EXHIBIT "A"
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 29, 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 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"), and their respective predecessors, successors, former and current
subsidiaries, affiliates, shareholders, directors, officers, agents, attorneys,
representatives, insurers, employees and assigns (collectively the "Investor
Group").
WITNESSETH:
WHEREAS, MPI (as "Holding Company"); MPM Singapore Pte Ltd (as
"Company"), a wholly owned subsidiary of MPI that is in liquidation ("MPM"); the
Investor Group (as "Investors"); and Transpac Capital (as "Agent"); are parties
to an agreement entitled Convertible Loan Agreement dated March 25, 1996 ("Loan
Agreement").
WHEREAS, in connection with the Loan Agreement, MPI (as "Guarantor")
entered into a guaranty dated March 26, 1996, pursuant to which MPI guaranteed
the payment obligations of MPM pursuant to the Loan Agreement ("Guaranty").
WHEREAS, in connection with the Loan Agreement, MPI (as "Company") and
the Investor Group (as "Investors") entered into a Subscription Agreement dated
March 25, 1996, pursuant to which MPI sold and issued to the Investor Group the
aggregate number of Eight Hundred Forty Two Thousand and Thirteen (842,013)
shares of MPI's common stock for an aggregate purchase price of Two Million
Dollars ($2,000,000.00), which would be equal to a price per share of Two Point
Three Seven Five Two Six Zero Two Dollars ($2.3752602) per share ("Subscription
Agreement").
WHEREAS, MPM has not been able to comply with its payment obligations
under the Loan Agreement, is in default thereunder, and is in liquidation.
WHEREAS, in an effort to restructure and settle all of MPI's
obligations under the Loan Agreement and the Guaranty, MPI and the Investor
Group entered into a Restructuring, Settlement and Mutual Release Agreement
dated April 22, 1998, pursuant to which MPI agreed to make certain payments and
issue certain warrants to the Investor Group, in exchange for the agreement of
the Investor Group to reduce the amount of MPI's obligations under the Loan
Agreement and the Guaranty ("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 Loan Agreement and Guaranty would be deemed
settled and the Investor Group 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 Agreement, the Guaranty,
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, MPI 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 Transpac
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 the Investor Group, accrued as of December 31, 1997 (which is the
entire amount MPI and the Investor Group have agreed is due and payable pursuant
to the Loan Agreement and the Guaranty), into Four Million Thirty One Thousand
Eight Hundred and 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 Microelectronic
Packaging (S) Pte. Ltd. and guaranteed by MPI to DBS Bank, accrued as of
December 31, 1997 (which is the entire amount MPI and DBS Bank 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.
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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 (869,932.00) 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 Ltd., 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.
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 and 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 Orix
Leasing Conversion, the Samsung Corning Conversion, the STMicroelectronics
Conversion and the Texas Instruments Conversion.
1.13 "Other Creditors" means collectively DBS Bank; Motorola,
Inc.; NS Electronics Bangkok Ltd.; Orix Leasing Singapore Limited; Samsung
Corning Co., Ltd.; STMicroelectronics, Inc.; and Texas Instruments Incorporated.
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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, Transpac Capital shall have sole discretion on behalf of the
Investor Group (but shall not be required) to terminate this Conversion
Agreement by giving a written termination notice to MPI ("Termination Notice").
In the event Transpac Capital 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 Transpac Capital
pursuant to the provisions of this Section 2.3, then this Conversion Agreement
shall be deemed completely void, and MPI and the Investor Group 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 the
Investor Group hereunder shall be deemed immediately terminated without notice,
and MPI and the Investor Group 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 7.3 of this
Agreement, the Former Agreements shall remain in full force and effect at all
times after the Effective Date.
3. Conditions to Transpac Conversion. The completion of the Transpac
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Conversion 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 Transpac
Conversion ("Completion Conditions"):
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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. Furthermore, in connection
with the STMicroelectronics Conversion, MPI will have agreed to amend the
warrants to purchase MPI's common stock held by STMicroelectronics, Inc., if at
all, only upon terms and conditions no more favorable to STMicroelectronics,
Inc., than those in the Transpac Warrant Amendments.
3.2 The material terms and conditions of the Transpac 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 Transpac 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 the Investor Group and the
Other Creditors as required pursuant to the Transpac Conversion and the Other
Creditor Conversions.
3.5 L.H. Friend, Weinress, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, 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 Transpac 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 Transpac
Capital.
3.6 MPI and the Investor Group 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 Transpac Conversion. MPI shall have the
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following affirmative obligations under this Conversion Agreement until such
time as the Transpac 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 Transpac 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
Transpac 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 the Investor Group and the
Other Creditors as required pursuant to the Transpac Conversion and the Other
Creditor Conversions.
4.5 MPI shall use its best and most diligent efforts to cause
the Transpac 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 the Investor
Group shall complete the Transpac 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 Transpac Capital 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 shall duly execute and deliver to Transpac Capital four
(4) counterpart copies of the form of First Amendment to Warrant To Purchase
Common Stock of MPI attached to this Conversion Agreement as Exhibit "C" and
incorporated herein by reference (collectively the "Transpac Warrant
Amendments"), one with respect to each of the Warrants to Purchase Common Stock
of MPI, dated April 24, 1998 (collectively the "Transpac Warrants"), issued
respectively to Transpac Capital, Transpac Holdings, Regional Investment and
Natsteel Equity.
(c) MPI shall duly execute and deliver to Transpac Capital a
counterpart copy of the form of IBM Proceeds Agreement attached to this
Conversion Agreement as Exhibit "D" and incorporated herein by reference ("IBM
Agreement").
(d) MPI's Chief Executive Officer shall duly execute and deliver
to Transpac 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 the Investor Group 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 the Investor Group in
connection herewith.
(e) MPI shall cause its legal counsel to duly execute and
deliver to Transpac the form of legal opinion letter attached to his Conversion
Agreement as Exhibit "F" and incorporated herein by reference ("Legal Opinion").
(f) MPI shall deliver to Transpac 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.
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(g) MPI shall deliver to Transpac stock certificates
representing shares of Series A Preferred Stock issued by MPI to the Investor
Group in the following names and numbers of shares:
(i) Transpac Capital Pte Ltd, 1,624,822
(ii) Transpac Industrial Holdings Ltd, 1,599,632
(iii) Regional Investment Company Ltd, 440,843
(iv) Natsteel Equity III Pte Ltd, 366,529
(h) MPI shall deliver to Transpac 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 Investor Group.
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(a) Each member of the Investor Group shall duly execute
and deliver to MPI a counterpart copy of the Registration Agreement.
(b) Each member of the Investor Group shall duly execute
and deliver to MPI the counterpart copy of the Transpac Warrant Amendment that
relates to the Transpac Warrant of the respective member of the Investor Group.
(c) Each member of the Investor Group shall duly execute
and deliver to MPI a counterpart copy of the form of IBM Agreement.
6.3 Effect of Conversion. Upon the occurrence of the
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Conversion Date, (a) the debts owed by MPI to all members of the Investor Group
shall be deemed to have been converted, respectively, into the number of shares
of MPI's Series A Preferred Stock issued to each respective member of the
Investor Group, 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 any of the members of
the Investor Group, 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
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completed pursuant to the terms and conditions of this Conversion Agreement,
then in that case
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only, effective as of the Conversion Date, MPI and the Investor Group 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 the Investor Group 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 the Investor
Group, without any remaining liability to either MPI or the Investor Group.
Without limiting the generality of the foregoing provisions of this section, MPI
and the Investor Group agree that MPI shall no longer have any obligations of
any kind under the Former Agreements to pay any amount to the Investor Group,
and the Investor Group 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 All rights of the Investor Group described in a letter from
▇▇▇▇ ▇▇▇ Hong to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, dated March 4, 1998, written with reference
to the Written Consent Solicitation of Shareholders, to the effect that MPI will
not issue any shares of preferred stock for an amount in excess of Two Hundred
Fifty Thousand Dollars ($250,000.00) without first obtaining the agreement of
Transpac Capital and/or the Investment Group, shall be deemed to have been
voluntarily terminated pursuant to the mutual agreement of MPI and the Investor
Group, without any remaining liability to either MPI or the Investor Group. As
of and at all times after the Conversion Date, the Investor Group agrees that
neither Transpac Capital nor any other member of the Investor Group has any
right of any kind to approve or consent to any issuance by MPI of any shares of
its stock of any class or series, except as provided otherwise under MPI's
articles of incorporation in effect from time to time, or except as provided
otherwise under applicable law. Furthermore, by executing this Conversion
Agreement, Transpac Capital and the other members of the Investment Group agree
to and approve all issuances by MPI of Series A Preferred Stock that are to be
issued in connection with the Transpac Conversion and the Other Creditor
Conversions, so long as such transactions are carried out in compliance with the
terms and conditions of this Conversion Agreement and the debt conversion
agreements between MPI and the Other Creditors
7.3 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 caused 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, the Transpac Warrants (as amended by the Transpac Warrant
Amendments), or the IBM Agreement
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(collectively the "Ancillary Agreements"), or any of the respective rights and
obligations of MPI and/or the Investor Group pursuant to the terms and
conditions of this Conversion Agreement or the Ancillary Agreements.
8. Representations, Warranties and Agreements of MPI. In addition
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to any representations and warranties MPI may make to the Investor Group
elsewhere in this Conversion Agreement, the Ancillary Agreements or in any other
document delivered to the Investor Group in connection herewith, MPI represents
and warrants to the Investor Group 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
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corporate power 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.
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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
the Investor Group 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.
8.5 Consents. No consent, approval, order or authorization of,
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or 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
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amended, and the rules thereunder, which filing will be effected
within 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 the Investor Group 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 each member of the
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Investor Group with all information each such party 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
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the negotiations relating to the Transaction Documents or the transactions
contemplated thereby that could give rise to an obligation on the part of any
member of the Investor Group 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
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is no 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 ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇. Both ▇▇. ▇▇▇▇▇▇▇ and ▇▇. ▇▇▇▇▇ 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 ($30,000.00) allegedly owed to ▇▇▇▇▇ ▇▇▇▇▇▇▇ as
compensation for services performed by him as the former Chairman of MPI's Board
of Directors;
12
(b) Failure to pay an amount alleged to be not less than
Seventy One Thousand Two Hundred Fifty Dollars ($71,250.00) allegedly owed in
the aggregate to ▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ as compensation under a consulting
agreement;
(c) Wrongful termination of a consulting agreement, for
which wrongful termination ▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ allege damages in the
aggregate of not less than Five Hundred Thousand Dollars ($500,000.00);
(d) Tortious interference with ▇▇. ▇▇▇▇▇'▇ and ▇▇.
▇▇▇▇▇▇▇'▇ 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 ▇▇. ▇▇▇▇▇ and ▇▇.
▇▇▇▇▇▇▇ allege damages in the aggregate of not less than Five Million Dollars
($5,000,000.00);
(e) Costs and expenses incurred in the Lawsuit in an
unspecified amount.
MPI believes the claims made by ▇▇. ▇▇▇▇▇ and ▇▇. ▇▇▇▇▇▇▇ against
MPI in the lawsuit are completely without merit. MPI is actively and vigorously
defending the lawsuit, and has made substantial counterclaims against ▇▇. ▇▇▇▇▇
and ▇▇. ▇▇▇▇▇▇▇ .
8.10 Capitalization. The capitalization of MPI immediately
--------------
prior to the Conversion Date will consist of the following:
(a) Preferred Stock. A total of 9,362,778 authorized
---------------
shares of preferred stock, no par value per share, consisting of 9,362,778
shares designated as Series A Preferred Stock, none of which will be issued and
outstanding. Upon the Transpac 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)
------------
authorized 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 conversion privileges of the Series A Preferred Stock; (ii) the rights of
first refusal granted to Transpac Capital, Transpac Holdings, Regional
Investment and Natsteel Equity under Section 8.1 of the Subscription Agreement;
(iii) 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 (iv) 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
13
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 the Investor
-----------------------------------------------------------
Group. In addition to any representations and warranties the Investor Group may
make to MPI elsewhere in this Conversion Agreement, the Ancillary Agreements or
in any other document delivered to MPI in connection herewith, the members of
the Investor Group severally as to themselves, but not jointly, represent and
warrant 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.
----------------------------------
9.1.1 Each member of the Investor Group 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 their respective 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 any member of the Investor Group 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 each member of the Investor Group which is a
party to such agreements or documents, and when so executed and delivered, will
constitute legal, valid and binding obligations of each member of the Investor
Group which is a party to such agreements or documents, 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 each member of
the Investor Group, which representation is respectively confirmed by each such
member's execution of this Conversion Agreement, and each such member hereby
confirms, that the Series A Preferred Stock to be received by each respective
member of the Investor Group, 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 such
member has no
14
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Conversion Agreement, each member of
the Investor Group further represents that such member 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. Notwithstanding the foregoing, MPI
acknowledges and understands that Transpac Capital may hold the Securities on
behalf of, for the benefit of or as the nominee for, certain affiliated or
related entities, and thus may distribute the Securities to such entities.
9.3 Disclosure of Information. Each respective member of the
-------------------------
Investor Group believes it has received all the information it considers
necessary or appropriate for deciding whether to acquire the Securities. Each
member of the Investor Group 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. Each member of the Investor Group
---------------------
acknowledges that it is able to 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. Each member of the Investor Group has carefully evaluated
such member's financial resources and investment position and the risks
associated with an investment in the Securities, and acknowledges that such
member is able to bear the economic risks of this investment. Each member of the
Investor Group further acknowledges that such member's financial condition is
such that the member is not under any present necessity or constraint to dispose
of the securities to satisfy any existing or contemplated debt or undertaking.
If other than an individual, each member of the Investor Group also represents
it has not been organized for the purpose of acquiring the Securities.
9.5 Restricted Securities. Each member of the Investor Group
---------------------
understands that the Securities 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,
each member of the Investor Group 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. Each member of the Investor Group 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 such Buyer is subject to restrictions imposed
by federal and state laws, that the stock certificates representing the
Securities will bear a restrictive legend stating that such member 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 the representations set forth above in this Section 9, each member of
the Investor Group further agrees not to make any disposition of all or any
portion of the Securities unless and until the
15
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) The member of the Investor Group disposing of the
Securities 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, such member 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, 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 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 a member of the Investor Group is not
---------------
a United States person, such member hereby represents that (a) they have
satisfied themselves as to
16
the full observance of the laws of their 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) such member'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. The member of the Investor Group have
------------------
not taken any actions in 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.
9.10 Transpac Capital as Agent. Each member of the Investor
-------------------------
Group hereby appoints Transpac Capital to act as its agent for purposes of this
Conversion Agreement. Each member of the Investor Group hereby authorizes
Transpac Capital to take such actions and exercise such rights, powers and
discretions as are specifically delegated to Transpac Capital pursuant to this
Conversion Agreement, and to take such other actions and exercise such other
rights, powers and discretions as are reasonably incidental thereto. However,
Transpac Capital shall not commence any legal action or other legal proceeding
in the name of any other member of the Investor Group without such member's
consent. The relationship between Transpac Capital and the Other Investors for
this purpose is that of agent and principal only. Transpac Capital shall not, by
virtue of any provision of this Conversion Agreement, be deemed to be a trustee
for any other member of the Investor Group, nor an agent or trustee for MPI.
10. Miscellaneous Provisions.
------------------------
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
-------------
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 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:
17
To MPI: Microelectronic Packaging, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
To any member of Transpac Capital Pte Ltd
the Investor Group ▇ ▇▇▇▇▇▇▇ ▇▇▇
#▇▇-▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇ Hong
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 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
18
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.
[The remainder of this page has been intentionally left blank.]
19
10.9 Survivability. All of the representations, warranties,
-------------
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. TRANSPAC CAPITAL PTE LTD
By:_________________________ By:______________________________
Signature Signature
By:_________________________ By:______________________________
Print Print
Title:______________________ Title:___________________________
[The remainder of this page has been intentionally left blank.]
20
CONTINUATION OF SIGNATURES FOR
DEBT CONVERSION
AND
MUTUAL SETTLEMENT AND RELEASE AGREEMENT
dated April 29, 1999
TRANSPAC INDUSTRIAL HOLDINGS LTD REGIONAL INVESTMENT COMPANY LTD
By:_________________________ By:______________________________
Signature Signature
By:_________________________ By:______________________________
Print Print
Title:______________________ Title:___________________________
NATSTEEL EQUITY III PTE LTD
By:______________________________
Signature
By:______________________________
Print
Title:___________________________
21