EXHIBIT 10.98
LOAN AND SECURITY AGREEMENT
---------------------------
This Loan and Security Agreement (this "Agreement"), effective 13 May, 1997 (the
"Effective Date"), is by and between (a) Texas Instruments Singapore (Pte)
Limited, a Singapore corporation having offices at 990 Bendemeer Road, Singapore
1233 ("TI"), and (b) Microelectronic Packaging, Inc., a California corporation
having offices at 9350 Trade Place, San Diego, California 92126, United States
of America ("MPI").
WHEREAS, Microelectronic Packaging (Singapore) Pte Ltd., a subsidiary of
MPI ("MPS"), has incurred certain debt obligations (the "Debt") pursuant to a
Loan and Security Agreement, dated as of May 16, 1995, by and among TI, MPS and
MPI, as amended, and certain other documents executed by MPS in connection
therewith (the "Loan Documents"); and
WHEREAS, MPI is purchasing the Debt of MPS from TI and, as consideration
therefor, MPI and TI are entering into this Loan and Security Agreement pursuant
to a Purchase and Sale Agreement, dated as of the date hereof, by and between
MPI and TI (the "Purchase and Sale Agreement");
NOW, THEREFORE, in consideration of the foregoing, the mutual promises and
covenants contained herein and other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. OBLIGATION OF TI
In consideration of the obligations of MPI, set forth below, TI will loan
to MPI US$ [**] subject to interest, repayment terms and other
conditions as set forth below. The date of the loan shall be 13 May, 1997.
The proceeds of the loan shall be used by MPI solely for the purchase by
MPI from TI of the Debt.
2. DETAILS OF THE LOAN
The loaned amount shall be set forth in a promissory note to be executed by
MPI in favor of TI, which promissory note shall be subject to the terms and
conditions hereof. MPI shall pay interest [**] per annum on the
outstanding principal balance of the loan, such interest to be calculated
and payable in the following manner:
interest due for any period = outstanding principal for the period x
[**] x number of calendar days in that period divided by 365.
Interest shall begin to accrue on May 17, 1997.
The principal of the loan and accumulated interest shall be paid back in
installments as set forth in Exhibit 1 attached hereto, MPI agrees to repay
the principal of the loan and interest thereon as set forth above.
MPI shall execute the aforementioned promissory note (the "Promissory
Note") coincident with the execution of this Agreement in a form as set
forth in Exhibit 2 attached hereto.
As long as any balances are owed to TI for principal and accumulated
interest under this Agreement, MPI shall not pay any cash dividends to its
shareholders.
3. LIEN
MPI grants to TI a security interest in all right, title and interest that
MPI has in the collateral previously granted to TI by MPS under the Loan
Documents and that MPI is acquiring from TI pursuant to the Purchase and
Sale Agreement as set forth on Exhibit 3 attached hereto (the
"Collateral"). MPI shall execute any papers which are reasonably necessary,
under the law, for TI to register, perfect under Singapore law and assert
its lien on and security interest in the Collateral.
MPI agrees that TI's security interest in the Collateral, if perfected,
shall have priority over all other security interests in the Collateral and
that the documents registering TI's security interest and agreements and
promissory notes involving MPI will clearly indicate such priority.
4. DEFAULT
If MPI breaches this Agreement by failing to perform any duty or obligation
set forth in Sections 1-3 of this Agreement, TI may give written notice
thereof to MPI. If the breach is not cured to the reasonable satisfaction
of TI within sixty (60) days after such notice; (ii) the Company commences
any case with respect to itself before any court relating to bankruptcy,
reorganization, liquidation, dissolution or winding-up (an "Insolvency
Proceeding"), undertaken under U.S. federal, state or foreign laws; or
(iii) any involuntary Insolvency Proceeding is commenced or filed against
the Company, and such proceeding or petition shall not be dismissed within
sixty (60) days after commencement or filing:
(a) The Promissory Note shall then become due and the due date for the
payment of unpaid principal and interest shall accelerate to the date
which is thirty (30) days after the effective date of such notice;
provided, however, that upon the occurrence of any event specified in
--------
(ii) or (iii) of this Section above (in the case of (iii) of this
Section above, upon the expiration of the 60-day period mentioned
therein), the Promissory Note shall automatically become due and
payable without further act of TI; and/or
(b) TI shall have the right to assert its lien in and to the Collateral,
including any of MPI's rights to peacefully enter MPS' premises during
normal working hours for the purpose of removal of any equipment
underlying the Collateral and to subsequently productively use (or
have used) such equipment for its
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benefit or to sell such equipment, any difference between the proceeds
of such sale and amounts owed to TI by MPI to remain a continuing
obligation of MPI; and/or
(c) TI shall have the right to assert its lien in and to the Collateral by
asserting MPI's right to take legal and equitable title to the
equipment underlying the Collateral via MPI's exercise of its right to
have MPS execute the appropriate documents vesting such title in MPI,
and the execution by MPI of appropriate documents vesting such title
in TI, in which event TI may, at its sole option and upon the
execution of the parties of an appropriate equipment loan agreement,
permit the equipment to remain on MPS premises to be used by MPS
solely for the benefit of TI; and/or
(d) TI shall have any other remedy which is permitted at law or in equity.
5. ACCELERATION OF PRINCIPAL REPAYMENT & ADJUSTMENT OF INTEREST
MPI agrees that if MPI's remaining operations, including the operations of
its subsidiaries, Microelectronic Packaging America and MPS, generate
higher income levels than those reflected in Exhibit 4 attached hereto
("Exhibit 4") (reproduced from Exhibit 6 attached to Addendum Two to the
Loan and Security Agreement, dated as of May 16, 1995, by and among TI, MPS
and MPI ("Addendum Two")), then additional principal repayment(s) will be
made against the latest principal due date. The additional principal
repayment(s) will be 33-1/3% of the amount that each year's actual "Net
Income" (as defined in Exhibit 4) for 1997, 1998 and 1999 exceeds the
forecasted Net Income as shown on Exhibit 4. (E.g., if MPI's income from
its remaining operations in 1997 exceeds forecast by US$500,000, MPI agrees
to pay an additional principal amount of US$166,500 or 33-1/3% of the
increased income.) All such accelerated principal repayment(s) will be made
by MPI to TI within forty-five (45) days after the end of each year-end.
Following such accelerated principal repayment(s), interest accrual amounts
shall be appropriately reduced and confirmed by an amended schedule signed
by both parties.
6. OTHER TRADE CUSTOMER EQUIPMENT LOANS
With respect to the repayment of remaining principal amounts due for the
approximately $10.5 million in trade customer supplied equipment loans
(referenced in Section 6 of Addendum Two), including the loan made pursuant
to this Agreement, MPI agrees that, to the extent that MPI has control of
repayment of such loans, no other trade customer lender will receive
repayments of principal (measured as a cumulative repayment percent of
balances outstanding at 31 December, 1996) at a rate faster than for the
repayment of principal to TI under this Agreement ("Preferable Rate of
Repayment"). MPI further agrees that, to the extent that any of MPI's
affiliates, other than MPS as indicated below, has control of repayment of
such loans, MPI will use its best efforts to ensure that no other trade
customer lender will receive Preferable
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Rate of Repayment. TI acknowledges that if a receiver or other
representative is appointed to exercise control over MPS, MPI may not be
able to influence any Preferable Rate of Repayment made by MPS.
7. APPLICABLE LAW
This Agreement and all questions relating to its validity, interpretation,
performance and enforcement will be governed by and construed in accordance
with the laws of the State of California, United States of America,
notwithstanding any conflict-of-law provisions to the contrary. The courts
of California or the federal courts of the United States of America located
in California will have jurisdiction over any and all disputes involving
this Agreement. If the laws of the State of California or the laws of the
Republic of Singapore prohibit loan interest in the amount set forth in
Section 2 of this Agreement, that amount shall be amended to be the maximum
allowed by such law.
8. MISCELLANEOUS
(a) This Agreement is the entire agreement between the parties hereto on
the subject matter hereof. No other oral, written or other agreement
or understanding shall have any affect or shall amend or modify this
Agreement. Only a writing executed by both parties hereto after the
execution of this Agreement shall be capable of amending this
Agreement.
(b) Written notice permitted or required by this Agreement shall be sent
by or sent to the persons listed below and shall be effective (i) when
delivered, if delivered by hand or (ii) three (3) days after
acknowledgment of receipt, if mailed by registered mail, postage
prepaid;
ON BEHALF OF TI ON BEHALF OF MPI
GENERAL MANAGER CHIEF FINANCIAL OFFICER
MOS MEMORY OPERATIONS MICROELECTRONIC PACKAGING, INC.
TEXAS INSTRUMENTS 9350 TRADE PLACE
SINGAPORE (PTE) LIMITED SAN DIEGO, CALIFORNIA 92126
990 BENDEMEER ROAD UNITED STATES OF AMERICA
SINGAPORE 1233
(c) Both parties hereto warrant that they are authorized to enter into
this Agreement and to perform the acts required hereby.
(d) MPI shall not assign its rights or delegate its duties hereunder
without the prior, express written permission of TI, such permission
to be executed by the same person executing this Agreement on behalf
of TI or that person's successor.
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(e) Any waiver, express or implied, by TI of any breach by MPI of any
provision of this Agreement shall not operate as a waiver of a later
breach of the same or another provision.
(f) The parties warrant that they will conform to all applicable laws and
governmental provisions in performing this Agreement, including the
applicable rules and regulations of the United States Department of
Commerce regarding exports.
(g) This Agreement and its terms and conditions, the fact of the
lender/debtor relationship between the parties, and other TI
information learned by MPI during the course of this Agreement which
is indicated by TI to be confidential, proprietary, secret, restricted
or the like shall be "Confidential Information." MPI and its employees
and contractors shall not disclose Confidential Information to anyone
other than MPI employees or contractors having a need to know, shall
use Confidential Information only to perform this Agreement, and
shall, in no event, use Confidential Information to the detriment of
TI. The foregoing obligation of MPI shall extend to publicity and
press releases. The foregoing restrictions shall not be applicable to
any portion of Confidential Information which is in the public domain
by other than the act of MPI, which was known to MPI at the time it
received the Confidential Information from TI, or which is rightfully
received by MPI from a third party. Notwithstanding the foregoing, if
MPI is, as a publicly held entity, required to disclose the fact of
the loan, or if a reasonably prudent publicly held entity would
disclose the fact of the loan, or if disclosure of the Confidential
Information is required by law, regulations, rule or order, subpoena,
judicial order or similar order, such disclosure shall not violate
this Section, PROVIDED HOWEVER, that such disclosure sets forth no
more than is reasonably necessary therefor.
(h) The failure of either party hereto to perform any obligation hereof
which is proximately caused by an Act of God, Force Majeure or other
event not within the reasonable expectation and control of the non-
performing party, shall not be a breach hereof if performance of such
obligation is expeditiously achieved following the cessation of the
event or its effects. Failure of the non-performing party to notify
the other party of the possible effects of an early occurring event
which might have otherwise resulted in excusable non-performance shall
constitute a breach hereof,
(i) TI and MPI agree to execute and deliver, or cause to be executed and
delivered, all such other instruments and take all such other actions
as either party hereto may reasonably request from time to time before
or after the Effective Date, and without payment of further
consideration, in order to effectuate the transactions provided for
herein. The parties will cooperate fully with each other in connection
with any steps required to be taken as part of their respective
obligations under this Agreement.
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(j) This Agreement may be executed in any number of counterparts, each of
which will be deemed to be an original as against any party whose
signature appears thereon, and all of which will together constitute
one and the same instrument. This Agreement will become binding when
one or more counterparts hereof, individually or taken together, will
bear the signatures of all of the parties hereto.
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IN WITNESS WHEREOF, the parties to this Loan and Security Agreement have
caused this Agreement to be duly executed and delivered as of the day and year
first written above.
TEXAS INSTRUMENTS MICROELECTRONIC PACKAGING, INC.
SINGAPORE (PTE) LIMITED
BY: /s/ John Culbreth BY: /s/ Denis J. Trafecanty
-------------------------- ------------------------------
BY (Printed): John Culbreth BY (Printed): Denis J. Trafecanty
---------------- -------------------------------
TITLE: Finance Director TITLE: Chief Financial Officer
----------------------- ----------------------------------
DATE: May 16, 1997 DATE: May 13, 1997
----------------------- ----------------------------------
ACKNOWLEDGED AND AGREED:
MICROELECTRONIC PACKAGING (SINGAPORE) PTE LTD.
BY: /s/ Pak Jee Fook
-------------------
BY (Printed): Pak Jee Fook
--------------
TITLE: Managing Director
-------------------
DATE: May 17, 1997
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EXHIBIT 1
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MICROELECTRONIC PACKAGING, INC.
QUARTERLY PAYMENT SCHEDULE
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Principal = [**] All Amounts in U.S.$
Interest Rate = [**] (for interest accrued beginning 17-May-1997)
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Date Days Interest Interest Principal Total Ending
O/S Accrual Payments Payment Payment Balance
- --------------------------------------------------------------------------------
13-May-97
16-Aug-97 95
16-Nov-97 92
16-Feb-98 92
16-May-98 89
16-Aug-98 92
16-Nov-98 92
16-Feb-99 92 [**]
16-May-99 89
16-Aug-99 92
16-Nov-99 92
16-Feb-00 92
16-May-00 90
16-Aug-00 92
16-Nov-00 92
TOTALS
================================================================================
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EXHIBIT 2
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FORM OF PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned promises to pay to TEXAS
INSTRUMENTS SINGAPORE (PTE) LIMITED OR ORDER, at CITIBANK N.A., SHENTON WAY,
SINGAPORE, or at such other place as TEXAS INSTRUMENTS SINGAPORE (PTE) LIMITED,
the holder hereof, may designate in writing, the principal sum of
US$ [**] with interest accrual beginning May 17, 1997 on the principal
computed at the rate of [**] per annum.
Principal and interest hereunder shall be due and payable in full as set forth
in Section 2 of a LOAN AND SECURITY AGREEMENT (the "Agreement") between holder
and the undersigned. Prepayments may be made on all or any portion of the
principal without premium or penalty.
This Promissory Note is issued under the terms and conditions of the
Agreement between the holder and the undersigned. The holder hereof and this
Promissory Note are entitled to all of the benefits provided for in the
Agreement, which is incorporated hereinto by reference.
Upon any occurrence of breach or default set forth in the Agreement,
the principal of this Promissory Note and interest then accrued thereon may, at
the option of the holder, be declared due and payable in the manner, and with
the effect, provided in the Agreement.
The undersigned specifically waives presentment for payment, demand,
notice of non-payment, protest and notice thereof, and, without further notice,
hereby consents to renewals, rearrangements, extensions or partial payments
either before or after maturity without prejudice to the holder thereof.
MICROELECTRONICS PACKAGING, INC.
BY:
BY (Printed):
TITLE:
DATE:
BPHPAI\JPS\0222330.03
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EXHIBIT 3
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COLLATERAL
ORIGINAL NBV*
QTY (US$'000)
--- -----------
PRESS
- -----
PRESS M/C (10 TON) 8 231.5
PRESS M/C (20 TON) 2 91.5
PRESS DIE (10 TON) 1 6.1
OPTIONAL ACCESSORIES
- - HOPPER 10 7.5
- - FEEDER & FEED CUP 13 2.6
- - VACUUM PAD 20 4.1
- - CHUTE 4 1.5
AUTO DOUBLE LOADING M/C 9 266.3
AUTO EDGE LOADING M/C 6 99.3
VACUUM CLEANER 1 6.5
DATA COLLECTION SYSTEM 1 34.4
-----
751.3
-----
KILN
- ----
SINTERING KILN 2 472.0
TUMBLING
- ---------------------
TUMBLING M/C (MANUAL) 1 23.0
TUMBLING M/C (SEMI-AUTO) 1 45.0
TUMBLING M/C (2ND, ULTRASONIC) 1 40.6
MEDIA RETURN SYSTEM 1 2.0
DRYER 1 9.5
TUMBLING M/C CONTROL PANEL 2 9.2
CONE BARREL (LARGE) 1 2.9
CONE BARREL (SMALL) 1 1.9
-----
134.1
-----
EPA
- ---
EPROM FURNACE 2 110.9
EPA G/F RETURN SYSTEM 1 25.1
BELT CLEANING SYSTEM 1 4.3
CLEANING SYSTEM 1 4.4
-----
144.7
-----
SCREEN ROOM
- -----------
STRETCHING M/C (TYPE 1) 1 5.1
STRETCHING M/C (TYPE 3) 1 9.8
AUTO EMULSION COATING M/C 1 5.0
SCREEN EXPOSURE M/C 1 13.4
HOT AIR BOX DRYER (HORIZONTAL) 2 1.9
BOX DRYER (PERPENDICULAR) 1 0.8
-----
36.0
-----
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ORIGINAL NBV*
QTY (US$'000)
--- -------------
PASTE ROOM
- ----------
VISCOMETER 1 1.0
HOBART MIXER M/C 7 7.0
N.C. DRYER 1 3.8
VEHICLE FILTERING SYSTEM 1 1.3
JAR ROLLER 4 5.6
-------
18.7
-------
PRINTING
- --------
PRINTER 6 380.7
DRYER 6 201.3
GLAZING FURNACE 3 165.1
BELT CLEANING SYSTEM 2 8.5
UNLOAD M/C 6 18.9
-------
775.0
-------
CERDIP RELIABILITY
- ------------------
CENTRIFUGE TEST SYSTEM 1 38.7
FINE LEAK TESTER 1 15.4
GROSS LEAK BUBBLE TESTER 1 3.6
GROSS LEAK PRESSURIZATION 1 34.7
He PRESSURIZATION SYSTEM 1 16.5
LIQUID THERMAL SHOCK TESTER 1 22.6
XRF-THICKNESS TESTER 1 41.2
SOLDER POT 1 5.5
PARTICLE REMOVER 3 3.1
SHOCK TESTING 1 20.3
-------
201.6
-------
CERDIP EQUIP + CERDIP RELIABILITY 2,533.4
SPARE PART 85.9
CONSUMABLE 515.3
TRANSPORT 365.5
-------
TOTAL 3,500.0
-------
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* Valued when equipment was originally acquired by Microelectronic Packaging
(Singapore) Pte Ltd.
BPHPA1\JPS\0222330.03
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[**]
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EXHIBIT 4
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MICROELECTRONIC PACKAGING, INC.
CONSOLIDATED PROFORMA
- ---------------------------------------------------------------------------------------------------------------------------------
Actual Forecast
Q3 '96 Q4 '96 FY '96 Q1 '97 Q2 '97 Q3 '97 Q4 '97 FY '97 FY '98 FY '99
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SALES
Direct Labor
Direct Materials
Variable Manufacturing
Overhead
Total Variable Cost
CONTRIBUTION MARGIN
Percent of Sales
Fixed Manufacturing
Overhead
GROSS MARGIN
Percent of Sales
Variable Selling Expenses [**]
Direct Fixed Overhead
Allocated Fixed Overhead
Total Overhead
OPERATING PROFIT
Percent of Sales
Interest Expense
Other
PRE-TAX PROFIT/(LOSS) FROM
CONTINUING OPERATIONS
Percent of Sales
Restructuring Expenses (1)
Write-Off's/ (Gain) on
extinguish of debt
Income Tax
NET INCOME
Percent of Sales
==================================================================================================================================
(1) [**]