THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Multi-Fineline Electronix, Inc. (MFLX)

1/26/2006 Proxy Information

WBL Corporation and its affiliated entities beneficially own 61% of the outstanding Common Stock. Choon Seng Tan, the Chief Executive Officer of WBL Corporation, and Huat Seng Lim, Ph.D., the Group General Manager (WearnesTech Solutions & Special Projects) for WBL Corporation, are members of the Board. Set forth below is a brief description of the existing relationships and agreements between the Company and WBL Corporation and its affiliated entities.

The Company has entered into indemnification agreements with each of its executive officers and directors. In addition, the Company’s executive officers and directors are indemnified under Delaware General Corporation Law and the Company’s Bylaws to the fullest extent permitted under Delaware law.

As discussed above under “Security Ownership of Certain Beneficial Owners and Management,” WBL Corporation and its affiliated entities beneficially own 61% of the outstanding Common Stock. Choon Seng Tan, the Chief Executive Officer of WBL Corporation, and Huat Seng Lim, Ph.D., the Group General Manager (WearnesTech Solutions & Special Projects) for WBL Corporation, are members of the Board. Set forth below is a brief description of the existing relationships and agreements between the Company and WBL Corporation and its affiliated entities.

On October 25, 2005, the Company entered into an Amended and Restated Stockholders Agreement with WBL Corporation, Wearnes Technology and United Wearnes. The amended agreement provides, among other things, that:

• The historical right of the WBL Corporation entities to recommend to the Nominating Committee for nomination as a director up to one-third of the Board was eliminated, as were certain previous restrictions on the ability of those entities to purchase additional shares of the Common Stock, to enter into financing arrangements that might indirectly affect the Company, and to vote their shares to remove the Bylaw provision requiring that a majority of the Board be independent;

• The WBL Corporation entities will have the right to approve the appointment of any new chief executive officer or the issuance of securities that would reduce the WBL Corporation entities’ effective stock ownership below a majority of the shares outstanding; and

• WBL Corporation will, for a period of two years and thereafter subject to the parties’ mutual agreement, use reasonable efforts to provide the Company with access to additional manufacturing facilities and packaging services while the Company’s manufacturing facilities are being expanded.

The agreement will terminate when the WBL Corporation entities no longer own at least one-third of the outstanding Common Stock, measured on a fully diluted basis.

In November 2003, the Company executed a $25 million credit facility with Norddeutsche Landesbank Girozentrale which was guaranteed in full by WBL Corporation. In connection with the Company’s initial public offering, the credit facility was reduced to $15 million and WBL Corporation’s guarantee was reduced to an amount equal to the percentage of the outstanding stock owned by WBL Corporation, subject to a minimum guarantee of 40% of the outstanding balance of the credit facility. During fiscal year 2005, this credit facility was amended to, among other things, eliminate the WBL Corporation guarantee. As of September 30, 2005, the Company had no outstanding balance on this line of credit.

From time to time, the Company makes sales to, and purchases from, WBL Corporation and its affiliates. During the fiscal year ended September 30, 2005, the Company purchased products and materials of $1.5 million from these entities and sold products and materials for $368,000 to these entities. As of September 30, 2005, the Company owed a total of $334,000 to WBL Corporation and its affiliates, and WBL Corporation and its affiliates owed the Company a total of $421,000. The Company believes that the commercial transactions described above were made or entered into on terms that are no less favorable to the Company than those the Company could obtain from unaffiliated third parties.

The Company files a combined California income tax return with Wearnes Hollingsworth Corporation, an affiliate of WBL Corporation, pursuant to a tax sharing agreement. The tax sharing agreement provides that the Company will pay Wearnes Hollingsworth Corporation for the California state income tax benefit realized by filing the combined California tax return. During the year ended September 30, 2005, the Company made no payment to Wearnes Hollingsworth Corporation pursuant to the tax sharing agreement.

Management fees may be charged to the Company by an affiliate of WBL Corporation, pursuant to a Corporate Services Agreement between the Company and such entity. Under this agreement, the Company may be billed for services on a time and materials basis. For the year ended September 30, 2005, no services were provided under this agreement.