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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by
Rule 14-a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
MICROELECTRONIC PACKAGING, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
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MICROELECTRONIC PACKAGING, INC.
NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS
August 18, 1999
TO THE SHAREHOLDERS OF MICROELECTRONIC PACKAGING, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Microelectronic Packaging, Inc. (the "Company"), a California corporation,
will be held on August 18, 1999, at 10:00 a.m., local time, at 9577 Chesapeake
Drive, San Diego, California 92123, for the following purposes:
1. To elect directors to serve for the ensuing year or until their
successors are elected and qualified.
2. To ratify the appointment of BDO Seidman, LLP ("BDO") as independent
accountants of the Company for the fiscal year ended December 31, 1999.
3. To vote upon such other matters as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on June 20, 1999 are
entitled to notice of and to vote at the meeting. The stock transfer books
will not be closed between the record date and the date of the meeting. A list
of shareholders entitled to vote at the Annual Meeting will be available for
inspection at the executive offices of the Company for a period of ten days
before the Annual Meeting.
All shareholders are cordially invited to attend the meeting in person.
However, to ensure your representation at the meeting, you are urged to sign
and return the enclosed Proxy as promptly as possible in the envelope enclosed
for that purpose.
Any shareholder attending the meeting may vote in person even if he or she
has returned a Proxy.
Sincerely,
/s/ ANDREW W. WROBEL
Andrew K. Wrobel
Chairman, President and Chief
Executive Officer
April 20, 1999
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE READ THE ATTACHED
PROXY STATEMENT CAREFULLY, AND COMPLETE, SIGN AND DATE THE ENCLOSED PROXY
CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED ENVELOPE.
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PROXY STATEMENT
TABLE OF CONTENTS
<TABLE>
<S> <C>
GENERAL.................................................................... 1
Revocability of Proxies.................................................. 1
Solicitation............................................................. 1
Deadline for Receipt of Shareholder Proposals............................ 1
Record Date and Voting................................................... 1
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING............................. 2
PROPOSAL ONE--ELECTION OF DIRECTORS...................................... 2
Nominees............................................................... 2
Business Experience of Directors....................................... 2
Director Remuneration.................................................. 4
Certain Relationships and Related Transactions......................... 5
PROPOSAL TWO--RATIFICATION OF INDEPENDENT ACCOUNTANTS.................... 7
OTHER MATTERS............................................................ 7
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT........... 8
EXECUTIVE COMPENSATION AND RELATED INFORMATION............................. 10
Option Grants in Last Fiscal Year........................................ 12
Aggregated Option Exercises and Fiscal Year-End Values................... 12
Compensation and Stock Option Committee Interlocks and Insider
Participation........................................................... 12
Employment Contracts and Termination of Employment and Change in Control
Arrangements............................................................ 12
COMPENSATION AND STOCK OPTION COMMITTEE REPORT............................. 14
General Compensation Policy.............................................. 14
Factors.................................................................. 14
Base Salary.............................................................. 14
Annual Incentive Compensation............................................ 14
Long-Term Incentive Compensation......................................... 14
CEO Compensation......................................................... 15
Compliance with Internal Revenue Code Section 162 (m).................... 15
COMPARISON OF SHAREHOLER RETURN............................................ 16
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934....... 17
FORM 10-K.................................................................. 17
</TABLE>
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MICROELECTRONIC PACKAGING, INC.
9577 Chesapeake Drive
San Diego, California 92123
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PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 18, 1999
GENERAL
The enclosed proxy ("Proxy") is solicited on behalf of the Board of
Directors of Microelectronic Packaging, Inc., a California corporation (the
"Company"), for use at the Annual Meeting of Shareholders to be held on August
18, 1999 (the "Annual Meeting"). The Annual Meeting will be held at 10:00
a.m., local time, at the Company's corporate headquarters at 9577 Chesapeake
Drive, San Diego, California, 92123.
These proxy solicitation materials were mailed on or about June 28, 1999 to
all shareholders entitled to vote at the Annual Meeting.
Revocability of Proxies
Any person giving a Proxy has the power to revoke it at any time before its
exercise. It may be revoked by filing with the Chief Financial Officer of the
Company at the Company's principal executive offices, 9577 Chesapeake Drive,
San Diego, California, 92123, a notice of revocation or another signed Proxy
with a later date. Any person may also revoke his or her Proxy by attending
the Annual Meeting and voting in person.
Solicitation
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials furnished to shareholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries, and
custodians holding shares in their names that are beneficially owned by others
so that they may forward this solicitation material to such beneficial owners.
In addition, the Company may reimburse such persons for their costs in
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail will be supplemented by solicitation by
telephone, telegram, or other means by directors, officers or employees of the
Company. No compensation will be paid to directors, officers or employees for
any such services.
Deadline for Receipt of Shareholder Proposals
Proposals of shareholders of the Company that are intended to be presented
by such shareholders at the 2000 Annual Meeting of Shareholders must be
received by the Company no later than December 30, 1999 in order that they may
be included in the proxy statement and form of proxy relating to that meeting.
Record Date and Voting
Shareholders of record on June 20, 1999 are entitled to notice of and to
vote at the Annual Meeting. At the record date, 10,856,890 shares of the
Company's common stock ("Common Stock"), no par value, were issued and
outstanding and no shares of preferred stock were outstanding. Abstentions and
broker non-votes are counted as present for the purpose of determining the
presence of a quorum for the transaction of business. Each shareholder is
entitled to one vote for each share of Common Stock held by such shareholder.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes.
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MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL ONE--ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Board of Directors shall be
comprised of no fewer than four (4) nor greater than seven (7) Directors, with
the exact number to be fixed by the Board. The currently authorized number of
Directors is five (5), and, as of the date of this Proxy Statement, is
comprised of Messrs. Wrobel, Bryan, Howland, Wong and Heeb. The Board of
Directors has selected six (6) nominees to be elected at the Annual Meeting.
Proxies cannot be voted for a greater number of persons than the number of
nominees named. At the Annual Meeting, six (6) Directors are to be elected to
serve until the Company's next annual meeting or until their successors are
elected and qualified. The Board of Directors has selected six (6) nominees,
all of whom are current Directors of the Company. Each person nominated for
election has agreed to serve if elected and management has no reason to
believe that any nominee will be unavailable to serve. Unless otherwise
instructed, the proxy holders will vote the Proxies received by them FOR the
nominees named below. The six (6) candidates receiving the highest number of
affirmative votes of the shares entitled to vote at the Annual Meeting will be
elected Directors of the Company.
Nominees
Set forth below is information regarding the nominees, including information
furnished by them as to principal occupations, certain other directorships
held by them, any arrangements pursuant to which they were selected as
directors or nominees and their ages as of April 15, 1999.
<TABLE>
<CAPTION>
Name Age Positions and Offices Held With The Company
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<C> <C> <S>
Andrew K. Wrobel (1)(3)(4)....... 47 Chairman, President and Chief Executive Officer
Anthony J. A. Bryan (1)(2)(4).... 76 Director
Frank Howland (2)(4)............. 72 Director
Wong Lin Hong (1)(3)............. 53 Director
Waldemar Heeb (2)(3)(4).......... 70 Director
James T. Waring, Esq. ........... 51 Nominee
</TABLE>
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(1) Member of the Compensation and Stock Option Committee
(2) Member of the Audit Committee
(3) Member of the Interested Directors' Transaction Committee
(4) Member of the Creditors' Restructuring Committee
Business Experience of Directors
The principal occupations of each current director of the Company for at
least the last five (5) years are as follows:
Andrew K. Wrobel has served as the Chairman, President and Chief Executive
Officer of the Company since January 1999. Prior to that, Mr. Wrobel was
President, Chief Executive Officer and Director of the Company since October
1997. From 1988 to 1997, Mr. Wrobel served as Chairman, President and Chief
Executive Officer of GIGATEK Memory Systems, Inc., a manufacturer of computer
disk drive back up cartridges. Prior to 1988, Mr. Wrobel was Vice President of
Technology for Carlisle Memory Products Group and Vice President of
Engineering for Data Electronics, and held various management positions in
Marketing and Engineering at Texas Instruments and BASF. Mr. Wrobel holds a
Masters degree from the Massachusetts Institute of Technology.
Anthony J. A. Bryan has served on the Company's Board of Directors since
November 1996. Since March 1996, Mr. Bryan has been Senior Managing Director
of The Watley Group, LLC, a firm that specializes in corporate restructurings,
management consulting, merchant banking and mergers and acquisitions. From
December 1987 to December 1995, Mr. Bryan was Chairman of the Executive
Committee of Hospital Corporation International, a hospital management and
health care company. From March 1988 to February 1991,
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Mr. Bryan was Chairman and Chief Executive Officer of Oceanics Group, a
company specializing in offshore surveying and positioning services. Prior to
that, Mr. Bryan was Chairman, President and Chief Operating Officer of
Copperweld Corporation and President and Chief Executive Officer of Cameron
Iron Works. Mr. Bryan has served on the boards of directors of several
industrial, charitable and educational institutions, including Federal
Express, Chrysler Corporation, Pittsburgh National Corporation and Imetal
(Paris). Mr. Bryan holds a Masters Degree in Business Administration from
Harvard University.
Frank L. Howland has served on the Company's Board of Directors since June
1994. Since March 1989, Dr. Howland has been President of Frank L. Howland
Inc., a consulting company specializing in the area of assembly and packaging
of electronic components. From 1955 to 1989, Dr. Howland was a manager in the
Electronic Component Research and Development divisions of Bell Laboratories,
Inc. Dr. Howland holds a B.S. degree in civil engineering from Rutgers
University and an M.S. and Ph.D. in civil/structural engineering from the
University of Illinois.
Wong Lin Hong has served on the Company's Board of Directors since August
1998. Mr. Wong is a director and Executive Vice President of Transpac Capital
Pte. Ltd., a private equity investment company based in Singapore. Mr. Wong
has been with Transpac since 1990. From January 1986 to July 1990, Mr. Wong
was the Managing Director and Vice President of Micropolis Ltd., the Singapore
subsidiary of Micropolis Corporation, a manufacturer of high capacity hard
disk drives. Mr. Wong was also previously the Managing Director of Computer
Memories (Far East) Ltd., a manufacturer of hard disk drives; the General
Manager of Micro Peripherals Singapore Pte. Ltd., a manufacturer of floppy
disk drives; and the Head of Electronics of the Economic Development Board,
the government agency that promotes economic and industrial development in
Singapore. Mr. Wong currently serves on the boards of several other companies
and educational institutions and is the Vice Chairman of the Singapore Venture
Capital Association. Mr. Wong holds a degree in electrical engineering and a
diploma in business administration.
Waldemar Heeb has served on the Company's Board of Directors since July
1998. Mr. Heeb served as President and Chief Financial Officer of CTM (a
wholly owned subsidiary of MPI) since its inception in February 1984 and
continued to serve as President of CTM after CTM was acquired by the Company
in June 1993. Mr. Heeb retired in 1996.
James T. Waring, Esq. is a nominee to the Company's Board of Directors and
is not currently a Director. Mr Waring's nomination to the Company's Board of
Directors is subject to completion of the Company's conversion of its Asian
debt into the Company's Series A Preferred Stock. Such debt conversion into
equity is subject to the completion of definitive agreements for all eight
creditors and the approval of a majority of the Company's shareholders. Mr.
Waring is a principal in FI Financial, LLC, a real estate investment company
with major projects including land acquisitions and building construction in
the greater San Diego area. Since 1982, Mr. Waring has been of counsel to
Ross, Dixon and Bell LLP (formerly Miller, Boyko and Bell) in San Diego,
California. In addition, Mr. Waring has been active in real estate organizing,
financing and bid strategy, as well as an investor for various real estate
projects. From 1975 to 1982, Mr. Waring practiced law, specializing in tax
planning and asset acquisition and sale. Mr. Waring holds a Juris Doctor
degree from the University of San Diego and a Bachelor of Science degree at
the University of Southern California.
There are no family relationships among executive officers or directors of
the Company.
During the fiscal year ended December 31, 1998, the Board of Directors held
seven (7) meetings and acted by unanimous written consent on two (2)
occasions. The Board of Directors has an Audit Committee, a Compensation and
Stock Option Committee, an Interested Directors' Transaction Committee and a
Creditors' Restructuring Committee. No Director serving for the full fiscal
year attended fewer than 75% of the aggregate number of meetings of the Board
of Directors and meetings of the Committees of the Board on which he serves.
The Audit Committee currently consists of three (3) Directors, Mr. Howland,
Mr. Heeb and Mr. Bryan. The Audit Committee is primarily responsible for
approving the services performed by the Company's independent accountants and
reviewing their reports regarding the Company's accounting practices and
systems of internal accounting controls. During the fiscal year ended December
31, 1998, the Audit Committee held one (1) meeting.
3
<PAGE>
The Compensation and Stock Option Committee currently consists of three (3)
Directors, Mr. Bryan, Mr. Wong and Mr. Wrobel, who is a non-voting member of
this Committee. During the fiscal year ended December 31, 1998, the
Compensation and Stock Option Committee held two (2) meetings and acted by
unanimous written consent on one (1) occasion. This Committee reviews and
approves the Company's general compensation policies and sets compensation
levels, subject to Board review, for the Company's directors and executive
officers.
The Interested Directors' Transaction Committee currently consists of three
(3) Directors, Mr. Wong, Mr. Heeb and Mr. Wrobel. The Interested Directors'
Transaction Committee did not meet during the fiscal year ended December 31,
1998 because it was created on January 11, 1999.
The Creditors' Restructuring Committee currently consists of four (4)
Directors, Mr. Wrobel, Mr. Bryan, Mr. Howland and Mr. Heeb. The Creditors'
Restructuring Committee did not meet during the fiscal year ended December 31,
1998 because it was created on January 11, 1999.
Mr. Lewis Solomon and Mr. Gary Stein both resigned as Directors of the
Company in 1998. They had served as Directors since 1996 and 1997,
respectively.
Director Remuneration
Fees and Expenses. Directors are reimbursed for expenses incurred in
connection with attending Board and Committee meetings. Each non-employee
Director receives a fee of $1,500 for each meeting attended, $750 for each
Board committee meeting that does not occur on the date of a Board meeting and
a fee of $1,000 for each month of Board service as a Director. Directors who
are also employees of the Company receive no additional remuneration for
serving as Directors (other than reimbursement for expenses incurred).
However, all reimbursements for expenses to Directors was suspended by the
Board in September 1998.
During 1998, the Company paid fees to the following Directors in their
capacity as a Director and in connection with consulting services provided to
the Company: Mr. Bryan-$40,000 (includes all of the fees paid to The Watley
Group, LLC); Dr. Howland-$11,000; Mr. Heeb-$2,000; Mr. Wong-$0; Mr. Stein (a
former Director)-$55,903 (includes a portion of the fees paid to G&L
Investments); and Mr. Solomon (a former Director)-$73,903 (includes a portion
of the fees paid to G&L Investments). (For further information regarding
consulting services provided to the Company by such Directors, See "Certain
Relationships and Related Transactions.")
Automatic Option Grants. Pursuant to the Automatic Option Grant Program of
the 1993 Plan, each individual who first joins the Board as a non-employee
director at any time after November 21, 1996 receives an option grant for
15,000 shares of Common Stock on the date of his or her initial election or
appointment to the Board. In addition, at each Annual Shareholders' Meeting,
beginning with the 1997 Annual Meeting, each individual who is to continue to
serve as a non-employee Board member, whether or not he or she is standing for
re-election at that particular meeting, will receive an option grant for
10,000 shares of Common Stock. Each grant under the Automatic Option Grant
Program will have an exercise price per share equal to the fair market value
per share of the Common Stock on the grant date and will have a maximum term
of ten years, subject to earlier termination should the optionee cease to
serve as a Board member. Each option granted under the Automatic Option Grant
Program becomes exercisable in four successive equal annual installments over
the optionee's period of continued Board service, measured from the grant
date. However, the shares subject to each outstanding option under the
Automatic Option Grant Program will accelerate and become exercisable in full
upon (i) an acquisition of the Company by merger or asset sale, (ii) a hostile
takeover of the Company or (iii) the optionee's death or disability while
continuing to serve as a Board member.
On July 1, 1998 and August 11, 1998 Messrs. Heeb and Wong, respectively,
were appointed to the Board. Mr. Wong was elected pursuant to the terms of a
March 1996 agreement among the Company and Transpac. This agreement provided
Transpac the right to appoint a Director. Pursuant to the Automatic Option
Grant
4
<PAGE>
Program of the 1993 Plan, Messrs. Heeb and Wong each received a stock option
grant for 15,000 shares of Common Stock at an exercise price of $0.45 per
share and $0.34 per share, respectively, the fair market value of the Common
Stock on the date of grant.
Under the Automatic Option Grant Program, a stock option for 10,000 shares
of Common Stock was granted on June 17, 1998 to each of Mr. Bryan and Dr.
Howland who continued to serve as non-employee Board members following the
Annual Shareholders Meeting held on that date. Each of these options has an
exercise price of $0.58 per share, the fair market value of the Common Stock
on the date of grant.
Discretionary Consultant Option Grants. In November 1996, Messrs. Bryan,
Howland, Solomon (a former director) and Stein (a former director) were
awarded option grants for a total of 900,000 shares under the Discretionary
Option Grant Program of the 1993 Plan to purchase shares of the Company's
Common Stock at an exercise price of $1.91 per share, the fair market value of
the Common Stock on such date. In August 1997, following approval by the
Company's shareholders of certain amendments to the 1993 Plan, these options
were cancelled and regranted at an exercise price of $0.19875, the fair market
value of the Common Stock of the Company on such date. The Company has
cancelled such options. In November 1997, Messrs Bryan, Howland, Solomon and
Stein were awarded option grants for a total of 633,333 shares under the
Discretionary Option Grant Program of the 1993 Plan to purchase shares of the
Common Stock at an exercise price of $0.505 per share, the fair market value
of the Common Stock on such date. Each option is immediately exercisable with
respect to 50% of the option shares and becomes exercisable with respect to an
additional 25% of the option shares on each of the first and second
anniversaries of the grant date. The option grants to Messrs. Solomon and
Stein, totaling 400,000 shares, have expired subsequent to December 31, 1998,
because such options were not exercised within 90 days of their resignation as
members of the Board of Directors, as required by the terms of their Option
Agreements.
Certain Relationships and Related Transactions
In November 1996, the Company entered into an agreement for consulting
services with G&L Investments ("G&L"), which establishes a consulting
relationship with, among others, Lewis Solomon (Chairman of the Board of
Directors) and Gary Stein (a Director). In exchange for consulting services,
G&L, through an affiliate, received $15,000 plus reasonable expenses for each
month that G&L provided services to the Company. On July 14, 1998, the Company
notified G&L that their agreement for consulting services was terminated
effective October 14, 1998.
In November 1996, the Company also entered into an agreement for consulting
services with The Watley Group, LLC ("Watley") which employs Mr. Anthony Bryan
(a Director), among others, pursuant to which Watley receives $15,000 plus
reasonable expenses for each month that it provides services to the Company.
On January 16, 1998, the Company notified Watley that their agreement for
consulting services was terminated effective April 16, 1998.
The Company has entered into an indemnification agreement with each of its
directors.
The Company and certain of its shareholders entered into a registration
rights agreement pursuant to which entities that may be deemed affiliated with
a greater than five percent shareholder were granted certain registration
rights. Such agreement provides for indemnification by the Company for such
persons.
In March 1996, pursuant to a subscription agreement, the Company consummated
the sale and issuance of 842,013 shares of Common Stock (the "Transpac
Shares") to Transpac Capital Pte. Ltd. and a group of related investors
(collectively, "Transpac"), at the purchase price of $2.37526 per share, for a
total purchase price of $2,000,000 (the "Transpac Financing"). Transpac has
board observer rights and the right to appoint a representative of Transpac to
the Company's Board of Directors. Such right was exercised in August 1998 with
the appointment of Mr. Wong to the Board of Directors. Mr. Wong is also a
director and Executive Vice President of Transpac.
5
<PAGE>
In connection with the Company's subsidiaries in Singapore, which ceased
operations in 1997, the Company fully guaranteed certain debt obligations.
During 1998, the Company signed agreements with each of these creditors, which
called for settlement payments of approximately $9.3 million to satisfy all
debt obligations. This included an agreement with Transpac which requires the
Company to pay to Transpac $3.1 million by May 1, 1999 and an additional
$1,000,000 by December 31, 1999, issue warrants to purchase 500,000 shares of
the Company's Common Stock at $1.00 per share, and other provisions. Under the
terms of the agreements, the indebtedness due to Transpac returns to the full
$9.3 million if the payment of $3.1 million is not made by May 1, 1999.
Because the Company has not been able to obtain funding to satisfy the
settlement payment obligation, the Company renegotiated the terms and has
entered into a non-binding letter agreement with Transpac which calls for the
conversion of all debt and accrued interest obligations into shares of the
Company's Series A Preferred Stock, each share of which will be convertible
into two shares of MPI Common Stock. Such Preferred Stock is ultimately
convertible into 8,063,651 shares of the Company's Common Stock. The non-
binding letter agreement further stipulates that the warrants issued to
Transpac to purchase 500,000 shares of the Company's Common Stock at $1.00 per
share be cancelled and reissued at $0.50 per share.
This debt conversion into equity is subject to the completion of definitive
agreements for all eight creditors and the approval of the debt conversion to
equity by a majority of the Company's shareholders.
The Company has entered into a letter agreement dated April 14, 1999 with
STMicroelectronics, Inc. and FI Financial, LLC. Mr. Waring, a nominee to the
Company's Board of Directors, is an officer of FI Financial. Under the terms
of the agreement, STMicroelectronics, a creditor of the Company, assigned its
rights to a series of agreements with the Company to FI Financial. FI
Financial, for consideration paid to STMicroelectronics of $500,000, will
receive shares of the Company's Series A Preferred Stock, which shares would
be convertible into 2,645,294 shares of the Company's Common Stock. The letter
agreement provides that the funds paid to STMicroelectronics are held in
escrow until the completion of definitive agreements for all eight creditors
and the approval of the debt conversion to equity by a majority of the
Company's shareholders. The issuance of the Preferred Stock is also subject to
the same conditions. FI Financial subsequently entered into a series of
Assignment of Interest agreements with a group of employees of the Company,
whereby the employees have collectively agreed to pay to FI Financial a total
of $150,000 in exchange for the right to receive a prorata portion of the
Company's Preferred Stock to be received by FI Financial. Under the terms of
the Assignment of Interest agreements, the group of employees would receive
shares of the Company's Series A Preferred Stock, which would be convertible
into 793,588 shares of the Company's Common Stock.
Mr. Trafecanty, as part of the group of employees discussed above, has
entered into an Assignment of Interest agreement with FI Financial. Under the
terms of the agreement, Mr. Trafecanty, for consideration paid to
STMicroelectronics of $35,000, will receive shares of the Company's Series A
Preferred Stock, which shares would be convertible into 185,185 shares of the
Company's Common Stock. The agreement provides that the funds paid to
STMicroelectronics are held in escrow until the completion of definitive
agreements for all eight creditors and the approval of the debt conversion to
equity by a majority of the Company's shareholders. The issuance of the
Preferred Stock is also subject to the same conditions.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. All future transactions, between the Company and
its officers, directors, principal shareholders and affiliates will be
approved by a majority of the Board of Directors, including a majority of the
independent and disinterested outside directors on the Board of Directors, and
will be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
The Board of Directors recommends that the shareholders vote FOR the
election of each of the nominees to serve as Directors of the Company until
the next Annual Meeting or until their successors have been elected and
qualified.
6
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PROPOSAL TWO--RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors has appointed the firm of BDO Seidman, LLP ("BDO"),
independent accountants, to audit the financial statements of the Company for
the fiscal year ended December 31, 1999, and is asking the shareholders to
ratify this appointment.
In the event the shareholders fail to ratify the appointment, the Board of
Directors will reconsider its selection. Even if the selection is ratified,
the Board of Directors in its discretion may direct the appointment of a
different independent accounting firm at any time during the year if the Board
of Directors believes that such a change would be in the best interests of the
Company and its shareholders. The affirmative vote of the holders of a
majority of the Company's voting shares represented and voting at the Annual
Meeting is required to ratify the selection of BDO.
A representative of BDO is expected to be present at the Annual Meeting,
will have the opportunity to make a statement if he or she desires to do so,
and will be available to respond to appropriate questions.
The Board of Directors recommends that the shareholders vote FOR the
ratification of the selection of BDO Seidman, LLP to serve as the Company's
independent accountants for the fiscal year ended December 31, 1999.
OTHER MATTERS
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the annual meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is
granted by the execution of the enclosed Proxy.
7
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SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information known to the Company regarding
the ownership of the Company's Common Stock as of April 15, 1999 for (i) each
Director and nominee who owns Common Stock, (ii) all persons or entities who
were known by the Company to be beneficial owners of five percent (5%) or more
of the Company's Common Stock, (iii) the Chief Executive Officer and the other
executive officers whose compensation for 1998 were each in excess of $100,000
and (iv) all executive officers and Directors of the Company as a group.
<TABLE>
<CAPTION>
Percent of Total
Number of Shares Shares Outstanding
Name and Address of Beneficial Owner Beneficially Owned(1) Beneficially Owned
------------------------------------ -------------------- ------------------
<S> <C> <C>
Entities that may be deemed to be
affiliated with
Transpac Capital Pte. Ltd. (2)....... 1,342,013 11.8%
6 Shenton Way
#2D-09 DBS Building
Tower Two
Singapore 068809
Joost Tjaden (3)..................... 687,620 6.3%
c/o TBM Associates
3500 Oaklawn, #215
Dallas, Texas 75219
Cabot Ceramics, Inc. (4)............. 654,326 6.0%
c/o Cabot Corporation
75 State Street
Boston, MA 02119-1806
Counterpoint Master LLC.............. 627,035 5.8%
1301 Avenue of the Americas
40th Floor
New York, NY 10019
Anthony J. A. Bryan (5).............. 183,333 1.7%
Frank Howland (5).................... 145,000 1.3%
Waldemar Heeb (5).................... 15,000 0.1%
Wong Lin Hong (5).................... 15,069 0.1%
James Waring (6)..................... -- --
Andrew K. Wrobel (5)................. 600,000 5.2%
c/o Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, California 92123
Denis J. Trafecanty (5).............. 300,000 2.7%
Timothy R. Sullivan (5).............. 150,000 1.3%
All directors and executive officers
as a group (7 persons).............. 1,408,402 11.4%
</TABLE>
- --------
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Percentage beneficially owned
is based on a total of 10,856,890 shares of Common Stock issued and
outstanding as of April 15, 1999.
8
<PAGE>
Shares of Common Stock subject to options or warrants currently exercisable
or convertible, or exercisable or convertible within 60 days of April 15,
1999 are deemed outstanding for computing the percentage of the person
holding such options or warrants but are not outstanding for computing the
percentage of any other person. Except as indicated in the footnotes to
this table and pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with respect to
all shares of Common Stock beneficially owned.
(2) The Transpac entities include Transpac Capital Pte Ltd. (the "Manager"), a
Singapore private limited company; Transpac Industrial Holdings Limited
("TIH"), a Singapore private limited company; Regional Investment Company
Limited ("Regional"), a Singapore public limited company; Transpac Equity
Fund ("TEF"), a British Virgin Islands trust; Transpac Venture Partnership
II ("TVP"), a collective investment scheme; Transpac Manager's Fund
("TMP"), a British Virgin Islands international business company; and
NatSteel Equity III Pte Ltd. ("NatSteel"), a Singapore private limited
company. The Manager does not have any direct ownership interest in the
Company's Common Stock. The Manager has, in its capacity as investment
adviser to each of TIH, Regional, TEF and TVP, the power to control the
voting and disposition of the 765,466 shares and warrants for 500,000
shares of Common Stock held in the aggregate by TIH, Regional, TEF and TVP
and, therefore, may be deemed to be a beneficial owner of such shares. TIH
has direct beneficial ownership of 334,069 shares and warrants for 198,500
shares of the Common Stock. TIH shares the power to control the voting and
disposition of such 334,069 shares of Common Stock and warrants for
198,500 shares with the Manager. The Manager further holds warrants to
purchase 201,500 shares of Common Stock. TIH disclaims beneficial
ownership of any shares of Common Stock held by any other Transpac entity.
Regional has direct beneficial ownership of 92,066 shares of the Common
Stock and warrants for 54,500 shares. Regional shares the power to control
the voting and disposition of such 92,066 shares of Common Stock and
warrants for 54,500 shares with the Manager. Regional disclaims beneficial
ownership of any shares of Common Stock held by any other Transpac entity.
TEF has direct beneficial ownership of 197,285 shares of the Common Stock.
TEF shares the power to control the voting and disposition of such 197,285
shares of Common Stock with the Manager. TEF disclaims beneficial
ownership of any shares of Common Stock held by any other Transpac entity.
TVP has direct beneficial ownership of 139,415 shares of the Common Stock.
TVP shares the power to control the voting and disposition of such 139,415
shares of Common Stock with the Manager. TVP disclaims beneficial
ownership of any shares of Common Stock held by any other Transpac entity.
TMF has direct beneficial ownership of 2,631 shares of the Common Stock.
NatSteel has direct beneficial ownership of 75,547 shares of the Common
Stock and warrants for 45,500 shares. NatSteel and the Manager have no
formal relationship, advisory or otherwise, in respect of the shares of
Common Stock held by NatSteel. However, NatSteel anticipates that it may
rely upon the advice of Transpac in connection with the voting and
disposition of the shares of Common Stock held by it. NatSteel disclaims
beneficial ownership of the shares of Common Stock held by any other
Transpac entity. The preceding information was partially obtained from a
Schedule 13D filed with the Securities and Exchange Commission on or about
April 3, 1996. Mr. Wong Lin Hong is Director and Executive Vice President
of Transpac Capital Pte Ltd., and as such may be deemed to share voting
and investment power with respect to the Transpac entities' shares. Mr.
Wong disclaims beneficial ownership of such shares except to the extent of
his pecuniary interest therein.
(3) Includes shares owned by TBM Associates, Inc. ("TBM"), an investment
management company in which Mr. Tjaden is a significant shareholder, and
as such may be deemed to share voting and investment power. TBM exercises
voting control over shares of MPI common stock held by Bostech Associates
(1,719 shares), Ion Associates (33,685 shares) and N. V. Bever Holding
(368,094 shares and a warrant to purchase 1,173 additional shares at an
exercise price of $5.63). Also includes shares held by Janivo Fonds
(99,307 shares) and Van Doorne Group (99,285 shares), over which Mr.
Tjaden exercises voting control. Mr. Tjaden disclaims beneficial ownership
of all such shares.
(4) Cabot Ceramics, Inc. is a corporation wholly owned by Cabot Corporation.
The executive management of Cabot Corporation has voting and investment
power over such shares and may be deemed to beneficially own such shares.
9
<PAGE>
(5) All shares in the form of stock options exercisable within 60 days of
April 15, 1999.
(6) Mr. Waring is a nominee to the Company's Board of Directors and is not
currently a Director. Mr Waring's nomination to the Company's Board of
Directors is subject to completion of the Company's conversion of its
Asian debt into the Company's Series A Preferred Stock. Such debt
conversion into equity is subject to the completion of definitive
agreements for all eight creditors and the approval of the debt conversion
to equity by a majority of the Company's shareholders.
To the Company's knowledge, based solely upon representations from such
shareholders, each beneficial owner of more than ten percent of the Company's
capital stock and all officers and directors filed all reports and reported
all transactions on a timely basis with the Securities and Exchange Commission
(the "Commission"), the NASD and the Company.
EXECUTIVE COMPENSATION AND RELATED INFORMATION
Summary of Cash and Certain Other Compensation
The following table provides certain summary information concerning
compensation earned, for services rendered in all capacities to the Company
and its subsidiaries, for the fiscal years ended December 31, 1998, 1997 and
1996, by all persons who served as the Company's Chief Executive Officer
during 1998, and each of the other four (4) most highly compensated executive
officers of the Company who earned more than $100,000 in compensation for the
1998 fiscal year (hereafter referred to as "Named Executive Officers").
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------------------ -------------------------------------
Awards Payouts
------------------------ -----------
Other Restricted Securities
Annual Stock Underlying LTIP All Other
Name and Principal Position Year Salary ($) Bonus ($) Comp. (1) Award(s) ($) Options (#) Payouts ($) Comp. ($)(2)
- --------------------------- ---- ---------- --------- --------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Andrew K. Wrobel (3)....... 1998 220,898 133,980 -- -- -- -- 3,015
Chairman, President 1997 46,664 25,000 -- -- 600,000 -- 99
and Chief Executive 1996 -- -- -- -- -- -- --
Officer
Denis J. Trafecanty (4).... 1998 158,154 80,000 46,723(5) -- -- -- 11,858
Senior Vice President 1997 149,414 35,000 28,798(5) -- 300,000(6) -- 5,102
and Chief Financial 1996 37,736 -- -- -- 50,000 -- --
Officer
Timothy R. Sullivan (7).... 1998 117,335 59,583 -- -- -- -- 4,559
Vice President and 1997 97,741 20,000 -- -- 150,000 -- 21,612(7)
Controller 1996 -- -- -- -- -- -- --
Pete H. Hudson, Ph.D. (8).. 1998 98,414 52,708 -- -- 75,000 -- 2,230
Vice President of 1997 -- -- -- -- -- -- --
Technology 1996 -- -- -- -- -- -- --
Dale Feine (9)............. 1998 99,200 7,000 -- -- -- -- 3,984
Director of New 1997 107,800 25,000 -- -- 125,000 -- 4,481
Business Development 1996 -- -- -- -- -- -- --
</TABLE>
- --------
(1) Other Annual Compensation for all other employees listed in the table is
less than $50,000 and 10% of the total of annual salary and bonus for such
individual.
10
<PAGE>
(2) All other compensation is comprised of (i) matching contributions made by
the Company on behalf of the Named Executive Officer to its Section 401(k)
Plan and (ii) annual premiums paid for group term life insurance policies.
Under such policies, the Named Executive Officer may designate the
beneficiary of the insurance proceeds payable upon death. The amounts of
the Company's matching contribution to its Section 401(k) Plan and the
life insurance premiums are set forth below:
<TABLE>
<CAPTION>
Life
Matching 401(k) Insurance
Contributions ($) Premium ($)
----------------- -----------
<S> <C> <C> <C>
Andrew K. Wrobel......................... 1998 -- 3,015
1997 -- 99
Denis J. Trafecanty...................... 1998 4,748 7,110
1997 4,360 742
Timothy R. Sullivan...................... 1998 3,594 965
1997 1,650 112
Pete H. Hudson, Ph.D. ................... 1998 1,652 578
1997 -- --
Dale Feine............................... 1998 3,372 612
1997 3,744 737
</TABLE>
(3) Mr. Wrobel was appointed as Chairman of the Board of Directors in January
1999. Mr. Wrobel was appointed President and Chief Executive Officer of
the Company in October 1997.
(4) Mr. Trafecanty was appointed as Chief Financial Officer of the Company in
August 1996.
(5) The Company provided a car allowance to Mr. Trafecanty of $6,000 for each
of 1998 and 1997, living expenses totaling $9,291 and $10,926 for 1998 and
1997 respectively, and reimbursed Mr. Trafecanty for the income tax impact
of these and other benefits, which totaled $18,637 and $8,147 for 1998 and
1997 respectively.
(6) Includes options for 50,000 shares granted on August 21, 1997 in exchange
for the cancellation of an option for 50,000 shares originally granted on
August 26, 1996 with an exercise price $4.00 per share.
(7) Mr. Sullivan was appointed as Vice President and Controller of the Company
in March 1997. The Company paid Mr. Sullivan $19,850 in connection with
consulting services rendered to the Company during January and February
1997. These fees are included in the caption All Other Compensation.
(8) Dr. Hudson become an employee of the Company on February 2, 1998.
(9) Mr. Feine became an employee of the Company on January 3, 1997.
11
<PAGE>
Option Grants in Last Fiscal Year
There were no stock option grants made to the Company's Chief Executive
Officer or any of the other Named Executive Officers during the fiscal year
ended December 31, 1998. No stock appreciation rights were granted or
exercised during such fiscal year.
Aggregated Option Exercises and Fiscal Year-End Values
No options were exercised by the Company's Chief Executive Officer or the
other Named Executive Officers during the fiscal year ended December 31, 1998.
The following table sets forth information concerning option holdings for such
fiscal year with respect to the Company's Chief Executive Officer and each of
the other Named Executive Officers. The fair market value of the Common Stock
at fiscal year-end was $0.15 per share, based on the average of the highest
bid and lowest ask price as quoted on the OTC Bulletin Board. No stock
appreciation rights were exercised or outstanding during such fiscal year.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End(#) at Fiscal Year End($)
----------------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ---------------- ----------- -------------
<S> <C> <C> <C> <C>
Andrew K. Wrobel........ 233,334 366,666 -- --
Denis J. Trafecanty..... 147,500 152,500 -- --
Timothy R. Sullivan..... 75,000 75,000 -- --
</TABLE>
Compensation and Stock Option Committee Interlocks and Insider Participation
The individuals who served on the Compensation and Stock Option Committee of
the Company's Board of Directors during the fiscal year ended December 31,
1998 were Mr. Bryan, Mr. Wong, and Mr. Wrobel as a non-voting member. Mr.
Wrobel is an officer and employee of the Company.
No current executive officer of the Company has ever served as a member of
the board of directors or compensation committee of any other entity that has
or has had one or more executive officers serving as a member of the Company's
Board of Directors or Compensation and Stock Option Committee. Mr. Wong is a
director and Executive Vice President of Transpac. Transpac has entered into
an agreement with the Company which calls for the conversion of all debt and
accrued interest obligations into shares of the Company's Series A Preferred
Stock, each share of which will be convertible into two shares of the
Company's Common Stock. Such Preferred Stock is ultimately convertible into
8,063,651 shares of the Company's Common Stock. The debt conversion is subject
to the completion of definitive agreements for all eight creditors and the
approval of the debt conversion to equity by a majority of the Company's
shareholders.
Employment Contracts and Termination of Employment and Change in Control
Arrangements
Employment Agreement with Andrew K. Wrobel. Effective October 6, 1997, the
Company entered into a one (1)-year employment agreement ("Agreement") with
Andrew K. Wrobel. The term of this Agreement shall automatically be extended,
unless not less than one (1) year prior to the expiration date, the Company
shall have delivered written notice to Mr. Wrobel that the term of this
Agreement shall terminate on the expiration date; or Mr. Wrobel, not less than
thirty (30) days prior to the expiration date, elects to terminate this
Agreement by delivering written notice of such desire to terminate to the
Company. Under the terms of this agreement, Mr. Wrobel is entitled to a base
salary of not less than $220,000 per year, plus a minimum increase of six (6)
percent of his base salary on each anniversary of the agreement. Mr. Wrobel is
also entitled to receive a bonus equal to sixty percent (60%) of his then
existing base salary, payable quarterly pro rata upon the Company's
achievement of the performance criteria set forth in the business plan to be
prepared by Mr. Wrobel for the Company and approved by the Board. The
Agreement also guaranteed Mr. Wrobel a stock option for 500,000 shares of the
Company's Common Stock at the fair market value on the date of the Agreement
($0.43 per share).
12
<PAGE>
The options will become exercisable on an accelerated basis in the event of an
acquisition of the Company by merger or asset sale, unless the options are
assumed by the acquiring entity. Mr. Wrobel participates in all of the
Company's employee benefit plans. In the event of his termination other than
for cause, Mr. Wrobel is entitled to full acceleration of his options and a
severance payment equal to one (1) year of his then current salary within five
(5) business days of his termination plus twelve (12) months additional
coverage under the Company's health, medical and dental plans.
Change in Control Arrangements. The Compensation and Stock Option Committee
of the Board of Directors has the authority as Plan Administrator of the 1993
Plan to provide for the accelerated vesting of the shares of Common Stock
subject to outstanding options held by the Chief Executive Officer and the
Company's other executive officers under that plan in the event their
employment were to be terminated (whether involuntarily or through a forced
resignation) following an acquisition of the Company by merger or asset sale.
In connection with a hostile change in control of the Company effected through
a successful tender offer for more than 50% of the Company's outstanding
voting stock or through a proxy contest for the election of Board members, the
Plan Administrator has the discretionary authority to provide for automatic
acceleration of outstanding options under the Discretionary Option Grant
Program of the 1993 Plan and the automatic vesting of outstanding shares under
the Stock Issuance Program.
13
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
For the 1998 fiscal year, the Compensation and Stock Option Committee of the
Board of Directors was responsible for establishing the base salary and
incentive cash bonus programs for the Company's executive officers and other
key employees and administering certain other compensation programs for such
individuals, subject in each instance to review and final approval by the full
Board. The Compensation and Stock Option Committee also had the exclusive
responsibility during such year for the administration of the Company's 1993
Plan under which grants may be made to executive officers and other key
employees.
General Compensation Policy. The fundamental policy of the Compensation and
Stock Option Committee is to provide the Company's executive officers and
other key employees with compensation opportunities based upon their
contribution to the financial success of the Company and their personal
performance. It is the Compensation and Stock Option Committee's objective to
have a substantial portion of each officer's compensation contingent upon the
Company's performance as well as upon his own level of performance.
Accordingly, the compensation package for each executive officer and key
employee is comprised of three elements: (i) base salary which reflects
individual performance, (ii) annual variable performance awards payable in
cash and tied to the Company's achievement of financial performance targets,
and (iii) long-term stock-based incentive awards which strengthen the
mutuality of interests between the executive officers and the Company's
shareholders. As an executive officer's level of responsibility increases, it
is the intent of the Compensation and Stock Option Committee to have a greater
portion of his total compensation be dependent upon Company performance and
stock price appreciation rather than base salary.
Factors. For Andrew K. Wrobel, the Compensation and Stock Option Committee
followed the terms of his employment agreement with the Company in determining
his compensation for 1998. That agreement specifies the compensation, subject
to Board adjustment, that was paid to Mr. Wrobel during 1998. Several of the
more important factors which the Compensation and Stock Option Committee
considered in establishing the components of the compensation packages for
executive officers who do not have an employment agreement with the Company
for the 1998 fiscal year are summarized below. Additional factors were also
taken into account and the Compensation and Stock Option Committee may, in its
discretion, apply entirely different factors, particularly different measures
of financial performance, in setting executive compensation for future fiscal
years.
Base Salary. The base salary for each officer who does not have an
employment agreement with the Company is determined on the basis of the
following factors: experience, personal performance and internal comparability
considerations. The weight given to each of these factors differs from
individual to individual, as the Compensation and Stock Option Committee deems
appropriate.
Annual Incentive Compensation. Annual bonuses are earned by each executive
officer primarily on the basis of the Company's achievement of certain
corporate financial performance targets established for each fiscal year
combined with the individual performance of such individual.
Long-Term Incentive Compensation. Long-term incentives are provided through
stock option grants. The grants are designed to align the interests of each
executive officer with those of the shareholders and provide each individual
with a significant incentive to manage the Company from the perspective of an
owner with an equity stake in the business. Each grant allows the individual
to acquire shares of the Common Stock at a fixed price per share (the market
price on the grant date) over a specified period of time (up to ten years).
Each option generally becomes exercisable in installments over a two and one-
half (2 1/2) or three (3)-year period, contingent upon the executive officer's
continued employment with the Company or a subsidiary. Accordingly, the option
will provide a return to the executive officer only if the executive officer
remains employed by the Company during the vesting period, and then only if
the market price of the underlying shares appreciates over the option term.
The number of shares subject to each option grant is set at a level intended
to create a meaningful opportunity for stock ownership based on the officer's
current position with the Company, the base salary
14
<PAGE>
associated with that position, the size of comparable awards made to
individuals in similar positions within the industry, the individual's
potential for increased responsibility and promotion over the option term, and
the individual's personal performance in recent periods. The Compensation and
Stock Option Committee also takes into account the number of vested and
unvested options held by the executive officer in order to maintain an
appropriate level of equity incentive for that individual. However, the
Compensation and Stock Option Committee does not adhere to any specific
guidelines as to the relative option holdings of the Company's executive
officers. In 1998, no Named Executives received an option grant. Such options
are described in the Summary Compensation Table, in the column entitled "Long
Term Compensation Awards--Securities Underlying Options" and in the "Option
Grants in Last Fiscal Year" table.
CEO Compensation. In setting the compensation payable to the Company's Chief
Executive Officer, Mr. Wrobel, the Compensation and Stock Option Committee
followed the terms of the employment agreement that was previously negotiated
between Mr. Wrobel and the Company and subsequently executed. In accordance
with the terms of his employment agreement, Mr. Wrobel received a base salary
of $220,898 in 1998.
A cash bonus was earned by Mr. Wrobel for the 1998 fiscal year of $133,980
and on October 6, 1997 Mr. Wrobel was granted an option to purchase 500,000
shares of Common Stock (see "Employment Contracts and Termination of
Employment and Change in Control Arrangements--Employment Agreement with
Andrew K. Wrobel") to make a portion of his total compensation contingent on
increased value for the Company's shareholders; the option will have no value
unless there is appreciation in the value of the Company's Common Stock over
the option term. On November 4, 1997, Mr. Wrobel received an option to
purchase an additional 100,000 shares of Common Stock.
Compliance with Internal Revenue Code Section 162(m). As a result of Section
162(m) of the Internal Revenue Code, the Company will not be allowed a federal
income tax deduction for compensation paid to certain executive officers, to
the extent that compensation exceeds $1 million per officer in any fiscal
year. This limitation applies to all compensation paid to the covered
executive officers, which is not considered to be performance-based.
Compensation that does qualify as performance-based compensation will not have
to be taken into account for purposes of this limitation. Non-performance
based compensation paid to the Company's executive officers for the 1997
fiscal year did not exceed the $1 million limit per officer, and the
Compensation and Stock Option Committee does not anticipate that the non-
performance based cash compensation to be paid to the Company's executive
officers for fiscal 1999 will exceed that limit. In addition, option grants
and other awards made under the 1993 Plan prior to January 1, 1998 were
structured so that any compensation deemed paid to an executive officer in
connection with those awards will qualify as performance-based compensation
which will not be subject to the $1 million limitation. However, any
compensation deemed paid by the Company in connection with transactions
relating to options or other awards granted during the 1999 fiscal year will
have to be taken into account for purposes of the $1 million limitation.
Because it is very unlikely that the compensation payable to any of the
Company's executive officers in the foreseeable future will approach the
$1 million limit, the Compensation and Stock Option Committee has decided at
this time not to take any action to limit or restructure the elements of
compensation payable to the Company's executive officers. The Compensation and
Stock Option Committee will reconsider this decision should the individual
compensation of any executive officer ever approach the $1 million level.
Dated as of April 20, 1999
Mr. Anthony J. A. Bryan
Mr. Wong Lin Hong
Mr. Andrew Wrobel
15
<PAGE>
COMPARISON OF SHAREHOLDER RETURN
The graph below reflects a comparison of the cumulative total return (change
in stock price plus reinvestment dividends) of the Company's Common Stock
price with the cumulative total returns of the Company's peer group based on
the Company's four-digit SIC Code Index (3674--Semiconductors and Related
Devices) and the S&P 500 Index.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG MICROELECTRONIC PACKAGING,
S&P 500 INDEX AND SIC CODE INDEX
Fiscal Year Ending
Company/Index/Market 4/22/94 12/30/94 12/29/95 12/31/96 12/31/97 12/31/98
Microelectronic
Packaging $100.00 $ 60.00 $ 40.00 $ 19.37 $ 11.60 $ 3.60
Semiconductors,
Related Device 100.00 110.58 179.59 289.13 301.29 453.62
S&P Composite 100.00 103.98 143.06 175.91 234.59 301.63
Assumes $100 invested on April 22, 1994
Assumes dividend reinvested
Fiscal year ending December 31, 1998
- --------
(1) The graph covers the period from April 21, 1994, the date the Company's
initial public offering commenced, through the fiscal year ended December
31, 1998.
(2) The graph assumes that $100 was invested on April 21, 1994 in the
Company's Common Stock and in each index and that all dividends were
reinvested. No cash dividends have been declared on the Company's Common
Stock.
(3) Shareholder returns over the indicated period should not be considered
indicative of future shareholder returns.
(4) The performance graph and all of the material in the Compensation and
Stock Option Committee Report is not deemed filed with the Securities and
Exchange Commission, and is not incorporated by reference to any filing of
the Company under the Securities Act of 1933, as amended or the Securities
Exchange Act of 1934, whether made before or after the date of this Proxy
Statement and irrespective of any general incorporation language in any
such filing.
16
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than ten percent of
the Company's Common Stock, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission ("SEC"). Executive
officers, directors and greater than ten percent shareholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no Form 5s were
required for such persons, the Company believes that all filing requirements
applicable to its officers, directors, and greater than ten percent beneficial
owners during the period from January 1, 1998 to December 31, 1998, were
complied with.
FORM 10-K
The Company files an Annual Report on Form 10-K with the SEC. A copy of the
Annual Report on Form 10-K (excluding exhibits) including financial statements
and schedules has been included with the mailing of this proxy to all
shareholders. Shareholders may obtain additional copies of these reports,
including financial statements and financial statement schedules, without
charge, by writing to Denis J. Trafecanty, Chief Financial Officer of the
Company, at the Company's executive offices at 9577 Chesapeake Drive, San
Diego, California 92123.
The Company knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters properly come before
the Annual Meeting, it is the intention of the persons named in the enclosed
form of Proxy to vote the shares they represent as the Board of Directors may
recommend. Discretionary authority with respect to such other matters is
granted by the execution of the enclosed Proxy.
THE BOARD OF DIRECTORS
/s/ ANDREW W. WROBEL
Dated: April 20, 1999
17
<PAGE>
PROXY
MICROELECTRONIC PACKAGING, INC.
Annual Meeting of Shareholders -- August 18, 1999
This Proxy is Solicited on Behalf of the Board of Directors of
Microelectronic Packaging, Inc.
The undersigned revokes all previous proxies, acknowledges receipt of the Notice
of the Annual Meeting of Shareholders to be held August 18, 1999 and the Proxy
Statement and appoints Andrew Wrobel and Denis Trafecanty and each of them, the
Proxy of the undersigned, with full power of substitution, to vote all shares of
Common Stock of Microelectronic Packaging, Inc. (the "Company") which the
undersigned is entitled to vote, either on his or her own behalf or on behalf of
any entity or entities, at the Annual Meeting of Shareholders of the Company to
be held at 9577 Chesapeake Drive, San Diego, California 92123 on August 18, 1999
at 10:00 a.m. (the "Annual Meeting"), and at any adjournment or postponement
thereof, with the same force and effect as the undersigned might or could do if
personally present thereat. The shares represented by this Proxy shall be voted
in the manner set forth on the reverse side.
(To be Signed on Reverse Side)
<PAGE>
[X] Please mark your
votes as in this
example using
dark ink only.
WITHHOLD
AUTHORITY
FOR TO VOTE
1. TO ELECT SIX DIRECTORS TO SERVE FOR THE NEXT YEAR [_] [_]
UNTIL THE EXPIRATION OF THEIR TERMS IN 1999 OR
UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED:
INSTRUCTION: To withhold authority to vote for any individual nominee, strike a
line through the nominee's name in the list below:
Andrew Wrobel, Anthony J.A. Bryan, Frank Howland, Wong Lin Hong, Waldemar Heeb
and James Waring
FOR AGAINST ABSTAIN
2. To ratify the appointment of BDO Seldman, LLP [_] [_] [_]
("BDO") as independent accountants of the
Company for the fiscal year ended December 31,
1999.
The Board of Directors recommends a vote FOR the proposals. This Proxy, when
properly executed, will be voted as specified above. This Proxy will be voted
FOR the proposals if no specification is made. This proxy will also be voted at
the discretion of the proxy holder on such matters other than the two specific
proposals as may come before the meeting.
Please print the name(s) appearing on each share certificate(s) over which you
have voting authority: ______________________________________________________
(Print name(s) on certificate)
Please sign your name:_________________________________ Date:_________________
(Authorized Signature)
