<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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
[X] Definitive Proxy Statement Commission Only (as permitted by
[_] Definitive Additional Materials Rule 14a-6(e)(2))
[_] Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
INTEGRATED PACKAGE ASSEMBLY CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transactions applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[_] 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:
-------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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Notes:
<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO THE STOCKHOLDERS:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Integrated Packaging Assembly Corporation, a Delaware corporation (the
"Company"), will be held on Friday, May 26, 2000, at 10:00 a.m., local time, at
the Company's offices at 2221 Old Oakland Road, San Jose, California, for the
following purposes:
1. To elect five (5) directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To ratify the appointment of PricewaterhouseCoopers LLP as independent
auditors for the Company for the 2000 fiscal year.
3. To transact such other business 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 stockholders of record at the close of business on April 20, 2000 are
entitled to notice of and to vote at the meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to mark,
sign and return the enclosed proxy as promptly as possible in the postage-
prepaid envelope enclosed for that purpose. Any stockholder attending the
meeting may vote in person even if he or she has returned a proxy.
FOR THE BOARD OF DIRECTORS
J. Robert Suffoletta
Secretary
San Jose, California
April 28, 2000
- --------------------------------------------------------------------------------
IMPORTANT: Whether or not you plan to attend the meeting, you are requested to
complete and promptly return the enclosed proxy in the envelope provided.
- --------------------------------------------------------------------------------
<PAGE>
INTEGRATED PACKAGING ASSEMBLY CORPORATION
2221 Oakland Road
San Jose, California
PROXY STATEMENT FOR 2000
ANNUAL MEETING OF STOCKHOLDERS
The enclosed Proxy is solicited on behalf of the Board of Directors of
Integrated Packaging Assembly Corporation (the "Company") for use at the Annual
Meeting of Stockholders to be held on Friday, May 26, 2000, at 10:00 a.m., local
time, or at any adjournment thereof, for the purposes set forth herein and in
the accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting
will be held at the Company's offices at 2221 Old Oakland Road, San Jose,
California 95131.
The proxy solicitation materials were mailed on or about April 28, 2000 to
all stockholders of record on April 20, 2000.
INFORMATION CONCERNING SOLICITATION AND VOTING
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the person
giving it any time before its use by delivering to the Secretary of the Company
at the above address of the Company, written notice of revocation or a duly
executed proxy bearing a later date, or by attending the meeting and voting in
person.
Record Date and Voting Securities
Stockholders of record at the close of business on April 20, 2000 (the
"Record Date") are entitled to notice of the meeting and to vote at the meeting.
At the Record Date, 55,195,515 shares of the Company's Common Stock, $0.001 par
value, were issued and outstanding and 3,000,000 shares of the Company's Series
A Convertible Preferred Stock, $0.001 par value, were issued and outstanding.
Voting and Solicitation
Proxies properly executed, duly returned to the Company and not revoked,
will be voted in accordance with the specifications made. Where no
specifications are given, such proxies will be voted as the management of the
Company may propose. If any matter not described in this Proxy Statement is
properly presented for action at the meeting, the persons named in the enclosed
form of proxy will have discretionary authority to vote according to their best
judgment.
Each stockholder is entitled to one vote for each share of Common Stock on
all matters presented at the meeting. The Series A Convertible Preferred Stock
shall vote with the shares of Common Stock and not as a separate class, except
with respect to the election of directors. With respect to the election of
directors, the holders of the Series A Convertible Preferred Stock voting as a
separate class are entitled to elect three directors, the holders of the Common
Stock voting as a separate class are entitled to elect one director, and the
holders of the Series A Convertible Preferred Stock and the Common Stock voting
together are entitled to elect the remaining directors. The holder of Series A
Convertible Preferred Stock shall be entitled to such number of votes as shall
be equal to the whole number of shares of Common Stock into which the holder's
aggregate number of shares of Series A Convertible Preferred Stock are
convertible. The required quorum for the transaction of business at the Annual
Meeting is a majority of the votes eligible to be cast by holders of shares of
Common Stock and Series A
1
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Convertible Preferred Stock issued and outstanding on the Record Date. Shares
that are voted "FOR," "AGAINST," "WITHHELD" or "ABSTAIN" are treated as being
present at the meeting for purposes of establishing a quorum and are also
treated as shares entitled to vote at the Annual Meeting (the "Votes Cast") with
respect to such matter. Abstentions will have the same effect as a vote against
a proposal. Broker non-votes will be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, but such non-
votes will not be counted for purposes of determining the number of Votes Cast
with respect to the particular proposal on which a broker has expressly not
voted. Thus, a broker non-vote will not effect the outcome of the voting on a
proposal.
The cost of soliciting proxies will be borne by the Company. The Company
may also reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation materials to such
beneficial owners. Proxies may also be solicited by certain of the Company's
directors, officers, and employees, without additional compensation, personally
or by telephone or telegram.
Deadline for Receipt of Stockholder Proposals
Stockholders of the Company may submit proper proposals for inclusion in
the Company's proxy statement and for consideration at the next annual meeting
of its stockholders by submitting their proposals in writing to the Secretary of
the Company in a timely manner. In order to be included in the Company's proxy
materials for the annual meeting of stockholders to be held in the year 2001,
stockholder proposals must be received by the Secretary of the Company no later
than December 30, 2000, and must otherwise comply with the requirements of Rule
14a-8 of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition, the Company's Bylaws establish an advance notice procedure
with regard to certain matters, including stockholder proposals not included in
the Company's proxy statement, to be brought before an annual meeting of
stockholders. For nominations or other business to be properly brought before
the meeting by a stockholder, such stockholder must provide written notice
delivered to the Secretary of the Company not less than 90 days in advance of
the annual or special meeting, which notice must contain specified information
concerning the matters to be brought before such meeting and concerning the
stockholder proposing such matters. A copy of the full text of the Bylaw
provisions discussed above may be obtained by writing to the Secretary of the
Company. All notices of proposals by stockholders, whether or not included in
the Company's proxy materials, should be sent to Integrated Packaging Assembly
Corporation, 2221 Old Oakland Road, San Jose, California 95131, Attention:
Corporate Secretary.
The attached proxy card grants the proxy holders discretionary authority to
vote on any matter raised at the Annual Meeting. If a stockholder intends to
submit a proposal at the Company's 2001 Annual Meeting, which is not eligible
for inclusion in the proxy statement and form of proxy relating to that meeting,
the stockholder must do so no later than March 14, 2001. If such a stockholder
fails to comply with the foregoing notice provision, the proxy holders will be
allowed to use their discretionary voting authority when the proposal is raised
at the 2001 Annual Meeting.
2
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
Nominees
A board of five (5) directors is to be elected at the Annual Meeting of
Stockholders. Unless otherwise instructed, the proxy holders will vote the
proxies received by them for the Company's five (5) nominees named below, all of
whom are presently directors of the Company. If any nominee of the Company is
unable or declines to serve as a director at the time of the Annual Meeting, the
proxies will be voted for the nominee designated by the present Board of
Directors to fill the vacancy. It is not expected that any nominee will be
unable or will decline to serve as a director. The term of office of each
person elected as a director will continue until the next Annual Meeting or
until a successor has been elected and qualified.
Vote Required; Recommendation of Board of Directors
A board of five (5) directors is to be elected at the Annual Meeting. The
Company's Board of Directors currently consists of five (5) persons. The
holders of the Series A Convertible Preferred Stock voting as a separate class
are entitled to elect three directors, the holders of the Common Stock voting as
a separate class are entitled to elect one director, and the holders of the
Series A Convertible Preferred Stock and the Common Stock voting together are
entitled to elect the remaining directors. Messrs. Duh, Lee and Tseng are
currently serving as the representatives of the Series A Convertible Preferred
Stock, Mr. Verderico is currently serving as the representative of the holders
of Common Stock, and Mr. Brooks is currently serving as the representative of
the holders of Series A Convertible Preferred Stock and the Common Stock. The
nominee(s) receiving the highest number of Votes Cast by the holder(s) entitled
to elect such director(s) will be elected as director(s) for the ensuing year.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
NOMINEES LISTED BELOW:
<TABLE>
<CAPTION>
Name Age Position
- ------------------------------------------ ---- ------------------------------------------------------------
<S> <C> <C>
Patrick Verderico......................... 56 Chief Executive Officer and President of the Company
Donald W. Brooks.......................... 61 Chairman, KLM Capital Group
Edward S. Duh............................. 35 Vice President, Orient Semiconductor Electronics, Limited
Calvin Lee................................ 48 President, Orient Semiconductor Electronics, Limited
Edmond Tseng.............................. 53 President, Orient Semiconductor Electronics, Inc. (USA)
</TABLE>
Except as set forth below, each nominee has been engaged in his principal
occupation described above during the past five (5) years. There is no family
relationship among any directors or executive officers of the Company.
Patrick Verderico joined the Company in April 1997 as its Chief Operating
Officer and was appointed the Company's President and Chief Executive Officer
and a director in July 1997. From August 1996 to April 1997, Mr. Verderico was
an independent business consultant. From April 1996 to July 1996, Mr. Verderico
was Chief Operating Officer and Executive Vice President of Maxtor Corporation,
a disk drive manufacturer. From January 1994 to March 1996, Mr. Verderico was
Chief Financial Officer and Vice President Finance and Administration of
Creative Technology, a multi-media company. From October 1992 to January 1994,
Mr. Verderico was Chief Financial Officer and Vice President Finance and
Administration of Cypress Semiconductor, Inc., a manufacturer of integrated
circuits. Prior to 1992, Mr. Verderico had various management positions in
finance and operations with Coopers & Lybrand, Philips Semiconductors and
National Semiconductor. Mr. Verderico is also a director of Catalyst
Semiconductor and Micro Component Technology, Inc.
3
<PAGE>
Donald W. Brooks has been a director of the Company since April 1999. Mr.
Brooks is the chairman of KLM Capital Group, an investment company. From July
1997 to February 1999, Mr. Brooks was the Co-Chief Executive Officer of UMC
Group (USA), a Taiwan silicon foundry company. From February 1991 to April
1997, Mr. Brooks was President of Taiwan Semiconductor Manufacturing Company,
also a silicon foundry company. Prior to 1991, Mr. Brooks held various
executive positions at Fairchild Semiconductor and Texas Instruments. Mr.
Brooks is also a director of UMC, Syntricity, Inc., and Sharewave.
Edward S. Duh has been a director of the Company since April 1999. Since
July 1993, Mr. Duh has been the Vice President and Special Assistant to the
President of Orient Semiconductor Electronics, Limited, an integrated circuit
packaging and electronics manufacture service company.
Calvin Lee has been a director of the Company since April 1999. Since
1994, Mr. Lee has been the President of Orient Semiconductor Electronics,
Limited, an integrated circuit packaging and electronics manufacture service
company.
Edmond Tseng has been a director and chairman of the board of the Company
since April 1999. Mr. Tseng has served as President of Orient Semiconductor
Electronics, Inc. (USA), a North American distributor of Orient Semiconductor
Electronics, Limited, since it was established in 1990. Mr. Tseng has 28 years
experience in the integrated circuit packaging industry. Mr. Tseng is also a
director of Asante Technologies.
Board Meetings and Committees
The Board of Directors of the Company held eleven (11) meetings during
fiscal 1999.
The Audit Committee, consisting of Messrs. Brooks, Duh and Lee, held one
(1) meeting during fiscal 1999. The Audit Committee reviews the financial
statements and the internal financial reporting system and controls of the
Company with the Company's management and independent accountants, recommends
resolutions for any dispute between the Company's management and its auditors,
and reviews other matters relating to the relationship of the Company with its
independent accountants.
The Compensation Committee, consisting of Messrs. Brooks, Duh and Lee, held
five (5) meetings during fiscal 1999. The Compensation Committee makes
recommendations to the Board of Directors regarding the Company's executive
compensation policies and administers the Company's stock option plan and
employee stock purchase plan.
The Option Committee consists of Mr. Verderico, and has the ability to
grant options (not to exceed 80,000 shares) to non-executive officers under the
Company's stock option plans.
The Board of Directors currently has no nominating committee or committee
performing a similar function.
Each director of the Company during 1999 attended at least 75% of (i) the
total number of meetings of the Board of Directors held during fiscal 1999 and
(ii) the total number of meetings held by all committees of the Board of
Directors during fiscal 1999 on which such director served.
Compensation of Directors
Directors receive no cash remuneration for serving on the Board of
Directors. Prior to April 1999, non-employee directors participated in the
Company's 1996 Director Stock Option Plan (the "1996 Director Option Plan"). In
1999, the 1996 Director Plan was replaced by the Company's 1999 Director Option
Plan (the "1999 Director Plan") The 1999 Director Plan provides that each non-
employee director of the Company will be granted an option to purchase 100,000
shares of Common Stock on the date such director first joins the Board and that
each
4
<PAGE>
non- employee director will also be granted an option to purchase 100,000 shares
of Common Stock upon such directors' annual reelection to the Board if the
director has served on the Board for at least six (6) months as of the date of
the reelection. All options granted under the 1999 Director Plan will have an
exercise price equal to the fair market value of the Common Stock on the date of
grant and will be fully vested and exercisable on the date of grant. Under the
1999 Director Plan, Messrs. Brooks, Duh, Lee and Tseng were each granted an
option to purchase 100,000 shares of Common Stock at an exercise price of $0.24
per share on September 3, 1999. Mr. Tseng was also granted an option to purchase
1,000,000 shares of Common Stock pursuant to the 1993 Stock Option Plan at an
exercise price of $0.59 per share on December 14, 1999.
5
<PAGE>
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has selected PricewaterhouseCoopers LLP, independent
accountants, to audit the financial statements of the Company for the 2000
fiscal year. This nomination is being presented to the stockholders for
ratification at the meeting. PricewaterhouseCoopers LLP has audited the
Company's financial statements since the Company's inception. A representative
of PricewaterhouseCoopers LLP is expected to be present at the meeting, will
have the opportunity to make a statement, and is expected to be available to
respond to appropriate questions.
Vote Required; Recommendation of Board of Directors
The affirmative vote of a majority of the Votes Cast on the proposal at the
Annual Meeting is required to ratify the Board's selection. If the stockholders
reject the nomination, the Board will reconsider its selection.
THE COMPANY'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS VOTING "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S
INDEPENDENT ACCOUNTANTS FOR THE 2000 FISCAL YEAR.
6
<PAGE>
ADDITIONAL INFORMATION
Principal Share Ownership
As of April 20, 2000, the following person was known by the Company to be
the beneficial owner of more than 5% of the Company's Common Stock:
<TABLE>
<CAPTION>
Beneficial Ownership
----------------------------------------
Name Number Percent
- --------------------------------------------------------------------- ---------- -----------
<S> <C> <C>
Orient Semiconductor Electronics, Limited ("OSE")(1)................. 60,567,390 62.8%
</TABLE>
(1) Includes 41,246,312 shares of Common Stock issuable upon conversion of the
3,000,000 shares of the Company's Series A Convertible Preferred Stock held
by OSE. OSE holds all of the outstanding shares of the Company's Series A
Convertible Preferred Stock, which can be converted into shares of Common
Stock at any time. Director Calvin Lee is President of OSE, director Edward
S. Duh is Vice President of OSE, and director Edmond Tseng is President of
OSE, Inc. (USA).
Security Ownership of Management
The following table sets forth the beneficial ownership of the Company's
Common Stock as of April 20, 2000 (i) by each director of the Company, (ii) by
the Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company for fiscal year 1999 (such officers are
collectively referred to as the "Named Executive Officers"), and (iii) by all
current directors and executive officers as a group:
<TABLE>
<CAPTION>
Beneficial Ownership
----------------------------------------
Name Number Percent
- --------------------------------------------------------------------- ---------- ----------
<S> <C> <C>
Patrick Verderico(1)................................................. 308,334 *
Gerald K. Fehr(2).................................................... 730,742 *
Richard J. Oshiro(3)................................................. 80,000 *
Chris B.K. Ooi(4).................................................... 104,000 *
F. Terrence Markle(5)................................................ 21,073 *
Edward S. Duh(6)..................................................... 60,667,390 62.8%
Calvin Lee(6)....................................................... 64,934,934 64.4%
Edmond Tseng(6)..................................................... 65,239,759 64.5%
Donald W. Brooks(7).................................................. 100,000 *
All directors and executive officers as a group (9 persons)(8)....... 71,052,081 66.5%
</TABLE>
______________________________
* Less than 1%
(1) Includes 308,334 shares issuable upon exercise of options to purchase
Common Stock which are exercisable within 60 days of April 20, 2000.
(2) Includes 67,917 shares issuable upon exercise of options to purchase Common
Stock which are exercisable within 60 days of April 20, 2000.
(3) Includes 80,000 shares issuable upon exercise of options to purchase Common
Stock, which are exercisable within 60 days of April 20, 2000.
(4) Includes 90,625 shares issuable upon exercise of options to purchase Common
Stock, which are exercisable within 60 days of April 20, 2000.
(5) Includes 17,188 shares issuable upon exercise of options to purchase Common
Stock, which are exercisable within 60 days of April 20, 2000.
(6) Includes 100,000 shares issuable upon exercise of options to purchase
Common Stock, which are exercisable within 60 days of April 20, 2000. Also
includes 41,246,312 shares of Common Stock issuable upon conversion of the
3,000,000 shares of the Company's Series A Convertible Preferred Stock held
by OSE. OSE holds all of the outstanding shares of the Company's Series A
Convertible Preferred Stock, which can be converted into shares of Common
Stock at any time.
7
<PAGE>
Director Calvin Lee is President of OSE, director Edward S. Duh is Vice
President of OSE, and director Edmond Tseng is President of OSE, Inc.
(USA).
(7) Includes 100,000 shares issuable upon exercise of options to purchase
Common Stock, which are exercisable within 60 days of April 20, 2000.
(8) Includes 964,064 shares issuable upon exercise of options to purchase
Common Stock, which are exercisable within 60 days of April 20, 2000. See
footnote 6 above.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth information concerning compensation paid to
the Named Executive Officers during the Company's last three fiscal years.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation(1) Awards
-------------------------------------- -------------
Name and Principal Position Fiscal Year Salary Bonus Options
- ----------------------------------------------------------------- ------------ -------- -------- -------------
<S> <C> <C> <C> <C>
Patrick Verderico (2)............................................ 1999 $336,693 $ 52,544 1,200,000
Chief Executive Officer and President 1998 318,269 116,500 --
1997 214,617 50,000 400,000
Gerald K. Fehr................................................... 1999 176,177 21,510 290,000
Executive Vice President, Chief Technology Officer 1998 173,460 24,933 100,000
1997 183,996 6,000 --
Richard J. Oshiro................................................ 1999 148,420 18,823 320,000
Vice President, Quality 1998 131,652 11,771 --
1997 108,000 270 --
Chris B.K. Ooi................................................... 1999 145,918 17,359 300,000
Vice President, Operations 1998 130,191 11,144 --
1997 108,000 -- --
F. Terrence Markle(3)............................................ 1999 131,107 11,327 125,000
Corporate Controller, Treasurer and Chief Accounting 1998 119,346 13,652 --
Officer 1997 30,385 -- 25,000
</TABLE>
__________________
(1) Excludes perquisites and other personal benefits, which for each Named
Executive Officer did not exceed the lesser of $50,000 or 10% of the total
annual salary and bonus for such officer during any fiscal year.
(2) Mr. Verderico joined the Company in April 1997.
(3) Mr. Markle joined the Company in September 1997 and left the Company in
April 2000.
Option Information
The following tables set forth information regarding stock options granted
to the Named Executive Officers during fiscal 1999, as well as options held by
such officers as of December 31, 1999.
<TABLE>
<CAPTION>
Options Granted in Last Fiscal Year
Individual Grants(1)
-------------------------------------------------
% of Total Potential Realizable Value at
Options Exercise or Annual Rates of Stock Price
Granted to Base Price Appreciation for Option
Options Employees in Per Expiration Term(2)
-----------------------------
Name Granted Fiscal Year Share Date 5% 10%
- ----------------------------------------- --------- ------------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Patrick Verderico........................ 1,200,000 15.1% $ 0.24 09/03/09 $181,122 $458,998
Gerald K. Fehr........................... 290,000 3.6% 0.24 09/03/09 43,771 110,924
Richard J. Oshiro........................ 320,000 4.0% 0.24 09/03/09 48,299 122,399
Chris B.K. Ooi........................... 300,000 3.8% 0.24 09/03/09 45,280 114,749
F. Terrence Markle....................... 125,000 1.6% 0.24 09/03/09 18,867 47,812
</TABLE>
___________________
9
<PAGE>
(1) Each of these options was granted pursuant to the Option Plan and is subject
to the terms of such plan. These options were granted at an exercise price
equal to the fair market value of the Company's Common Stock as determined
by the Board of Directors of the Company on the date of grant and, as long
as the optionee maintains continuous employment with the Company, vest over
a four year period at a rate of 25% of the shares subject to the option on
the first anniversary of the date of grant and an additional 1/48th of the
shares subject to the option at the end of each one-month period thereafter.
(2) Potential gains are net of the exercise price but before taxes associated
with the exercise. Amounts represent hypothetical gains that could be
achieved for the respective options if they were exercised at the end of the
option term. The assumed 5% and 10% rates of stock appreciation are based on
appreciation from the exercise price per share. These rates are provided in
accordance with the rules of the Securities and Exchange Commission and do
not represent the Company's estimate or projection of the future Common
Stock price. Actual gains, if any, on stock option exercises are dependent
on the future financial performance of the Company, overall stock market
conditions and the option holders' continued employment through the vesting
period.
Aggregated Option Exercises in Last Fiscal Year And
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Fiscal Year-End Option Values
---------------------------------------------------------------
Value of Unexercised
Shares Number of Unexercised Options In-the-Money Options at
Acquired on Value at Fiscal Year End Fiscal Year End(1)
------------------------------- ------------------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------------ ---------- ---------- ------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Patrick Verderico................... -- $ -- 266,667 1,333,333 $ -- $368,280
Gerald K. Fehr...................... -- -- 47,917 342,083 -- 89,001
Richard J. Oshiro................... -- -- 80,000 320,000 26,152 98,208
Chris B.K. Ooi...................... -- -- 96,875 303,125 -- 92,070
F. Terrence Markle.................. -- -- 14,063 135,937 -- 38,363
</TABLE>
___________________
(1) The value of unexercised options at fiscal year end represents the
difference between the exercise price of the options and the closing price
of the Company's Common Stock on December 31, 1999 of $0.54690 per share.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee of the Board of Directors during 1999 consisted
of Messrs. Brooks, Duh and Lee, none of whom was an officer or employee of the
Company. No member of the Compensation Committee or executive officer of the
Company has a relationship that would constitute an interlocking relationship
with executive officers or directors of another entity.
Report of the Compensation Committee of the Board of Directors
The Compensation Committee (the "Committee") was comprised of Messrs.
Brooks, Duh and Lee during 1999. The Committee sets, reviews and administers the
Company's executive compensation program. The role of the Committee is to
establish and recommend salaries and other compensation paid to executive
officers of the Company and to administer the Company's stock option plans and
employee stock purchase plan. The Committee approves all stock option grants to
executive officers, all executive officer base salaries and any cash bonus
payments to executive officers and reviews all stock option grants to employees.
The Company's executive pay programs are designed to attract and retain
executives who will contribute to the Company's long-term success, to mesh
executive and stockholder interests through stock option based plans and to
provide a compensation package that recognizes individual contributions and
Company performance.
The Committee has determined that the most effective means of compensation
are base salaries, incentive bonuses and long-term incentives through the
Company's stock option programs.
Base Salary. The base salaries of executive officers are initially
determined by evaluating the responsibilities of the position held and the
experience and performance of the individual, with reference to the
10
<PAGE>
competitive marketplace for executive talent, including a comparison to base
salaries for comparable positions in high growth, technology-based companies of
reasonably similar size. The Committee reviews executive salaries annually and
adjusts them as appropriate to reflect changes in the market conditions and
individual performance and responsibility. During fiscal 1999, salaries for
executive officers were increased by 5%. The Chief Executive Officer's salary
was increased from $325,000 to $341,250.
Bonus. The Company maintains a bonus plan for executive officers which
provides for bonuses based on achievement of individual and company performance
goals. Specifically, each executive officer can earn from 35% to 65% of his
annual base salary in the form of incentive bonus payments if all company and
individual performance goals are satisfied. The target bonus factor for the
Chief Executive Officer is 65%. The bonus is based 20% upon achievement of
individual performance goals and 80% upon achievement of company performance
goals. This bonus program reflects the Committee's view that bonuses should only
be paid when the Company and the individual executive achieve predetermined
performance goals. Messrs. Verderico, Fehr, Oshiro, Ooi and Markle were paid
bonuses in 1999 in the amounts of $52,544, $21,510, $18,823, $17,359 and
$11,327, respectively. All such bonuses were paid based on achievement of
management business objectives.
Stock Options. Under the Company's Option Plan, stock options may be
granted to executive officers and other employees of the Company. Upon joining
the Company, an individual's initial option grant is based on the individual's
responsibilities and position. The size of any annual stock option awards is
based primarily on an individual's performance and responsibilities. The
Committee believes stock option grants are an effective method of ensuring that
the executive is taking a longer term view of the Company's performance and that
the executive's and the stockholder's interests are in alignment.
The options granted to the Company's executive officers include a provision
that provides that the options shall become fully vested and exercisable in the
event of a change in control of the Company.
Other. Other elements of executive compensation include Company-wide
medical and life insurance benefits and the ability to defer compensation
pursuant to a 401(k) plan. The Company does not currently match contributions
under the 401(k) plan.
The Company's Chief Executive Officer does not receive any other special or
additional compensation other than as described above.
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code and the regulations thereunder (the "Section"). The
Section disallows a tax deduction for any publicly-held corporation for
individual compensation exceeding $1 million in any taxable year for any of the
Named Executive Officers, unless such compensation is performance-based. Since
the cash compensation of each of the Named Executive Officers is below the $1
million threshold and the Committee believes that any options granted under the
Option Plan will meet the requirements of being performance-based, the Committee
believes that the Section will not reduce the tax deduction available to the
Company. The Company's policy is to qualify, to the extent reasonable, its
executive officers' compensation for deductibility under applicable tax laws.
However, the Committee believes that its primary responsibility is to provide a
compensation program that will attract, retain and reward the executive talent
necessary to the Company's success. Consequently, the Committee recognizes that
the loss of a tax deduction could be necessary in some circumstances.
Compensation Committee of the Board of Directors
Donald W. Brooks
Edward S. Duh
Calvin Lee
11
<PAGE>
Comparison of Total Cumulative Stockholder Return
The following graph sets forth the Company's total cumulative stockholder
return compared to the Standard & Poor's 500 Index and the Philadelphia
Semiconductor Index for the period February 28, 1996 (the date of the Company's
initial public offering) through December 31, 1999. Total stockholder return
assumes $100 invested at the beginning of the period in the Common Stock of the
Company, the stocks represented in the Standard & Poor's 500 Index and the
stocks represented in the Philadelphia Semiconductor Index, respectively. Total
return also assumes reinvestment of dividends; the Company has paid no dividends
on its Common Stock.
Historical stock price performance should not be relied upon as indicative
of future stock price performance.
2/28/96 12/31/96 12/31/97 12/31/98 12/31/99
------- -------- -------- -------- --------
IPAC 100 108 0.08 0.01 0.07
S&P 500 100 115 151 191 228
Philadelphia
Semiconductor Index 100 122 134 178 359
[GRAPH APPEARS HERE]
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely on its review of copies of filings under Section 16(a) of the
Securities Exchange Act of 1934, as amended, received by it, or written
representations from certain reporting persons, the Company believes that during
fiscal 1999 all Section 16 filing requirements were met.
CERTAIN TRANSACTIONS
On April 29, 1999, OSE purchased 4,000,000 shares of the Series A
Convertible Preferred Stock (the "Series A Preferred") of the Company for a cash
purchase price of $6,800,000. OSE acquired the shares of Series A Preferred from
the Company pursuant to a Preferred Stock Purchase Agreement dated April 29,
1999 (the "Purchase Agreement"). Each share of Series A Preferred is initially
convertible into 13.7487705 shares of the Company's Common Stock. Each share of
Series A Preferred has voting rights equal to the number of shares of Common
Stock into which each such share is convertible. Pursuant to the Company's
Certificate of Designation of Series A Convertible Preferred Stock, the holders
of Series A Preferred shall be entitled to elect three (3) members
12
<PAGE>
of the Company's Board of Directors; the holders of Common Stock shall be
entitled to elect one (1) member of the Board of Directors; and the holders of
Common Stock and Series A Preferred, voting together as a single class on an as-
is-converted basis, shall be entitled to elect the remaining members of the
Board of Directors. Messrs. Duh, Lee and Tseng are currently serving on the
Board as representatives of the holders of the Series A Preferred. The holder of
the Company's Series A Preferred and the holders of the Company's Common Stock
have a right of first refusal to purchase, at the same price and on the same
general terms, a pro rata portion of equity securities that the Company may
propose to issue in certain future transactions. The right of first refusal
expires upon a change in control of the Company or, in the case of the holders
of Common Stock, October 29, 1999 (if earlier). On August 4, 1999, OSE converted
1,000,000 shares of Series A Preferred into 13,748,771 shares of the Company's
Common Stock.
On July 1, 1999, the Company issued 326,022 shares of Common Stock to OSE
as a dividend on the Series A Preferred held by OSE in accordance with the terms
of such shares. On January 1, 2000, the Company issued 369,092 shares of Common
Stock to OSE as a dividend on the Series A Preferred held by OSE in accordance
with the terms of such shares.
On October 29, 1999, the Company acquired Orient Semiconductor Electronics,
Inc. (OSEI), the North American distributor of OSE, in a stock for stock
exchange valued at approximately $4.7 million. In connection with the
acquisition, the Company issued 25,910,090 shares of its Common Stock with a
fair market value of $4.3 million. Edmond Tseng and Calvin Lee, each of whom is
a director of the Company, received 4,572,369 and 4,267,544 shares of Common
Stock, respectively, in the acquisition, and OSE received 4,877,193 shares of
Common Stock in the acquisition. As a result of the transaction, OSEI will be
operated as a wholly owned subsidiary of the Company.
OTHER MATTERS
The Company knows of no other matters to be submitted at the Annual
Meeting. If any other matters properly come before the meeting, it is the
intention of the persons named in the enclosed proxy to vote the shares they
represent as the Board of Directors of the Company may recommend.
THE BOARD OF DIRECTORS
San Jose, California
April 28, 2000
13
<PAGE>
INTEGRATED PACKAGING ASSEMBLY CORPORATION
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Patrick Verderico and Edmond Tseng, jointly
and severally, proxies with full power of substitution, to vote all shares of
Common Stock of Integrated Packaging Assembly Corporation, a Delaware
corporation (the "Company"), which the undersigned is entitled to vote at the
Annual Meeting of Stockholders to be held at the Company's offices located at
2221 Old Oakland Road, San Jose, California on Friday, May 26, 2000 at 10:00
a.m. Pacific Time, and at any adjournment thereof (1) as hereinafter specified
upon the proposals listed on the reverse side hereof and as more particularly
described in the Proxy Statement of the Company dated April 28, 2000 (the "Proxy
Statement"), receipt of which is hereby acknowledged, and (2) in their
discretion, upon such other matters as may properly come before the meeting. The
undersigned hereby acknowledges receipt of the Company's Annual Report on Form
10-K for the year ended December 31, 1999.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED.
IF NO SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED FOR
PROPOSALS 1 AND 2.
(Continued and to be signed on reverse side)
- -----------------------------FOLD AND DETACH HERE-------------------------------
<PAGE>
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
1. ELECTION OF DIRECTORS
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
Patrick Verderico [_] [_]
Donald W. Brooks [_] [_]
Edward S. Duh [_] [_]
Calvin Lee [_] [_]
Edmond Tseng [_] [_]
</TABLE>
MARK HERE IF YOU PLAN TO ATTEND THE MEETING [_]
MARK HERE FOR ADDRESS CHANGE AND NOTE BELOW [_]
2. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS FOR THE 2000 FISCAL YEAR.
FOR [_] AGAINST [_] ABSTAIN [_]
AND IN THEIR DISCRETION, UPON SUCH OTHER MATTER, OR MATTERS, WHICH MAY PROPERLY
COME BEFORE THE MEETING OR ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, YOU ARE URGED TO SIGN
AND PROMPTLY MAIL THIS PROXY IN THE RETURN ENVELOPE SO THAT YOUR SHARES MAY BE
REPRESENTED AT THE MEETING.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT ACCOUNTANTS AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE
MEETING.
Signature(s)_________________________ Dated ______________, 2000
Signature(s)_________________________ Dated ______________, 2000
