motorola such
---------------------
financial information as Motorola shall periodically request.
11. Events of Default. Any of the following shall constitute, at the sole
-----------------
option of Motorola, an "Event of Default" by MPA, MPI or CTM under this
Agreement:
a. Failure to make the Discounted Payment by the Payment Deadline;
b. Discovery that any material representation or warranty made to
Motorola by MPA, MPI or CTM was materially inaccurate at the time made.
c. If one or more judgments are entered against MPI, MPA or CTM in an
aggregate amount in excess of $500,000.00.
d. If a judgment lien attaches to any asset of MPI, MPA or CTM.
-3-
<PAGE>
e. If any creditor which holds a lien on any asset of MPI, MPA or CTM
(other than Motorola) takes any action toward foreclosure on, or enforcement of
its lien against, any asset of MPI, MPA or CTM.
12. Remedies Upon Default. Upon the occurrence of an Event of Default
---------------------
(other than the Stated Default) Motorola may, at its option and without notice
or demand:
a. Refuse to accept the Discounted Payment referred to in paragraph
4.a. above.
b. Immediately make demand for the Motorola Debt and accelerate all
obligations owed under this Agreement, the Loan Agreements, and enforce its
rights thereunder and hereunder, and to collect the Motorola Obligations.
c. Exercise any or all of its remedies under the Loan Agreements, or
under applicable law or under any other agreement.
13. Release Procedure. Effective on the Release Date, if and only if no
-----------------
event of default has occurred hereunder on or before the Release Date:
a. Motorola agrees as follows:
(i) Motorola, fully and forever releases and discharges MPI, MPA, CTM and
their predecessors, successors, former or current subsidiaries,
affiliates, officers, directors, shareholders, agents, attorneys,
representatives, employees and assigns (collectively the "MPI
Releasees") from and against any and all claims, damages and causes of
action they may have against each such person or entity with respect to
any matter under the provisions of, arising out of or in connection
with, the Loan Documents, including any breach of any representation or
warranty or noncompliance or nonfulfillment of any covenant or agreement
set forth in such documents; provided that such release and discharge
shall not extend to any claims, damages and causes of action any
Motorola Releasee may have against any MPI Releasee for fraud or willful
misconduct with respect to any of the Loan Documents or any of the
transactions contemplated by this Agreement.
(ii) Each of the Loan Documents, regardless of whether it is in default, are
fully and completely terminated and rendered devoid of legal effect and
unenforceable, such that even provisions of the Loan Documents that,
according to their terms, survive termination, are terminated and
nullified. Further, any loan, debt, liability or other obligation
created pursuant to or arising out of the Loan Documents, as well as any
writings, agreements, notes or certificates representing such loan,
debt, liability or obligations, are canceled and rendered devoid of
force and effect.
b. MPI, MPA and CTM (collectively the "MPI Releasing Parties") each
agrees as follows:
-4-
<PAGE>
(i) MPI, MPA and CTM each, fully and forever releases and
discharges Motorola and its predecessors, successors, former or current
subsidiaries, affiliates, officers, directors, shareholders, agents,
attorneys, representatives, employees and assigns (collectively the
"Motorola Releasees") from any claims, damages, and causes of action it
or they may have against any of them with respect to any matter under
the provisions of, arising out of or in connection with the Loan
Documents; provided that such release and discharge shall not extend to
any claims, damages and causes of action any MPI Releasing Party may
have against any Motorola Releasee for fraud or willful misconduct with
respect to any of the Loan Documents or any of the transactions
contemplated by this Agreement.
(ii) Each MPI Releasing Party acknowledges and agrees that each of
the Loan Documents are fully and completely terminated and rendered
devoid of force and effect, such that even provisions of the Loan
Documents and each of their respective related agreements, letters,
documents and instruments that , according to their terms, survive
termination, are terminated and nullified.
c. MPA, MPI, CTM and Motorola (collectively the "Releasing Parties")
each understands (i) that it is possible that unknown losses or claims may exist
or (ii) that past known losses have been underestimated; nevertheless each of
the Releasing Parties is taking this risk into account in determining the
consideration it is to receive for this release through this Forbearance
Agreement. Consequently, each of the Releasing Parties expressly waives all
rights and benefits conferred by Section 1542 of the California Civil Code which
provides as follows:
"A general release does not extend to claims which
the creditor does not know or suspect to exist in
his favor at the time of executing the release which
if known by him must have materially affected his
settlement with the debtor."
d. Each of the Releasing Parties agrees that it shall not prosecute or
pursue and shall not directly or indirectly assist in the prosecution or pursuit
of any claim or cause of action or lawsuit arising from the claims or causes of
action waived or released herein.
14. Confidentiality. No party to this Agreement shall, except as may be
---------------
mandated by statutory or regulatory requirements, as may be required by legal
process in the course of actual litigation or in the case of a subpoena, as may
be necessary for MPI to negotiate with its creditors, disclose to others the
fact or terms of this settlement, the amounts referred to in this Agreement or
the fact of the payment of said amounts, except that each such party may
disclose to each such party's attorneys, accountant or other advisors to whom
the disclosure is necessary to effectuate the purposes for which such party has
consulted with such professional advisors and except that (i) MPI may file this
Agreement with any governmental or regulatory body, describe it and refer to it
in any filing it makes pursuant to federal and state securities laws or to its
Board of Directors or shareholders, and (ii) MPI may issue a press release
describing the general terms
-5-
<PAGE>
of this Agreement in connection with any public filing it makes with any
governmental or regulatory body.
15. Representations and Warranties.
------------------------------
a. MPI Releasing Parties. MPI, MPA and CTM each represents and warrants
---------------------
that:
(i) It has all requisite corporate power and authority to execute
and deliver, and fulfill its obligations under this Agreement. This
Agreement (notwithstanding the lack of approval of MPS), upon execution and
delivery by it and assuming due and proper execution and delivery by the
other parties, will constitute a valid and binding obligation of said MPI
Releasing Party, enforceable in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, moratorium and other
laws of general application affecting the enforcement of creditors' rights.
(ii) No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any federal, state
or local governmental authority on its part is required in connection with
the execution, delivery and performance of this Agreement by it, other than
state securities law filings.
(iii) No consent, approval, waiver or other action by any person
under any contract, agreement, indenture, lease, instrument or other
document to which it is a party or by which it is bound is necessary for
the execution, delivery and performance of this Agreement by MPI.
(iv) Motorola has a first priority lien on the assets of MPA, MPI
and CTM.
(v) All financial information provided to Motorola by or on behalf
of MPI is materially correct.
(vi) Except as set forth on Exhibit A hereto, no other creditor has
a lien (consensual or otherwise) on its assets.
b. Motorola. Motorola represents and warrants that:
--------
(i) It has all requisite corporate power and authority to execute
and deliver, and fulfill its obligations under this Agreement. This
Agreement (notwithstanding the lack of approval of MPS), upon execution and
delivery by Motorola, and assuming due and proper execution and delivery by
MPI, will constitute a valid and binding obligation of Motorola,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy,
-6-
<PAGE>
insolvency, moratorium and other laws of general application affecting
the enforcement of creditors' rights.
(ii) No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any foreign,
federal, state or local governmental or other authority or third party on
the part of Motorola is required in connection with the execution,
delivery and performance of this Agreement.
(iii) No consent, approval, waiver or other action by any person
under any contract, agreement, indenture, lease, instrument or other
document or law, ordinance, statute, rule or regulation to which Motorola
is a party or by which it or its property is bound is necessary for the
execution, delivery and performance of this Agreement.
(iv) Motorola has paid all amounts owed to Citicorp under the 1997
Note.
16. Miscellaneous. MPI, MPA, CTM and Motorola hereby agree as follows:
-------------
a. Severability. If any provision of this Agreement is found to be
------------
unenforceable, it shall not affect the enforceability of the remaining
provisions and the court shall enforce all remaining provisions to the extent
permitted by law. All parties agree that, notwithstanding the lack of execution
of this agreement by MPS, this Agreement is valid, binding and enforceable on
all parties.
b. Prior Agreements. This Agreement shall supersede and amend any and
----------------
all prior agreements between MPI, MPS and the MPI Releasees, on one hand, and
Motorola and/or any Motorola Releasee, on the other hand, concerning the subject
matter contained herein; upon satisfaction of the conditions set forth in
paragraph 4 and paragraph 13, such agreements will be deemed satisfied and
terminated.
c. Successors and Assigns. This Agreement shall bind and benefit each
----------------------
of Motorola and its successors and assigns and shall also bind and benefit each
MPI and its successors and assigns. This Agreement may not be assigned by MPI,
by operation of law (e.g., merger) or otherwise (e.g., sale of substantially all
assets), without the prior written consent of Motorola, except that no such
consent shall be required after the Release Date.
d. Governing Law. This Agreement shall be deemed to have been entered
-------------
into in the State of California and shall be construed and interpreted in
accordance with the laws of California.
e. Jurisdiction. The parties to the Agreement hereby (i) irrevocably
------------
submit to the jurisdiction of the courts of the State of California and the
Federal courts of the United States sitting in the State of California for the
purpose of any action or proceeding arising out of or relating to this Agreement
and any other documents and instruments relating hereto, (ii) agree
-7-
<PAGE>
that all claims in respect of any such action or proceeding may be heard and
determined in such courts, (iii) irrevocably waive (to the extent permitted by
applicable law) any objection which any of them now or hereafter may have to the
laying of venue of any such action or proceeding brought in any of the foregoing
courts, and any objection on the ground that any such action or proceeding in
any such court has been brought in an inconvenient forum and (iv) agree that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
permitted by law.
f. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
g. Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
h. Amendment. No amendment, modification or waiver of this Agreement or
---------
any part thereof shall be effective unless it is in writing and is signed by MPI
and Motorola. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof. Nor shall any waiver
on the part of any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
The rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or breach or nonfulfillment of or noncompliance
with any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
i. Termination. This agreement may be terminated upon the mutual
-----------
written consent of MPI and Motorola. Motorola may terminate this Agreement upon
three (3) business days' written notice to MPI in the event (i) an Insolvency
Action occurs or (ii) MPI commits a material breach of this Agreement. Unless
previously terminated pursuant to Section 3 of this Agreement, the Loan
Documents including the Guarantee Agreement shall remain in full force and
effect upon any termination of this Agreement.
j. Survival of Representations, Warranties, Covenants and Agreements.
-----------------------------------------------------------------
The representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
k. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be
-8-
<PAGE>
deemed to have been given when delivered personally to the recipient, sent to
the recipient by reputable overnight courier service (charges prepaid), mailed
to the recipient by certified or registered mail, return, receipt requested and
postage prepaid, or transmitted by facsimile (with request for immediate
confirmation of receipt in a manner customary for communications of such type
and with physical delivery of the communication being made by one of the other
means specified in this Section as promptly as practicable thereafter). Such
notices, demands and other communications shall be addressed as follows:
If to Motorola:
Bernard Gutman
SCG Group Controller
Motorola, Inc.
Semiconductor Component Group
5005 East McDowell Rd.
MD C210
Phoenix, AZ 85008
Telephone: (602) 244-3886
Telecopy: (602) 244-7250
with a copy to
Peter S. Munoz
Jackson Tufts Cole & Black, LLP
650 California Street
San Francisco, CA 94108
Telephone: (415) 433-1950
Telecopy: (415) 392-3494
If to MPI:
Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
Attn: President
Telephone: (619) 292-7000
Telecopy: (619) 292-7881
with a copy to:
Brobeck, Phleger & Harrison LLP
550 West C Street
Suite 1300
-9-
<PAGE>
San Diego, CA 92101
Attention: John Cook, Esq.
Telephone: (619)
Telecopy: (619) 234-3848
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party
(provided that notice of a change of address shall be effective only upon
receipt thereof).
l. Advice of Attorney. Each of the parties hereto expressly declares
------------------
that it knows and understands the contents of this Agreement and has had an
opportunity to consult with an attorney regarding its form and content.
m. No Other Beneficiaries. Except for the releases contained in
----------------------
paragraph 13 above, nothing contained in this Agreement is intended, nor shall
it be construed or deemed, to confer any rights, powers or privileges on any
person, firm, partnership, corporation or other entity who or which is not an
express party herein or a successor-in-interest to any party hereto.
n. Neutral Construction. Each of the parties hereto has been involved
--------------------
in the negotiation, review and execution of this Agreement; and each has had the
opportunity to receive independent legal advice from an attorney or attorneys of
its choice with respect to the advisability of making and executing this
Agreement. In the event of any dispute of controversy regarding this Agreement,
the parties hereto shall be considered to be the joint authors of this Agreement
and no provision of this Agreement shall be interpreted against a party hereto
because of authorship.
IN WITNESS WHEREOF, parties hereto have executed this Agreement on and as
of the day and year first above written.
MICROELECTRONIC PACKAGING, INC. CTM ELECTRONICS, INC.
By: /s/ Denis J. Trafecanty By: /s/ Denis J. Trafecanty
---------------------------- ----------------------------------
Denis J. Trafecanty
Chief Financial Officer
MOTOROLA, INC.
MICROELECTRONIC PACKAGING AMERICA
By: /s/ B. Gutmann
----------------------------------
Name:Bernard Gutmann
By: /s/ Denis J. Trafecanty Its:SCG Group Controller
-----------------------
-10-
<PAGE>
Exhibit 10.81
RESTRUCTURING, SETTLEMENT
AND MUTUAL RELEASE AGREEMENT
----------------------------
This Restructuring, Settlement and Mutual Release Agreement (this "Agreement")
is entered into as of this 9th day of July, 1998, by and among Microelectronic
Packaging, Inc. ("MPI"), on behalf of itself and its predecessors, successors,
former or current subsidiaries, affiliates, officers, directors, shareholders,
agents, attorneys, representatives, insurers, employees and assigns
(collectively with MPI, the "MPI Releasees"), and NS Electronics Bangkok (1993)
Ltd. ("NSEB"), and its predecessors, successors, subsidiaries, affiliates,
officers, directors, stockholders, agents, attorneys, representatives, insurers,
employees and assigns (collectively with NSEB, the "NSEB Releasees").
W I T N E S S E T H:
WHEREAS, NSEB and MPI entered into the Loan and Security Agreement dated May
30, 1995 (the "Loan Agreement") and, in connection with the Loan Agreement, NSEB
loaned $1,500,000 to MPI pursuant to a Secured Promissory Note (the "Note") of
even date with the Loan Agreement, which Note calls for certain payments and
interest amounts which were thereafter due and payable periodically;
WHEREAS, MPI and NSEB entered into an Amended Loan and Security Agreement (the
"Amended Loan Agreement") and, in connection with the Amended Loan Agreement,
NSEB loaned $1,250,000 to MPI pursuant to a Second Secured Promissory Note (the
"Second Note" and, collectively with the Loan Agreement, the Note and the
Amended Loan Agreement, the "Loan Agreements") of even date with the Amended
Loan Agreement, which proceeds were used to pay off and cancel the Note, and
which Second Note calls for certain payments and interest amounts which were
thereafter due and payable periodically, such that as of December 31, 1997 the
balance of principal and unpaid interest owed pursuant to the Second Note was
$1,421,875;
WHEREAS, NSEB owes the sum of $665,000 to Microelectronic Packaging (S) Pte
Ltd, a subsidiary of MPI currently in liquidation ("MPS"), which is carried on
MPS' accounts as an account receivable (the "Account Receivable"), to which the
Development Bank of Singapore Limited ("DBS") has a priority claim in the MPS
liquidation proceeding, and NSEB wishes to satisfy its obligation to repay the
Account Receivable by offsetting it against the amounts owed to NSEB by MPI
under the Loan Agreements in connection with any settlement of the amounts due
under the Loan Agreements; and
WHEREAS, the parties wish to settle all obligations under the Loan Agreements,
and terminate and release all rights and obligations under such documents and
all other related agreements, and settle all other disputes that may exist
between MPI and each of the other MPI Releasees and NSEB and each of the other
NSEB Releasees.
NOW, THEREFORE, in consideration of the mutual promises contained herein and
for other good and sufficient consideration, the receipt and sufficiency of
which is hereby
<PAGE>
acknowledged, the parties agree as follows:
1. Definitions.
-----------
a. "Payment Date" shall mean the calendar date after MPI completes the full
performance of its obligation under subsection 2.a. of this Agreement.
b. "Release Date" shall be the later of the calendar date that is ninety
(90) days after the Payment Date and the calendar date upon which MPI completes
the full performance of its obligation under Section 2.b.
c. "Insolvency Action" shall mean the commencement of a voluntary or
involuntary case against MPI under the United States Bankruptcy Code or an
assignment for the benefit of creditors by MPI that is not dismissed within
sixty (60) days of its commencement.
d. Other defined terms shall have the meanings assigned to them herein.
2. Settlement. In order to settle the defaults, amounts owed, debts,
----------
liabilities and other obligations pursuant to, in connection with, or arising
out of the Loan Agreements and each of their respective related agreements,
letters, documents and instruments (collectively, the "Loan Documents"), MPI
agrees that, within six (6) calendar months of the Effective Date, it will:
a. pay to NSEB the amount of US$227,062.00, by wire transfer in accordance
with the wire transfer instructions provided by NSEB; and
b. provide to NSEB a written release executed by DBS providing that NSEB is
no longer liable for the Account Receivable.
3. Release Procedure. If and only if no Insolvency Action has occurred, then
-----------------
effective the Release Date:
a. NSEB, on behalf of itself and the other NSEB Releasees, agrees as
follows:
i. NSEB, on behalf of itself and each other NSEB Releasee, fully and
forever releases and discharges each of the MPI Releasees from and against any
and all claims, damages and causes of action they may have against each such
person or entity with respect to any matter under the provisions of, arising out
of or in connection with, the Loan Documents, including any breach of any
representation or warranty or noncompliance or nonfulfillment of any covenant or
agreement set forth in such documents; provided that such release and discharge
shall not extend to any claims, damages and causes of action any NSEB Releasee
may have against any MPI Releasee for fraud or willful misconduct with respect
to any of the Loan Documents.
ii. NSEB agrees that each of the Loan Documents, regardless of whether
they are in default, are fully and completely terminated and rendered devoid of
legal effect and unenforceable, such that even provisions of the Loan Documents
that, according to their terms, survive termination, are terminated and
nullified. Further, NSEB acknowledges and agrees that any loan, debt, liability
or other obligation created pursuant to or arising out of the Loan Documents, as
well as any writings, agreements, notes or certificates representing such loan,
debt, liability or obligations, are canceled and rendered devoid of force and
effect.
<PAGE>
b. MPI, on behalf of itself and the other MPI Releasees, agrees as follows:
i. MPI, on behalf of itself and each other MPI Releasee, fully and
forever releases and discharges each of the NSEB Releasees from any claims,
damages, and causes of action it or they may have against any of them with
respect to any matter under the provisions of, arising out of or in connection
with the Loan Documents; provided that such release and discharge shall not
extend to any claims, damages and causes of action any MPI Releasee may have
against any NSEB Releasee for fraud or willful misconduct with respect to any of
the Loan Documents.
ii. MPI acknowledges and agrees that each of the Loan Documents are
fully and completely terminated and rendered devoid of force and effect, such
that even provisions of the Loan Documents and each of their respective related
agreements, letters, documents and instruments that, according to their terms,
survive termination, are terminated and nullified.
4. Confidentiality. No party to this Agreement shall, except as may be
---------------
mandated by statutory or regulatory requirements, as may be required by legal
process in the course of actual litigation or in the case of a subpoena, as may
be necessary for MPI to negotiate with its creditors, disclose to others the
fact or terms of this settlement, the amounts referred to in this Agreement or
the fact of the payment of said amounts, except that each such party may
disclose to each such party's attorneys, accountant or other advisors to whom
the disclosure is necessary to effectuate the purposes for which such party has
consulted with such professional advisors and except that (i) MPI may file this
Agreement with any governmental or regulatory body, describe it and refer to it
in any filing it makes pursuant to federal and state securities laws or to its
Board of Directors or shareholders, and (ii) MPI may issue a press release
describing the general terms of this Agreement in connection with any public
filing it makes with any governmental or regulatory body.
5. Representations and Warranties.
------------------------------
a. MPI. MPI represents and warrants that:
---
i. It has all requisite corporate power and authority to execute and
deliver, and fulfill its obligations under this Agreement. This Agreement, upon
execution and delivery by MPI and assuming due and proper execution and delivery
by the other parties, will constitute a valid and binding obligation of MPI,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, moratorium and other laws of general
application affecting the enforcement of creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of MPI is required in connection with
the execution, delivery and performance of this Agreement by MPI, other than
state securities law filings.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document to which
MPI is a party or by which it is bound is necessary for the execution, delivery
and performance of this Agreement by MPI.
<PAGE>
b. NSEB. NSEB represents and warrants that:
----
i. It has all requisite corporate power and authority to execute and
deliver, and fulfill its obligations under this Agreement. This Agreement, upon
execution and delivery by NSEB, and assuming due and proper execution and
delivery by MPI, will constitute a valid and binding obligation of NSEB,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, moratorium and other laws of general
application affecting the enforcement of creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any foreign, federal,
state or local governmental or other authority or third party on the part of
NSEB is required in connection with the execution, delivery and performance of
this Agreement.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document or law,
ordinance, statute, rule or regulation to which NSEB is a party or by which it
or its property is bound is necessary for the execution, delivery and
performance of this Agreement.
6. Miscellaneous. MPI and NSEB hereby agree as follows:
-------------
a. Severability. If any provision of this Agreement is found to be
------------
unenforceable, it shall not affect the enforceability of the remaining
provisions and the court shall enforce all remaining provisions to the extent
permitted by law. All parties agree that this Agreement is valid, binding and
enforceable on all parties.
b. Prior Agreements. This Agreement shall supersede and render null and
----------------
void any and all prior agreements between MPI and/or any MPI Releasee, on one
hand, and NSEB and/or any NSEB Releasee, on the other hand, concerning the
subject matter contained herein.
c. Successors and Assigns. This Agreement shall bind and benefit each of
----------------------
NSEB and its successors and assigns and shall also bind and benefit each MPI and
its successors and assigns. This Agreement may not be assigned by MPI, by
operation of law (e.g., merger) or otherwise (e.g., sale of substantially all
assets), without the prior written consent of NSEB, except that no such consent
shall be required after the Release Date.
d. Governing Law. This Agreement shall be deemed to have been entered into
-------------
in the State of California and shall be construed and interpreted in accordance
with the laws of California.
<PAGE>
e. Jurisdiction. The parties to the Agreement hereby (i) irrevocably
------------
submit to the jurisdiction of the courts of the State of California and the
Federal courts of the United States sitting in the State of California for the
purpose of any action or proceeding arising out of or relating to this Agreement
and any other documents and instruments relating hereto, (ii) agree that all
claims in respect of any such action or proceeding may be heard and determined
in such courts, (iii) irrevocably waive (to the extent permitted by applicable
law) any objection which any of them now or hereafter may have to the laying of
venue of any such action or proceeding brought in any of the foregoing courts,
and any objection on the ground that any such action or proceeding in any such
court has been brought in an inconvenient forum and (iv) agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
permitted by law.
f. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
g. Titles and Subtitles. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
h. Amendment. No amendment, modification or waiver of this Agreement or
---------
any part thereof shall be effective unless it is in writing and is signed by MPI
and NSEB. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
The rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or breach or nonfulfillment of or noncompliance
with any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
i. Termination. This Agreement may be terminated upon the mutual written
-----------
consent of MPI and NSEB. NSEB may terminate this Agreement upon three (3)
business days' written notice to MPI in the event (i) an Insolvency Action
occurs or (ii) MPI commits a material breach of this Agreement. Unless
previously terminated pursuant to Section 3 of this Agreement, the Loan
Documents shall remain in full force and effect upon any termination of this
Agreement.
j. Survival of Representations, Warranties, Covenants and Agreements. The
-----------------------------------------------------------------
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
k. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid), mailed to the recipient by certified or registered mail,
<PAGE>
return, receipt requested and postage prepaid, or transmitted by facsimile (with
request for immediate confirmation of receipt in a manner customary for
communications of such type and with physical delivery of the communication
being made by one of the other means specified in this Section as promptly as
practicable thereafter). Such notices, demands and other communications shall be
addressed as follows:
If to NSEB:
Attn: Dr. Ted Nunthirapakorn, Ph.D.
Chief Financial Officer
NS Electronics Bangkok Ltd.
40/10 Soi Lasalle, Sukhumvit 105
Bangna, Prakanong
Bangkok 10260, Thailand
If to MPI:
Attn: President
Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
Telephone: (619) 292-7000
Telecopy: (619) 292-7881
with a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, California 94303-0913
Attention: Warren T. Lazarow, Esq.
Telephone: (650) 424-0160
Telecopy: (650) 496-2885
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party
(provided that notice of a change of address shall be effective only upon
receipt thereof).
m. Strict Construction. This Agreement is the result of arms-length
-------------------
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on and as of the day and year first above written.
MICROELECTRONIC PACKAGING, INC.
By: /s/ Denis J. Trafecanty
-----------------------
Denis J. Trafecanty
Chief Financial Officer
NS ELECTRONICS BANGKOK (1993) LTD.
By: /s/ Thakol Nunthirapakorn
-------------------------
Dr. Ted Nunthirapakorn, Ph.D.
Chief Financial Officer
<PAGE>
EXHIBIT 10.82
RESTRUCTURING, SETTLEMENT
AND MUTUAL RELEASE AGREEMENT
----------------------------
This Restructuring, Settlement and Mutual Release Agreement (this "Agreement")
is entered into as of this 10th day of July, 1998 (the "Effective Date"), by and
among Microelectronic Packaging, Inc. ("MPI"), on behalf of itself and its
predecessors, successors, former or current subsidiaries, affiliates, officers,
directors, shareholders, agents, attorneys, representatives, insurers, employees
and assigns (other than Microelectronic Packaging (S) Pte Ltd ("MPS") and MPM
(S) Pte Ltd ("MPM"), both of which are subsidiaries of MPI that are currently in
liquidation) (collectively with MPI, the "MPI Releasees"), and The Development
Bank of Singapore Limited ("DBS") and its predecessors, successors,
subsidiaries, affiliates, officers, directors, stockholders, agents, attorneys,
representatives, insurers, employees and assigns (collectively with DBS, the
"DBS Releasees").
W I T N E S S E T H:
WHEREAS, DBS and MPS entered into a Deed of Debenture dated June 10, 1986 (the
"Deed"), which was subsequently amended by supplemental deeds dated July 16,
1987, February 20, 1989, August 24, 1990, June 4, 1992, October 30, 1993 and
January 11, 1994 (the "Supplemental Deeds"), such that, in connection with the
Deed and the Supplemental Deeds, DBS provided certain credit facilities to MPS,
and the Deed and the Supplemental Deeds call for certain payments and interest
amounts on amounts loaned to MPS pursuant to such credit facilities which were
thereafter due and payable periodically;
WHEREAS, DBS and MPS restated the terms of such credit facilities in an
agreement dated August 15, 1994 (the "Restatement"), and MPS owed DBS S$4.275
million as of March 8, 1998 under the Deed, the Supplemental Deeds and the
Restatement;
WHEREAS, DBS and MPM entered into a credit facilities arrangement dated
December 15, 1994 (the "Facilities Arrangement" and, collectively with the Deed,
the Supplemental Deeds and the Restatement, the "Loan Agreements"), such that in
connection with the Facilities Arrangement, DBS provided certain credit
facilities to MPM, and the Facilities Arrangement calls for certain payments and
interest amounts on amounts loaned to MPM pursuant to such credit facilities
which were thereafter due and payable periodically, such that MPM owed DBS
S$2.134 million as of March 8, 1998 under the Facilities Arrangement;
WHEREAS, MPI guaranteed the obligations of MPS under the Deed (the
"Guarantees"), the Supplemental Deeds and the Restatement and the obligations of
MPM under the Facilities Arrangement, and MPS and MPM have defaulted upon such
obligations, giving rise to MPI's obligations under such guarantees;
WHEREAS, DBS has a priority claim in the MPS liquidation proceeding with
respect to certain buildings owned by MPS and located at 28 Tuas Avenue 10 and
31 Tuas Avenue 8, respectively, Singapore (the "Buildings"), which DBS has
advised MPI have a
<PAGE>
liquidation value (net of DBS Finance's mortgage on 28 Tuas Avenue 10 and
reasonable selling commissions) ("Net Liquidation Amount") of S$4.24 million,
which partially offsets the guarantee obligations of MPI;
WHEREAS, NS Electronics Bangkok (1993) Ltd. ("NSEB") owes the sum of
US$673,807.77 to MPS, which is carried on MPS' accounts as an account receivable
(the "Account Receivable"), to which DBS has a priority claim in the MPS
liquidation proceeding, and MPI has requested that DBS provide to NSEB a written
release of the Account Receivable;
WHEREAS, DBS has asserted an entitlement to certain insurance proceeds
in respect of certain fire-related insurance claims (claim number 553KF68422
with the Hartford Insurance Company relating to a date of loss of April 5, 1997)
of MPS and MPM ("Insurance Proceeds"), which proceeds will be paid to MPI, and
DBS has requested that MPI pay to DBS a guaranteed minimum amount of
US$136,606.02 in respect of such Insurance Proceeds; and
WHEREAS, the parties wish to settle all obligations under the Loan
Agreements and the Guarantees, and terminate and release all rights and
obligations under such documents and all other related agreements, and settle
all other disputes that may exist between MPI and each of the other MPI
Releasees and DBS and each of the other DBS Releasees.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and sufficient consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. Definitions.
-----------
a. "Payment Date" shall mean the calendar date after MPI completes the full
performance of its obligation under subsection 2.a.i. of this Agreement.
b. "Release Date" shall be the calendar date that is ninety (90) days after
the Payment Date.
c. "Insolvency Action" shall mean the commencement of a voluntary or
involuntary case against MPI under the United States Bankruptcy Code or an
assignment for the benefit of creditors by MPI that is not dismissed within
sixty (60) days of its commencement.
d. Other defined terms shall have the meanings assigned to them herein.
2. Settlement. In order to settle the defaults, amounts owed, debts,
----------
liabilities and other obligations pursuant to, in connection with, or arising
out of the Loan Agreements, the Guarantees and each of their respective related
agreements, letters, documents and instruments (collectively, the "Loan
Documents"), MPI and DBS agree that:
a.
i. MPI will, within six (6) calendar months of the Effective Date, pay
to DBS the amount of US$1,177,397.20 (exclusive of any wire transfer charges) by
wire transfer in accordance with the wire transfer instructions provided by DBS.
Any and all wire transfer
<PAGE>
charges incurred in connection with the payment required under this paragraph
shall be borne solely by MPI; and
ii. Provided that DBS has timely completed the full performance of its
obligations under subsection 2.b. of this Agreement:
A. if MPI receives Insurance Proceeds in an aggregate amount which
exceeds US$136,606.02, then MPI will promptly pay to DBS the amount by which
such aggregate amount of Insurance Proceeds exceeds US$136,606.02.
B. within thirty (30) days of receiving Net Monetary Proceeds from
the Settlement (as defined below), MPI will pay to DBS five percent (5%) of the
net monetary proceeds MPI receives directly from International Business Machines
Corporation ("IBM") or any agent of IBM pursuant to any cash settlement,
monetary award granted pursuant to court-ordered arbitration or meditation
proceedings or court order based upon claims for monetary damages asserted by
MPI under the Purchase Option Agreement dated August 4, 1994 by and between IBM
and MPI and the Multilayer Technology Transfer and Licensing Agreement dated
August 4, 1994 between IBM and MPI (the "Settlement"). "Net Monetary Proceeds"
are monetary proceeds from the Settlement received by MPI less all expenses MPI
incurs in obtaining the Settlement, including without limitation legal fees and
expenses.
C. if DBS receives a Net Liquidation Amount of less than S$4.24
million, MPI will pay to DBS, within six (6) calendar months of notice from DBS
of the amount of the Net Liquidation Amount received by DBS and the existence of
such a shortfall, thirty percent (30%) of the difference between S$4.24 million
and the Net Liquidation Amount received by DBS.
b. Immediately upon receipt of the payment provided for in Section 2.a.i.,
the Receivers and Managers of MPS will provide to NSEB a written release
executed by the Receivers and Managers of MPS providing that NSEB is no longer
liable for the Account Receivable.
3. Release Procedure. If and only if no Insolvency Action has occurred, then
-----------------
effective the Release Date:
a. DBS, on behalf of itself and the other DBS Releasees, agrees as follows:
i. DBS, on behalf of itself and each other DBS Releasee, fully and
forever releases and discharges each of the MPI Releasees (which do not include
MPS or MPM) from and against any and all claims, damages and causes of action
they may have against each such person or entity with respect to any matter
under the provisions of, arising out of or in connection with, the Loan
Documents, including any breach of any representation or warranty or
noncompliance or nonfulfillment of any covenant or agreement set forth in such
documents; provided that such release and discharge shall not extend to (A) any
claims, damages and causes of action any DBS Releasee may have against any MPI
Releasee for fraud or willful misconduct
<PAGE>
with respect to any of the Loan Documents, or (B) the obligations of MPI under
this Agreement.
ii. DBS agrees that each of the Loan Documents so far as they relate to
or are enforceable against or capable of relating to or capable of being
enforceable against MPI, regardless of whether they are in default, are fully
and completely terminated and rendered devoid of legal effect and unenforceable,
such that even provisions of the Loan Documents that, according to their terms,
survive termination, are terminated and nullified. Further, DBS acknowledges and
agrees that any loan, debt, liability or other obligation created pursuant to or
arising out of the Loan Documents so far as they relate to or are enforceable
against or capable of relating to or capable of being enforceable against MPI,
as well as any writings, agreements, notes or certificates representing such
loan, debt, liability or obligations, are canceled and rendered devoid of force
and effect.
iii. Notwithstanding anything in this Agreement to the contrary, in
particular (but without prejudice to the generality of this Section 3.a.iii.)
Section 3.a.ii. above:
A. MPI's liability under the Guarantees shall only be discharged
effective the date which is ninety calendar days after the
calendar date MPI pays to DBS the US$1,177,397.20 required
under Section 2.a.i. of this Agreement.
B. Nothing herein shall be construed as a waiver by DBS of any of
DBS's rights and remedies against MPS and/or MPM whether in
connection with MPS' liquidation or under the Deed,
Supplemental Deeds, the Restatement and the Loan Documents and
DBS reserves and retains all such rights and remedies (legal,
equitable or otherwise) against MPS and MPM.
b. MPI, on behalf of itself and the other MPI Releasees, agrees as follows:
i. MPI, on behalf of itself and each other MPI Releasee, fully and
forever releases and discharges each of the DBS Releasees from any claims,
damages, and causes of action it or they may have against any of them with
respect to any matter under the provisions of, arising out of or in connection
with the Loan Documents; provided that such release and discharge shall not
extend to (A) any claims, damages and causes of action any MPI Releasee may have
against any DBS Releasee for fraud or willful misconduct with respect to any of
the Loan Documents, or (B) the obligations of DBS under this Agreement.
ii. MPI acknowledges and agrees that each of the Loan Documents are
fully and completely terminated and rendered devoid of force and effect, such
that even provisions of the Loan Documents and each of their respective related
agreements, letters, documents and instruments that, according to their terms,
survive termination, are terminated and nullified.
<PAGE>
4. Confidentiality. No party to this Agreement shall, except as may be
---------------
mandated by statutory or regulatory requirements, as may be required by legal
process in the course of actual litigation or in the case of a subpoena, or as
may be necessary for MPI to negotiate with its creditors, disclose to others the
fact or terms of this settlement, the amounts referred to in this Agreement or
the fact of the payment of said amounts, except that each such party may
disclose to each such party's attorneys, accountant or other advisors to whom
the disclosure is necessary to effectuate the purposes for which such party has
consulted with such professional advisors and except that (i) MPI may file this
Agreement with any governmental or regulatory body, describe it and refer to it
in any filing it makes pursuant to federal and state securities laws or to its
Board of Directors or shareholders, and (ii) MPI may issue a press release
describing the general terms of this Agreement in connection with any public
filing it makes with any governmental or regulatory body.
5. Representations and Warranties.
------------------------------
a. MPI. MPI represents and warrants that:
---
i. It has all requisite corporate power and authority to execute and
deliver, and fulfill its obligations under this Agreement. This Agreement
(notwithstanding the lack of approval of MPS and MPM), upon execution and
delivery by MPI and assuming due and proper execution and delivery by DBS, will
constitute a valid and binding obligation of MPI, enforceable in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
moratorium and other laws of general application affecting the enforcement of
creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any federal, state or
local governmental authority on the part of MPI is required in connection with
the execution, delivery and performance of this Agreement by MPI, other than
state securities law filings.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document to which
MPI is a party or by which it is bound is necessary for the execution, delivery
and performance of this Agreement by MPI.
b. DBS. DBS represents and warrants that:
---
i. It has all requisite corporate power and authority to execute and
deliver, and fulfill its obligations under this Agreement. This Agreement
(notwithstanding the lack of approval of MPS and MPM), upon execution and
delivery by DBS, and assuming due and proper execution and delivery by MPI, will
constitute a valid and binding obligation of DBS, enforceable in accordance with
its terms, except as such enforcement may be limited by bankruptcy, insolvency,
moratorium and other laws of general application affecting the enforcement of
creditors' rights.
ii. No consent, approval, order or authorization, or registration,
qualification, designation, declaration or filing with, any foreign, federal,
state or local governmental or other authority or third party on the part of DBS
is required in connection with the execution, delivery
<PAGE>
and performance of this Agreement.
iii. No consent, approval, waiver or other action by any person under
any contract, agreement, indenture, lease, instrument or other document or law,
ordinance, statute, rule or regulation to which DBS is a party or by which it or
its property is bound is necessary for the execution, delivery and performance
of this Agreement.
6. Miscellaneous. MPI and DBS hereby agree as follows:
-------------
a. Severability. If any provision of this Agreement is found to be
------------
unenforceable, it shall not affect the enforceability of the remaining
provisions and the court shall enforce all remaining provisions to the extent
permitted by law. All parties agree that, notwithstanding the lack of execution
of this Agreement by MPS and MPM, this Agreement is valid, binding and
enforceable on all parties.
b. Prior Agreements. This Agreement shall supersede and render null and
----------------
void any and all prior agreements between MPI and/or any MPI Releasee, on one
hand, and DBS and/or any DBS Releasee, on the other hand, concerning the subject
matter contained herein.
c. Successors and Assigns. This Agreement shall bind and benefit each of
----------------------
DBS and its successors and assigns and shall also bind and benefit each MPI and
its successors and assigns. This Agreement may not be assigned by MPI, by
operation of law (e.g., merger) or otherwise (e.g., sale of substantially all
assets), without the prior written consent of DBS, except that no such consent
shall be required after the Release Date.
d. Governing Law. This Agreement shall be deemed to have been entered into
-------------
in the State of California and shall be construed and interpreted in accordance
with the laws of California.
e. Jurisdiction. The parties to the Agreement hereby (i) irrevocably
------------
submit to the jurisdiction of the courts of the State of California and the
Federal courts of the United States sitting in the State of California for the
purpose of any action or proceeding arising out of or relating to this Agreement
and any other documents and instruments relating hereto, (ii) agree that all
claims in respect of any such action or proceeding may be heard and determined
in such courts, (iii) irrevocably waive (to the extent permitted by applicable
law) any objection which any of them now or hereafter may have to the laying of
venue of any such action or proceeding brought in any of the foregoing courts,
and any objection on the ground that any such action or proceeding in any such
court has been brought in an inconvenient forum and (iv) agree that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
permitted by law.
f. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
g. Titles and Subtitles. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
<PAGE>
h. Amendment. No amendment, modification or waiver of this Agreement or
---------
any part thereof shall be effective unless it is in writing and is signed by MPI
and DBS. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof. Nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
The rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or breach or nonfulfillment of or noncompliance
with any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
i. Termination. This Agreement may be terminated upon the mutual written
-----------
consent of MPI and DBS. DBS may terminate this Agreement upon three (3)
business days' written notice to MPI in the event (i) an Insolvency Action
occurs or (ii) MPI commits a material breach of this Agreement. Unless
previously terminated pursuant to Section 3 of this Agreement, the Loan
Documents shall remain in full force and effect upon any termination of this
Agreement.
j. Survival of Representations, Warranties, Covenants and Agreements. The
-----------------------------------------------------------------
representations, warranties, covenants and agreements contained in this
Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
k. Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable overnight courier service (charges
prepaid), mailed to the recipient by certified or registered mail, return,
receipt requested and postage prepaid, or transmitted by facsimile (with request
for immediate confirmation of receipt in a manner customary for communications
of such type and with physical delivery of the communication being made by one
of the other means specified in this Section as promptly as practicable
thereafter). Such notices, demands and other communications shall be addressed
as follows:
If to DBS:
Attn: Manager, Communications/Electronics
Corporate Banking
DBS Bank
6 Shenton Way
DBS Building, Tower One
Singapore 068809
<PAGE>
If to MPI:
Attn: President
Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
Telephone: (619) 292-7000
Telecopy: (619) 292-7881
with a copy to:
Brobeck, Phleger & Harrison LLP
Two Embarcadero Place
2200 Geng Road
Palo Alto, California 94303-0913
Attention: Warren T. Lazarow, Esq.
Telephone: (650) 424-0160
Telecopy: (650) 496-2885
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party
(provided that notice of a change of address shall be effective only upon
receipt thereof).
l. Stamp Duties. Any stamp duties imposed under applicable Singapore law in
------------
respect of this Agreement, shall be borne by MPI.
m. Strict Construction. This Agreement is the result of arms-length
-------------------
negotiations between the parties hereto and has been prepared jointly by the
parties. In applying and interpreting the provisions of this Agreement, there
shall be no presumption that the Agreement was prepared by any one party or that
the Agreement shall be construed in favor of or against any one party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and
as of the day and year first above written.
MICROELECTRONIC PACKAGING, INC.
By: /s/ Denis J. Trafecanty
------------------------------
Denis J. Trafecanty
Chief Financial Officer
<PAGE>
THE DEVELOPMENT BANK OF SINGAPORE
LIMITED
By: /s/ Joan Ting-Wong (Mrs)
------------------------
Senior Vice President
<PAGE>
EXHIBIT 10.83
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION STATEMENT
IN EFFECT WITH RESPECT TO SUCH SECURITIES, OR DELIVERY OF AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES THAT SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE ACT.
No. WCS-_____
WARRANT TO PURCHASE COMMON STOCK
of
MICROELECTRONIC PACKAGING, INC.
Void after April 24, 2003
This certifies that, for valid and good consideration, __________ (the
"Holder") is entitled, subject to the terms set forth below, to purchase from
Microelectronic Packaging, Inc. (the "Company"), a California corporation, the
number of shares of the Common Stock of the Company, as constituted on the date
hereof, upon surrender hereof, at the principal office of the Company referred
to below at the Exercise Price as set forth in Section 2 below. The number,
character and Exercise Price of such shares of Common Stock are subject to
determination and adjustment as provided below.
1. Term of Warrant. Subject to the terms and conditions set forth herein,
---------------
this Warrant shall be exercisable, in whole or in part, at any time or from time
to time on or after April 24, 1998. This Warrant shall expire at 5:00 p.m.,
Pacific Standard Time, on April 24, 2003 without any action on the part of any
party (the "Expiration Date").
2. Exercise Price. The exercise price at which this Warrant may be exercised
--------------
shall be $1.00 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.
3. Number of Shares. The Holder is entitled, subject to the provisions of
----------------
this Warrant, to purchase from the Company an aggregate of ______ fully paid and
nonassessable shares of Common Stock of the Company (subject to adjustment as
provided herein) (the "Warrant Shares").
<PAGE>
4. Exercise of Warrant.
-------------------
a. Subject to the terms and conditions set forth herein, the purchase
rights represented by this Warrant are exercisable by the Holder in whole or in
part, at any time, or from time to time, during the term hereof as described in
Section 1 above, and such exercise shall be effected by the surrender of this
Warrant, the Notice of Paid Exercise annexed hereto and upon payment of the
Exercise Price in cash or by check.
b. This Warrant shall be deemed to have been exercised immediately prior
to the close of business on the date of its surrender for exercise as provided
above, and the person or persons entitled to receive the shares of Common Stock
issuable upon such exercise shall be treated for all purposes as the holder of
record of such shares as of the close of business on such date. As promptly as
practicable on or after such date, the Company at its expense shall issue and
deliver to the person or persons entitled to receive the same a certificate or
certificates for the number of shares issuable upon such exercise.
c. Upon any partial exercise of this Warrant, there shall be issued to
the Holder hereof a new Warrant certificate in respect of the Warrant Shares as
to which the Warrant Shares evidenced by this Warrant certificate shall not have
been exercised. This Warrant certificate may be exchanged at the office of the
Company by surrender of this Warrant certificate properly endorsed either
separately or in combination with one or more other Warrant certificates for one
or more new Warrant certificates evidencing the right of the Holder thereof to
purchase the same aggregate number of Warrant Shares as were purchasable upon
exercise of this Warrant evidenced by the Warrant certificate or certificates
exchanged. No fractional shares will be issued upon the exercise of any Warrant,
but the Company will pay the cash value thereof determined as provided in this
Warrant. This Warrant certificate is transferable at the office of the Company
in the manner and subject to the limitations set forth in this Warrant.
d. In lieu of exercising this Warrant by paying the Exercise Price in
cash or by check, Holder may elect to receive shares equal to the value of this
Warrant (or the portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with the Notice of Net Exercise
annexed hereto in which event the Company shall issue to Holder a number of
shares of the Company's Common Stock, computed using the following formula:
Where X - The number of shares of Common Stock to be
issued to Holder.
X= (Y)(A-B)
--------
A
<PAGE>
Y - The number of shares of Common Stock covered by this
Warrant to be canceled pursuant to such exercise under
this Warrant.
A - The fair market value of one share of the Company's
Common Stock,
B - Exercise Price (as adjusted to the date of such
calculations).
For purposes of this Section 4.d., the fair market value of one share of the
Company's Common Stock as of any date shall be determined as follows:
(1) if such stock is then quoted on the Nasdaq Stock
Market, American Stock Exchange or New York Stock Exchange, its average closing
price on such market or exchange calculated over the 30 trading days immediately
preceding the date of determination, as reported in The Wall Street Journal;
-----------------------
(2) if such stock is publicly traded and is then
listed on a national securities exchange, its average closing price calculated
over the 30 trading days immediately preceding the date of determination on the
principal national securities exchange on which the stock is listed or admitted
to trading as reported in The Wall Street Journal;
-----------------------
(3) if such stock is publicly traded, but is not
quoted on the Nasdaq Stock Market nor listed or admitted to trading on a
national securities exchange, the mean of the average closing bid and asked
prices calculated over the 30 trading days immediately preceding the date of
determination as reported in The Wall Street Journal (or, if not so reported, as
-----------------------
otherwise reported by any newspaper or other source as the Board of Directors of
the Company may determine in good faith); or
(4) if none of the foregoing is applicable, as
determined by the Board of Directors of the Company in good faith; provided,
however, that if Transpac (as defined below), acting as agent for the Warrant
Holders (as defined below), objects to such determination, then as determined by
an investment banker or accountant mutually acceptable to the Company and
Transpac (as defined below), with the costs of such appraisal to be borne by
Transpac (as defined below).
If the Company's Common Stock is not publicly traded, the Board of Directors
of the Company shall inform the Warrant Holders (as defined below) of its good
faith determination of the fair market value of such Common Stock upon the
written request of any Warrant Holder (as defined below).
e. The Company hereby represents and covenants that the Warrant
Shares (or other securities) received upon exercise of this Warrant are and will
be listed, admitted to
<PAGE>
trading or authorized for quotation on any stock market or securities exchange
upon which the Common Stock or any other securities of the Company are then
listed, admitted to trading or authorized for quotation.
5. No Fractional Shares or Scrip. No fractional shares or scrip representing
-----------------------------
fractional shares shall be issued upon the exercise of this Warrant. In lieu of
any fractional share to which the Holder would otherwise be entitled, the
Company shall make a cash payment equal to the Exercise Price multiplied by such
fraction.
6. No Rights of Shareholder. The Holder shall not be entitled to vote or
------------------------
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company that may at any time be issuable on the exercise
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action or to receive notice of meetings, or to receive
dividends or subscription rights or otherwise until this Warrant shall have been
exercised and the shares of Common Stock purchasable upon the exercise hereof
shall have been issued, as provided herein.
7. Transfer of Warrant.
-------------------
a. Warrant Register. The Company will maintain a register (the "Warrant
----------------
Register") containing the names and addresses of the Holder or Holders. Any
Holder of this Warrant or any portion thereof may change his address as shown on
the Warrant Register by written notice to the Company requesting such change.
Any notice or written communication required or permitted to be given to the
Holder may be delivered or given by mail to such Holder as shown on the Warrant
Register and at the address shown on the Warrant Register. Until this Warrant
is transferred on the Warrant Register of the Company, the Company may treat the
Holder as shown on the Warrant Register as the absolute owner of this Warrant
for all purposes.
b. Non-transferability and Non-Negotiability of Warrant. This Warrant may
----------------------------------------------------
not be transferred or assigned without compliance with all applicable federal
and state securities laws by the transferor and the transferee (including the
delivery of investment representation letters and legal opinions reasonably
satisfactory to the Company). Any Holder of this Warrant or Warrant Shares (i)
that is a partnership or like organization may distribute or transfer all or any
portion of such securities to its partners or affiliated entities, or (ii) that
is a corporation or other entity may distribute or transfer all or any portion
of such securities to its subsidiaries or its parent company or entity, and, in
each case, shall not be obligated to provide the Company with any securities
laws opinion of counsel with respect to such distribution or transfer.
c. Compliance with Securities Laws.
-------------------------------
<PAGE>
(1) Authorization. Holder has full power and authority to enter into
-------------
this Warrant, and such Warrant constitutes its valid and legally binding
obligation, enforceable in accordance with its terms.
(2) Purchase Entirely for Own Account. This Warrant has been
---------------------------------
purchased by the Holder for such Holder's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and such Holder has no present intention of selling, granting any participation
in, or otherwise distributing the same. Such Holder does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer, or
grant participation to any person with respect to this Warrant or underlying
shares of Common Stock.
(3) Disclosure of Information. Such Holder acknowledges that it has
-------------------------
received all the information that it has requested in connection with the
purchase of this Warrant, including the Company's filings with the Securities
and Exchange Commission. Holder further represents that it has had an
opportunity to ask questions and receive answers from the Company, as well as to
consult its own legal, tax and other advisors, regarding the information
provided and the terms and conditions of the offering of this Warrant. Holder
represents and warrants that it is prepared to lose its entire interest in this
Warrant and the underlying shares of Common Stock and has not relied on the
Company or any of the Company's advisors in determining whether to make this
investment in the Company.
(4) Investment Experience. Holder 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 this Warrant and the
underlying shares of Common Stock. Such Holder also represents it has not been
organized for the purpose of acquiring this Warrant.
(5) Accredited Investor.
-------------------
(A) Holder is an "accredited investor" as defined below and
understands the meaning of that term.
(B) The term "accredited investor" as used herein refers to:
(a) Any bank as defined in section 3(a)(2) of the Act, or
any savings and loan association or other institution as defined in section
3(a)(5(A) of the Act whether acting in its individual or fiduciary capacity; any
broker dealer registered pursuant to section 15 of the Securities Exchange Act
of 1934; any insurance company as defined in section 2(13) of the Act; any
investment company registered under the Investment Borrower Act of 1940 or any
business development company as defined in section 2(a)(48) of that Act; any
Small Business Investment Borrower licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment Act
of 1958; any plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its political
subdivisions, for the
<PAGE>
benefit of its employees, if such plan has total assets in excess of $5,000,000;
any employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a self-
directed plan, with investment decisions made solely by persons that are
accredited investors;
(b) Any private business development company as defined in
section 202(a)(22) of the Investment Advisers Act of 1940;
(c) Any organization described in section 501(c)(3) of the
Internal Revenue Code, corporation, Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
(d) Any director, executive officer, or general partner of the
issuer of the securities being offered or sold, or any director, executive
officer, or general partner of a general partner of that issuer;
(e) Any natural person whose individual net worth, or joint net
worth with that person's spouse, at the time of his purchase exceeds $1,000,000;
(f) Any natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with that person's
spouse in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current year;
(g) Any trust with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered, whose
purchase is directed by a person who has such knowledge and experience in
financial and business matters that he is capable of evaluating the merits and
risks of the prospective investment or the issuer believes immediately prior to
making any sale that such person comes within this description; or
(h) Any entity in which all of the equity owners are accredited
investors.
As used in this Section, the term "net worth" means the excess of total
assets over total liabilities. For the purpose of determining a person's net
worth, the principal residence owned by an individual should be valued at fair
market value, including the cost of improvements, net of current encumbrances.
As used in this Section, "income" means actual economic income, which may differ
from adjusted gross income for income tax purposes. Accordingly, the Holder
should consider whether it should add any or all of the following items to its
adjusted gross income for
<PAGE>
income tax purposes in order to reflect more accurately its actual economic
income: any amounts attributable to tax-exempt income received, losses claimed
as a limited partner in any limited partnership, and deductions claimed for
depletion.
(6) Restricted Securities. The Holder understands that this Warrant
---------------------
and underlying Common Stock it is purchasing are characterized as "restricted
securities" under U.S. federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and
without registration under such laws and applicable regulations and cannot be
resold without registration under the Act, except in certain limited
circumstances. In this connection, the Holder represents that it is familiar
with SEC Rule 144, as currently in effect, and understands the resale
limitations imposed on these securities by the Act.
(7) Representations by Foreign Investor. The Holder hereby
-----------------------------------
represents that it has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with any invitation to subscribe for this Warrant
and underlying shares of Common Stock, including (i) the legal requirements
within its jurisdiction for the purchase of this Warrant and underlying shares
of Common Stock, (ii) any foreign exchange restrictions applicable to such
purchase, (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 purchase, holding, redemption, sale, or transfer of this Warrant and
underlying shares of Common Stock. The Holder's subscription and payment for,
and its continued beneficial ownership of this Warrant, will not violate any
applicable securities or other laws of its jurisdiction.
(8) Compliance with Securities Laws. Unless otherwise provided
-------------------------------
herein, without in any way limiting the representations set forth above, the
Holder further agrees not to make any disposition of all or any portion of this
Warrant or any shares of Common Stock to be issued upon exercise hereof unless
and until the transferee has agreed in writing for the benefit of the Company to
be bound by the terms of this Warrant, provided and to the extent such sections
are then applicable, and:
(A) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement; or
(B) (1) the Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition and (2) the
Holder shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such securities under the Act.
<PAGE>
8. Legends. This Warrant and all shares of Common Stock issued upon
-------
exercise hereof will bear one or all of the following legends; provided, that if
this Warrant is exercised under Section 4.d. on or after the second anniversary
of the date of issuance of this Warrant, the legend in paragraph (A) below shall
be removed unless in the opinion of counsel reasonably acceptable to the Holder
such legend is required by applicable law:
(A) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES,
OR DELIVERY OF AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES THAT SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE WITH THE ACT."
(B) Any legend required by the laws of the State of
California or other applicable authority, including any legend required by the
California Department of Corporations and Sections 417 and 418 of the California
Corporations Code.
9. Reservation of Stock. The Company covenants that during the term
--------------------
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of this Warrant and, from time to time, will
take all steps necessary to amend its articles of incorporation to provide
sufficient reserves of shares of Common Stock issuable upon exercise of this
Warrant. The Company further covenants that all shares that may be issued upon
the exercise of rights represented by this Warrant, upon exercise of the rights
represented by this Warrant and payment of the Exercise Price, all as set forth
herein, will be free from all taxes, liens, and charges in respect of the issue
thereof (other than taxes in respect of any transfer occurring contemporaneously
or otherwise specified herein) and will be fully paid and non-assessable. The
Company agrees that its issuance of this Warrant shall constitute full authority
to its officers who are charged with the duty of executing stock certificates to
execute and issue the necessary certificates for shares of Common Stock upon the
exercise of this Warrant.
10. Amendments and Waivers.
----------------------
a. Any term of this Warrant may be amended or waived with the
written consent of the Company and the Holder.
b. No waivers of or exceptions to any term, condition or
provision of this Warrant, in any one or more instances, shall be deemed to be,
or construed as, a further or continuing waiver of any such term, condition or
provision.
11. Adjustments. The number of shares purchasable hereunder are
-----------
subject to adjustment from time to time as follows:
<PAGE>
a. Merger, Sale of Assets, etc. If at any time, while this
---------------------------
Warrant, or any portion thereof, is outstanding and unexpired there shall be (i)
a reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger (other than
a mere reincorporation merger where the subsidiary or affiliate of the Company
used to effectuate the reincorporation merger assumes all of the Company's
obligations under this Warrant) or consolidation of the Company with or into
another corporation in which the Company is not the surviving entity, or a
merger in which the Company is the surviving entity but the shares of the
Company's capital stock outstanding immediately prior to the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash, or otherwise, or (iii) a sale or transfer of the Company's
properties and assets as, or substantially as, an entirety to any other person,
then, as a part of such reorganization, merger, consolidation, sale or transfer,
lawful provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified herein and upon payment of the Exercise Price then in effect or
by net exercise pursuant to Section 4.d., the number of shares of stock or other
securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer which a holder of the
shares deliverable upon such exercise of this Warrant would have been entitled
to receive in such reorganization, consolidation, merger, sale or transfer, if
this Warrant had been exercised immediately before the consummation of such
reorganization, merger, consolidation, sale or transfer, all subject to further
adjustment as provided in this Section 11. The foregoing provisions of this
Section 11(a) shall similarly apply to successive reorganizations,
consolidations, mergers, sales and transfers and to the stock or securities of
any other corporation which are at the time receivable upon the exercise of this
Warrant. If the per share consideration payable to the Holder hereof for shares
in connection with any such transaction is in a form other than cash or
marketable securities, then the value of such consideration shall be determined
in good faith by the Company's Board of Directors. In all events, appropriate
adjustment (as determined in good faith by the Company's Board of Directors)
shall be made in the application of the provisions of this Warrant with respect
to the rights and interests of the Holder after the transaction, to the end that
the provisions of this Warrant shall be applicable after that event, as near as
reasonably may be, in relation to any shares or other property deliverable after
that event upon exercise of this Warrant.
b. Reclassification, etc. If the Company at any time while this
---------------------
Warrant, or any portion thereof, remains outstanding and unexpired shall, by
reclassification of securities or otherwise, change any of the securities as to
which purchase rights under this Warrant exist into the same or a different
number of securities of any other class or classes, this Warrant shall
thereafter represent the right to acquire such number and kind of securities as
would have been issuable as the result of such change with respect to the
securities which were subject to the purchase rights under this Warrant
immediately prior to such reclassification or other change, and the Exercise
Price therefor shall be appropriately adjusted, all subject to further
adjustment as provided in this Section 11.
<PAGE>
c. Split, Subdivision or Combination of Shares. If the Company
-------------------------------------------
at any time while this Warrant, or any portion thereof, remains outstanding and
unexpired shall split, subdivide or combine the securities as to which purchase
rights under this Warrant exist, into a different number of securities of the
same class, this Warrant shall thereafter represent the right to acquire such
number of securities as would have been issuable as the result of such change
with respect to the securities which were subject to the purchase rights under
this Warrant immediately prior to such change, and the Exercise Price for such
securities shall be proportionately decreased in the case of a split or
subdivision or proportionately increased in the case of a combination.
d. Adjustments for Dividends in Stock or Other Securities or
---------------------------------------------------------
Property. If while this Warrant, or any portion hereof, remains outstanding and
- --------
unexpired the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or, on or after the record date
fixed for the determination of eligible shareholders, shall have become entitled
to receive, without payment therefor, other or additional stock or other
securities or property of the Company by way of dividend, then and in each case,
this Warrant shall represent the right to acquire, in addition to the number of
shares of the security receivable upon exercise of this Warrant, and without
payment of any additional consideration therefor, the amount of such other or
additional stock or other securities or property of the Company which such
holder would hold on the date of such exercise had it been the holder of record
of the security receivable upon exercise of this Warrant on the date hereof and
had thereafter, during the period from the date hereof to and including the date
of such exercise, retained such shares and/or all other additional stock
available by it as aforesaid during such period, giving effect to all
adjustments called for during such period by the provisions of this Section 11.
e. Prior Notice of Certain Events. The Company will provide
------------------------------
Holder with notice of any merger, asset sale or dividend not less than ten (10)
business days prior to the record date for such event.
12. Registration of Warrant Shares.
------------------------------
a. Company Registration. If (but without any obligation to do
--------------------
so) the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Warrant Holders (as
defined below)) any of its common stock under the Act in connection with the
public offering of such securities solely for cash (other than a registration
relating solely to the sale of securities to participants in a Company stock
plan or a registration in which the only Common Stock being registered is Common
Stock issuable upon conversion of debt securities which are also being
registered), the Company shall, at such time, promptly give each Warrant Holder
thirty (30) days prior written notice of such registration. Upon the written
request of each Warrant Holder given within twenty (20) days after mailing of
notice of such registration by the Company in accordance with Section 13.b., the
Company shall, subject to the provisions of Section 12.d., at the Company's
expense, cause to be registered under the Act all of the Warrant Shares that
each Warrant Holder has requested to be registered.
b. Demand Registration. Beginning April 24, 1999, Holders of at
-------------------
least 50% of the Warrant Shares issued or issuable pursuant to all of the
Warrants issued in connection
<PAGE>
with to the Restructuring, Settlement and Mutual Release Agreement (the
"Settlement Agreement") dated April 24, 1998 by and among the Company, Transpac
Capital Pte Ltd ("Transpac"), Transpac Industrial Holdings Ltd, Regional
Investment Company Ltd and Natsteel Equity III Pte Ltd (the "Warrant Holders")
shall have the right to request the filing of a registration statement on Form
S-3 but if the use of Form S-3 is not then available, then on such other Form(s)
as may be available to sell the Warrant Shares (and all subsequent references
herein to Form S-3 shall be deemed to be references to such other Form(s) as
well unless expressly provided otherwise) (such requests shall be in writing and
shall state the number of shares of Warrant Shares to be disposed of and the
intended methods of disposition of such shares by such Holder or Holders);
provided, however, that the Company shall not be obligated to effect any such
registration if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Warrant Shares and such other securities (if any) on Form S-3 at an aggregate
price to the public of less than $1,000,000, (provided that such $1,000,000
minimum shall not apply if the Warrant Holders represent in writing to the
Company that they intend to dispose of at least 250,000 Warrant Shares) or (ii)
after the Company has effected one (1) such registration pursuant to such a
request of the Holders.
c. Company Obligations. In the case of each registration
-------------------
effected by the Company pursuant to Section 12.b., the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will use its best efforts
to:
(1) File such S-3 registration statement with the Securities
and Exchange Commission within 45 days of receipt of a request pursuant to
Section 12.b. and, to the extent practicable, cause such registration statement
to be declared effective within 45 days of such request. In the event that such
registration statement is not on Form S-3, then the 45 day periods set forth in
the immediately preceding sentence shall be extended to 90 days.
(2) Keep the registration statement effective for one year
after the effective date of such registration statement;
(3) 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 Securities Act with respect to the disposition of all
securities covered by such registration statement;
(4) Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
a Holder from time to time may reasonably request;
(5) Notify each seller of Warrant Shares covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities 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
<PAGE>
therein not misleading or incomplete in the light of the circumstances then
existing, and shall promptly prepare and file with the Securities and Exchange
Commission either a supplement to such prospectus or amendment to such
registration statement or a filing under the Securities Exchange Act of 1934, as
amended (the "1934 Act"), which is incorporated by reference into such
registration statement (and in the case of an amendment to such registration
statement use its best efforts to cause such amendment to become effective as
soon as possible), as may be necessary so that, as thereafter delivered to
purchasers of such shares, 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 such
seller, shall furnish to such seller a reasonable number of copies of such
supplement, amendment or filing under the 1934 Act;
(6) Cause all such Warrant Shares registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
d. Limiting Provisions.
-------------------
(1) Notwithstanding the provisions of Section 12.a., if the
Company shall furnish to the Holders requesting inclusion in a registration
statement pursuant to Section 12.a., a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be detrimental to the Company and its
shareholders for such registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer taking action with respect to such filing for a period
of not more than 120 days after receipt of the request for such registration;
provided, however, that the Company may not utilize this right more than once in
any twelve-month period.
(2) In connection with any offering involving an
underwriting of shares of the Company's capital stock, the Company shall not be
required under Section 12.a., to include any of the Warrant Shares in such
underwriting, unless the Warrant 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 Warrant Shares, requested by shareholders 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 such securities, including Warrant Shares, 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
owned by each selling shareholder or in such other proportions as shall mutually
be agreed to by such selling shareholders). The limitations contained in this
Section 12.c.(3) could result in no Warrant Shares being sold in a particular
underwriting.
<PAGE>
Officers, directors and employees of the Company, as well as other shareholders
who do not have contractual registration rights, will not be permitted to
participate in the registration unless the registration request of the Warrant
Holders is fully satisfied.
13. Miscellaneous.
-------------
a. Governing Law. This Warrant shall be governed by and
-------------
construed under the laws of California. The parties to this Warrant hereby (i)
irrevocably submit to the jurisdiction of the courts of Singapore, the courts of
the State of California, and the Federal courts of the United States sitting in
the State of California for the purpose of any action or proceeding arising out
of or relating to this Warrant and any other documents and instruments relating
hereto, (ii) agree that all claims in respect of any such action or proceeding
may be heard and determined in such courts, (iii) irrevocably waive (to the
extent permitted by applicable law) any objection which it now or hereafter may
have to the laying of venue of any such action or proceeding brought in any of
the foregoing courts, and any objection on the ground that any such action or
proceeding in any such court has been brought in an inconvenient forum and (iv)
agree that a final judgment in any such action or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner permitted by law.
b. Notices. Unless otherwise provided, any notice required or
-------
permitted under this Warrant shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof in the case of the
Company, and on the Warrant Register in the case of the Holder, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties.
c. Counterparts. This Warrant may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
d. Successor and Assigns. This Warrant shall bind and benefit
---------------------
the Holder and each of its successors and assigns and the Company and each of
its successors and assigns.
<PAGE>
IN WITNESS WHEREOF, each of Microelectronic Packaging, Inc., and the
Holder has caused this Warrant to be executed by one of its duly authorized
officers or such other authorized person or entity.
Dated: April 24, 1998 MICROELECTRONIC PACKAGING, INC.
By: /s/ Denis J. Trafecanty
-------------------------------
Denis J. Trafecanty
-------------------------------------
(Print Name of Signatory)
Title: Senior Vice President and CFO
-----------------------------
By:
--------------------------------
-------------------------------------
(Print Name of Signatory)
Title:
------------------------------
<PAGE>
NOTICE OF PAID EXERCISE
-----------------------
To: MICROELECTRONIC PACKAGING, INC.
(1) The undersigned hereby elects to purchase __________ shares of Common
Stock of Microelectronic Packaging, Inc. pursuant to Section 4(a) of the
attached Warrant, and tenders herewith payment of the purchase price for such
shares.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, and for
investment, and that the undersigned will not offer, sell, or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws or unless sold pursuant to Rule 144 of such Act.
(3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_________________________________________
[Name]
And, if said number of shares of Common Stock shall not be all the shares
of Common Stock purchasable under the within Warrant certificate, a new Warrant
certificate is to be issued in the name of said undersigned for the balance
remaining of the Warrant Shares purchasable thereunder less any fraction of a
share paid in cash.
<PAGE>
NOTICE OF NET EXERCISE
----------------------
To: MICROELECTRONIC PACKAGING, INC.
(1) The undersigned hereby elects to purchase __________ shares of Common
Stock of Microelectronic Packaging, Inc. pursuant to Section 4.d. of the
attached Warrant, such that an additional number of shares of Common Stock under
the Warrant will be cancelled in respect of the purchase price in the manner set
forth in Section 4.d.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock are being acquired solely for the
account of the undersigned and not as a nominee for any other party, and for
investment, and that the undersigned will not offer, sell, or otherwise dispose
of any such shares of Common Stock except under circumstances that will not
result in a violation of the Securities Act of 1933, as amended, or any state
securities laws or unless sold pursuant to Rule 144 of such Act.
(3) Please issue a certificate or certificates representing said shares of
Common Stock in the name of the undersigned or in such other name as is
specified below:
_______________________________
[Name]
And, if number of shares of Common Stock being cancelled pursuant to
Section 4.d. of the Warrant shall not be all the shares of Common Stock
purchasable under the within Warrant certificate, a new Warrant certificate is
to be issued in the name of said undersigned for the balance remaining of the
Warrant Shares purchasable thereunder less any fraction of a share paid in cash.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AS OF JUNE 30, 1998 AND THE STATEMENTS OF OPERATIONS, CASH FLOWS AND
SHAREHOLDERS EQUITY FOR THE PERIOD ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> APR-01-1998 APR-01-1997
<PERIOD-END> JUN-30-1998 JUN-30-1997
<CASH> 778 1,296
<SECURITIES> 0 0
<RECEIVABLES> 1,981 2,504
<ALLOWANCES> 0 0
<INVENTORY> 4,780 4,230
<CURRENT-ASSETS> 7,818 8,417
<PP&E> 2,005 1,212
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 10,048 9,911
<CURRENT-LIABILITIES> 38,749 50,074
<BONDS> 59 69
0 0
0 0
<COMMON> 40,079 40,016
<OTHER-SE> (68,839) (80,248)
<TOTAL-LIABILITY-AND-EQUITY> 10,048 9,911
<SALES> 5,825 8,878
<TOTAL-REVENUES> 5,825 8,878
<CGS> 4,559 8,292
<TOTAL-COSTS> 4,559 8,292
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 3 5
<INCOME-PRETAX> 229 (716)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 229 (716)
<DISCONTINUED> 0 (10,995)
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 229 (11,711)
<EPS-PRIMARY> 0.02 (1.09)
<EPS-DILUTED> 0.02 (1.09)
</TABLE>
