Exhibit 10.76
DEBT CONVERSION
AND
MUTUAL SETTLEMENT AND RELEASE AGREEMENT
THIS DEBT CONVERSION AND MUTUAL SETTLEMENT AND RELEASE AGREEMENT
("Conversion Agreement") is entered into at San Diego, California, effective as
of April 16, 1999 ("Effective Date"), between Microelectronic Packaging, Inc.
("MPI"), on behalf of itself and its predecessors, successors, former and
current subsidiaries, affiliates, shareholders, directors, officers, agents,
attorneys, representatives, insurers, employees and assigns (collectively with
MPI the "MPI Group"); and ORIX Leasing Singapore Limited ("ORIX"), and their
respective predecessors, successors, former and current subsidiaries,
affiliates, shareholders, directors, officers, agents, attorneys,
representatives, insurers, employees and assigns (collectively with ORIX the
"Investor Group").
WITNESSETH:
WHEREAS, pursuant to Hire Purchase Agreement Nos. H/1875/95-9264, H-1874/
95-9263, H/1986/95-9265, H/2212/95-9668, H/0459/96-1061, H/0957/96-1329,
H/0959/96-1331, H/0958/96-1330, H/0069/96-0179 and H/1751/96-2298 by and between
MPM Singapore Pte. Ltd. ("MPM") and ORIX and pursuant to Hire Purchase Agreement
No. H/0956-96-1328 by and between Microelectronic Packaging (S) Pte Ltd ("MPS")
and ORIX (collectively, the "Agreements"), ORIX leased equipment to MPM and MPS,
respectively, each a subsidiary of MPI currently in liquidation, which
Agreements call for certain lease payments and interest amounts were thereafter
due and payable periodically;
WHEREAS, MPI entered into a Guarantee and Indemnity with ORIX in connection
with each of the Agreements (collectively, the "Guarantees"), pursuant to which
MPI agreed to guaranty the obligations of MPM and MPS under the Agreements;
WHEREAS, MPM and MPS have defaulted on their obligations under the
Agreements and giving rise to MPI's obligations under the Guarantees; and
WHEREAS, in an effort to restructure and settle all of MPI's obligations
under the Guarantees, MPI and ORIX entered into a Restructuring, Settlement and
Mutual Release Agreement dated April 14, 1998, pursuant to which MPI agreed to
make certain payments to ORIX, in exchange for the agreement of ORIX to reduce
the amount of MPI's obligations under the Guarantees ("Restructuring
Agreement"). Contingent upon MPI's performance of its obligations under the
Restructuring Agreement, the Restructuring Agreement provided that all
obligations of MPI under the Guarantees would be deemed settled and ORIX would
release MPI from any further obligations with respect thereto.
WHEREAS, MPI is not able to comply with its payment obligations under the
Restructuring Agreement.
WHEREAS, the MPI Group with respect to the Investor Group, and the Investor
Group with respect to the MPI Group, desire to finally settle all of their
respective rights and obligations under the Loan Agreements, the Guarantees, the
Restructuring Agreement and all
amendments thereto, and all other related agreements (collectively the "Former
Agreements"), terminate and release all of their respective rights and
obligations under the Former Agreements, and settle all other disputes of any
kind that may or could exist between the MPI Group and the Investor Group with
respect to the Former Agreements, all upon the terms and conditions set forth in
this Conversion Agreement.
NOW THEREFORE, in consideration of the mutual agreements contained herein
and for other good and sufficient consideration, the receipt and sufficiency of
which is hereby acknowledged, the MPI Group and the Investor Group agree as
follows:
1. Defined Terms. In addition to those terms that may be defined elsewhere
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in this Conversion Agreement, the following terms shall have the meanings
defined in this Section 1.
1.1 "Conversion Date" means the date upon which the ORIX Conversion
occurs pursuant to the terms and conditions hereof.
1.2 "Performance Date" means June 30, 1999.
1.3 "Series A Preferred Stock" means the Series A Preferred Stock of
MPI, the rights, preferences privileges and restrictions of which are set forth
in the Certificate of Amendment to the Amended and Restated Articles of
Incorporation of MPI, in the form attached hereto as Exhibit "A" and
incorporated herein by reference.
1.4 "Transpac Conversion" means the conversion of indebtedness in the
amount of principal and interest owed by MPM and guaranteed by MPI in the
aggregate to Transpac Capital Pte. Ltd., Transpac Industrial Holdings Ltd.,
Regional Investment Company Ltd. and Natsteel Equity III Pte. Ltd. (the
"Transpac Entities"), accrued as of December 31, 1997 (which is the entire
amount MPI and the Transpac Entities have agreed is due and payable), into Four
Million Thirty One Thousand Eight Hundred Twenty Six (4,031,826) shares of
Series A Preferred Stock.
1.5 "DBS Bank Conversion" means the conversion of indebtedness in the
amount of principal and interest owed by MPM and MPS and guaranteed by MPI to
Development Bank of Singapore Ltd. ("DBS"), accrued as of December 31, 1997
(which is the entire amount MPI and DBS have agreed is due and payable), into
One Million One Hundred Fifty Four Thousand Three Hundred Eleven (1,154,311)
shares of Series A Preferred Stock.
1.6 "Motorola Conversion" means the conversion of indebtedness in the
amount of principal and interest owed by MPS and guaranteed by MPI to Motorola,
Inc., accrued as of December 31, 1997 (which is the entire amount MPI and
Motorola have agreed is due and payable), into Eight Hundred Sixty Nine Thousand
Nine Hundred Thirty Two (869,932) shares of Series A Preferred Stock.
1.7 "NS Electronics Conversion" means the conversion of indebtedness
in the amount of principal and interest owed by MPI to NS Electronics Bangkok
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(1993) Ltd. ("NSEB"), accrued as of December 31, 1997 (which is the entire
amount MPI and NSEB have agreed is due and payable), into Two Hundred Seventy
One Thousand One Hundred Seventy Six (271,176) shares of Series A Preferred
Stock.
1.8 "ORIX Leasing Conversion" means the conversion of indebtedness in
the amount of principal and interest owed by MPM and MPS and guaranteed by MPI
to ORIX Leasing Singapore Limited, accrued as of December 31, 1997 (which is the
entire amount MPI and ORIX Leasing have agreed is due and payable) into Four
Hundred Seventy Three Thousand Five Hundred Eighty Four (473,584) shares of
Series A Preferred Stock.
1.9 "Samsung Corning Conversion" means the conversion of indebtedness
in the amount of principal and interest owed by MPS and guaranteed by MPI to
Samsung Corning Co., Ltd., accrued as of December 31, 1997 (which is the entire
amount MPI and Samsung Corning have agreed is due and payable) into One Hundred
Eighty Three Thousand Two Hundred Seventy Five (183,275) shares of Series A
Preferred Stock.
1.10 "STMicroelectronics Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPS and guaranteed
by MPI to STMicroelectronics, Inc. (and/or any one or more assignees and/or
transferees of STMicroelectronics, Inc.), accrued as of December 31, 1997 (which
is the entire amount MPI and STMicroelectronics have agreed is due and payable)
into One Million Three Hundred Twenty Two Thousand Six Hundred Forty One
(1,322,641) shares of Series A Preferred Stock.
1.11 "Texas Instruments Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPS and guaranteed
by MPI to Texas Instruments Incorporated, accrued as of December 31, 1997 (which
is the entire amount MPI and Texas Instruments have agreed is due and payable)
into One Million Fifty Six Thousand Twenty Seven (1,056,027) shares of Series A
Preferred Stock.
1.12 "Other Creditor Conversions" means collectively the DBS Bank
Conversion, the Motorola Conversion, the NS Electronics Conversion, the Transpac
Conversion, the Samsung Corning Conversion, the STMicroelectronics Conversion
and the Texas Instruments Conversion.
1.13 "Other Creditors" means collectively DBS; Motorola, Inc.; NSEB;
the Transpac Entities; Samsung Corning Co., Ltd.; STMicroelectronics, Inc.; and
Texas Instruments Incorporated.
1.14 "Insolvency Action" means the commencement of a voluntary or
involuntary case against MPI under the United States Bankruptcy Code ("Code") or
an assignment for the benefit of creditors by MPI, but shall not include any
involuntary case brought under the Code which is dismissed within sixty (60)
days of its commencement where no action is brought during such time period to
avoid any issuance of Series A Preferred Stock by MPI or the performance by MPI
of any of its other obligations pursuant to this Conversion Agreement.
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2. Duration of Conversion Agreement. This Conversion Agreement shall
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remain in full force and effect until the Conversion Date, subject to the
following termination provisions:
2.1 Prior to the Performance Date, no party shall have any right to
terminate this Conversion Agreement in any respect, and all of the terms and
conditions hereof shall remain in full force and effect as set forth herein.
2.2 As of and after the Conversion Date, even if the Conversion Date
occurs after the Performance Date, no party shall have any right to terminate
this Conversion Agreement in any respect, and all of the terms and conditions
hereof shall remain in full force and effect as set forth herein.
2.3 After the Performance Date, so long as the Conversion Date has not
occurred, ORIX shall have sole discretion (but shall not be required) to
terminate this Conversion Agreement by giving a written termination notice to
MPI ("Termination Notice"). In the event ORIX gives MPI a Termination Notice
after the Performance Date and prior to any occurrence of the Conversion Date,
then this Conversion Agreement shall be deemed terminated as of the date the
Termination Notice is deemed given to MPI pursuant to the provisions of Section
10.3 hereof. In the event this Conversion Agreement is terminated by ORIX
pursuant to the provisions of this Section 2.3, then this Conversion Agreement
shall be deemed completely void, and MPI and ORIX shall retain and remain
subject to whatever respective rights and obligations they may otherwise have
under the Former Agreements.
2.4 Regardless of any other provision of this Section 2, if an
Insolvency Action is commenced prior to the Conversion Date, then this
Conversion Agreement and the respective rights and obligations of MPI and ORIX
hereunder shall be deemed immediately terminated without notice, and MPI and
ORIX shall retain and remain subject to whatever respective rights and
obligations they may have under the Former Agreements.
2.5 Except as provided otherwise in Sections 7.1 or 7.2 of this
Agreement, the Former Agreements shall remain in full force and effect at all
times after the Effective Date.
3. Conditions to ORIX Conversion. The completion of the ORIX Conversion
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pursuant to the terms and conditions of this Conversion Agreement shall be
subject to the performance and satisfaction of each of the following conditions,
either prior to or concurrently with the occurrence of the ORIX Conversion
("Completion Conditions"):
3.1. The completion of the Other Creditor Conversions pursuant to
agreements entered into between MPI and the Other Creditors upon terms and
conditions that are not more favorable to any of such Other Creditors than the
terms and conditions contained in this Conversion Agreement. In particular, but
without limiting the generality of the foregoing provisions of this section, the
effective price per share of the Series A Preferred Stock applicable to the
Other Creditor Conversions shall not be less than One Dollar And Two Cents
($1.02), and the terms and conditions of the settlement and release provisions
applicable to the Other Creditor
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Conversions shall not be different in any material respect from the terms and
conditions of the settlement and release provisions contained in this Conversion
Agreement.
3.2 The material terms and conditions of the ORIX Conversion and the
Other Creditor Conversions shall have been approved by MPI's Board of Directors,
which approval shall be sought and obtained by MPI in accordance with all
applicable laws.
3.3 The material terms and conditions of the ORIX Conversion and the
Other Creditor Conversions shall have been approved by MPI's Shareholders, which
approval shall be sought and obtained by MPI in accordance with all applicable
laws.
3.4 The Certificate of Amendment of the Amended and Restated Articles
of Incorporation of MPI, in the form attached hereto as Exhibit "A" and
incorporated herein by reference ("Certificate of Amendment"), shall have been
duly adopted by all necessary corporate action of the Board of Directors and
shareholders of MPI, and shall have been duly filed with and accepted by the
California Secretary of State, upon which filing and acceptance MPI shall be
authorized to issue the Series A Preferred Stock to ORIX and the Other Creditors
as required pursuant to the ORIX Conversion and the Other Creditor Conversions.
3.5 L.H. Friend, Weinress, Frankson & Presson, Inc., an investment
banking firm who serves as financial adviser to MPI, shall have executed and
issued to MPI a written opinion, in form and substance satisfactory to MPI in
its sole discretion, concluding that the ORIX Conversion and the Other Creditor
Conversions are fair to MPI's Shareholders ("Fairness Opinion"), and a copy of
such Fairness Opinion shall have been provided to ORIX.
3.6 MPI and ORIX shall have performed each of their respective
obligations and conditions that this Conversion Agreement requires them to
perform on or prior to the Conversion Date.
4. Obligations of MPI for ORIX Conversion. MPI shall have the following
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affirmative obligations under this Conversion Agreement until such time as the
ORIX Conversion has been completed, or this Conversion Agreement has been
terminated pursuant to the provisions of Section 2 hereof:
4.1 MPI shall use its best and most diligent efforts to obtain the
agreement of each of the Other Creditors to complete the Other Creditor
Conversions pursuant to agreements entered into between MPI and the Other
Creditors upon terms and conditions that are not more favorable to such Other
Creditors than the terms and conditions contained in this Conversion Agreement.
In particular, but without limiting the generality of the foregoing provisions
of this section, MPI shall use its best and most diligent efforts to obtain the
agreement of the Other Creditors that the effective price per share of the
Series A Preferred Stock applicable to the Other Creditor Conversions shall not
be less than One Dollar And Two Cents ($1.02), and the terms and conditions of
the settlement and release provisions applicable to the Other Creditor
Conversions shall not be different in any material respect from the terms and
conditions of the settlement and release provisions contained in this Conversion
Agreement.
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4.2 MPI shall use its best and most diligent efforts to obtain the
approval of MPI's Board of Directors of the material terms and conditions of the
ORIX Conversion and the Other Creditor Conversions, which approval shall be
obtained in accordance with applicable laws.
4.3 MPI shall use its best and most diligent efforts to obtain the
approval of MPI's Shareholders of the material terms and conditions of the ORIX
Conversion and the Other Creditor Conversions, which approval shall be obtained
in accordance with applicable laws.
4.4 MPI shall use its best and most diligent efforts to cause the
Certificate of Amendment to be approved by MPI's Board of Directors and
shareholders, which approval shall be obtained in accordance with applicable
laws, and to cause the Certificate of Amendment to be filed with and accepted by
the California Secretary of State, upon which filing and acceptance MPI shall be
authorized to issue the Series A Preferred Stock to ORIX and the Other Creditors
as required pursuant to the ORIX Conversion and the Other Creditor Conversions.
4.5 MPI shall use its best and most diligent efforts to cause the ORIX
Conversion to be completed as soon as reasonably possible.
4.6 MPI shall use its best and most diligent efforts at all times
prior to the Conversion Date, to conduct its business in the usual and ordinary
course.
5. [This Section has been intentionally left blank.]
6. Completion of Conversion. At such time as all of the Completion
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Conditions have been performed and satisfied by MPI, then MPI and ORIX shall
complete the ORIX Conversion concurrently with the completion by MPI and the
Other Creditors of the Other Creditor Conversions, by concurrently taking the
following actions:
6.1 Actions By MPI.
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(a) MPI shall duly execute and deliver to ORIX a counterpart copy
of the form of Registration Rights Agreement attached to this Conversion
Agreement as Exhibit "B" and incorporated herein by reference ("Registration
Agreement").
(b) MPI's Chief Executive Officer shall duly execute and deliver
to ORIX the form of Certificate of Chief Executive Officer attached to this
Conversion Agreement as Exhibit "E" and incorporated herein by reference
("Certificate of CEO"), certifying the following matters:
(i) Any approvals of MPI's shareholders and directors that
may be required under any applicable law, in connection with the transactions
contemplated by this Conversion Agreement, have been duly obtained and are in
full force and effect as of the Conversion Date.
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(ii) All of the representations and warranties of MPI set
forth in this Conversion Agreement,. the Ancillary Agreements (as defined below)
or in any other document delivered to ORIX in connection herewith, are true,
accurate, complete, and not misleading in any material respect as of the
Conversion Date.
(iii) MPI has performed all of the duties and obligations
required to be performed by MPI on or prior to the Conversion Date, pursuant to
the provisions of this Conversion Agreement, the Ancillary Agreements (as
defined below) or in any other document delivered to ORIX in connection
herewith.
(c) MPI shall cause its legal counsel to duly execute and deliver
to ORIX the of legal opinion letter attached to his Conversion Agreement as
Exhibit "F" and incorporated herein by reference ("Legal Opinion").
(d) MPI shall deliver to ORIX copies of certificates of good
standing for MPI issued by the California Secretary and State and the California
Franchise Tax Board, dated not more than five (5) days prior to the Conversion
Date.
(e) MPI shall deliver to ORIX the stock certificate representing
Four Hundred Seventy Three Thousand Five Hundred Eighty Four (473,584) shares of
Series A Preferred Stock issued by MPI to ORIX.
(f) MPI shall deliver to ORIX and its legal counsel copies of the
following documents:
(i) A copy of the Certificate of Amendment and Bylaws of MPI
(as amended through the Conversion Date), certified by the Secretary of MPI as
true and correct copies thereof as of the Conversion Date.
(ii) A copy of the resolutions of the Board of Directors and
shareholders of MPI evidencing the amendment to MPI's Amended and Restated
Articles of Incorporation providing for the authorization of the Series A
Preferred Stock and the approval of this Agreement and the other
agreements, documents, and matters contemplated hereby, certified by the
Secretary of MPI to be true, complete and correct.
6.2 Actions By ORIX.
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(a) ORIX shall duly execute and deliver to MPI a counterpart copy
of the Registration Agreement.
6.3 Effect of Conversion. Upon the occurrence of the Conversion Date,
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(a) the debts owed by MPI to ORIX shall be deemed to have been converted,
respectively, into the number of shares of MPI's Series A Preferred Stock issued
to ORIX, as set forth in Section 6.1; and (b) as of and after the Conversion
Date, MPI shall not owe any debt of any kind to ORIX, as set forth in more
detail pursuant to Section 7 of this Conversion Agreement.
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7. Settlement and Mutual Release. If and only if the Conversion is
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completed pursuant to the terms and conditions of this Conversion Agreement,
then in that case only, effective as of the Conversion Date, MPI and ORIX agree
that the terms and conditions of this Section 7 shall be in effect with respect
to the Former Agreements and all of the respective rights and obligations of MPI
and ORIX pursuant to the Former Agreements and all other related agreements:
7.1 The Former Agreements shall be deemed to have been voluntarily
terminated pursuant to the mutual agreement of MPI and ORIX, without any
remaining liability to either the MPI Group or the Investor Group. Without
limiting the generality of the foregoing provisions of this section, MPI and
ORIX agree that MPI shall no longer have any obligations of any kind under the
Former Agreements to pay any amount to ORIX, and ORIX shall no longer have any
rights of any kind under the Former Agreements to convert any amounts owed under
the Former Agreements into, or to otherwise obtain ownership of, shares of MPI's
stock of any class or series.
7.2 The MPI Group with respect to the Investor Group, and the Investor
Group with respect to the MPI Group, shall be deemed to have forever released
and discharged each other from and against any and all claims, damages and
causes of action they may have against each other with respect to and in
connection with the Former Agreements and any matter arising out of the terms
and conditions thereof, including without limitation, any breach of any
representation or warranty or noncompliance or nonfulfillment of any covenant or
agreement contained in or arising out of the Former Agreements; provided that
such release and discharge shall not extend to any claims, damages and causes of
action any member of the Investor Group may have against any member of the MPI
Group (or any member of the MPI Group may have against any member of the
Investor Group) for fraud or willful misconduct with respect to any of the
Former Agreements or any of the transactions contemplated by this Agreement.
However, the foregoing release provisions of this section do not apply to this
Conversion Agreement, or the Certificate of Amendment, the Registration
Agreement, (collectively the "Ancillary Agreements"), or any of the respective
rights and obligations of MPI and/or ORIX pursuant to the terms and conditions
of this Conversion Agreement or the Ancillary Agreements.
8. Representations, Warranties and Agreements of MPI. In addition to any
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representations and warranties MPI may make to ORIX elsewhere in this Conversion
Agreement, the Ancillary Agreements or in any other document delivered to ORIX
in connection herewith, MPI represents and warrants to ORIX that the statements
contained in this Section 8 are true, accurate, complete, and not misleading in
any material respect, and also shall be so as of the Conversion Date.
8.1 Organization and Good Standing, and Other Status. MPI is a
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corporation, legally and validly incorporated, organized and existing under the
laws of the State of California. MPI is in good standing as certified by both
the California Secretary of State and the California Franchise Tax Board.
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8.2 Authority to Conduct Business. MPI possesses full corporate power
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and lawful authority to own, lease and operate its assets, and to carry on its
business as presently conducted. MPI is duly and legally qualified to do
business and is in good standing in each country, state, county, city or other
jurisdiction in which the failure to so qualify would have a material adverse
impact on MPI's business.
8.3 Authority Regarding this Agreement.
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8.3.1 MPI has the complete and unrestricted right, power,
authority and capacity to (a) execute and deliver this Conversion Agreement, the
Ancillary Agreements and every other document executed and delivered by MPI to
ORIX in connection therewith (collectively the "Transaction Documents"); and (b)
carry out and perform each of MPI's obligations pursuant to the Transaction
Documents.
8.3.2 As of the Conversion Date, no further corporate or
shareholder authority, approvals, actions or proceedings will be necessary on
the part of MPI to authorize the Transaction Documents or any of the
transactions contemplated thereby.
8.3.3 This Conversion Agreement has been, and, as of the
Conversion Date all of the other Transaction Documents will have been, duly and
validly executed and delivered by MPI, and when so executed and delivered, will
constitute legal, valid and binding obligations of MPI, enforceable in
accordance with their terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
contained in the Registration Agreement may be limited by applicable federal or
state securities laws.
8.3.4 The execution and delivery of this Conversion Agreement
does not, the execution and delivery of the other Transaction Documents will
not, and the consummation of the transactions contemplated thereby will not,
violate any provision of MPI's Amended and Restated Articles of Incorporation or
Bylaws (as amended), or any mortgage, lien, lease, agreement, instrument, order,
judgment or decree to which MPI is a party or by which MPI or any of its assets
is bound.
8.4 Valid Issuance of Preferred and Common Stock. The Series A
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Preferred Stock, when issued and delivered in accordance with the terms of this
Conversion Agreement, will be duly and validly issued, fully paid, and
nonassessable, and will be free of restrictions on transfer other than those
stated in this Conversion Agreement and/or that may arise under applicable state
and federal securities laws. The common stock of MPI issuable upon conversion of
the Series A Preferred Stock has been duly and validly reserved for issuance
and, upon issuance in accordance with the terms of the Certificate of Amendment,
will be duly and validly issued, fully paid, and nonassessable, and will be free
of restrictions on transfer other than those stated in this Conversion Agreement
and/or that may arise under applicable state and federal securities laws.
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8.5 Consents. No consent, approval, order or authorization of, or
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registration, qualification, designation, declaration or filing with, any
federal, state or local governmental authority or any third party on the part of
MPI is required in connection with the consummation of the transactions
contemplated by this Conversion Agreement, except (i) the filing of the
Certificate of Amendment with the California Secretary of State; (ii) the filing
required pursuant to Section 25102(f) of the California Corporate Securities Law
of 1968, as amended, and the rules thereunder, which filing will be effected
within fifteen (15) days after the issuance of the Series A Preferred Stock
pursuant hereto.
8.6 Offering. Subject in part to the truth and accuracy of the
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representations of ORIX set forth in Section 9 of this Agreement, the issuance
of the Series A Preferred Stock as contemplated by the Transaction Documents is
exempt from the registration and qualification requirements of any applicable
state and federal securities laws, and neither MPI nor any authorized agent
acting on its behalf will take any action hereafter that would cause the loss of
such exemption.
8.7 Disclosure. MPI has fully provided ORIX with all information ORIX
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has requested for deciding whether to enter into the transactions contemplated
by the Transaction Documents, including without limitation, the acquisition of
the Series A Preferred Stock.
8.8 Brokers. MPI has not taken any actions in connection with the
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negotiations relating to the Transaction Documents or the transactions
contemplated thereby that could give rise to an obligation on the part of ORIX
to pay any brokerage or finder's fee, commission or similar compensation to any
party in connection therewith.
8.9 Litigation: Except as set forth in this Section 8.9, there is no
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action, suit, proceeding, claim, arbitration or investigation ("Action") pending
(or, to the best of MPI's knowledge, currently threatened) against MPI, its
activities, properties or assets or, to the best of MPI's knowledge, against any
officer, director or employee of MPI in connection with such officer's,
director's or employee's relationship with, or actions taken on behalf of, MPI.
To the best of MPI's knowledge, there is no factual or legal basis for any such
Action that might result, individually or in the aggregate, in any material
adverse change in the business, properties, assets, financial condition, affairs
or prospects of MPI. MPI is not a party to or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or government agency or
instrumentality, and there is no Action by MPI currently pending or which MPI
intends to initiate (other than claims for monetary damages asserted by MPI
against International Business Machines Corporation ("IBM") under the Purchase
Option Agreement dated August 4, 1994, between IBM and MPI and the Multilayer
Technology Transfer and Licensing Agreement dated August 4, 1994, between IBM
and MPI). MPI is a defendant in a lawsuit filed on December 18, 1998, against
MPI and Schlumberger Technologies, Inc., in the United States District Court for
the Southern District of New York ("Lawsuit"). The plaintiffs in the Lawsuit are
Gary Stein and Lewis Solomon. Both Mr. Solomon and Mr. Stein are former
directors of MPI. The Lawsuit alleges the following claims against MPI:
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(a) Failure to pay an amount alleged to be not less than Thirty
Thousand Dollars ($30,000) allegedly owed to Lewis Solomon as compensation for
services performed by him as the former Chairman of MPI's Board of Directors;
(b) Failure to pay an amount alleged to be not less than Seventy
One Thousand Two Hundred Fifty Dollars ($71,250) allegedly owed in the aggregate
to Mr. Stein and Mr. Solomon as compensation under a consulting agreement;
(c) Wrongful termination of a consulting agreement, for which
wrongful termination Mr. Stein and Mr. Solomon allege damages in the aggregate
of not less than Five Hundred Thousand Dollars ($500,000);
(d) Tortious interference with Mr. Stein's and Mr. Solomon's
prospective economic relationships and business advantages as consultants and
directors of public corporations, presumably arising out of MPI's termination of
their consulting agreement, for which Mr. Stein and Mr. Solomon allege damages
in the aggregate of not less Than Five Million Dollars ($5,000,000);
(e) Costs and expenses incurred in the Lawsuit in an unspecified
amount.
MPI believes the claims made by Mr. Stein and Mr. Solomon against MPI
in the lawsuit are completely without merit. MPI is actively and vigorously
defending the lawsuit, and has made substantial counterclaims against Mr. Stein
and Mr. Solomon.
8.10 Capitalization. The capitalization of MPI immediately prior to the
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Conversion Date will consist of the following:
(a) Preferred Stock. A total Of Nine Million Three Hundred Sixty
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Two Thousand Seven Hundred Seventy Eight (9,362,778) authorized shares of
preferred stock, no par value per share, consisting of Nine Million Three
Hundred Sixty Two Thousand Seven Hundred Seventy Eight (9,362,778) shares
designated as Series A Preferred Stock, none of which will be issued and
outstanding. Upon the ORIX Conversion and Other Creditor Conversions, the
rights, preferences and privileges of the Series A Preferred Stock will be as
stated in MPI's Amended and Restated Articles of Incorporation, as amended by
the Certificate of Amendment, and as provided by law.
(b) Common Stock. A total of Fifty Million (50,000,000)
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authorized shares of common stock, no par value per share (the "Common Stock"),
of which not more than Eleven Million (11,000,000) shares will be issued and
outstanding.
(c) Options, Warrants, Reserved Shares. Except for: (i) the
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conversion privileges of the Series A Preferred Stock; (ii) Four Million Six
Hundred Ninety Thousand Six Hundred Thirty Two (4,690,632) shares of Common
Stock reserved for issuance under MPI's 1993 Stock Option Plan under which
options to purchase Two Million Four Hundred Twenty Four Thousand Five Hundred
(2,424,500) shares are outstanding; and (iii)
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warrants to purchase Seven Hundred Thousand (700,000) shares of Common Stock;
there is no outstanding, option, warrant, right (including conversion or
preemptive rights) or agreement for the purchase or acquisition from MPI of any
shares of its capital stock or any securities convertible into or ultimately
exchangeable or exercisable for any shares of MPI's capital stock. Apart from
the exceptions noted in this Section 8.10, and except for rights of first
refusal held by MPI to purchase shares of its stock issued under MPI's 1993
Stock Option Plan, no shares of MPI's outstanding capital stock , or stock
issuable upon exercise or exchange of any outstanding options, warrants or
rights, or other stock issuable by MPI, are subject to any preemptive rights,
rights of first refusal or other rights to purchase such stock (whether in favor
of MPI or any other person), pursuant to any agreement or commitment of MPI.
9. Representations, Warranties and Agreements of ORIX. In addition to
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any representations and warranties ORIX may make to MPI elsewhere in this
Conversion Agreement, the Ancillary Agreements or in any other document
delivered to MPI in connection herewith ORIX, represents and warrants to MPI
that the statements contained in this Section 9 are true, accurate, complete,
and not misleading in any material respect, and also shall be so as of the
Conversion Date.
9.1 Authority Regarding this Agreement.
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9.1.1 ORIX has the complete and unrestricted right, power,
authority and capacity to (a) execute and deliver each Transaction Document to
which it is a party; and (b) carry out and perform each of its obligations
pursuant to such Transaction Documents.
9.1.2 As of the Conversion Date, no further corporate or
shareholder authority, approvals, actions or proceedings will be necessary on
the part of ORIX to authorize the Transaction Documents or any of the
transactions contemplated thereby.
9.1.3 This Conversion Agreement has been, and, as of the
Conversion Date all of the other Transaction Documents will have been, duly and
validly executed and delivered by ORIX, and when so executed and delivered, will
constitute legal, valid and binding obligations of ORIX, enforceable in
accordance with their terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally, (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies, and (iii) to the extent the indemnification provisions
contained in the Registration Agreement may be limited by applicable federal or
state securities laws.
9.2 Purchase Entirely For Own Account. MPI is entering into the
---------------------------------
Transaction Documents in reliance on the representation made by ORIX, which
representation is confirmed by ORIX's execution of this Conversion Agreement,
and ORIX hereby confirms, that the Series A Preferred Stock to be received by
ORIX, and MPI's common stock issuable upon conversion thereof (collectively the
"Securities") will be acquired for investment and not with a view to the resale
or distribution of any part thereof, and that ORIX has no present intention of
selling, granting any participation in, or otherwise distributing the same. By
executing this
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Conversion Agreement, ORIX further represents that ORIX does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Securities.
9.3 Disclosure of Information. ORIX believes it has received all
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the information it considers necessary or appropriate for deciding whether to
acquire the Securities. ORIX further represents that it has had an opportunity
to ask questions and receive answers from MPI regarding the terms and conditions
of the Transaction Documents and the business, properties, prospects and
financial condition of MPI.
9.4 Investment Experience. ORIX acknowledges that it is able to
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fend for itself, can bear the economic risk of its investment, and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Securities. ORIX has
carefully evaluated its financial resources and investment position and the
risks associated with an investment in the Securities, and acknowledges that it
is able to bear the economic risks of this investment. ORIX further acknowledges
that its financial condition is such that it is not under any present necessity
or constraint to dispose of the securities to satisfy any existing or
contemplated debt or undertaking. ORIX also represents it has not been organized
for the purpose of acquiring the Securities.
9.5 Restricted Securities. ORIX understands that the Securities
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are characterized as "restricted securities" under the federal securities laws
of the United States, inasmuch as they are being acquired from MPI in a
transaction not involving a public offering, and that under such laws and
applicable regulations the Securities may be resold without registration only in
certain limited circumstances. In this connection, ORIX represents that it is
familiar with Securities and Exchange Commission ("SEC") Rule 144, as presently
in effect, and understands the resale limitations imposed thereby and generally
by the federal securities laws of the United States. ORIX further understands
that the Securities have not been registered under the Securities Act of 1933,
as amended ("33 Act") or qualified or otherwise registered under the applicable
securities laws of any state or other jurisdiction, that any disposition of the
Securities by ORIX is subject to restrictions imposed by federal and state laws,
that the stock certificates representing the Securities will bear a restrictive
legend stating that ORIX cannot dispose of the Securities absent such
registration and qualification, except pursuant to any available exemption from
such registration and qualification.
9.6 Further Restrictions on Transfer. Without in any way limiting
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the representations set forth above in this Section 9, ORIX further agrees not
to make any disposition of all or any portion of the Securities unless and until
the transferee has agreed in writing for the benefit of MPI to be bound by the
provisions of Sections 9.3 through 9.7 hereof, and the provisions of the
Registration Agreement, to the extent such sections and such agreement are then
applicable, and:
(a) There is then in effect a Registration Statement under
the 33 Act covering such proposed disposition and such disposition is made in
accordance with such Registration Statement; or
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(b) ORIX shall have notified MPI of the proposed disposition
and shall have furnished MPI with a detailed statement of the circumstances
surrounding the proposed disposition, and if reasonably requested by MPI, ORIX
shall have furnished MPI with an opinion of counsel, reasonably satisfactory to
MPI, that such disposition will not require registration of the Securities in
question under the 33 Act.
Notwithstanding the provisions of paragraphs (a) and (b) above, no
such registration statement or opinion of counsel shall be required: (i) for any
transfer of any Securities in compliance with SEC Rule 144 or Rule 144A; or (ii)
for any transfer of any Securities by a holder thereof that is a partnership or
a corporation to: (1) a partner of such partnership or a shareholder of such
corporation; (2) a retired partner of such partnership who retires after the
date hereof; or (3) the estate of any such partner or shareholder; provided,
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that in each of the foregoing cases the transferee agrees in writing to be
subject to the terms of this Section 9 to the same extent as if the transferee
were an original purchaser of Securities hereunder.
9.7 Restrictive Legend. Each certificate representing the Series
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A Preferred Stock or any other securities issued in respect of the Series A
Preferred Stock or upon the conversion thereof, shall be stamped or otherwise
imprinted with a legend in the following form, in addition to any legend
required pursuant to applicable state securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (AS AMENDED), NOR QUALIFIED OR OTHERWISE REGISTERED
UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. THESE
SECURITIES HAVE BEEN ACQUIRED ONLY FOR INVESTMENT AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF OR HYPOTHECATED (a) IN THE
ABSENCE OF BOTH (i) AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT
OF 1933 (AS AMENDED), AND (ii) AN EFFECTIVE QUALIFICATION OR REGISTRATION UNDER
THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, OR (b) UNLESS
AN EXEMPTION FROM ANY SUCH REGISTRATIONS OR QUALIFICATIONS IS AVAILABLE AND THE
ISSUER HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT
SUCH REGISTRATIONS OR QUALIFICATIONS ARE NOT REQUIRED.
9.8 Foreign Persons. If ORIX is not a United States person, ORIX
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hereby represents that (a) it has satisfied itself as to the full observance of
the laws of its own jurisdiction in connection with any acquisition of the
Securities, including without limitation (i) the legal requirements within such
jurisdiction applicable to the acquisition of the Securities; (ii) any foreign
exchange restrictions applicable to such acquisition; (iii) any governmental or
other consents that may need to be obtained; and (iv) the income tax and other
tax consequences, if any, that may be relevant to the acquisition, holding, sale
or transfer of the Securities; and (b) ORIX's acquisition and continued
ownership of the Securities will not violate any applicable securities or other
laws of such member's jurisdiction.
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9.9 Brokers or Finders. ORIX has not taken any actions in
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connection with the negotiations relating to this Conversion Agreement or the
transactions contemplated hereby that could give rise to an obligation on the
part of MPI to pay any brokerage or finder's fee, commission or similar
compensation to any party in connection therewith.
10. Miscellaneous Provisions.
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10.1 Exhibits. All exhibits described in this Conversion
--------
Agreement are incorporated by reference as if fully set forth herein, and
constitute a material part of this Conversion Agreement, whether or not such
exhibits are attached hereto.
10.2 Governing Law. This Conversion Agreement shall in all
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respects be construed, interpreted and enforced in accordance with and governed
by the laws of the State of California, United States of America. Any legal
action between the parties regarding this Conversion Agreement shall be brought
in, and the parties hereby consent to the jurisdiction of and venue in, either
(a) the federal and state courts located in the County of San Diego, State of
California, United States of America; or (b) the courts located in the country
of Singapore.
10.3 Notices. Any notice, demand or other communication required
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or permitted under this Conversion Agreement shall be deemed given and delivered
when in writing and (a) personally served upon the receiving party, or (b) upon
the third (3rd) calendar day after mailing to the receiving party by either (i)
United States registered or certified mail, postage prepaid, or (ii) FedEx or
other comparable overnight delivery service, delivery charges prepaid, and
addressed as follows:
To MPI: Microelectronic Packaging, Inc.
9577 Chesapeake Drive
San Diego, CA 92123
Attn: Chief Executive Officer
To ORIX: ORIX Leasing Singapore Limited
331 North Bridge Road #19-01/06
Odean Towers, Singapore 188720
Attn: Managing Director
Any party may change the address specified in this section by giving the other
party notice of such new address in the manner set forth herein.
10.4 Severability. In the event that any provision of this
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Conversion Agreement becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable or invalid, then this Conversion Agreement shall
continue in full force and effect without said provision. If this Conversion
Agreement continues in full force and effect as provided above, the parties
shall replace the invalid provision with a valid provision which corresponds as
far as possible to the spirit and purpose of the invalid provision.
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10.5 Counterparts. This Conversion Agreement may be executed in
------------
any number of counterparts, each of which may be executed by less than all of
the parties hereto, each of which shall be enforceable against the parties
actually executing such counterparts, and all of which together shall constitute
one document.
10.6 Entire Agreement. This Conversion Agreement, the Ancillary
----------------
Agreements, and the documents and agreements contemplated herein and therein,
constitute the entire agreement between the parties with respect to the subject
matter hereof, and supersede all prior oral or written agreements,
representations or warranties between the parties other than those set forth
herein or herein provided for.
10.7 Successors and Assigns. Except as specifically permitted
----------------------
pursuant to the terms and conditions hereof, no party shall be permitted to
assign their respective rights or obligations under this Conversion Agreement
without the prior written consent of the other parties. The provisions hereof
shall inure to the benefit of, and be binding upon, the permitted successors and
assigns, heirs, executors, and administrators of the parties hereto.
10.8 Amendment and Waiver. No modification or waiver of any
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provision of this Conversion Agreement shall be binding upon the party against
whom it is sought to be enforced, unless specifically set forth in writing
signed by an authorized representative of that party. A waiver by any party of
any of the terms or conditions of this Conversion Agreement in any one instance
shall not be deemed or construed to be a waiver of such terms or conditions for
the future, or of any subsequent breach thereof. The failure by any party hereto
at any time to enforce any of the provisions of this Conversion Agreement, or to
require at any time performance of any of the provisions hereof, shall in no way
to be construed to be a waiver of such provisions or to affect either the
validity of this Conversion Agreement or the right of any party to thereafter
enforce each and every provision of this Conversion Agreement.
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10.9 Survivability. All of the representations, warranties,
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agreements and obligations of the parties pursuant to this Conversion Agreement
shall survive any issuance of the Shares and/or the Option Shares by the Company
to the Buyers.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Conversion Agreement as of the date first above written.
MICROELECTRONIC PACKAGING, INC. ORIX LEASING SINGAPORE LIMITED
By: /s/ Denis J. Trafecanty By: /s/ C.T. Kwek
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Signature Signature
Title: Senior Vice President and CFO Title: Managing Director
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