UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
Commission file number 1-228
ZEMEX CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-5496920
(State or other jurisdiction (I.R.S. Employer identification Number)
of incorporation or organization)
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
Toronto, Ontario, Canada, M5J 2S1
(Address of principal executive offices)
(416) 365-8080
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act
New York Stock Exchange Capital Stock, $1.00 par value
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
As of September 30, 1998, there were 8,511,742 shares of capital stock
outstanding.
<PAGE>
PART I
ITEM I - FINANCIAL STATEMENTS
ZEMEX CORPORATION
CONSOLIDATED BALANCE SHEETS
(US$)
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997
- -------------------------------------------------------- ------------- -------------
ASSETS (unaudited)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 9,658,000 $ 2,189,000
Marketable securities 4,158,000 --
Accounts receivable 18,659,000 16,287,000
Inventories 16,547,000 17,595,000
Prepaid expenses 925,000 786,000
Deferred income taxes 1,328,000 1,328,000
- -------------------------------------------------------- ------------- -------------
51,275,000 38,185,000
Property, Plant and Equipment 83,465,000 70,812,000
Other Assets 16,796,000 9,777,000
- -------------------------------------------------------- ------------- -------------
Total Assets $ 151,536,000 $ 118,774,000
======================================================== ============= =============
LIABILITIES
Current Liabilities
Bank indebtedness $ 10,000,000 $ 3,000,000
Accounts payable 9,115,000 9,805,000
Accrued liabilities 4,432,000 3,151,000
Accrued income taxes 857,000 1,235,000
Current portion of long term debt 2,092,000 2,019,000
- -------------------------------------------------------- ------------- -------------
26,496,000 19,210,000
Long Term Debt 39,810,000 20,527,000
Other Non-Current Liabilities 1,107,000 1,014,000
Deferred Income Taxes 1,254,000 1,488,000
- -------------------------------------------------------- ------------- -------------
68,667,000 42,239,000
- -------------------------------------------------------- ------------- -------------
Minority Interest 3,115,000 --
- -------------------------------------------------------- ------------- -------------
SHAREHOLDERS' EQUITY
Common stock 8,512,000 9,204,000
Paid-in capital 47,473,000 53,298,000
Retained earnings 28,093,000 24,235,000
Note receivable from shareholder (1,749,000) (1,749,000)
Cumulative translation adjustment (2,162,000) (1,588,000)
Change in market value of available-for-sale securities (413,000) --
Treasury stock at cost -- (6,865,000)
- -------------------------------------------------------- ------------- -------------
79,754,000 76,535,000
- -------------------------------------------------------- ------------- -------------
Total Liabilities and Shareholders' Equity $ 151,536,000 $ 118,774,000
======================================================== ============= =============
</TABLE>
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ZEMEX CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(US$)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
1998 1997 1998 1997
- ------------------------------------------- ------------ ------------ ------------ ------------
(unaudited)
<S> <C> <C> <C> <C>
NET SALES $ 25,677,000 $ 24,773,000 $ 78,056,000 $ 73,672,000
- ------------------------------------------- ------------ ------------ ------------ ------------
COSTS AND EXPENSES
Cost of goods sold 18,130,000 17,874,000 55,594,000 53,522,000
Selling, general and administrative 2,881,000 3,076,000 9,742,000 9,457,000
Depreciation, depletion and amortization 1,562,000 1,451,000 4,824,000 4,301,000
- ------------------------------------------- ------------ ------------ ------------ ------------
22,573,000 22,401,000 70,160,000 67,280,000
OPERATING INCOME 3,104,000 2,372,000 7,896,000 6,392,000
- ------------------------------------------- ------------ ------------ ------------ ------------
Interest expense, net (369,000) (497,000) (1,405,000) (1,506,000)
Other, net (852,000) 1,366,000 (979,000) 1,342,000
- ------------------------------------------- ------------ ------------ ------------ ------------
(1,221,000) 869,000 (2,384,000) (164,000)
INCOME BEFORE PROVISION FOR
INCOME TAXES AND MINORITY INTEREST 1,883,000 3,241,000 5,512,000 6,228,000
Provision for income taxes 565,000 1,146,000 1,655,000 2,207,000
Minority interest (40,000) -- (1,000) --
- ------------------------------------------- ------------ ------------ ------------ ------------
NET INCOME $ 1,358,000 $ 2,095,000 $ 3,858,000 $ 4,021,000
=========================================== ============ ============ ============ ============
NET INCOME PER SHARE - basic $ 0.17 $ 0.26 $ 0.48 $ 0.50
- diluted $ 0.16 $ 0.25 $ 0.46 $ 0.49
- ------------------------------------------- ------------ ------------ ------------ ------------
AVERAGE COMMON SHARES OUTSTANDING 8,117,274 8,089,296 8,105,870 8,091,113
=========================================== ============ ============ ============ ============
</TABLE>
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<PAGE>
ZEMEX CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(US$)
<TABLE>
<CAPTION>
- ----------------------------------------------------------- ------------ ------------
1998 1997
- ----------------------------------------------------------- ------------ ------------
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 3,858,000 $ 4,021,000
Adjustments to reconcile net income to net cash flows
Depreciation, depletion and amortization 4,824,000 4,301,000
Amortization of deferred financing costs 125,000 106,000
Decrease in deferred income taxes (234,000) (310,000)
Minority interest in subsidiary earnings (1,000) --
Increase in other assets (611,000) (747,000)
Increase in other non-current liabilities 92,000 274,000
Loss (gain) on sale of property, plant and equipment 2,000 (1,489,000)
Changes in non-cash working capital items (2,286,000) 2,070,000
- ----------------------------------------------------------- ------------ ------------
Net cash provided by operating activities 5,769,000 8,226,000
- ----------------------------------------------------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (13,979,000) (10,119,000)
Acquisitions, net of cash acquired (7,440,000) --
Proceeds from sale of assets 3,120,000 3,548,000
Acquisition of available-for-sale securities (13,762,000)
Proceeds of sale of available-for-sale securities 9,772,000 --
Change in market value of available-for-sale securities (413,000) --
- ----------------------------------------------------------- ------------ ------------
Net cash used in investing activities (22,702,000) (6,571,000)
- ----------------------------------------------------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in long term debt 17,119,000 2,664,000
Net increase (decrease) in bank indebtedness 7,000,000 (4,890,000)
Issuance of common stock 765,000 482,000
Purchase of common stock (417,000) (397,000)
- ----------------------------------------------------------- ------------ ------------
Net cash provided by (used in) financing activities 24,467,000 (2,141,000)
- ----------------------------------------------------------- ------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (65,000) 27,000
- ----------------------------------------------------------- ------------ ------------
NET INCREASE (DECREASE) IN CASH 7,469,000 (459,000)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,189,000 2,279,000
=========================================================== ============ ============
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,658,000 $ 1,820,000
=========================================================== ============ ============
</TABLE>
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<PAGE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements include the accounts of Zemex Corporation
and its wholly-owned subsidiaries (the "Corporation"). The financial data for
the three months ended September 30, 1998 and 1997 and for the nine months ended
September 30, 1998 and 1997 are unaudited but, in the opinion of the management
of the Corporation, reflect all adjustments, consisting only of normal recurring
adjustments, considered necessary for a fair presentation of financial position
and results of operations. All material intercompany transactions have been
eliminated.
1. In January 1998, the Corporation, through its wholly-owned subsidiary,
Zemex Industrial Minerals, Inc., acquired a muscovite mica producer for
approximately $3.5 million, which includes the assumption of debt. The two
facilities acquired in the purchase are located in the Spruce Pine, North
Carolina area and are operating under the name Zemex Mica Corporation
("ZMC"). The acquisition was financed through borrowings on the
Corporation's credit facility. The acquisition of ZMC has been accounted
for using the purchase method of accounting and, accordingly, the purchase
price has been allocated first to the assets purchased and liabilities
assumed and the excess purchase price has been allocated to intangible
assets. The net purchase price was allocated as follows:
Tangible Assets Acquired $ 936,000
Liabilities Assumed (1,542,000)
Intangible Assets Acquired 2,610,000
------------
Cash Consideration $ 2,004,000
============
2. On February 24, 1998, Industria Mineraria Fabi S.r.1. ("Fabi") became a
partner in the Corporation's talc facility located in Benwood, West
Virginia by acquiring a 40% interest in a new limited liability company,
Zemex Fabi-Benwood, LLC. As part of the transaction, Fabi paid $3.4 million
and is providing access to its technology. Suzorite Minerals Products,
Inc., a wholly-owned subsidiary of the Corporation, will manage the new
entity pursuant to an operating agreement. There was no gain or loss
recognized by the Corporation on the transaction.
3. Effective June 1, 1998, Alumitech, Inc., a 100% wholly-owned subsidiary of
the Corporation, acquired all of the issued and outstanding shares of S&R
Enterprises, Inc. ("S&R") for approximately $8.3 million, which included
the assumption of debt. S&R is an aluminum dross processor located in
Wabash, Indiana. The Corporation used its credit facility to finance the
acquisition. The acquisition of S&R has been accounted for using the
purchase method of accounting and, accordingly, the purchase price has been
allocated first to the assets purchased and liabilities assumed and the
excess purchase price has been allocated to intangible assets. The net
purchase price was allocated as follows:
Tangible Assets Acquired $ 4,806,000
Liabilities Assumed (2,785,000)
Intangible Assets Acquired 3,510,000
------------
Cash Consideration $ 5,531,000
============
4. During the second quarter of 1998, the Corporation initiated an attempted
acquisition of control of Inmet Mining Corporation ("Inmet"). Approximately
4 million shares of Inmet were acquired and financed by the Corporation's
credit facilities as amended (see Liquidity and Capital Resources).
Subsequently, the acquisition was abandoned and the Corporation sold
approximately 2.6 million common shares of Inmet for proceeds of
approximately C$14.7 million. As at September 30, 1998, the Corporation
booked a provision
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<PAGE>
of $413,000 as a reduction to shareholders' equity to mark the residual
investment in the available-for sale securities to market. The Corporation
also booked a foreign exchange loss of $0.7 million in other income as a
result of a decline in the value of its Canadian dollar investment in
Inmet.
5. Recent Accounting Pronouncements - In April 1998, the American Institute of
Certified Public Accountants issued Statement of Position 98-5 "Reporting
on the Costs of Start-up Activities", which will be effective for the
Corporation's 1999 annual consolidated financial statements. This Statement
requires costs of start-up activities and organization costs to be expensed
as incurred. Initial application of this Statement will be reported as the
cumulative effect of a change in accounting principle, without retroactive
application. It is anticipated that all of the Corporation's pre-production
and set-up costs will be removed from Property, Plant and Equipment in
complying with this Statement. These costs were $1,655,000 and $1,105,000
at September 30, 1998 and December 31, 1997, respectively.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF THE CORPORATION
The following is a discussion and analysis of the financial condition and
results of operations of the Corporation for the three months ended September
30, 1998 and the three months ended September 30, 1997, and for the nine months
ended September 30, 1998 and the nine months ended September 30, 1997, and
certain factors that may affect the Corporation's prospective financial
condition and results of operations. The following should be read in conjunction
with the Consolidated Financial Statements and related notes thereto.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1998 Compared to Three Months Ended September
30, 1997
Net Sales
The Corporation's net sales for the three months ended September 30, 1998 were
$25.7 million compared to $24.8 million for the three months ended September 30,
1997, reflecting a 5.4% decline in sales of industrial minerals and a 10.8%
increase in sales of metal products.
Net sales in the industrial minerals segment for the three month period ended
September 30, 1998 decreased by $0.6 million, or 5.4%, to $10.3 million from
$10.9 million in the corresponding period of 1997. Sales volumes of mica, talc,
sand and potassium feldspar were slightly lower in the third quarter of 1998
compared to the third quarter of 1997.
Net sales of the Corporation's metal products were $15.3 million for the three
months ended September 30, 1998, an increase of $1.5 million from the comparable
period in 1997. The increase in the 1998 period is a result of increased sales
of fiber, flameshield products, and ferrous and non-ferrous metal powders,
partially offset by lower aluminum prices.
Cost of Goods Sold
Cost of goods sold for the three months ended September 30, 1998 was $18.1
million compared to $17.9 million for the third quarter of 1997. As a percentage
of net sales, gross margin increased from 27.9% for
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the three months ended September 30, 1997 to 29.4% for the corresponding period
in 1998. The increase in gross margin is attributable to cost control and
improved operating efficiencies in the industrial minerals group and to the
benefits of higher volumes in the metal products group. Management believes
that the trend to higher margins will be continued in 1999 due to the same
factors.
Selling, General and Administrative Expense
Selling, general, and administrative ("SG&A") expense for the three months ended
September 30, 1998 decreased by 6.4% to $2.9 million from $3.1 million in the
comparable period of 1997. As a percentage of net sales, SG&A expense decreased
to 11.2% in the third quarter of 1998 from 12.4% in the same period in 1997 due
to savings of $0.2 million in SG&A expense and a corresponding $0.9 million
increase in sales quarter over quarter.
Depreciation, Depletion and Amortization
Depreciation, depletion and amortization ("DD&A") for the three months ended
September 30, 1998 was $1.6 million, an increase of $0.1 million, or 7.6%, over
the corresponding period in 1997. This increase is due to the additional
depreciation of capital expenditures completed by the Corporation during the
last twelve months.
Operating Income
As a result of the foregoing, operating income for the three month period ended
September 30, 1998 was $3.1 million, an increase of $0.7 million, or 30.1%, from
the comparable period in 1997.
Interest Expense, Net
Although the Corporation had higher levels of debt outstanding at September 30,
1998 compared to September 30, 1997, interest expense for the three months ended
September 30, 1998 was $0.4 million, down from $0.5 million for the three months
ended September 30, 1997. The decrease is due to the capitalization of interest
relating to major construction projects. As the projects are completed,
management expects interest expense to increase to a higher level in 1999.
Other Income/Expense
Other expenses for the three months ended September 30, 1998 totalled $0.9
million of which $0.7 million is related to the recognition of the translation
loss on the Corporation's investment in Inmet (see note 4). In the corresponding
period of 1997, the Corporation recognized a one-time pre-tax gain of $1.4
million, or $0.9 million after tax, from the disposition of Alumitech's dormant
fiber line.
Provision for Income Taxes
The Corporation's provision for income taxes for the three months ended
September 30, 1998 decreased to $0.6 million from $1.1 million in the third
quarter of 1997 due to a $2.3 million decrement in other income/expense in the
third quarter of 1998 compared to the same quarter in 1997.
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Net Income
As a result of the factors discussed above, net income for the three months
ended September 30, 1998 was $1.4 million, a decrease of $0.7 million, or 35.2%,
from the comparable period in 1997.
Nine Months Ended September 30, 1998 Compared to Nine Months Ended September 30,
1997
Net Sales
The Corporation's net sales for the nine months ended September 30, 1998 were
$78.1 million, an increase of $4.4 million, or 6.0%, from 1997. The increase is
due to a 1.0% increase in sales of industrial minerals and a 10.0% increase in
sales of metal products.
Net sales in the industrial minerals segment for the nine month period ended
September 30, 1998 were up marginally by $0.3 million to $33.4 million from
$33.1 million in 1997. The increase is due to higher sales volume of feldspar,
talc and sand products.
Net sales in the metal products segment for the nine months ended September 30,
1998 were $44.7 million, an increase of $4.1 million, or 10.0%, from the
comparable period in 1997. Increased sales of aluminum, fiber, ferrous and
non-ferrous metal powder products contributed to the rise in sales period over
period.
Cost of Goods Sold
Cost of goods sold for the nine months ended September 30, 1998 was $55.6
million, an increase of $2.1 million, or 3.9%, from the first three quarters of
1997. As a percentage of net sales, gross margin increased to 28.8% in 1998 from
27.4% in 1997. The increase is due to higher sales volumes and improved
operating efficiencies. Management anticipates that the trend to higher margins
will continue in 1999.
Selling, General and Administrative Expense
SG&A expense for the nine months ended September 30, 1998 increased to $9.7
million from $9.4 million in 1997, an increase of $0.3 million, or 3.0%. As a
percentage of net sales, SG&A expense decreased from 12.8% in 1997 to 12.5% in
the 1998 period.
Depreciation, Depletion and Amortization
DD&A for the nine months ended September 30, 1998 was $4.8 million, an increase
of $0.5 million, or 12.2%, over the comparable period in 1997 as a result of
assets acquired and placed in service over the last twelve months.
Operating Income
Operating income for the nine month period ended September 30, 1998 was $7.9
million, an increase of $1.5 million, or 23.5%, from the comparable period in
1997. As a percentage of sales, operating income increased to 10.1% in the first
three quarters of 1998 from 8.7% in the corresponding period of 1997.
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Interest Expense, Net
Although the Corporation had higher levels of debt outstanding at September 30,
1998 compared to September 30, 1997, interest expense for the nine months ended
September 30, 1998 was $1.4 million, a decrease of $0.1 million from the
comparable period in 1997. The decline in interest expense is due to the
capitalization of interest relating to major construction projects. As these
projects are completed, the interest expense will increase in future periods.
Other Income/Expense
The Corporation recognized a foreign exchange translation loss of $0.7 million
in connection with its attempted acquisition of Inmet and its purchase of Inmet
common shares in 1998. As well, during 1997, the Corporation had a one-time
pre-tax gain of $1.4 million, or $0.9 million after tax, from the disposition of
Alumitech's fiber line.
Provision for Income Taxes
The Corporation's provision for income taxes for the nine month period September
30, 1998 decreased to $1.7 million from $2.2 million in the comparable period of
1997. The decrease is due to lower pre-tax income in the first nine months of
1998 due to the swing in other income/expense as discussed above.
Net Income
As a result of the factors discussed above, net income for the nine months ended
September 30, 1998 was $3.9 million, a decrease of $0.2 million, or 4.0%, from
the comparable period in 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow from Operations
During the first nine months of 1998, the Corporation generated $5.8 million of
cash from operations as compared to $8.2 million cash generated for the first
nine months of 1997. The decrease of $2.4 million is due to changes in non-cash
working capital items. In the nine month period ended September 30, 1998,
current liabilities decreased by approximately $1.5 million, accounts receivable
due to higher sales increased $2.4 million and, through improved management,
inventory declined by $1.0 million. The decrease in liabilities resulted from
declining levels of construction and an effort to obtain purchase discounts in
several operations by expeditious payment of invoices.
The Corporation had $24.8 million of working capital at September 30, 1998,
compared to $19.0 million at December 31, 1997.
On July 30, 1998, the Corporation signed Amendment No. 5 to its Loan and
Security Agreement which provided, on a reducing, revolving basis, incremental
credit of $10 million through October 31, 1998, and $5 million from November 1,
1998 through December 31, 1998. As the Corporation had used the balance of its
credit facility to purchase its share position in Inmet, the increase in the
amount available under the working capital line was necessary to fund
incremental capital expenditures and ordinary working capital requirements.
A copy of this amendment is filed as an exhibit to this Form 10Q.
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Approximately $4.0 million of the proceeds from the disposition of the
Corporation's Inmet common shares have, subsequent to September 30, 1998, been
utilized to reduce borrowings under the incremental facility and to free up
available funds.
It is the opinion of management that there are sufficient sources of funds
available to meet its anticipated cash requirements.
YEAR 2000
The Corporation operates in basic industries that do not rely heavily on
computerized systems. The major systems operated by the Corporation are those
for financial reporting, all of which are year 2000 compliant. As a result, it
is the opinion of management that any year 2000 issues that may arise will not
have a material adverse impact on the financial condition or performance of the
Corporation. The Corporation is continuing its review of key suppliers to
determine their exposure to problems arising from Year 2000. The review is being
conducted by management personnel and additional resources are not believed to
be required. Given the current status of the Corporation's activities, no
contingency plans are currently in place.
ITEM 3 - MARKET RISK
Market risk represents the risk of loss that may impact the consolidated
financial statements of the Corporation due to adverse changes in financial
market prices and rates. The Corporation's market risk is primarily the result
of fluctuations in interest rates and aluminum prices. Management monitors the
movements in interest rates and performs sensitivity analysis on aluminum prices
and, on that basis, decides on the appropriate measures to take. The Corporation
believes that aluminum prices and interest rates in the current environment are
such that no measures need be taken at this time.
The Corporation does not hold or issue financial instruments for trading
purposes. A discussion of the Corporation's financial instruments is included in
the financial instruments note to the Consolidated Financial Statements in the
Corporation's 1997 Annual Report, which are incorporated by reference in the
Corporation's Form 10K for the year ended December 31, 1997.
CAUTIONARY "SAFE HARBOR" STATEMENT UNDER THE
UNITED STATES PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
With the exception of historical matters, the matters discussed in this report
are forward looking statements that involve risks and uncertainties that could
cause actual results to differ materially from targeted or projected results.
Factors that could cause actual results to differ materially include, among
others, fluctuations in aluminum prices, problems regarding unanticipated
competition, processing, access and transportation of supplies, availability of
materials and equipment, force majeure events, the failure of plant equipment or
processes to operate in accordance with specifications or expectations,
accidents, labor relations, delays in start-up dates, environmental costs and
risks, the outcome of acquisition negotiations and general domestic and
international economic and political conditions, as well as other factors
described herein or in the Corporation's filings with the Commission. Many of
these factors are beyond the Corporation's ability to predict or control.
Readers are cautioned not to put undue reliance on forward looking statements.
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PART II
ITEM 1 - LEGAL PROCEEDINGS
During September 1998, the Corporation settled a civil action brought by Dryvit
Systems, Inc. ("Dryvit") in the State of Rhode Island captioned Dryvit Systems,
Inc. v. The Feldspar Corporation, Taggart Sand Products Corp., Surface Systems,
Inc., The Morie Company, Inc., Eriez Magnetics, Inc., and Law Engineering, Inc.,
C.A. No. KC 93-108, State of Rhode Island, Kent. The Corporation's insurance
carrier settled with the plaintiff and there were no settlement costs absorbed
by the Corporation.
ITEM 5 - OTHER INFORMATION
In September 1998, the Corporation extended a short-term loan to Richard L.
Lister, President and Chief Executive Officer, in the amount of $100,000. The
loan is payable in full by Mr. Lister by December 31, 1998. Also in September
1998, Paul A. Carroll, a director of Zemex, signed a promissory note for
$123,948 payable to the Corporation on or before December 31, 1998.
Richard L. Lister, President and Chief Executive Officer, and Allen J. Palmiere,
Vice President and Chief Financial Officer, executed change of
control/termination agreements effective October 1, 1998, copies of which
agreements are being filed as exhibits to this Form 10Q.
On October 5, 1998, the Corporation filed a Form S-4 Registration Statement with
the Securities and Exchange Commission ("SEC") outlining its proposal to move
its domicile from Delaware and to reincorporate as a Canadian company under the
Canada Business Corporations Act. A special meeting of shareholders will be
called to consider and vote upon a proposal to approve a reincorporation into
Canada. The change in domicile will not result in any significant change to the
business of Zemex or to the equity or voting interests of Zemex shareholders.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Agreement between Zemex Corporation and Allen J. Palmiere,
dated October 1, 1998.
10.2 Agreement between Zemex Corporation and Richard L. Lister,
dated October 1, 1998.
10.3 Amendment No. 5 to Loan and Security Agreement among Zemex
Corporation, The Feldspar Corporation, NationsBank of
Tennessee, N.A., The Chase Manhattan Bank and NationsBank of
Tennessee, N.A. as agent.
(b) Reports on Form 8-K
None.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereuhto duly authorized.
Dated this 13th day of November, 1998.
ZEMEX CORPORATION
(Registrant)
By: /s/ Allen J. Palmiere
------------------------------------
Allen J. Palmiere
Vice President and Chief
Financial Officer
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EXHIBIT INDEX
10.1 Agreement between Zemex Corporation and Allen J. Palmiere, dated
October 1, 1998.
10.2 Agreement between Zemex Corporation and Richard L. Lister, dated
October 1, 1998.
10.3 Amendment No. 5 to Loan and Security Agreement among Zemex
Corporation, The Feldspar Corporation, NationsBank of Tennessee,
N.A., The Chase Manhattan Bank and NationsBank of Tennessee, N.A. as
agent.
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THIS AGREEMENT made as of the 1st day of October, 1998.
B E T W E E N:
ZEMEX CORPORATION
(hereinafter called the "Corporation")
- and -
ALLEN J. PALMIERE
(hereinafter called the "Executive")
WITNESSES THAT:
WHEREAS the Executive is presently employed by the Corporation or a Subsidiary
and has been for a substantial period of time;
AND WHEREAS the Corporation and the Executive are desirous of having certain
rights and benefits in the event that the Executive is dismissed or the
Executive's employment relationship with the Corporation or the Subsidiary is
terminated in the manner set out herein;
AND WHEREAS the Corporation wishes to retain the benefit of the Executive's
employment with the Corporation or the Subsidiary and to ensure that the
Executive is able to carry out his responsibilities with the Corporation or the
Subsidiary free from any distractions associated with any change in the
ownership of the Corporation or its assets;
NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and for other good and valuable consideration
(the receipt and sufficiency of which is hereby acknowledged by the parties
hereto), it is agreed by and between the parties hereto as follows:
SECTION 1 - DEFINITIONS: Terms used in this Agreement but not otherwise defined
herein have the meanings set forth below:
(a) "BENEFIT PLANS" means any stock option or share purchase plan, employee
loan, insurance, long-term disability, medical, dental and other executive and
employee benefit plans, including any pension or similar plans, perquisites and
privileges as may be provided to the Executive by the Corporation or the
Subsidiary;
(b) "CHANGE IN CONTROL" means a transaction or series of transactions whereby
directly or indirectly:
<PAGE>
(i) any person or combination of persons (other than any combination of
Dundee Bancorp Inc. or any affiliate thereof and Richard L. Lister or
a corporation controlled by any one or more of such persons) obtains a
sufficient number of securities of the Corporation to affect
materially the control of the Corporation; or
(ii) the Corporation shall consolidate or merge with or into, amalgamate
with, or enter into a statutory arrangement with, any other person
(other than a subsidiary of the Corporation) or any other person
(other than a subsidiary of the Corporation) shall consolidate or
merge with or into, or amalgamate with or enter into a statutory
arrangement with, the Corporation, and, in connection therewith, all
or part of the outstanding voting shares shall be changed in any way,
reclassified or converted into, exchanged or otherwise acquired for
shares or other securities of the Corporation or any other person or
for cash or any other property; or
(iii) the Corporation shall be liquidated or dissolved or shall sell or
otherwise transfer, including by way of the grant of a leasehold
interest (or one or more of its subsidiaries shall sell or otherwise
transfer, including by way of the grant of a leasehold interest)
property or assets (A) aggregating more than 50% of the consolidated
assets (measured by either book value or fair market value) of the
Corporation and its subsidiaries as at the end of the most recently
completed financial year of the Corporation or (B) which during the
most recently completed financial year of the Corporation generated,
or during the then current financial year of the Corporation are
expected to generate, more than 50% of the consolidated operating
income or cash flow of the Corporation and its subsidiaries, to any
other person or persons (other than the Corporation or one or more of
its subsidiaries); or
(iv) the Corporation shall issue shares of common stock from the treasury
of the Corporation in a sufficient number to affect materially the
control of the Corporation; or
(v) the Incumbent Directors cease to represent a majority of the members
of the Board of Directors;
for the purposes of Sections 1(b)(i) and (iv), a person or combination of
persons holding shares or other securities in excess of the number which,
directly or following conversion thereof, would entitle the holders thereof to
cast 20% or more of the votes attaching to all shares of the Corporation which
may be cast to elect directors of the Corporation, shall be deemed to be in a
position to affect materially the control of the Corporation;
(c) "EXPIRY DATE" means thirty months after a Change in Control occurs;
(d) "INCUMBENT DIRECTORS" means the members of the Board of Directors holding
office at the date of this Agreement and any additional Directors appointed by
or with the consent of the Incumbent Directors;
2
<PAGE>
(e) "SUBSIDIARIES" means the following:
(i) Alumitech, Inc.;
(ii) Pyron Corporation; and
(iii) Zemex Industrial Minerals, Inc.;
and "Subsidiary" means any one of them with which the Executive has employment;
(f) "TRIGGERING EVENT" means any one of the following events which occurs
without the express or implied agreement of the Executive:
(i) an adverse change in any of the duties, powers, rights, discretion,
salary or benefits of the Executive as they exist at the date of this
Agreement; or
(ii) a diminution of the title of the Executive as it exists at the date of
this Agreement; or
(iii) a change in the person or body to whom the Executive reports at the
date of this Agreement, except if such person or body is of equivalent
rank or stature or such change is as a result of the resignation or
removal of such person or the persons comprising such body, as the
case may be, provided that this shall not include a change resulting
from a promotion in the normal course of business; or
(iv) a change in the municipality at which the Executive is regularly
required to carry out the terms of his employment with the Corporation
at the date of this Agreement unless the Executive's terms of
employment include the obligation to receive geographic transfers from
time to time in the normal course of business.
SECTION 2 - RIGHTS UPON OCCURRENCE OF TRIGGERING EVENT: If a Change in Control
occurs and if, in respect of the Executive, a Triggering Event occurs on or
before the Expiry Date, the Executive shall be entitled to elect to terminate
his employment with the Corporation and to receive a payment from the
Corporation in an amount equal to the aggregate of (a) 200 % of his then current
annual base salary and (b) 200% of the average of the annual bonus, if any,
payable to him in respect of each of the three fiscal years of the Corporation
ended immediately prior to such date. This Section 2 shall not apply if such
Triggering Event follows a Change in Control which involves a sale of securities
or assets of the Corporation with which the Executive is involved as a purchaser
in any manner, whether directly or indirectly (by way of participation in a
corporation or partnership that is a purchaser or by provision of debt, equity
or purchase-leaseback financing).
Section 3 - Termination Rights Conditional: All termination rights of the
Executive provided for in Section 2 are conditional upon the Executive electing
to exercise such rights by notice given
3
<PAGE>
to the Corporation up to 6 months after the Expiry Date and are exercisable only
if the Executive does not resign from his employment with the Corporation or the
Subsidiary (other than at the request of the Corporation or the Subsidiary) and
does not actively seek alternative employment, in each case for at least 180
days following the date of the Change in Control.
SECTION 4 - RIGHTS UPON DISMISSAL WITHOUT CAUSE: The Executive shall be entitled
to a payment by the Corporation of an amount calculated as provided for in
Section 2 if a Triggering Event does not occur but the Executive is dismissed
from his employment with the Corporation without cause after a Change in Control
and within twenty-four months after the Change in Control. The Corporation shall
not dismiss the Executive for any reason unless such dismissal is specifically
approved by the Board of Directors of the Corporation.
SECTION 5 - PAYMENTS UNDER THIS AGREEMENT: Any payment to be made by the
Corporation pursuant to the terms of this Agreement shall be made by the
Corporation in cash in a lump sum within five business days of the giving of
notice by the Executive pursuant to Section 3, or within five business days of
the dismissal from the Executive's employment as referred to in Section 4, as
the case may be. Any payment to be made under Section 2 or 4 shall be
calculated, in the case of Section 2, at the date of giving notice pursuant to
Section 3 and, in the case of Section 4, at the date of dismissal.
Notwithstanding the foregoing provisions of this Section 5, at the option of the
Executive a payment, or any part thereof, to be made to the Executive shall be
deferred to such date or dates as shall be designated in writing by the
Executive.
SECTION 6 - PAYMENTS IN LIEU OF ALL OTHER DAMAGE CLAIMS, ETC.: All payments
provided for herein shall be in lieu of all other notice or damage claims as
regards dismissal or termination of the Executive's employment with the
Corporation or any subsidiary of the Corporation after a Change in Control and
the arrangements provided for herein shall not be considered in any judicial
determination of appropriate damages at common law for dismissal without cause,
other than as provided for in this Agreement. At the request of either party,
the parties shall exchange mutual signed releases of liability conforming to the
substantive provisions of this Agreement.
SECTION 7 - AGREEMENT SUPPLEMENTAL: This Agreement shall be supplemental to any
other contract of employment or otherwise, whether written or oral, that exists
between the Corporation or any subsidiary of the Corporation and the Executive,
except insofar as any such contract relates to the termination of the employment
relationship between the Corporation or any subsidiary of the Corporation and
the Executive, in which case this Agreement shall supersede the termination
provisions of any such other contract of employment or otherwise.
SECTION 8 - BENEFIT PLANS: In the event that the Executive is entitled to a
payment pursuant to Section 2 or 4, the Executive shall be entitled to have all
Benefit Plans as constituted at the date of the giving of notice by the
Executive pursuant to Section 3, or the dismissal from the Executive's
employment, as the case may be, continued for a period of twenty-four months
after the date of the giving of notice by the Executive pursuant to Section 3,
or the dismissal from the Executive's employment, as the case may be, or for any
longer period available under any Benefit Plans when coverage is provided from a
source other than the Corporation.
4
<PAGE>
SECTION 9 - STOCK OPTIONS: In the event that the Executive is entitled to a
payment pursuant to Section 2 or 4, the term during which any stock option
granted to the Executive by the Corporation or any subsidiary of the Corporation
may be exercised shall be extended to the later of the expiry date of the option
or twenty-four months after the date of the giving of notice by the Executive
pursuant to Section 3, or the dismissal from the Executive's employment as
referred to in Section 4, as the case may be; provided that the maximum term of
any such option shall not exceed 6 years from the date of grant of the option or
such longer period as shall be permitted under the terms of the Corporation's
stock option plan. In addition, in such event any provisions of the stock option
or the stock option plan restricting the number of option shares which may be
purchased before a particular date shall be waived and the options shall be
fully vested immediately. The terms of any stock option plan or agreement shall
be deemed amended to reflect the provisions of this Section 9.
SECTION 10 - DESIGNATION OF BENEFICIARY: In the event that the Executive dies
prior to the satisfaction of all of the Corporation's obligations under the
terms of this Agreement, any remaining amounts payable to the Executive by the
Corporation shall be paid to the person or persons (a "Beneficiary") previously
designated by the Executive to the Corporation for such purposes. Any such
designation of a Beneficiary shall be made in writing, signed by the Executive
and dated and filed with the Secretary of the Corporation. In the event that no
such designation is made, all such remaining amounts shall be paid by the
Corporation to the estate of the Executive. If the Executive has exercised the
option pursuant to Section 5 to defer a payment, or any part thereof, to be made
to the Executive, the Beneficiary or the executor of the estate, as the case may
be, shall have the further option to require payment in full of any such
remaining amounts to the Beneficiary or the executor, as the case may be, by
giving notice in writing to that effect to the Corporation.
SECTION 11 - ASSIGNMENT AND ASSUMPTION: This Agreement automatically shall be
assigned by the Corporation to any successor corporation of the Corporation and
shall be binding upon such successor corporation. For the purposes of this
Section 11, "successor corporation" shall include any person referred to in
Subsection 1(b)(ii) or (iii). The Corporation shall ensure that the successor
corporation shall continue the provisions of this Agreement as if it were the
original party in place of the Corporation; provided however that the
Corporation shall not thereby be relieved of any obligation to the Executive
pursuant to this Agreement. In the event of a transaction or series of
transactions as described in Subsection 1(b)(ii) or (iii), appropriate
arrangements shall be made by the Corporation for the successor corporation to
honour this Agreement as if the Executive had exercised his maximum rights
hereunder as of the effective date of such transaction.
SECTION 12 - FURTHER ASSURANCES: Each of the parties hereto agrees to do and
execute or cause to be made, done or executed all such further and other things,
acts, deeds, documents, assignments and assurances as may be necessary or
reasonably required to carry out the intent and purpose of this Agreement fully
and effectually. Without limiting the generality of the foregoing, the
Corporation shall take all reasonable steps in order to structure the payment or
payments provided for in this Agreement in the manner most advantageous to the
Executive with respect to
5
<PAGE>
the provisions of the Income Tax Act (Canada), the Internal Revenue Code (United
States of America) or any similar legislation in place in any other jurisdiction
of the Executive's residence.
SECTION 13 - REVIEW OF AGREEMENT: In the event of a threatened or pending Change
in Control of the Corporation, and following a Change in Control of the
Corporation which is not followed within six months by a Triggering Event in
respect of the Executive, the Corporation in either case shall enter into a
review of the terms of this Agreement and shall implement any amendments hereto
which are agreed to by both parties.
SECTION 14 - RETRANSFER: In the event that within 12 months prior to the date of
the Triggering Event the Executive was transferred by the Corporation or the
Subsidiary to his then place of residence and if the Executive has been resident
in such location for less than 24 months at the time that he becomes entitled to
a payment pursuant to Section 2 or 4, if the Executive exercises his rights
under this Section 14 at the time of the giving of notice by the Executive
pursuant to Section 3, or upon giving notice to the Corporation within 30 days
of dismissal from the Executive's employment as referred to in Section 4, as the
case may be, the Corporation shall pay the direct moving expenses of moving the
Executive and his immediate family and their household effects to his
immediately preceding place of residence offset by any such costs paid by any
new employer.
SECTION 15 - OUTPLACEMENT SERVICES: The Corporation shall pay the reasonable
costs (to a maximum of 15% of the then current annual base salary of the
Executive) of the services of an outplacement counselling service mutually
satisfactory to the Corporation and the Executive, and for a maximum period of
12 months, for the Executive in the event that the Executive is entitled to
receive a payment pursuant to Section 2 or 4.
SECTION 16 - GENDER: Whenever the context of this Agreement so requires or
permits, the masculine gender includes the feminine gender.
SECTION 17 - NOTICE: Any election or designation to be made by the Executive
pursuant to the terms of this Agreement shall be by notice in writing and shall
be hand delivered to the Corporation at the following address:
Zemex Corporation
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
Toronto, Ontario
M5J 2S1
Telephone: (416) 365-8080
Fax: (416) 365-8094
Attention: Chairman of the Board
SECTION 18 - TERM: This Agreement shall commence as of the date first above
written and shall terminate on December 31, 2003 unless extended with the mutual
agreement of the parties hereto and approved by the Board of Directors of the
Corporation; provided that if a Change of Control
6
<PAGE>
occurs on or before December 31, 2003 the term of this Agreement shall be
automatically extended to the Expiry Date.
SECTION 19 - GOVERNING LAW: This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be executed
as of the date first above written.
ZEMEX CORPORATION
By: /s/ Paul A. Carroll
------------------------------------
Paul A. Carroll
Director
SIGNED, SEALED & DELIVERED )
in the presence of )
)
)
)
/s/ Patricia K. Moran ) /s/ Allen J. Palmiere
- --------------------------------- ) ---------------------------------
Witness ) Allen J. Palmiere
7
THIS AGREEMENT made as of the 1st day of October, 1998.
B E T W E E N:
ZEMEX CORPORATION
(hereinafter called the "Corporation")
- and -
RICHARD L. LISTER
(hereinafter called the "Executive")
WITNESSES THAT:
WHEREAS the Executive is presently employed by the Corporation or a Subsidiary
and has been for a substantial period of time;
AND WHEREAS the Corporation and the Executive are desirous of having certain
rights and benefits in the event that the Executive is dismissed or the
Executive's employment relationship with the Corporation or the Subsidiary is
terminated in the manner set out herein;
AND WHEREAS the Corporation wishes to retain the benefit of the Executive's
employment with the Corporation or the Subsidiary and to ensure that the
Executive is able to carry out his responsibilities with the Corporation or the
Subsidiary free from any distractions associated with any change in the
ownership of the Corporation or its assets;
NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements hereinafter contained, and for other good and valuable consideration
(the receipt and sufficiency of which is hereby acknowledged by the parties
hereto), it is agreed by and between the parties hereto as follows:
SECTION 1 - DEFINITIONS: Terms used in this Agreement but not otherwise defined
herein have the meanings set forth below:
(a) "BENEFIT PLANS" means any stock option or share purchase plan, employee
loan, insurance, long-term disability, medical, dental and other executive and
employee benefit plans, including any pension or similar plans, perquisites and
privileges as may be provided to the Executive by the Corporation or the
Subsidiary;
(b) "CHANGE IN CONTROL" means a transaction or series of transactions whereby
directly or indirectly:
<PAGE>
(i) any person or combination of persons (other than any combination of
Dundee Bancorp Inc. or any affiliate thereof and Richard L. Lister or
a corporation controlled by any one or more of such persons) obtains a
sufficient number of securities of the Corporation to affect
materially the control of the Corporation; or
(ii) the Corporation shall consolidate or merge with or into, amalgamate
with, or enter into a statutory arrangement with, any other person
(other than a subsidiary of the Corporation) or any other person
(other than a subsidiary of the Corporation) shall consolidate or
merge with or into, or amalgamate with or enter into a statutory
arrangement with, the Corporation, and, in connection therewith, all
or part of the outstanding voting shares shall be changed in any way,
reclassified or converted into, exchanged or otherwise acquired for
shares or other securities of the Corporation or any other person or
for cash or any other property; or
(iii) the Corporation shall be liquidated or dissolved or shall sell or
otherwise transfer, including by way of the grant of a leasehold
interest (or one or more of its subsidiaries shall sell or otherwise
transfer, including by way of the grant of a leasehold interest)
property or assets (A) aggregating more than 50% of the consolidated
assets (measured by either book value or fair market value) of the
Corporation and its subsidiaries as at the end of the most recently
completed financial year of the Corporation or (B) which during the
most recently completed financial year of the Corporation generated,
or during the then current financial year of the Corporation are
expected to generate, more than 50% of the consolidated operating
income or cash flow of the Corporation and its subsidiaries, to any
other person or persons (other than the Corporation or one or more of
its subsidiaries); or
(iv) the Corporation shall issue shares of common stock from the treasury
of the Corporation in a sufficient number to affect materially the
control of the Corporation; or
(v) the Incumbent Directors cease to represent a majority of the members
of the Board of Directors;
for the purposes of Sections 1(b)(i) and (iv), a person or combination of
persons holding shares or other securities in excess of the number which,
directly or following conversion thereof, would entitle the holders thereof to
cast 20% or more of the votes attaching to all shares of the Corporation which
may be cast to elect directors of the Corporation, shall be deemed to be in a
position to affect materially the control of the Corporation;
(c) "EXPIRY DATE" means forty-two months after a Change in Control occurs;
(d) "INCUMBENT DIRECTORS" means the members of the Board of Directors holding
office at the date of this Agreement and any additional Directors appointed by
or with the consent of the Incumbent Directors;
2
<PAGE>
(e) "SUBSIDIARIES" means the following:
(i) Alumitech, Inc.;
(ii) Pyron Corporation; and
(iii) Zemex Industrial Minerals, Inc.;
and "Subsidiary" means any one of them with which the Executive has employment;
(f) "TRIGGERING EVENT" means any one of the following events which occurs
without the express or implied agreement of the Executive:
(i) an adverse change in any of the duties, powers, rights, discretion,
salary or benefits of the Executive as they exist at the date of this
Agreement; or
(ii) a diminution of the title of the Executive as it exists at the date of
this Agreement; or
(iii) a change in the person or body to whom the Executive reports at the
date of this Agreement, except if such person or body is of equivalent
rank or stature or such change is as a result of the resignation or
removal of such person or the persons comprising such body, as the
case may be, provided that this shall not include a change resulting
from a promotion in the normal course of business; or
(iv) a change in the municipality at which the Executive is regularly
required to carry out the terms of his employment with the Corporation
at the date of this Agreement unless the Executive's terms of
employment include the obligation to receive geographic transfers from
time to time in the normal course of business.
SECTION 2 - RIGHTS UPON OCCURRENCE OF TRIGGERING EVENT: If a Change in Control
occurs and if, in respect of the Executive, a Triggering Event occurs on or
before the Expiry Date, the Executive shall be entitled to elect to terminate
his employment with the Corporation and to receive a payment from the
Corporation in an amount equal to the aggregate of (a) 300 % of his then current
annual base salary and (b) 300% of the average of the annual bonus, if any,
payable to him in respect of each of the three fiscal years of the Corporation
ended immediately prior to such date. This Section 2 shall not apply if such
Triggering Event follows a Change in Control which involves a sale of securities
or assets of the Corporation with which the Executive is involved as a purchaser
in any manner, whether directly or indirectly (by way of participation in a
corporation or partnership that is a purchaser or by provision of debt, equity
or purchase-leaseback financing).
SECTION 3 - TERMINATION RIGHTS CONDITIONAL: All termination rights of the
Executive provided for in Section 2 are conditional upon the Executive electing
to exercise such rights by notice given
3
<PAGE>
to the Corporation up to 6 months after the Expiry Date and are exercisable only
if the Executive does not resign from his employment with the Corporation or the
Subsidiary (other than at the request of the Corporation or the Subsidiary) and
does not actively seek alternative employment, in each case for at least 180
days following the date of the Change in Control.
SECTION 4 - RIGHTS UPON DISMISSAL WITHOUT CAUSE: The Executive shall be entitled
to a payment by the Corporation of an amount calculated as provided for in
Section 2 if a Triggering Event does not occur but the Executive is dismissed
from his employment with the Corporation without cause after a Change in Control
and within thirty-six months after the Change in Control. The Corporation shall
not dismiss the Executive for any reason unless such dismissal is specifically
approved by the Board of Directors of the Corporation.
SECTION 5 - PAYMENTS UNDER THIS AGREEMENT: Any payment to be made by the
Corporation pursuant to the terms of this Agreement shall be made by the
Corporation in cash in a lump sum within five business days of the giving of
notice by the Executive pursuant to Section 3, or within five business days of
the dismissal from the Executive's employment as referred to in Section 4, as
the case may be. Any payment to be made under Section 2 or 4 shall be
calculated, in the case of Section 2, at the date of giving notice pursuant to
Section 3 and, in the case of Section 4, at the date of dismissal.
Notwithstanding the foregoing provisions of this Section 5, at the option of the
Executive a payment, or any part thereof, to be made to the Executive shall be
deferred to such date or dates as shall be designated in writing by the
Executive.
SECTION 6 - PAYMENTS IN LIEU OF ALL OTHER DAMAGE CLAIMS ETC.: All payments
provided for herein shall be in lieu of all other notice or damage claims as
regards dismissal or termination of the Executive's employment with the
Corporation or any subsidiary of the Corporation after a Change in Control and
the arrangements provided for herein shall not be considered in any judicial
determination of appropriate damages at common law for dismissal without cause,
other than as provided for in this Agreement. At the request of either party,
the parties shall exchange mutual signed releases of liability conforming to the
substantive provisions of this Agreement.
SECTION 7 - AGREEMENT SUPPLEMENTAL: This Agreement shall be supplemental to any
other contract of employment or otherwise, whether written or oral, that exists
between the Corporation or any subsidiary of the Corporation and the Executive,
except insofar as any such contract relates to the termination of the employment
relationship between the Corporation or any subsidiary of the Corporation and
the Executive, in which case this Agreement shall supersede the termination
provisions of any such other contract of employment or otherwise.
SECTION 8 - BENEFIT PLANS: In the event that the Executive is entitled to a
payment pursuant to Section 2 or 4, the Executive shall be entitled to have all
Benefit Plans as constituted at the date of the giving of notice by the
Executive pursuant to Section 3, or the dismissal from the Executive's
employment, as the case may be, continued for a period of thirty-six months
after the date of the giving of notice by the Executive pursuant to Section 3,
or the dismissal from the Executive's employment, as the case may be, or for any
longer period available under any Benefit Plans when coverage is provided from a
source other than the Corporation.
4
<PAGE>
SECTION 9 - STOCK OPTIONS: In the event that the Executive is entitled to a
payment pursuant to Section 2 or 4, the term during which any stock option
granted to the Executive by the Corporation or any subsidiary of the Corporation
may be exercised shall be extended to the later of the expiry date of the option
or thirty-six months after the date of the giving of notice by the Executive
pursuant to Section 3, or the dismissal from the Executive's employment as
referred to in Section 4 as the case may be; provided that the maximum term of
any such option shall not exceed 6 years from the date of grant of the option or
such longer period as shall be permitted under the terms of the Corporation's
stock option plan. In addition, in such event any provisions of the stock option
or the stock option plan restricting the number of option shares which may be
purchased before a particular date shall be waived and the options shall be
fully vested immediately. The terms of any stock option plan or agreement shall
be deemed amended to reflect the provisions of this Section 9.
SECTION 10 - DESIGNATION OF BENEFICIARY: In the event that the Executive dies
prior to the satisfaction of all of the Corporation's obligations under the
terms of this Agreement, any remaining amounts payable to the Executive by the
Corporation shall be paid to the person or persons (a "Beneficiary") previously
designated by the Executive to the Corporation for such purposes. Any such
designation of a Beneficiary shall be made in writing, signed by the Executive
and dated and filed with the Secretary of the Corporation. In the event that no
such designation is made, all such remaining amounts shall be paid by the
Corporation to the estate of the Executive. If the Executive has exercised the
option pursuant to Section 5 to defer a payment, or any part thereof, to be made
to the Executive, the Beneficiary or the executor of the estate, as the case may
be, shall have the further option to require payment in full of any such
remaining amounts to the Beneficiary or the executor, as the case may be, by
giving notice in writing to that effect to the Corporation.
SECTION 11 - ASSIGNMENT AND ASSUMPTION: This Agreement automatically shall be
assigned by the Corporation to any successor corporation of the Corporation and
shall be binding upon such successor corporation. For the purposes of this
Section 11, "successor corporation" shall include any person referred to in
Subsection 1(b)(ii) or (iii). The Corporation shall ensure that the successor
corporation shall continue the provisions of this Agreement as if it were the
original party in place of the Corporation; provided however that the
Corporation shall not thereby be relieved of any obligation to the Executive
pursuant to this Agreement. In the event of a transaction or series of
transactions as described in Subsection 1(b)(ii) or (iii), appropriate
arrangements shall be made by the Corporation for the successor corporation to
honour this Agreement as if the Executive had exercised his maximum rights
hereunder as of the effective date of such transaction.
SECTION 12 - FURTHER ASSURANCES: Each of the parties hereto agrees to do and
execute or cause to be made, done or executed all such further and other things,
acts, deeds, documents, assignments and assurances as may be necessary or
reasonably required to carry out the intent and purpose of this Agreement fully
and effectually. Without limiting the generality of the foregoing, the
Corporation shall take all reasonable steps in order to structure the payment or
payments provided for in this Agreement in the manner most advantageous to the
Executive with respect to
5
<PAGE>
the provisions of the Income Tax Act (Canada), the Internal Revenue Code (United
States of America) or any similar legislation in place in any other jurisdiction
of the Executive's residence.
SECTION 13 - REVIEW OF AGREEMENT: In the event of a threatened or pending Change
in Control of the Corporation, and following a Change in Control of the
Corporation which is not followed within six months by a Triggering Event in
respect of the Executive, the Corporation in either case shall enter into a
review of the terms of this Agreement and shall implement any amendments hereto
which are agreed to by both parties.
SECTION 14 - RETRANSFER: In the event that within 12 months prior to the date of
the Triggering Event the Executive was transferred by the Corporation or the
Subsidiary to his then place of residence and if the Executive has been resident
in such location for less than 24 months at the time that he becomes entitled to
a payment pursuant to Section 2 or 4, if the Executive exercises his rights
under this Section 14 at the time of the giving of notice by the Executive
pursuant to Section 3, or upon giving notice to the Corporation within 30 days
of dismissal from the Executive's employment as referred to in Section 4, as the
case may be, the Corporation shall pay the direct moving expenses of moving the
Executive and his immediate family and their household effects to his
immediately preceding place of residence offset by any such costs paid by any
new employer.
SECTION 15 - OUTPLACEMENT SERVICES: The Corporation shall pay the reasonable
costs (to a maximum of 15% of the then current annual base salary of the
Executive) of the services of an outplacement counselling service mutually
satisfactory to the Corporation and the Executive, and for a maximum period of
12 months, for the Executive in the event that the Executive is entitled to
receive a payment pursuant to Section 2 or 4.
SECTION 16 - GENDER: Whenever the context of this Agreement so requires or
permits, the masculine gender includes the feminine gender.
SECTION 17 - NOTICE: Any election or designation to be made by the Executive
pursuant to the terms of this Agreement shall be by notice in writing and shall
be hand delivered to the Corporation at the following address:
Zemex Corporation
Canada Trust Tower, BCE Place
161 Bay Street, Suite 3750
Toronto, Ontario
M5J 2S1
Telephone: (416) 365-8080
Fax: (416) 365-8094
Attention: Chairman of the Board
SECTION 18 - TERM: This Agreement shall commence as of the date first above
written and shall terminate on December 31, 2003 unless extended with the mutual
agreement of the parties hereto and approved by the Board of Directors of the
Corporation; provided that if a Change of Control
6
<PAGE>
occurs on or before December 31, 2003 the term of this Agreement shall be
automatically extended to the Expiry Date.
SECTION 19 - GOVERNING LAW: This Agreement shall be governed by and construed in
accordance with the laws of the Province of Ontario.
IN WITNESS WHEREOF the parties hereto have caused this agreement to be executed
as of the date first above written.
ZEMEX CORPORATION
By: /s/ Paul A. Carroll
---------------------------------------
Paul A. Carroll
Director
SIGNED, SEALED & DELIVERED )
in the presence of )
)
)
/s/ Patricia K. Moran ) /s/ Richard L. Lister
- ----------------------------- ) ----------------------------------
Witness ) Richard L. Lister
7
AMENDMENT NO. 5
DATED AS OF JULY 30, 1998
TO
LOAN AND SECURITY AGREEMENT
AS AMENDED
DATED AS OF MARCH 15, 1995
AMONG
ZEMEX CORPORATION AND
THE FELDSPAR CORPORATION
AND
NATIONSBANK OF TENNESSEE, N.A.,
AND THE CHASE MANHATTAN BANK
AND
NATIONSBANK OF TENNESSEE, N.A., AS AGENT
<PAGE>
TABLE OF CONTENTS
1. Definitions...........................................................1
2. Amendments to Agreement...............................................2
3. Representations and Warranties........................................3
3.1. Incorporation..................................................3
3.2. Due Authorization, No Conflicts, Etc...........................4
3.3. Due Execution, Etc.............................................5
3.4. Real Property..................................................5
4. Conditions Precedent..................................................5
4.1. Conditions Precedent to Effectiveness of Amendment No. 5.......5
5. Effectiveness of Amendment No. 5......................................6
6. Closing...............................................................7
7. Deliveries............................................................7
8. Governing Law, Etc....................................................7
9. Section Titles and Table of Contents..................................7
10. Waiver of Jury Trial..................................................7
11. Counterparts..........................................................7
12. Agreement to Remain in Effect.........................................8
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<PAGE>
AMENDMENT No. 5 dated as of July 30, 1998, under and to that certain Loan
and Security Agreement dated as of March 15, 1995 as amended by Amendment No. 1
dated March 12, 1997, Amendment No. 2 dated July 12, 1997, Amendment No. 3 dated
June 26, 1998, and Amendment No. 4 dated July 13, 1998 (collectively, the
"Agreement"), among Zemex Corporation, a Delaware corporation, and The Feldspar
Corporation, a North Carolina corporation (individually and collectively, the
"Borrower"), the Guarantors, jointly and severally, including the additional
Participating Subsidiaries; each of the undersigned Banks (in such capacity the
"Banks") and NationsBank of Tennessee, N.A. as agent for the Banks (in such
capacity the "Agent").
W I T N E S S E T H:
WHEREAS, Borrower, the Banks and the Agent are parties to the Agreement;
and
WHEREAS, Zemex Corporation, having already used a portion of its
Commitments to purchase certain common stock in Inmet Mining Corporation, needs
to increase its Working Capital Loan from Five Million and No/100 Dollars
($5,000,000.00) to Fifteen Million and No/100 Dollars ($15,000,000.00) on a
temporary basis to fund its Working Capital needs; and
WHEREAS, the Banks are willing to allow the Working Capital Bank to
increase the Working Capital Loan as aforesaid subject to, among other things,
Zemex Corporation executing the Inmet Stock Pledge Agreement as hereinafter
defined and delivering to the Agent as soon as practicable all shares in Inmet
Mining Corporation owned by Zemex Corporation together with irrevocable stock
powers of attorney for said shares duly executed by Zemex Corporation;
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements set forth herein, and for other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS. All capitalized terms used in this Amendment No. 5 which
are not otherwise defined herein shall have the respective meanings ascribed
thereto in the Agreement.
<PAGE>
2. AMENDMENTS TO AGREEMENT.
2.1. Section I of the Agreement, DEFINITIONS, is hereby amended by
adding thereto the following new definitions as follows:
"AMENDMENT NO. 5 EFFECTIVE DATE" has the meaning specified in Section
5 of Amendment No. 5.
"INMET" means Inmet Mining Corporation, a corporation amalgamated
under the Canadian Business Corporations Act, as amended.
"INMET STOCK PLEDGE AGREEMENT" means that Stock Pledge Agreement in
the form attached hereto as Exhibit F-1 to be executed by Zemex
Corporation.
In addition to the foregoing new definitions, the following definitions are
hereby amended:
(ii) "WORKING CAPITAL COMMITMENT" is hereby amended to delete
everything after the word "commitment" and to replace it with the
following: "described in paragraph 2.3(A) hereof."
2.2. Paragraph 2.3(A) is hereby amended to delete the same in its
entirety and replace it with the following new subparagraph as follows:
"2.3(A) Subject to the terms and conditions of and relying upon the
representations, warranties and covenants contained in this Agreement
for a period ending on the day prior to the Working Capital Loan
Termination Date, the Working Capital Bank agrees to fund to the
Borrower on a reducing, revolving basis amounts up to Fifteen Million
and No/100 Dollars ($15,000,000.00) from the Amendment No. 5 Effective
Date through October 31, 1998, amounts up to Ten Million and No/100
Dollars from November 1, 1998 through December 31, 1998, and amounts
up to Five Million and No/100 Dollars ($5,000,000.00) from January 1,
1999 to the Working Capital Loan Termination Date. On November 1,
1998, all Working Capital Loan amounts in excess of $10,000,000 shall
be due and payable by Borrower to the Working Capital Bank on demand,
and on January 1, 1999, all Working Capital Loan amounts in excess of
$5,000,000 shall be due and
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<PAGE>
payable by Borrower to the Working Capital Bank on demand; provided,
any dividends or capital distributions paid on the Inmet stock pledged
pursuant to the Inmet Stock Pledge Agreement shall be paid immediately
to the Working Capital Bank for application to the Working Capital
Loan, where they shall permanently reduce on a dollar-for-dollar basis
both the Working Capital Commitment and the Working Capital Loan (but
not below $5,000,000.00). The Working Capital Loan shall be evidenced
by the $15,000,000 Note of Borrower to the Working Capital Bank which
Note is substantially in the form set forth in Exhibit A-1 attached
hereto, with the Note payable in accordance with its terms. The
Borrower may obtain loans, repay without penalty or premium and
reborrow hereunder, from the date of this Agreement up to and not
including the Working Capital Loan Termination Date, either the then
applicable amount of the Working Capital Loan Commitment or any lesser
sum which is in the minimum amount of $1,000 and in an integral
multiple of $1,000 if in excess thereof.
2.3. All dividends and capital distributions, if any, paid on the
Inmet stock pledged pursuant to the Inmet Stock Pledge Agreement shall be paid
immediately to the Working Capital Bank to be applied as a permanent reduction
on the Working Capital Loan and the Working Capital Commitment.
2.4. In connection herewith the Borrower agrees to pay to the Banks an
amendment fee of Twenty Thousand and No/100 Dollars ($20,000.00), to be payable
Ten Thousand and No/100 Dollars ($10,000.00) to NationsBank of Tennessee, N.A.
and $10,000.00 to The Chase Manhattan Bank.
3. REPRESENTATIONS AND WARRANTIES. To induce the Banks and the Agent to
enter into this Amendment No. 5, Borrower and Guarantors jointly and severally
represent and warrant to the Banks and the Agent as follows:
3.1. INCORPORATION. Alumitech, Inc., Aluminum Waste Technology, Inc.
and Zemex Industrial Minerals, Inc. are corporations duly organized, validly
existing and in good standing under the laws of
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<PAGE>
the State of Delaware; Engineered Thermal Systems, Inc. and AWT Properties, Inc.
are corporations duly organized, validly existing and in good standing under the
laws of the State of Ohio; and S&R Enterprises, Inc. is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Indiana; each of said corporations has the lawful power to own its properties
and to engage in the business it conducts, and each is duly qualified and in
good standing as a foreign corporation in the jurisdictions wherein the nature
of the business transacted by it or property owned by it is both material and
makes qualification necessary; Zemex Industrial Minerals, Inc. has its chief
executive office and principal place of business in Atlanta, Georgia and each of
the other corporations has its chief executive office and principal place of
business located at Streetsboro, Portage County, Ohio; each of Alumitech, Inc.,
Aluminum Waste Technology, Inc., Engineered Thermal Systems, Inc., and AWT
Properties, Inc. has its equipment and inventory located in the State of Ohio,
Zemex Industrial Minerals, Inc. has all of its inventory and equipment located
in Atlanta, Georgia, and S&R Enterprises, Inc. has all of its inventory and
equipment located in Wabash, Indiana.
3.2. DUE AUTHORIZATION, NO CONFLICTS, ETC. The execution, delivery and
performance by the Borrower and Guarantors of this Amendment No. 5 and any and
all other agreements, instruments and documents to be executed and/or delivered
by the Borrower or any Guarantor pursuant hereto or in connection herewith, and
the consummation by Borrower and Guarantors of the transactions contemplated
hereby or thereby: (a) are within the corporate powers of each; (b) have been
duly authorized by all necessary corporate action, including without limitation,
the consent of stockholders where required; (c) do not and will not (i)
contravene the respective certificate of incorporation or by-laws or other
comparable governing documents of Borrower or any Guarantor, (ii) violate any
Laws, or any order or decree of any court or governmental authority, or (iii)
conflict with or result in the breach of, or constitute a default under, or
result in the termi nation of, any material contractual obligation of Borrower
or any Guarantor, and (d) do not require the consent, authorization by, or
approval of, or notice to, or filing or registration with, any governmental
authority or any other Person other than those which have been obtained and
copies of which have been delivered to the Agent pursuant to Subsection
4.1(a)(ii) hereof, each of which is in full force and effect.
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<PAGE>
3.3. DUE EXECUTION, ETC. This Amendment No. 5 and each of the other
agreements, instruments and documents to be executed and/or delivered by
Borrower or any Guarantor pursuant hereto or in connection herewith (a) has been
duly executed and delivered, and (b) constitutes the legal, valid and binding
obligation of each, enforceable against it in accordance with its terms, subject
however to state and federal bankruptcy, insolvency, reorganization and other
laws and general principles of equity affecting enforcement of the rights of
creditors generally.
3.4. REAL PROPERTY. The Borrower and its Participating Subsidiaries
have good and marketable title to the Real Property subject to no encumbrances
other than Permitted Liens and those noted in the Deeds of Trust originally
executed and delivered on March 15, 1995.
4. CONDITIONS PRECEDENT. The effectiveness of this Amendment No. 5 is
subject to the fulfillment of the following conditions precedent on or prior to
the Amendment No. 5 Effective Date (as here inafter defined in Section 5
hereof):
4.1. CONDITIONS PRECEDENT TO EFFECTIVENESS OF AMENDMENT NO. 5. The
Agent shall have received, on or prior to the Amendment No. 5 Effective Date,
the following, each dated on or prior to the Amendment No. 5 Effective Date
unless otherwise indicated, in form and substance satisfactory to the Agent and
in sufficient copies for each Bank:
(a) Certified copies of (i) the resolutions of the Board of Directors
of Borrower and each Guarantor approving this Amendment No. 5 and each other
agreement, instrument or document to be executed by them pursuant hereto or as
contemplated hereby, and (ii) all documents evidencing other necessary corporate
action and required governmental and third party approvals, licenses and
consents with respect to this Amendment No. 5 and the transactions contemplated
hereby.
(b) A certificate of the Secretary or an Assistant Secretary of
Borrower and each Guarantor certifying the names and true signatures of the
officers of Borrower and each Guarantor who have been authorized to execute on
behalf of Borrower and such Guarantor this Amendment No. 5 and any other
agreement, instrument or document executed or to be executed by Borrower and any
Guarantor in connection herewith.
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<PAGE>
(c) A certificate dated the Amendment No. 5 Effective Date signed by
the President or any Vice-President of Borrower, to the following effect:
(i) The representations and warranties of the Borrower contained in
Sections 3.1, 3.2 and 3.3 of this Amendment No. 5 are true and correct on
and as of such date as though made on and as of such date;
(ii) No Default or Event of Default has occurred and is continuing,
and no Default or Event of Default would result from the execution and
delivery of this Amendment No. 5 or the other agreements, instruments and
documents contemplated hereby; and
(iii) The Borrower has paid or agreed to pay all amounts payable by it
pursuant to the Agreement as amended hereby (including, without limitation,
all legal fees and expenses of Banks' counsel incurred in connection
herewith) to the extent then due and payable.
(d) An original Inmet Stock Pledge Agreement duly executed by Zemex
Corporation, in the form attached hereto as EXHIBIT F-1.
(e) A federal reserve form (or forms) U-1, duly completed and executed
by Zemex Corporation and by The Feldspar Corporation.
(f) A favorable opinion of Messrs. Hogan & Hartson, L.L.P., counsel to
the Borrower, in substantially the form of EXHIBIT A hereto, and as to such
other matters as any Bank, through the Agent, may reasonably request.
5. EFFECTIVENESS OF AMENDMENT NO. 5. This Amendment No. 5 and the
Exhibits attached hereto shall become effective at such time as (a) each of the
conditions precedent set forth in Section 4.1 hereof shall have been satisfied,
and (b) counterparts of this Amendment No. 5, executed and delivered by the
Borrowers, the Banks and the Agent shall have been received by the Agent (or,
alternatively, confirmation of the execution hereof by such parties shall have
been received by the Agent). The date upon which the conditions described in
clauses (a) and (b) of the foregoing sentence shall have been fulfilled is
referred to herein as the "Amendment No. 5 Effective Date".
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<PAGE>
6. CLOSING. The Closing under this Amendment No. 5 shall occur on the
Amendment Effective Date at the offices of Boult, Cummings, Conners & Berry, 1
NationsBank Plaza, Nashville, Tennessee 37219, or such other location as the
parties may agree.
7. DELIVERIES. The Borrower covenants to deliver to the Agent on
behalf of the Banks: (a) on or before August 7, 1998, certificates evidencing
not less than 4,075,500 shares of Inmet together with fully executed stock
powers of attorney in form and substance satisfactory to the Agent.
8. GOVERNING LAW, ETC. This Amendment No. 5 shall be governed by, and
construed in accordance with, the laws of the State of Tennessee as provided in
Section 10.9 of the Agreement, which Section is incorporated herein by reference
and made a part hereof as though set forth in full herein.
9. SECTION TITLES AND TABLE OF CONTENTS. The Section Titles and Table
of Contents contained in this Amendment No. 5 are and shall be without
substantive meaning or content of any kind whatsoever and are not a part of the
agreement among the parties hereto.
10. WAIVER OF JURY TRIAL. EACH PARTY HERETO, INCLUDING THE BORROWER,
EACH SUBSIDIARY, THE BANKS, AND THE AGENT, HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE (TO THE EXTENT PERMITTED BY APPLICABLE LAWS) ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER, RELATING TO, OR
CONNECTED WITH THIS AGREEMENT, THE COLLATERAL OR ANY OTHER AGREEMENT, INSTRUMENT
OR DOCUMENT CONTEMPLATED HEREBY OR DELIVERED IN CONNECTION HEREWITH AND AGREE
THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY. THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE BANKS' AND THE AGENT ENTERING INTO
THIS AGREEMENT.
11. COUNTERPARTS. This Amendment No. 5 may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument.
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<PAGE>
12. AGREEMENT TO REMAIN IN EFFECT. Except as expressly provided
herein, the Agreement and each other Collateral Document shall be and shall
continue in full force and effect in accordance with its respective terms.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
5 to be executed by their respective officers thereunto duly authorized, as of
the date first above written.
AGENT BORROWER
NATIONSBANK OF TENNESSEE, N.A., ZEMEX CORPORATION
as Agent
BY: /S/ JACK WILLIAMS BY: /S/ ALLEN PALMIERE
--------------------------------- ---------------------------------
TITLE: Senior Vice President TITLE: Vice President and Chief
Financial Officer
BY: /S/ PATRICIA K. MORAN
--------------------------------
TITLE: Secretary and Assistant
Treasurer
BANKS
NATIONSBANK OF TENNESSEE, N.A. THE FELDSPAR CORPORATION
BY: /S/ JACK WILLIAMS BY: /S/ ALLEN PALMIERE
--------------------------------- ---------------------------------
TITLE: Senior Vice President TITLE: Vice President
THE CHASE MANHATTAN BANK GUARANTORS AND PARTICIPATING
(formerly Chemical Bank) SUBSIDIARIES
PYRON CORPORATION
BY: /S/ DENNIS J. DOMBECK
---------------------------------
TITLE: Senior Vice President BY: /S/ ALLEN PALMIERE
---------------------------------
TITLE: Vice President
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<PAGE>
PYRON METAL POWDERS, INC.
BY: /S/ ALLEN PALMIERE
--------------------------------
TITLE: Vice President
SUZORITE MICA PRODUCTS INC. LES
PRODUITS MICA SUZORITE INC.
BY: /S/ ALLEN PALMIERE
--------------------------------
TITLE: Vice President
SUZORITE MINERAL PRODUCTS, INC.
BY: /S/ ALLEN PALMIERE
--------------------------------
TITLE: Vice President
ALUMITECH, INC.
BY: /S/ ALLEN PALMIERE
--------------------------------
TITLE: Vice President
ENGINEERED THERMAL SYSTEMS, INC.
BY: /S/ ALLEN PALMIERE
--------------------------------
TITLE: Vice President
ALUMINUM WASTE TECHNOLOGY, INC.
BY: /S/ ALLEN PALMIERE
--------------------------------
TITLE: Vice President
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<PAGE>
AWT PROPERTIES, INC.
BY: /S/ ALLEN PALMIERE
--------------------------------
TITLE: Vice President
ZEMEX INDUSTRIAL MINERALS, INC.
BY: /S/ ALLEN PALMIERE
--------------------------------
TITLE: Vice President
S&R ENTERPRISES, INC.
BY: /S/ ALLEN PALMIERE
--------------------------------
TITLE: Vice President
- 10 -
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<PERIOD-END> SEP-30-1998
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0
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