EXHIBIT 10.79
April 14, 1999
VIA FAX TRANSMISSION
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(972) 466-7044
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AND REGULAR MAIL
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Steven K. Rose, Esq.
Vice President, Secretary and
General Counsel
STMicroelectronics, Inc.
1310 Electronics Drive
M. S. 2346
Carrollton, Texas 75006
Re: Microelectronic Packaging, Inc.
Dear Mr. Rose:
The purpose of this letter is to provide a statement of the good faith
intent and agreement of STMicroelectronics, Inc. ("ST"), Microelectronic
Packaging, Inc. ("MPI") and FI Financial, LLC ("FIF"), with respect to the
complete assignment and transfer by ST to FIF (and by FIF at its discretion to
certain employees of Microelectronic Packaging, Inc. ("MPI") and certain non-
employees of MPI ("Investor Group")), of all of ST's rights, title, claims and
interests in, under and pursuant to the following agreements and documents: (a)
Deed of Guarantee and Indemnity dated August 17, 1995, entered into between MPI
and SGS-Thompson Microelectronics Pte Limited ("SGS") ("Guaranty"); (b) a
document entitled "Charge" dated August 17, 1995, entered into between
Microelectronic Packaging (S) PTE LTD ("MPS"), and SGS ("Charge"); (c) Supply
Guarantee and Preferred Allocation Agreement dated July, 1995, between MPS and
SGS ("Supply Agreement"); (d) Supplemental Agreement to Supply Guarantee and
Preferred Allocation Agreement dated August 17, 1995 and October 19, 1995,
entered into between MPS and SGS ("Supplemental Agreement"); (e) Warrant to
Purchase Common Stock of MPI dated September 24, 1998, pursuant to which ST is
entitled to purchase an aggregate of Two Hundred Thousand (200,000) shares of
MPI's common stock at a price of One Dollar ($1.00) per share ("Warrant"); (f)
the Judgment by Confession and Stipulated Judgment dated September 24, 1998,
between MPI and ST, and all agreements and documents related thereto
("Judgments"); and (g) Restructuring, Settlement and Mutual Release Agreement
dated September 24, 1998, entered into between, among others, ST and MPI
("Settlement Agreement") (all of the foregoing agreements and documents are
referred to collectively in this letter as the "ST Agreements").
1. In addition to those terms that may be defined elsewhere in
this letter, the following terms shall have the meanings defined in this Section
1.
1.1 "Transpac Conversion" means the conversion of indebtedness
in the amount of principal and interest owed by MPM (S) Pte. Ltd. ("MPM") and
guaranteed by MPI in the aggregate to Transpac Capital Pte Ltd ("Transpac
Capital"), Transpac Industrial Holdings Ltd ("Transpac Holdings"), Regional
Investment Company Ltd ("Regional Investment"), and Natsteel Equity III Pte Ltd
("Natsteel Equity") (collectively 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
and Twenty Six (4,031,826) shares of Series A Preferred Stock, or such other
amounts as may be agreed upon between such parties.
1.2 "DBS 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 Limited ("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 and Eleven (1,154,311)
shares of Series A Preferred Stock, or such other amounts as may be agreed upon
between such parties.
1.3 "Motorola Conversion" means the conversion of indebtedness
in the amount of principal and interest owed by MPS and guaranteed by MPI to
Motorola, Inc. ("Motorola"), 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, or such other amounts as may be agreed upon between such
parties.
1.4 "NS Electronics Conversion" means the conversion of
indebtedness in the amount of principal and interest owed by MPI to NS
Electronics Bangkok (1993) Ltd. ("NS Electronics"), accrued as of December 31,
1997 (which is the entire amount MPI and NS Electronics have agreed is due and
payable), into Two Hundred Seventy One Thousand One Hundred Seventy Six
(271,176) shares of Series A Preferred Stock, or such other amounts as may be
agreed upon between such parties.
1.5 "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 ("Orix Leasing"), 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, or such other amounts
as may be agreed upon between such parties.
1.6 "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. ("Samsung Corning"), accrued as of December
31, 1997 (which is the entire amount MPI and Samsung have agreed is due and
payable) into One Hundred Eighty
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Three Thousand Two Hundred Seventy Five (183,275) shares of Series A Preferred
Stock, or such other amounts as may be agreed upon between such parties.
1.7 "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 ("Texas Instruments"), 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 and Twenty Seven
(1,056,027) shares of Series A Preferred Stock, or such other amounts as may be
agreed upon between such parties.
1.8 "Other Creditor Conversions" means collectively the Transpac
Conversion, the DBS Conversion, the Motorola Conversion, the NS Electronics
Conversion, the Orix Leasing Conversion, the Samsung Corning Conversion, and the
Texas Instruments Conversion.
1.9 "Other Creditors" means collectively the Transpac Entities,
DBS; Motorola ; NS Electronics; Orix Leasing; Samsung Corning; and Texas
Instruments.
2. None of the funds to be paid by FIF or any member of the Investor
Group to ST in exchange for the assignment and transfer of the ST Agreements
will have been obtained from MPI.
3. Assuming the terms and conditions of this letter and the Escrow
Instructions (as hereafter defined) are satisfied, all of the rights, title,
claims and interests of ST in, under and pursuant to the ST Agreements will be
transferred to FIF, and none of such rights, title, claims and interests will be
transferred to MPI. ST agrees that, pursuant to agreements that will be entered
into between FIF and members of the Investor Group, certain portions of the
interests obtained by FIF in the ST Agreements will be assigned by FIF to
members of the Investor Group. However, the respective rights and obligations of
FIF and ST pursuant to this letter and the Escrow Instructions (as hereafter
defined) shall not be affected in any manner by any assignment or lack of
assignment by FIF to members of the Investor Group or any other party, of any
portion of FIF's interests in the ST Agreements. Regardless of any other
provision of this letter, the Escrow Instructions (as hereafter defined) or the
Assignment Agreement (as hereafter defined), FIF represents, warrants and agrees
that:
3.1 FIF is a sophisticated and experienced investor who has the
capability to evaluate the risks of the transactions described in and
contemplated by this letter, and has the ability to protect FIF's own interests
in connection therewith.
3.2 FIF has performed whatever due diligence review FIF deems
necessary and/or appropriate in connection with the transactions described in
and contemplated by this letter, and is satisfied with the results of such due
diligence review.
3.3 FIF has not requested that ST make, and ST has not made and
is not making, any representations or warranties of any kind regarding the
propriety of FIF's
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contemplated acquisition of the ST Agreements, the value or enforceability of
any rights ST may have under the ST Agreements, the value or enforceability of
any rights FIF may have as an assignee of the ST Agreements, the value or
enforceability of any rights FIF may have to acquire shares of capital stock of
MPI by virtue of FIF's acquisition of the ST Agreements, or the current or
potential value of any of such shares of capital stock.
4. Subject to the terms and conditions of this letter and the Escrow
Instructions (as hereafter defined), not later than June 30, 1999, FIF will pay
to ST in cash in one lump sum, the amount of Five Hundred Thousand United States
Dollars (US$500,000.00) ("Investor Payment"), in exchange for ST's complete
assignment and transfer to FIF of all of ST's rights, title, claims and
interests in, under and pursuant to the ST Agreements ("ST Assignment"). The ST
Assignment will be evidenced by an assignment agreement in the form of Exhibit
"A" attached hereto and incorporated herein by reference ("Assignment
Agreement"). ST agrees that, pursuant to agreements that will be entered into
between FIF and members of the Investor Group, certain portions of the interests
obtained by FIF under the Assignment Agreement will be assigned by FIF to
members of the Investor Group. However, the respective rights and obligations of
FIF and ST pursuant to this letter and the Escrow Instructions (as hereafter
defined) shall not be affected in any manner by any assignment or lack of
assignment by FIF to members of the Investor Group or any other party, of any
portion of FIF's interests under the Assignment Agreement.
5. FIF shall not have any obligations to pay the Investor Payment to
ST until such time as all of the following conditions have been completely
satisfied:
5.1 MPI has obtained the approval of its Board of Directors and
Shareholders with respect to the Other Creditor Conversions and the conversion
of the ST Agreements by FIF (and its assignees) into an aggregate of One Million
Three Hundred Twenty Two Thousand Six Hundred Forty Seven (1,322,647) shares of
MPI's Series A Preferred Stock, or such other amounts as may be agreed upon
between such parties.
5.2 ST shall have duly executed the Assignment Agreement and
delivered such originally executed copy to the Escrow Agent (as hereafter
defined).
5.3 ST shall have delivered to the Escrow Agent (as hereafter
defined) (a) the originally executed copies of the Warrant, the Judgments and
the Settlement Agreement; and (b) all of the originally executed copies, or in
the alternative the cleanest copies in ST's possession, of the remainder of the
ST Agreements (collectively "ST Agreement Copies").
6. Not later than April 19, 1999, FIF shall have deposited the
entire amount of the Investor Payment in trust with Mission Valley Escrow
Company in San Diego, California ("Escrow Agent"), pursuant to written escrow
instructions ("Escrow Instructions") that have been approved and executed by
both FIF and ST ("Escrow Account"), and the entire amount of the Investor
Payment shall continually remain on deposit in the Escrow Account at all times
during the term of this letter. MPI shall pay all fees and expenses charged by
the Escrow Agent. All interest or other amounts earned or accrued with respect
to the Escrow Account prior to the
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payment of the Investor Payment to ST, shall remain the property of FIF and its
assignees. The Escrow Instructions shall include the following provisions, in
addition to any other provisions that may be jointly approved by FIF and ST:
6.1 At such time during the term of the Escrow Account as the
conditions stated in Sections 5.1, 5.2 and 5.3 above have been satisfied, the
Escrow Agent shall (a) deliver the Investor Payment to ST; and (b) concurrently
deliver the original executed copy of the Assignment Agreement and the ST
Agreement Copies to FIF.
6.2 In the event the Investor Payment has not been paid to ST at
or before 5:00 p.m. California time on June 30, 1999 ("Escrow Termination
Date"), then the Escrow Account shall be deemed to have been automatically
terminated as of that specific time, without the need for any further
instructions from or actions taken by either ST or FIF, and the Escrow Agent
shall thereupon immediately return all funds in the Escrow Account to FIF, and
immediately return the originally executed copy of the Assignment Agreement and
the ST Agreement Copies to ST.
6.3 The Escrow Termination Date shall not be extended beyond
June 30, 1999, except pursuant to the written agreement of ST and FIF.
7. Once the Investor Payment has been deposited in the Escrow
Account pursuant to the provisions of Section 6 hereof, this letter shall remain
in full force and effect until 5:00 p.m. California time on June 30, 1999, or
until such earlier time as the Investor Payment has been paid to ST. In the
event the Investor Payment is not deposited in the Escrow Account pursuant to
the provisions of Section 6 hereof, then this letter shall be deemed void and of
no force or effect.
8. Once the Investor Payment has been deposited in the Escrow
Account pursuant to the provisions of Section 6 hereof, if thereafter the
Investor Payment has not been paid to ST at or before 5:00 p.m. California time
on June 30, 1999, then as of that specific time, this letter shall immediately
terminate ("Automatic Termination").
9. Once the Investor Payment has been deposited in the Escrow
Account pursuant to the provisions of Section 6 hereof, until such time as there
has been an Automatic Termination, ST hereby specifically agrees that ST will
not seek to enforce any of the ST Agreements, or any of ST's rights pursuant
thereto, including without limitation, any rights ST may have pursuant to the
Judgments. However, MPI agrees that no provision of this letter or the Escrow
Instructions, and no actions taken or omitted to be taken by ST in connection
therewith, nor any other fact or circumstance existing in connection with any of
the foregoing, shall constitute or be construed to constitute any (a) waiver by
ST of any rights ST may have under the ST Agreements prior to the time ST has
received the Investor Payment; or (b) basis for the allegation of any defense by
MPI against the enforcement of the ST Agreements in accordance with their terms,
including without limitation, any defense based on theories of estoppel or
laches.
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10. MPI agrees that concurrently with the Escrow Agent's delivery
of the Investor Payment to ST as described herein, MPI will duly execute and
deliver to ST a release agreement in a form that is substantially the same as
the releases granted by MPI to ST pursuant to the provisions of the Settlement
Agreement.
11. The parties intend that the provisions of this letter be binding
upon each of them in accordance with their respective rights and obligations as
set forth herein.
By executing this letter where indicated below, ST, FIF and MPI are
indicating their agreement to be bound by the terms and conditions of this
letter.
STMICROELECTRONICS, INC. FI FINANCIAL, LLC
By: /s/ Steven K. Rose By: /s/ James T. Waring
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Vice President Manager
MICROELECTRONIC PACKAGING, INC.
By: /s/ Denis J. Trafecanty
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Senior Vice President
Chief Financial Officer
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EXHIBIT "A"
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT is entered into effective as of June _____,
1999 ("Effective Date"), between STMicroelectronics, Inc. ("ST"), and FI
Financial, LLC ("FIF"), with respect to the payment by FIF of a cash lump sum in
the amount of Five Hundred Thousand United States Dollars (US$500,000.00)
("Investor Payment"), in exchange for the assignment by ST to FIF pursuant to
the terms and conditions hereof, of all of ST's rights, title, claims and
interest in, under and pursuant to each and every one of the following
agreements and documents: (a) Deed of Guarantee and Indemnity dated August 17,
1995, entered into between Microelectronic Packaging, Inc. ("MPI") and SGS-
Thompson Microelectronics Pte Limited ("SGS") ("Guaranty"); (b) a document
entitled "Charge" dated August 17, 1995, entered into between Microelectronic
Packaging (S) PTE LTD ("MPS") and SGS ("Charge"); (c) Supply Guarantee and
Preferred Allocation Agreement dated July, 1995, between MPS and SGS ("Supply
Agreement"); (d) Supplemental Agreement to Supply Guarantee and Preferred
Allocation Agreement dated August 17, 1995 and October 19, 1995, entered into
between MPS and SGS ("Supplemental Agreement"); (e) Warrant to Purchase Common
Stock of MPI dated September 24, 1998, pursuant to which ST is entitled to
purchase an aggregate of Two Hundred Thousand (200,000) shares of MPI's common
stock at a price of One Dollar ($1.00) per share ("Warrant"); (f) the Judgment
by Confession and Stipulated Judgment dated September 24, 1998, between MPI and
ST, and all agreements and documents related thereto ("Judgments"); and (g)
Restructuring, Settlement and Mutual Release Agreement dated September 24, 1998,
entered into between, among others, ST and MPI (all of the foregoing agreements
and documents are referred to collectively in this letter as the "ST
Agreements").
FOR VALUE RECEIVED, and in consideration of the payment to ST of the
Investor Payment, ST hereby completely assigns, conveys and transfers to FIF,
all of ST's rights, title, claims and interests in, under and pursuant to each
and every one of the ST Agreements ("Assignment").
In connection with the Assignment, ST represents and warrants to FIF
that as of the Effective Date, ST is the sole and exclusive owner of all of the
rights, title, claims and interests of SGS and ST in, under and pursuant to the
ST Agreements, and that ST has not assigned, conveyed or otherwise transferred
any interest in or any portion of the ST Agreements to any party other than FIF.
Otherwise, ST does not make any additional representations or warranties of any
kind with respect to the ST Agreements. Regardless of any other provision of
this Assignment Agreement, FIF represents, warrants and agrees that:
(a) FIF is a sophisticated and experienced investor who has the
capability to evaluate the risks of the transactions contemplated by this
Assignment Agreement, and has the ability to protect FIF's own interests in
connection therewith.
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(b) FIF has performed whatever due diligence review FIF deems
necessary and/or appropriate in connection with the transactions contemplated by
this Assignment Agreement, and is satisfied with the results of such due
diligence review.
(c) FIF has not requested that ST make, and ST has not made and is not
making, any representations or warranties of any kind regarding the propriety of
FIF's contemplated acquisition of the ST Agreements, the value or enforceability
of any rights ST may have under the ST Agreements, the value or enforceability
of any rights FIF may have as an assignee of the ST Agreements, the value or
enforceability of any rights FIF may have to acquire shares of capital stock of
MPI by virtue of FIF's acquisition of the ST Agreements, or the current or
potential value of any of such shares of capital stock
IN WITNESS WHEREOF, ST and FIF have executed and delivered this Assignment
Agreement as of the Effective Date.
STMICROELECTRONICS, INC. FI FINANCIAL, LLC
By: /s/ Steven K. Rose By: /s/ James T. Waring
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