EXHIBIT 10.93
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 June 10, 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 FI Financial, LLC ("FIF") and their respective
predecessors, successors, former and current subsidiaries, affiliates,
shareholders, directors, officers, agents, attorneys, representatives, insurers,
employees and assigns (collectively with FIF the "Investor Group").
WITNESSETH:
WHEREAS, pursuant to a Supply Guarantee and Preferred Allocation
Agreement dated August 17, 1995 by and among MPI, Microelectronic Packaging (S)
Pte Ltd ("MPS") and STMicroelectronics Pte. Ltd. (formerly known as SGS-Thomson
Microelectronics, Pte. Ltd.) ("ST-Singapore") (including the Charge agreement
executed by MPS pursuant thereto, collectively, the "Initial Loan Agreement"),
ST-Singapore made a lump sum advance in the amount of Four Million US Dollars
(US$4,000,000) to MPS, a subsidiary of MPI, upon which certain interest amounts
were thereafter due and payable periodically under the Initial Loan Agreement as
amended by Supplemental Agreement to the Supply Guarantee and Preferred
Allocation Agreement dated August 17, 1995, which Supplemental Agreement was
itself dated October 19, 1995 (collectively with the Initial Loan Agreement, the
"Loan Agreement");
WHEREAS, MPI entered into a Deed of Guarantee and Indemnity dated
August 17, 1995 with ST-Singapore (the "Guarantee"), pursuant to which MPI
agreed to guaranty the obligations of MPS under the Loan Agreement;
WHEREAS, MPS has defaulted on its obligations under the Loan Agreement
giving rise to MPI's obligations under the Guarantee; and
WHEREAS, ST-Singapore has assigned its rights under the Loan Agreement
and Guarantee to STMicroelectronics, Inc. (formerly known as SGS-Thomson
Microelectronics, Inc.) ("ST"); and
WHEREAS, in an effort to restructure and settle all of MPI's
obligations under the Guarantee, MPI and ST entered into a Restructuring,
Settlement and Mutual Release Agreement dated September 24, 1998, pursuant to
which MPI agreed to make certain payments to ST, in exchange for the agreement
of ST to reduce the amount of MPI's obligations under the Guarantee
("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 Guarantee would be deemed settled
and ST 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, in connection with a Letter of Intent, signed on April 15,
1999, ST has agreed to the assignment of all of its rights pursuant to their
creditor position with MPI and its subsidiaries to FIF.
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 Agreement, the Guarantee,
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
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elsewhere 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 FIF
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 DBS, accrued as of December 31, 1997 (which is the entire amount MPI and
DBS have agreed is due
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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 (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 "FIF Conversion" means the conversion of indebtedness in the
amount of principal and interest owed by MPS and guaranteed by MPI to FIF
(and/or any one or more assignees and/or transferees of FIF, accrued as of
December 31, 1997 (which is the entire amount MPI and FIF have agreed is due and
payable) into One Million Three Hundred Twenty Two Thousand Six Hundred Forty
Seven (1,322,647) 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 Texas Instruments Conversion, the Samsung Corning Conversion,
the ORIX Leasing Conversion, the Motorola Conversion, the NS Electronics
Conversion and the Transpac Conversion.
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1.13 "Other Creditors" means collectively DBS Bank; Texas
Instruments, Inc.; Samsung Corning Company, Ltd.; ORIX Leasing Singapore
Limited; Motorola, Inc.; NS Electronics Bangkok, Ltd.; and the Transpac
Entities.
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.
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, FIF 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 FIF 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 FIF
pursuant to the provisions of this Section 2.3, then this Conversion Agreement
shall be deemed completely void, and MPI and FIF 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 FIF
hereunder shall be deemed immediately terminated without notice, and MPI and FIF
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.
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3. Conditions to FIF Conversion. The completion of the FIF 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 FIF 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 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 FIF 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 FIF 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 FIF and the Other Creditors
as required pursuant to the FIF 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 FIF 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 FIF.
3.6 MPI and FIF 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 FIF Conversion. MPI shall have the following
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affirmative obligations under this Conversion Agreement until such time as the
FIF Conversion has been completed, or this Conversion Agreement has been
terminated pursuant to the provisions of Section 2 hereof:
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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.
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
FIF 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 FIF
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 FIF and the Other Creditors
as required pursuant to the FIF Conversion and the Other Creditor Conversions.
4.5 MPI shall use its best and most diligent efforts to cause the FIF
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 FIF shall
complete the FIF 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 FIF 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
FIF 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.
(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 FIF 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 FIF in connection herewith.
(c) MPI shall cause its legal counsel to duly execute and deliver to
FIF the form of legal opinion letter attached to his Conversion Agreement as
Exhibit "F" and incorporated herein by reference ("Legal Opinion").
(d) MPI shall deliver to FIF copies of certificates of good standing
for MPI issued by the California Secretary of State and the California Franchise
Tax Board, dated not more than five (5) days prior to the Conversion Date.
(e) MPI shall deliver to FIF the stock certificate representing One
Million Three Hundred Twenty Two Thousand Six Hundred Forty Seven (1,322,647)
shares of Series A Preferred Stock issued by MPI to FIF.
(f) MPI shall deliver to FIF 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
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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 FIF.
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(a) FIF 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 FIF shall be deemed to have been converted,
respectively, into the number of shares of MPI's Series A Preferred Stock issued
to FIF, 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 FIF, as set forth in more detail
pursuant to Section 7 of this Conversion Agreement.
7. Settlement and Mutual Release. If and only if the Conversion is completed
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pursuant to the terms and conditions of this Conversion Agreement, then in that
case only, effective as of the Conversion Date, MPI and FIF 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 FIF
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 FIF, 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 FIF
agree that MPI shall no longer have any obligations of any kind under the Former
Agreements to pay any amount to FIF, and FIF 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 FIF pursuant to the terms and conditions of
this Conversion Agreement or the Ancillary Agreements.
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8. Representations, Warranties and Agreements of MPI. In addition to any
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representations and warranties MPI may make to FIF elsewhere in this Conversion
Agreement, the Ancillary Agreements or in any other document delivered to FIF in
connection herewith, MPI represents and warrants to FIF 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.
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 FIF 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,
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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 Preferred
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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.
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 FIF 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 FIF with all information FIF has
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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 FIF 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,
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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:
(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 FIF Conversion and Other Creditor Conversions, the rights,
preferences and privileges of the Series A Preferred Stock will be as
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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) authorized
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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) 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 FIF. In addition to any
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representations and warranties FIF may make to MPI elsewhere in this Conversion
Agreement, the Ancillary Agreements or in any other document delivered to MPI in
connection herewith FIF, 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 FIF 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
FIF 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 FIF, and when so executed and delivered, will
constitute legal, valid and binding obligations of FIF, enforceable in
accordance with their terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general
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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 FIF, which
representation is confirmed by FIF's execution of this Conversion Agreement, and
FIF hereby confirms, that the Series A Preferred Stock to be received by FIF,
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 FIF has no present intention of
selling, granting any participation in, or otherwise distributing the same. By
executing this Conversion Agreement, FIF further represents that FIF 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. FIF believes it has received all the
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information it considers necessary or appropriate for deciding whether to
acquire the Securities. FIF 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. FIF acknowledges that it is able to fend for
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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. FIF 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. FIF 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. FIF also represents it has not been organized
for the purpose of acquiring the Securities.
9.5 Restricted Securities. FIF understands that the Securities are
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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, FIF 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. FIF 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 FIF is subject to restrictions imposed by federal and state laws,
that the stock certificates representing the Securities will bear a restrictive
legend stating that FIF cannot dispose of the Securities absent such
registration and qualification, except pursuant to any available exemption from
such registration and qualification.
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9.6 Further Restrictions on Transfer. Without in any way limiting the
--------------------------------
representations set forth above in this Section 9, FIF 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
(b) FIF 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, FIF 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 A
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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.
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9.8 Foreign Persons. If FIF is not a United States person, FIF hereby
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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) FIF's acquisition and continued ownership
of the Securities will not violate any applicable securities or other laws of
such member's jurisdiction.
9.9 Brokers or Finders. FIF has not taken any actions in connection with
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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.
------------------------
10.1 Exhibits. All exhibits described in this Conversion Agreement are
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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 respects be
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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 or
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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 FIF: FI Financial, LLC
c/o Ross, Dixon and Bell
550 West B Street, #400
San Diego, CA 92101
Attn: James T. Waring, Esq.
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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 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.
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 provision of
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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, agreements
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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. FI FINANCIAL, LLC
By: /s/ Denis J. Trafecanty By: /s/ James T. Waring
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Signature Signature
By: Denis J. Trafecanty By: James T. Waring
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Print Print
Title: Senior Vice President and CFO Title: Manager
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