(Salon, Marraw & Dyckman, LLP Letterhead)
March 17, 1998
VIA FEDERAL EXPRESS
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Semiconductor Packaging
Materials Co., Inc.
File No. 1 - 10938
Preliminary Proxy Material
Gentlemen:
Pursuant to Rule 14a-6 of the Securities Exchange
Act of 1934, we hereby file the preliminary Notice of Annual Meeting, Proxy
Statement and Proxy Card for the above-captioned registrant. We plan to mail the
material to the Company's stockholders on March 30, 1998 and would appreciate
receiving any comments which you may have by close of business on March 26,
1998. If you can not reach me please speak to my partner, Stephen J. Feinberg at
(212) 661-7100.
Very truly yours,
Alan M. Rashes
AMR:val
<PAGE>
Schedule 14A Information
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendments No. )
Filed by the Registrant (x)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
(X) Preliminary Proxy Statement
( ) Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e) (2))
( ) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
SEMICONDUCTOR PACKAGING MATERIALS CO., INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
same
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (check the appropriate box) :
(X) No fee required
( ) Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and
0-11(1).
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined) :
----------------------------------------------------------------
<PAGE>
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a) (2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
<PAGE>
SEMICONDUCTOR PACKAGING MATERIALS CO., INC.
One Labriola Court
Armonk, New York 10504
--------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON
April 28, 1998
--------------------------
To the Stockholders of Semiconductor Packaging Materials Co., Inc.:
You are cordially invited to attend the Annual Meeting of Stockholders
(the "Annual Meeting") of Semiconductor Packaging Materials Co., Inc. (the
"Company"), which will be held at 11:00 a.m. (E.D.T.) on April 28, 1998, at The
Club 101, 101 Park Avenue, New York, New York 10178, telephone number (212)
687-1045, to consider and act upon the following matters:
(1) The election of a Board of Directors consisting of six persons to
hold office for a one-year term and until their successors are duly
elected and qualified. The persons nominated by the Board of
Directors (Gilbert D. Raker, Frank J. Polese, Richard D. Fain, John
U. Moorhead II, Steven B. Sands and Mark A. Pinto) are described in
the accompanying Proxy Statement.
(2) The amendment to Article First of the Company's Certificate of
Incorporation to change the name of the Company to SEMX Corporation
(3) The ratification of the amendment to the Amended Employees'
Incentive Stock Option Plan as described in the accompanying Proxy
Statement.
(4) The ratification of the amendment to the Company's Non-Qualified
Incentive Stock Option Plan as described in the accompanying Proxy
Statement.
(5) The ratification of the appointment of Goldstein Golub Kessler &
Company, P.C. as the Company's auditors for the year ending December
31, 1998.
<PAGE>
(6) The transaction of such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only stockholders of record at the close of business on March 17, 1998
will be entitled to notice of, and to vote at, the Annual Meeting or any
adjournments thereof.
Whether or not you expect to attend the Annual Meeting in person, please
complete, date and sign the accompanying proxy card which is being solicited on
behalf of the Board of Directors, and return it without delay in the enclosed
postage prepaid envelope. Your proxy is revocable and will not be used if you
are present and prefer to vote in person or if you revoke the proxy.
Date: March 30, 1998 By order of the Board of Directors,
ANDREW A. LOZYNIAK, SECRETARY
<PAGE>
SEMICONDUCTOR PACKAGING MATERIALS CO., INC.
One Labriola Court
Armonk, New York 10504
(914) 273-5500
--------------------------
Proxy Statement
Annual Meeting of Stockholders
To Be Held On
April 28, 1998 At
THE CLUB 101, 101 PARK AVENUE
NEW YORK, NEW YORK
These proxy materials are furnished to holders of Common Stock, $.10 par
value ("Common Stock"), of Semiconductor Packaging Materials Co., Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders of the Company and for any adjournment or adjournments thereof
(the "Annual Meeting"), to be held at 11:00 A.M. (E.D.T.) on April 28, 1998, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders. A proxy (the "Proxy") for the Annual Meeting is enclosed, by means
of which you may indicate your votes as to each of the proposals described in
this Proxy Statement.
All Proxies which are properly completed, signed and returned to the
Company prior to the Annual Meeting, and which have not been revoked, will be
voted in accordance with the stockholder's instructions contained in such Proxy.
The affirmative vote by holders of a majority of the Common Stock represented at
the Annual Meeting is required for the election of Directors, and for the
ratification of the appointment of the Company's auditors. The affirmative vote
by holders of a majority of the common stock entitled to vote is required for
the amendment of the Company's Certificate of Incorporation to change the name
of the Company to SEMX Corporation. Similarly, the affirmative vote by holders
of a majority of the common stock entitled to vote is required for approval of
the ratification of the amendment to the Company's Non-Qualified Incentive Stock
Option Plan and for the approval of the ratification of the amendment to the
Company's Amended Employees' Incentive Stock Option Plan. In the absence of
contrary instructions, shares represented by such Proxy will be voted FOR the
election of the nominees for Director as set forth herein, FOR the change of
name of the Company, FOR the ratification of the adoption of the
<PAGE>
amendment to the Company's Non-Qualified Incentive Stock Option Plan, FOR the
ratification of the amendment to the Company's Amended Employees' Incentive
Stock Option Plan, and FOR the ratification of the appointment of the Company's
auditors for the year ending December 31, 1998. Shares represented by proxies
which are marked "abstain" for Items 2, 3 and 4 on the proxy card, and proxies
which are marked to deny discretionary authority on all other matters, will not
be included in the vote totals with respect to those items, and therefore will
have no effect on the vote. An automated system administered by the Company's
transfer agent counts the votes. The Company's Certificate of Incorporation and
By-laws do not contain provisions concerning the treatment of abstentions and
broker non-votes. Broker non-votes will be included in the determination of the
presence of a quorum, but will not be counted for purposes of determining
whether a proposal or nominee has been approved.
The Board of Directors does not anticipate that the nominees will be
unavailable for election and does not know of any other matters that may be
brought before the Annual Meeting. In the event that any other matter shall come
before the Annual Meeting or the nominees are not available for election, the
persons named in the enclosed Proxy will have discretionary authority to vote
all Proxies not marked to the contrary with respect to such matter in accordance
with their best judgment.
A stockholder may revoke their Proxy at any time before it is exercised
by filing with the Secretary of the Company at its executive offices at One
Labriola Court, Armonk, New York 10504, either by written notice of revocation
or a duly executed Proxy bearing a later date, or by appearing in person at the
Annual Meeting and expressing a desire to vote their shares in person. All costs
of this solicitation are to be borne by the Company.
A list of stockholders entitled to vote at the Annual Meeting will be
open to examination by any stockholder, for any purpose germane to the meeting,
at the executive offices of the Company, One Labriola Court, Armonk, New York
10504, during ordinary business hours for ten days prior to the Annual Meeting.
Such list will also be available during the Annual Meeting.
This Proxy Statement, the accompanying Notice of Annual Meeting of
Stockholders, the Proxy and the 1997 Annual Report to Stockholders including
financial statements are expected to be mailed commencing on or about March 30,
1998 to stockholders of record on March 17, 1998.
2
<PAGE>
VOTING SECURITIES
March 17, 1998, has been fixed as the record date for the determination
of stockholders entitled to notice of and to vote at the Annual Meeting or any
adjournment or adjournments thereof. As of that date, the Company had
outstanding 6,075,616 shares of Common Stock outstanding (which figure excludes
300,000 treasury shares not entitled to vote). The Company has no shares of
Preferred Stock, $.10 par value issued.
The following table sets forth, as of March 17, 1998, certain
information concerning those persons known to the Company to be the beneficial
owners (as such term is defined in Rule 13d-3 under the Securities Exchange Act
of 1934 (the "Exchange Act") of more than five (5%) percent of the outstanding
shares of Common Stock of the Company and the number of shares of Common Stock
of the Company owned by all Directors and nominees of the Company, individually,
the Chief Executive Officer of the Company, each of the Named Executive
Officers, and by all Directors and executive officers of the Company as a group:
Name and Address of Amount and Nature
Beneficial Owner and of Beneficial Percent of
Identity of Group (1)(2) Ownership Class
Richard D. Fain (3) 33,700 *
Kenneth J. Huth (4) 58,550 *
Andrew A. Lozyniak (5) 49,075 *
John U. Moorhead, II (6) 75,100 1.2%
Mark A. Pinto (7) 51,500 *
Frank J. Polese (8) 454,734 7.4%
Gilbert D. Raker (9) 798,775 12.9%
Steven B. Sands (10) 253,250 4.2%
All executive officers 1,774,684 27.8%
and Directors as a group
(8 persons) (11)
Kennedy Capital 323,900(a) 5.2%
10829 Olive Boulevard
St. Louis, Missouri 63141
- --------------------
*Less than 1% of outstanding shares of Common Stock
(a) Represents sole dispositive power, sole voting power is 288,600 shares or
4.8%.
3
<PAGE>
(1) Unless otherwise noted, the Company believes that all persons named
in the table have sole investment power with respect to all shares
of Common Stock beneficially owned by them. A person is deemed to be
the beneficial owner of securities that can be acquired by such
person within 60 days from the date hereof upon the exercise of
warrants or options. Each beneficial owner's percentage ownership is
determined by assuming that options or warrants that are held by
such person (but not those held by any other person) and which are
exercisable within 60 days from the date hereof have been exercised.
(2) The address of all of the persons is c/o Semiconductor Packaging
Materials Co., Inc., One Labriola Court, Armonk, New York 10504.
(3) Includes 2,700 shares of Common Stock held in trust for Mr. Fain's
children, as to which Mr. Fain disclaims beneficial ownership.
Includes underlying options to purchase 17,500 shares of Common
Stock.
(4) Includes underlying options to purchase 20,000 shares of Common
Stock.
(5) Includes underlying options to purchase 13,075 shares of common
stock.Excludes 1,925 shares of Common Stock issuable upon the
exercise of options held by Mr. Lozyniak which are not exercisable
within 60 days from the date hereof.
(6) Includes 3,600 shares of Common Stock owned by his spouse, as to
which Mr. Moorhead disclaims beneficial ownership and underlying
options to purchase 42,500 shares of Common Stock.
(7) Includes 19,500 shares of Common Stock owned by Mr. Pinto's father,
as to which Mr. Pinto disclaims beneficial ownership, and includes
an underlying option to purchase 10,000 shares of common stock but
excludes any shares owned by Sutro & Company, Mr. Pinto's employer.
(8) Includes underlying options to purchase 70,000 shares of Common
Stock.
(9) Includes underlying options to purchase 127,500 shares of Common
Stock, 12,500 shares of Common Stock beneficially owned by Mr.
Raker's minor daughter, as to which Mr. Raker disclaims beneficial
ownership and 1,625 shares beneficially owned by his spouse, as to
which Mr. Raker disclaims beneficial ownership. Excludes 32,800
shares of Common Stock issuable upon the exercise of an option held
by Mr.
4
<PAGE>
Raker which is not exercisable within 60 days from the date
hereof.
(10) Includes an aggregate of 235,000 shares owned by three limited
partnerships, the general partners of which are corporations of
which Mr. Sands is a 50% stockholder. Includes underlying options to
purchase 17,500 shares of Common Stock.
(11) Includes an aggregate of 318,075 shares of Common Stock issuable
upon exercise of options described in notes (3), (4), (5), (6), (7),
(8) (9) and (10).
PROPOSAL 1
ELECTION OF DIRECTORS
The six (6) nominees of management for election as Directors of the
Company at the Annual Meeting and certain information concerning each member are
set forth below. All the nominees are currently serving as Directors of the
Company. If elected, a Director of the Company, will hold office until the next
Annual Meeting of Stockholders or until their successor is duly elected and
qualified or until their death, resignation or removal. It is intended that the
accompanying form of Proxy will be voted FOR the election as Directors of the
nominees named below, unless the Proxy contains contrary instructions to
withhold authority. Proxies cannot be voted for a greater number of persons than
the number of nominees named in the Proxy Statement.
Management has no reason to believe that the nominees will not be
candidates or will be unable to serve. However, in the event that any nominee
should become unable or unwilling to serve as a Director, the Proxy will be
voted for the election of the remainder of those named, and for such substitute
person as shall be designated by the Directors.
5
<PAGE>
The following persons, each of whom is currently serving as a Director
of the Company are nominated for election.
Name Age Position
Gilbert D. Raker 54 Chairman of the Board,
President and Chief
Executive Officer
Frank J. Polese 41 Vice Chairman and Director
Richard D. Fain 50 Director
John U. Moorhead, II 45 Director
Steven B. Sands 39 Director
Mark A. Pinto 41 Director
Gilbert D. Raker, Chairman of the Board, and Chief Executive Officer of
the Company since May 1990, President since December 31, 1995.
Frank J. Polese - Vice Chairman of the Company since January 1996 and a
Director of the Company since July 1993. Mr. Polese also served as President of
the Company between January, 1994 and December, 1995. Mr. Polese has served
since August 1991 as President of Polese Company, Inc., a California corporation
("Polese Company"), which was acquired by the Company on May 27, 1993, prior to
which Mr. Polese was its sole shareholder. Prior to August 1991, Mr. Polese was
a manufacturer's representative specializing in products incorporated into
microelectronic packages for the electronics industry.
Richard D. Fain - a Director of the Company since October 1991. Since
April 1988, Mr. Fain has been Chairman of the Board of Directors and Chief
Executive Officer of Royal Caribbean Cruises, Ltd., a company engaged in the
operation of cruise ships. From 1975 until April 1988, Mr. Fain served in
various executive capacities and as a Director of Gotaas Larsen Shipping
Corporation, a company engaged in operating tankers and liquid natural gas
vessels.
John U. Moorhead, II - a Director of the Company since October 1991.
Since January, 1995, Mr. Moorhead has been a managing director of V. M. Equity
Partners, an investment banking firm. Since November, 1990 Mr. Moorhead has been
President of The Moorhead Group, Inc., an investment banking and consulting
firm. From January 1988 to October 1990, Mr. Moorhead was
6
<PAGE>
Director of the New Business Group of the Investment Banking Division of Lehman
Brothers. From November 1984 to December 1987, Mr. Moorhead was a senior
executive at E.F. Hutton.
Steven B. Sands - a Director of the Company since January 1992. Since
November 1990, Mr. Sands has been Chairman of Sands Brothers & Co., Ltd., an
investment banking and brokerage firm. From 1987 to 1989, Mr. Sands served as a
Managing Director of Rodman & Renshaw, a NYSE member firm. From 1984 to 1986,
Mr. Sands served as a Managing Director of Laidlaw Adams & Peck, an investment
banking firm. Mr. Sands serves as a Director of Brightpoint, Inc. (wholesale
distributor of cellular phones), The Village Green Bookstore, Inc. (owns and
operates book store chain), Digital Solutions, Inc. (leases temporary
employees), Command Security Corporation (security guard service company) and M.
C. Equities, Inc.(insurance holding company).
Mark A. Pinto - a Director of the Company since July 1995. He has been
Vice President/Institutional Sales, Corporate Bond Department of Sutro & Co.
since 1990. From 1987 until 1990, Mr. Pinto was Vice President/Fixed Income of
Kidder Peabody & Co. Mr. Pinto has been employed in the securities industry
since 1983.
Certain Information Concerning the Board of Directors
The Company held seven meetings of the Board of Directors during the
fiscal year ended December 31, 1997 ("Fiscal 1997") and conducted other business
by unanimous written consent. All of the directors attended at least 75% of the
Board of Directors, with the exception of Richard D. Fain.
The Company has a standing audit committee of the Board of Directors,
comprised of Messrs. Sands and Pinto, of which Mr. Pinto is the Chairman. During
1997, the audit committee met one time.
The Company has a standing compensation committee of the Board of
Directors (the "Compensation Committee"), which is comprised of Messrs. Fain and
Moorhead, of which Mr. Moorhead is the Chairman. During 1997, the Compensation
Committee met two times.
The Board of Directors does not have any other standing committees.
7
<PAGE>
Executive Officers
The Executive Officers of the Company are as follows:
Name Age Position
Gilbert D. Raker 54 Chairman of the Board,
President and
Chief Executive Officer
Frank J. Polese 41 Vice Chairman of the
Board, President of
Polese Company
Kenneth J. Huth 59 Executive Vice President
Andrew A. Lozyniak 40 Executive Vice President,
Secretary, Treasurer and
Chief Financial Officer
Kenneth J. Huth - Executive Vice President of the Company since January,
1994. President of the Company from January 1990 to December 1993. From 1972 to
December 1989, Mr. Huth served as President of Kenneth J. Huth, Inc., a
manufacturer's representative specializing in precision stampings and related
products for the electronics industry.
Andrew A. Lozyniak - Executive Vice President since January, 1995,
Secretary, Treasurer and Chief Financial Officer of the Company since February
1992. From October 1991 until January 1992, Mr. Lozyniak acted as an independent
financial consultant. From July 1986 until September 1991, Mr. Lozyniak was
employed as Controller and Treasurer of Ditri Associates, Inc. ("DAI"). In
connection with his employment with DAI, Mr. Lozyniak also served in various
financial and operating positions with affiliated operating companies and served
as an executive officer of six companies acquired by the principals of DAI.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and Directors, and persons who
beneficially own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "Commission") and the NASDAQ. Officers,
Directors and greater-than-10% stockholders are required by the Commission's
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
8
<PAGE>
Based solely on a review of the copies of such forms furnished to the
Company, the Company believes that during Fiscal 1997, all Section 16(a) filing
requirements applicable to its officers, Directors and greater-than-10%
beneficial owners were complied with in a timely fashion.
9
<PAGE>
Executive Compensation
The following table summarizes the compensation paid to, or earned by,
the Company's Chief Executive Officer and each of the three other executive
officers, other than its Chief Executive Officer (the "Named Executive
Officers"), who were serving as executive officers at the end of the 1995, 1996
and 1997 fiscal years, for services rendered in all capacities to the Company
during such year.
<TABLE>
<CAPTION>
(A) SUMMARY COMPENSATION TABLE
Annual Compensation Awards
------------------- ------
Name and Securities
Principal Fiscal Underlying All Other(1)
Position Year Salary($) Bonus($) Options/SARs(#) Compensation($)
- -------- ---- --------- -------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Gilbert D. Raker, 1997 $259,384 $75,000 32,800
Chairman, President and, 1996 $237,000 $60,000 37,500
Chief Executive Officer 1995 $225,000 $35,000 20,000
Frank J. Polese, Vice 1997 $156,923 $25,000 5,000
Chairman and President 1996 $156,388 0 10,000
of Polese Company (2) 1995 $147,696 $20,000 10,000
Kenneth J. Huth, 1997 $152,057 $30,000 5,000
Executive Vice 1996 $140,000 $40,000 10,000
President 1995 $137,500 $25,000 5,000
Andrew A. Lozyniak, 1997 $141,624 $35,000 5,000
Executive Vice 1996 $117,500 $30,000 20,000 $19,535(3)
President and Chief 1995 $110,000 $20,000 10,000
Financial Officer
</TABLE>
- -------------------------
(1) The aggregate amount of such compensation is the lesser of either
$50,000 or 10% of such person's total annual salary and bonus.
(2) Mr. Polese became Vice Chairman in January 1996.
(3) Represents car allowance, amounts contributed under the 401 (K) Plan
by the Company and reimbursement for certain other expenses.
10
<PAGE>
(B) OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Percent of Hypothetical
Number of Securities Total Options/SAR Value at
Underlying Granted to Employees Exercise or Base Expiration Date of
Name of Individual Options/SARs In Fiscal Year Price ($Share) Date Grant (1)
- ------------------ ------------ -------------- -------------- ---- ---------
<S> <C> <C> <C> <C> <C>
Gilbert D. Raker 7,800 4.3% $12.7875 10/23/02 $41,129
12,500 6.8% $11.625 10/23/02 $59,877
12,500 6.8% $13.50 10/23/02 $69,534
Frank Polese 5,000 2.7% $8.00 04/30/07 $22,600
Kenneth J. Huth 5,000 2.7% $8.00 04/30/07 $22,600
Andrew A. Lozyniak 5,000 2.7% $8.00 04/30/07 $22,600
</TABLE>
(1) The estimated present value at grant of options during fiscal year 1997
has been calculated using the Black-Scholes option pricing model, based
upon the following assumptions; estimated time until exercise: 3 years in
the case of Mr. Raker's options and 5 years in the case of all other
options presented; a risk free interest rate of 5.84%, 5.86% and 5.86% for
Mr. Raker's $12.7875 option, $11.625 option and $13.50 option,
respectively, and a risk free rate of 6.57%% for all $8.00 options,
representing in each case Treasury Note rates for the expected life of the
option at the time of grant. The approach used in developing the
assumptions upon which the Black-Scholes valuation was done is consistent
with the requirements of Statement of Financial Accounting Standard No.
123, "Accounting for Stock-Based Compensation."
11
<PAGE>
(C) AGGREGATED OPTION/SAR EXERCISES IN LAST
FISCAL YEAR AND FISCAL YEAR-END OPTION/SAR
VALUES
The following table sets forth (a) the number of shares received and the
aggregate dollar value realized in connection with each exercise of outstanding
stock options during the 1997 fiscal year by the Chief Executive Officer and
each of the Named Executive Officers, (b) the total number of all outstanding,
unexercised options (separately identifying exercisable and unexercisable
options) held by such executive officers as of the end of Fiscal 1997, and (c)
the aggregate dollar value of all such unexercised options that are in-the-money
(i.e., options as to which the fair market value of the underlying Common Stock
that is subject to the option exceeds the exercise price of the option), as of
the end of Fiscal 1997:
<TABLE>
<CAPTION>
Number of Value of Unexercised
Unexercised In the Money
Options/SARs at Options/SARs at
Shares Fiscal Year-End(#) Fiscal Year-End(#)
Acquired/ Value Exercisable/ Exercisable/
Name Exercise(#) Realized($) Unexercisable Unexercisable
- ----------- ------------ ------------ ----------------- -------------
<S> <C> <C> <C> <C>
Gilbert D. Raker __ __ 127,500/32,800 $120,519/$0
Frank J. Polese __ __ 70,000/0 $115,375/$0
Kenneth J. Huth __ __ 20,000/0 $0/$0
Andrew A. Lozyniak 10,000 $0 13,075/1925 $0/$0
</TABLE>
Compensation of Directors
The independent Directors of the Company, Messrs. Fain, Moorhead, Sands
and Pinto, are each compensated $6,000 per fiscal year and $500 per meeting for
serving on the Board of Directors. The Chairman of each committee of the Board
receives $1,000 for their service. Members of each committee receive $500 per
meeting attended.
Pursuant to the Company's Non-Qualified Stock Option Plan (the
"Non-Qualified Plan"), non-employee Directors (Messrs. Fain, Moorhead, Pinto and
Sands) will receive options to purchase 2,500 shares of Common Stock as of the
date of the Annual Meeting. The options will be exercisable at a price equal to
100% of the fair market value of the common stock on the date of grant.
12
<PAGE>
Employment Agreements
On December 15, 1994, the Company entered into a five-year employment
agreement with Gilbert Raker, pursuant to which Mr. Raker will receive an annual
salary in 1998 of $272,000, with an automatic increase of $12,000 commencing
January, 1999. Thereafter, Mr. Raker's increases in salary shall be at the
discretion of the Board. Bonuses may be paid at the discretion of the
Compensation Committee. In the event of a change of control (as defined) of the
Company, Mr. Raker may terminate his employment with the Company, and receive
the remaining compensation under his employment agreement. Mr. Raker has agreed
not to engage in a business that is competitive with the Company during the term
of the agreement and for a period of one year thereafter.
On December 15, 1994, Polese Company entered into a five-year employment
agreement with Frank J. Polese, pursuant to which Mr. Polese will receive an
annual salary in 1998 of $182,000. Mr. Polese's subsequent annual salary
increases shall be at the discretion of the Compensation Committee. For a period
of ten years, Mr. Polese has the right to receive 10% of (i) the pre-tax profit
from Polese Company's copper tungsten product line, after allocating operating
costs, and (ii) the proceeds of the sale, if any, by the Company of the
copper/tungsten heat dissipation technology. Mr. Polese's agreement contains the
same change of control and non-competition provisions as Mr. Raker's agreement.
On December 15, 1994, the Company entered into a three-year employment
agreement with Kenneth Huth, pursuant to which Mr. Huth will receive an annual
salary in 1998 of $157,500. Mr. Huth's subsequent annual salary increases shall
be at the discretion of the Compensation Committee. After expiration of the
initial term, the agreement continues on a year-to-year basis unless terminated.
Mr. Huth's agreement contains the same change of control and non-competition
provisions as Mr. Raker's agreement.
On December 15, 1994, the Company entered into a three-year employment
agreement with Andrew A. Lozyniak, pursuant to which Mr. Lozyniak will receive
an annual salary in 1998 of $145,600 Mr. Lozyniak's subsequent annual salary
increases shall be at the discretion of the Compensation Committee. After
expiration of the initial term, the agreement continues on a year-to-year basis
unless terminated. Mr. Lozyniak's agreement contains the same change of control
and non-competition provisions as Mr. Raker's agreement.
13
<PAGE>
Employee Stock Option Plan
The Company has adopted the Semiconductor Packaging Materials Co., Inc.
Amended Employees' Incentive Stock Option Plan (the "Plan") pursuant to which
shares of the Company's Common Stock are reserved for issuance upon exercise of
options designated as "incentive stock options" within the meaning of Section
422A of the Internal Revenue Code of 1986, as amended. There are 600,000 shares
reserved for issuance upon exercise of options, which number is subject to
increase to 900,000 shares upon approval of Proposal 4 of this Proxy Statement.
The Plan is administered for the Board of Directors by the Compensation
Committee, which determines among other things, the persons to be granted
options under the Plan, the number of shares subject to each option and the
option price. The exercise price of any stock option granted under the Plan may
not be less than the fair market value of the shares subject to the option on
the date of grant, provided that the exercise price of any incentive option
granted to an optionee owning more than 10% of the outstanding Common Stock may
not be less than 110% of the fair market value of the shares underlying such
option on the date of grant and the aggregate fair market value of stock with
respect to which incentive options are exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000. The term of each
option and the manner in which it may be exercised is determined by the Board of
Directors or the Compensation Committee, provided that any option granted to an
optionee owning more than 10% of the Common Stock shall have a term of no more
than five years. Incentive Options may be granted only to employees and no
option granted to an employee may be exercised unless the optionee is an
employee of the Company and has been in such position for at least one year
after the date of grant. Options are not transferable, except upon death of the
optionee. To date, 595,800 options (as adjusted) have been granted under the
Plan.
Non-Qualified Stock Option Plan
In 1995, the Company adopted, a Non-Qualified Stock Option Plan (the
"Non-Qualified Plan") to grant non-qualified stock options not intended to
qualify under Section 422(b) of the Internal Revenue Code of 1986, as amended,
to purchase an aggregate of 100,000 shares. The Non-Qualified Plan provides that
non-qualified stock options ("NQSOs" or "Options") may be granted to
non-employees, Directors and consultants to the Company and its subsidiaries,
all of whom are eligible to participate in the Non-Qualified Plan (the
"Participants"). The Plan which was
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amended by the Board of Directors on March 11, 1996 and ratified by the
Stockholders at the 1996 annual meeting, provides that all non-employee Director
will receive options to purchase 2,500 shares of Common Stock as of the date of
the Annual Meeting commencing with the Annual Meeting of 1997. The options are
exercisable at a price equal to 100% of the fair market value of the common
stock on the date of grant. The Non-Qualified Plan is administered by a stock
option committee (the "Non-Qualified Committee") consisting of two non-employee
directors appointed by the Board of Directors. The two non-employee directors
are currently Messrs. Pinto and Sands. The terms of the options granted under
the Non-Qualified Plan are to be determined by the Non-Qualified Committee. An
option must be granted within ten years from the date that the Non-Qualified
Plan was adopted. Options will be exercisable in whole or part at any time
during the ten-year period, but will not have an expiration date later than ten
years from the date of grant. Options are non-transferable, except upon death of
the optionee. The Board has adopted an amendment to the Non-Qualified Plan
making grants of options available to employees of the Company and reserving an
additional 200,000 shares of common stock for grants under the Non-Qualified
Plan. The amendment is being presented to the stockholders for ratification. See
Proposal No. 4. To date, 45,000 options have been granted under the
Non-Qualified Plan.
Stock Options Outside Of A Plan
The Company had issued options for 265,000 shares outside of its option
plans to certain Directors of the Company, consultants and employees.
CERTAIN TRANSACTIONS
In connection with the acquisition of all of the issued and outstanding shares
of Common Stock of Polese Company in 1993, for a ten-year period commencing on
January 1, 1994, Mr. Polese has the right to receive 10% of (i) the pre-tax
profit from the copper tungsten product line after allocating operating costs
and (ii) the proceeds of the sale, if any, by the Company of the tungsten/copper
heat dissipation technology.
During 1997, a company owned by Mr. Polese acquired machinery and
equipment from the Company for $254,000. The Company recognized a $46,000 gain
on this sale.
The Company believes that transactions between the Company, its
officers, Directors, principal stockholders, its subsidiaries or its or their
affiliates have been, and in the future will be,
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on terms no less favorable to the Company than could be obtained from
unaffiliated third-parties. Future transactions with affiliates will be approved
by a majority of the disinterested members of the Board of Directors.
REPORT OF COMPENSATION COMMITTEE
The Report of the Compensation Committee and the Performance Graph
herein shall not be incorporated by reference into any filing notwithstanding
anything to the contrary set forth in any of the Company's previous filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934 that might incorporate future filings in whole or in part, including this
Proxy Statement.
The Compensation Committee of the Board of Directors (the "Committee")
is composed entirely of independent non-employee directors. The Committee is
responsible for establishing and administering the Company's employee
compensation plans, subject to the approval of the Board of Directors. The
Committee applies a philosophy based on the premise that the achievements and
successes of the Company result from the coordinated efforts of all individuals
working toward common objectives.
Compensation Philosophy
The goals of the Company's compensation program are to align
compensation with business performance and to enable the Company to attract and
retain competent executives who contribute to the success and profitability of
the Company.
The Committee is committed to providing compensation that helps attract
and retain highly competent executive officers. Executive Officers are rewarded
based upon corporate performance and profitability through the payment of
bonuses and the grant to them of stock options. The Company believes stock
ownership by management fosters an interest in the enhancement of stockholder
value and thus aligns management's interest with that of the stockholders.
Compensation of the Chief Executive Officer.
Gilbert D. Raker, the Chairman of the Board, President and Chief
Executive Officer has been instrumental in the continued expansion and growth of
the Company. He has played and continues to play a pivotal role in the movement
of the Company into new areas of business. In 1994, the Company entered into a
five year employment agreement with Mr. Raker. Mr. Raker currently receives a
base salary of $272,000 per annum, which automatically
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increases by $12,000 per annum in January 1999, thereafter increases in his
salary are at the discretion of the Board. In addition, the Compensation
Committee, in its discretion may pay Mr. Raker a bonus
In recognition of his continuing efforts to lead the Company into
expanding business areas, the Committee awarded Mr. Raker a bonus of $75,000 for
the fiscal year ended 1997.
In addition to receiving a bonus, Mr. Raker participates in the
Company's Amended Employees' Incentive Stock Option Plan.
COMPENSATION VEHICLES
The Company uses a total compensation program that consists of cash and
equity based compensation.
CASH BASED COMPENSATION
Salary and Bonuses
Individual salary determinations of the Company's executive officers
are based on experience, duties and functions, performance and comparison to
peers, both inside and outside of the Company.
The Board of Directors in its discretion, may award bonuses to
executive officers in recognition of their performance and their contribution to
the success of the Company.
401-K PLAN
The Company has a 401-K Plan and matches up to 2% of the total
compensation of participants in the Plan up to a maximum allowed by law.
EQUITY BASED COMPENSATION
The Company utilizes its Amended Employees' Incentive Stock
Option Plan, which is administered by the Committee, to provide executive
officers, among others, involved in the Company's development, an opportunity to
acquire or increase their proprietary interest in the financial successes and
progress of the Company by means of grants of options to purchase Company Common
Stock. The Plan utilizes vesting periods, which are determined by the Committee,
to encourage executive officers to continue in the employ of the Company.
The Board of Directors has adopted, subject to stockholder
approval, the amendment to the Non-Qualified
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Incentive Stock Option Plan. (See Proposal No. 4 in the Proxy Statement) which,
if approved, will allow the Company to reward employees with non-qualified stock
options in recognition of their continued contributions to the financial success
and progress of the Company.
THE COMPENSATION COMMITTEE: John U. Moorhead, II
Richard D. Fain
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PERFORMANCE GRAPH
Set forth below is a Performance Graph that shows the cumulative
total return on the Company's Common Stock compared with the cumulative total
return of the Small Cap 600 and a peer group index for the period of the
Company's last five fiscal years (January 1992 = 100):
Because the Company is involved in a variety of microelectronic
and semiconductor businesses, no published peer group accurately mirrors the
Company's business or weighs those businesses to match their relative
contributions to the Company's overall performance. Accordingly, the Company has
created a special per group index that includes companies in the principal lines
of business in which the Company does business. The common stocks of the
following companies have been included in the peer group index: Alpha
Technologies Group, Inc., Brush Wellman, Inc., Kulicke & Soffa Industries, Inc.,
Merix Corp., Methode Electronics, Inc., Robinson Nugent Inc. and Sheldahl.
CHART
A $100 investment in Semiconductor Packaging Materials Common Stock in December,
1992 would be equal to $295.00 in December, 1997. The Board of Directors
recognize that the market price of stock is influenced by many factors, only one
in which is company performance. The stock price performance shown on the
Performance Graph is not necessarily indicative of future price performance.
The Board of Directors Recommend that the STOCKHOLDERS Vote "FOR"
all the NOMINEES LISTED IN THE FOREGOING PROPOSAL 1.
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DATA FOR COMPARISON OF CUMULATIVE TOTAL RETURNS*
Small
Cap 600 SPM PEER GROUP
12/92 $100.00 $100.00 $100.00
12/93 118.69 166.67 127.84
12/94 113.02 250.00 191.31
12/95 146.70 370.00 266.38
12/96 177.81 435.00 275.25
12/97 223.08 295.00 277.89
- ---------------
*Assumes the investment of $100 on December 31, 1992, and the reinvestment of
all dividends.
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PROPOSAL 2
PROPOSAL TO AMEND THE CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY
The Board of Directors has approved for submission to a vote of the
Stockholders a proposal to change the name of the Company to SEMX Corporation.
If approved by the Company's stockholders, the amendment will become
effective when filed with the Secretary of State of Delaware, and will amend
Article First of the Company's Certificate of Incorporation to read as follows:
ARTICLE FIRST
"The name of the Corporation is SEMX Corporation."
The Company is involved in a variety of areas in the microelectronics
and semiconductor businesses. The Company's present name conveys the false
impression that the Company is principally involved in the semiconductor
industry, which industry tends to be extremely cyclical and volatile. This
volatility is reflected in the prices of the stocks of companies in the
semiconductor industry. Although the Company is involved in the reprocessing of
silicon wafers, it is also involved in numerous and varied areas of the
microelectronics industry.
Due to all of the aforementioned reasons, and the belief that as the
Company grows and diversifies, the Company's present name does not and will not
reflect the Company's activities, the Board of Directors believes that the name
SEMX Corporation will be beneficial to the Company.
The affirmative vote of the holders of a majority of the outstanding
Common Stock of the Company is required to adopt the proposed amendment.
If the proposed amendment to the Company's Certificate is approved, the
Board of Directors intends to file an amendment to the Company's Certificate in
the form of Exhibit A to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE
FOREGOING PROPOSAL 2.
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PROPOSAL 3
RATIFICATION OF THE AMENDMENT TO THE
SEMICONDUCTOR PACKAGING MATERIALS CO., INC.
AMENDED EMPLOYEES' INCENTIVE STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to the
approval of stockholders, an amendment to the Company's Amended Employees'
Incentive Stock Option Plan (the "ISO Plan") increasing the aggregate number of
shares of Common Stock of the Company available under the ISO Plan from 600,000
to 900,000 shares.
As of the date of this Proxy Statement, options to purchase 595,800
shares have been granted.
The Board of Directors has deemed it in the best interests of the
Company to increase the authorized shares under the ISO Plan by 300,000 shares,
to 900,000 shares, so as to provide employees, future employees and other
persons involved in the continuing development and successes of the Company and
its subsidiaries an opportunity to acquire or increase their proprietary
interest in the financial success and progress of the Company by means of grants
of options to purchase Common Stock. It is the opinion of the Board of Directors
that by providing the Company's employees the opportunity to acquire an equity
investment in the Company, the ISO Plan will maintain and strengthen their
desire to remain with the Company, stimulate their efforts on the Company's
behalf, and also enable the Company to attract other qualified personnel to the
Company's employ.
The affirmative vote of a majority of the outstanding shares of Common
Stock of the Company is required for approval of the proposed amendment to the
ISO Plan. The Board recommends a vote in favor thereof.
The following statements summarize certain provisions of the ISO Plan,
which is qualified in its entirety by reference to the text of the Plan, copies
of which are available for examination at the Securities and Exchange Commission
and at the principal office of the Company at 1 Labriola Court, Armonk, New York
10504. Additional information about the Plan may be obtained from the Company's
Secretary at (914) 273-5500.
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<PAGE>
Eligibility for Participation
The ISO Plan provides that employee incentive stock options ("EISOs")
may be granted to employees (including officers and Directors who are also
employees) of the Company and its subsidiaries, all of whom are eligible to
participate in the ISO Plan (collectively referred to as "Participants"). The
Board of Directors or the Compensation Committee will select the optionees and
determine the number of shares to be subject to each option. In making such
determination, the nature of the services rendered by Participants will be taken
into account, as well as the Participant's present and potential contributions
to the success of the Company, and such other relevant factors as the Board of
Directors or the Compensation Committee shall, in its discretion, deem relevant.
EISOs may not be granted under the ISO Plan to any one person for shares
first exercisable in any calendar year having an aggregate fair market value
(measured at the time of grant) in excess of $100,000.
Administration
The Plan is administered by the Compensation Committee which is
comprised of not less than two non-employee directors appointed by the Board.
The Compensation Committee is currently comprised of John U. Moorhead, II and
Richard D. Fain, with Mr. Moorhead serving as the Chairman. No Director who is
eligible to receive options under the Plan may serve on the Compensation
Committee. The interpretation and construction of any provisions of the Plan by
the Board or its committee shall be final and conclusive. Members of the Board
will receive no compensation for their services in connection with the
administration of the Plan.
Terms of Options
The terms of options granted under the ISO Plan are to be determined by
the Board or the Compensation Committee. Each option is to be evidenced by a
stock option agreement between the Company and the employee to whom such option
is granted, and is subject to the following additional terms and conditions.
(a) Exercise of the Option. The Board of Directors or the Compensation
Committee will determine the time periods during which options granted under the
ISO Plan may be exercised. An option must be granted within ten (10) years from
the date the ISO Plan was adopted on December 20, 1991 (the "Effective Date").
Options will be exercisable in whole or in part at any time during the exercise
period but will not have an expiration date
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<PAGE>
later than ten (10) years from the date of grant. EISOs granted to holders of
more than 10% of the Company's Common Stock may not have a term of more than
five years. Unless otherwise provided in any option agreement issued under the
ISO Plan, any option granted under the Plan may be exercisable in whole or in
part at any time during the exercise period and must become fully exercisable
with five years from the date of its grant and no less than 20% of the Option
shall become exercisable in any of the first five years of the Option. An option
is exercised by giving written notice of exercise to the Company specifying the
number of full shares of Common Stock to be purchased and tendering payment of
the purchase price to the Company in cash or certified check, or at the
discretion of the Board or the committee, by delivery of shares of Common Stock
having a fair market value equal to the Option Price.
(b) Option Price. In no event may the option price of an ISO be less
than the fair market value on the date of grant. Such fair market value of an
EISO shall be determined by the Board of Directors and, if the shares of Common
Stock are listed on a national securities exchange or traded on the
over-the-counter market, the fair market value shall be the last reported sale
price of the Common Stock on such date. EISOs granted to holders of more than
10% of the Company's Common Stock are subject to the additional restriction that
the option price must be at least 110% of the fair market value of the Company's
Common Stock on the date of grant.
(c) Termination of Employment; Death. If the employment of an optionee
under the ISO Plan is terminated otherwise than by retirement, death or
disability, such optionee's options shall immediately terminate, provided the
Compensation Committee may allow the Options to be exercised at any time within
the three months after the date of termination.
In the event an optionee dies while in the employ of the Company
or a subsidiary or parent thereof, his option may be exercised by a legatee or
legatees of such option under such optionee's Last Will and Testament or by his
personal representatives or distributees at any time within one year after his
death or prior to the expiration of the Option.
In any event, an option may only be exercised to the extent that
it could have been exercised by the optionee at the time of his termination of
employment or death. In no event may an option be exercised after the expiration
of ten years from the date of its grant.
In the event an optionee becomes disabled while employed by the
Company or any subsidiary and ceases to be
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<PAGE>
employed as a result thereof, the Compensation Committee, in its discretion, may
allow any options held by the optionee to be fully exercised, at any time within
one year after the date of such termination of employment, unless either the
options or the ISO Plan otherwise provides for earlier termination of the
options.
(d) Nontransferability of Options; No Liens. An option is
nontransferable and non assignable by the optionee, other than by will or the
laws of descent and distribution, and is exercisable during the optionee's
lifetime only by the optionee, or in the event of his or her death, by a person
who acquires the right to exercise the option by bequest or inheritance or by
reason of the death of the optionee.
The option agreement may contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Board of
Directors or the Compensation Committee.
Termination; Amendment or Discontinuance
The ISO Plan (but not options previously granted under the ISO Plan)
shall terminate ten years from the earlier of the date of its adoption by the
stockholders or its Effective Date. No option will be granted after termination
of the ISO Plan.
The Board of Directors may terminate the ISO Plan at any time prior to
its expiration date, or from time to time make such modifications or amendments
of the ISO Plan as it deems advisable. However, the Board may not, without the
approval of a majority of the then outstanding shares of the Company entitled to
vote thereon, except under conditions described under "Adjustments Upon Changes
in Common Stock" increase the maximum number of shares as to which options may
be granted under the Plan, change the standards of eligibility under the Plan,
increase the benefits which may accrue to participants under the ISO Plan, cause
options under the ISO Plan to fail to meet the requirements of EISOs, or require
prior approval of a majority vote of the stockholders of the Company under the
applicable provisions of the General Corporation Law of Delaware.
No termination, modification or amendment of the ISO Plan may adversely
affect the terms of any outstanding options without the consent of the holders
of such options
Adjustments Upon Changes in Common Stock
In the event that the number of outstanding shares of Common Stock of
the Company is changed by reason of a stock split,
25
<PAGE>
reverse stock split or stock dividend, the Board of Directors of the Company
will make an appropriate adjustment in the aggregate number of shares of Common
Stock available under the ISO Plan, in the number of shares of Common Stock
reserved for issuance upon the exercise of then outstanding options and in the
exercise prices of such options. Any adjustment in the number of shares will
apply proportionately only to the unexercised portion of options granted under
the ISO Plan. Fractions of shares resulting from any such adjustment shall be
revised to the next lower whole number of shares.
All options then currently outstanding shall become immediately
exercisable in full until expiration of their respective terms upon either the
first purchase of the Company's Common Stock pursuant to a third party tender
offer or exchange offer or a merger or consolidation with a third party, sale of
all or substantially all assets of the Company or plan of liquidation and/or
dissolution approved by the Company's stockholders.
Federal Income Tax Consequences
The following discussion is only a summary of the principal Federal
income tax consequences of the options granted under the ISO Plan and is based
on existing Federal law, which is subject to change, in some cases
retroactively. This discussion is also qualified by the particular circumstances
of individual optionees, which may substantially alter or modify the Federal
income tax consequences herein discussed.
Generally, under present law, when an option qualifies as an ISO under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") (i) an
employee will not realize taxable income either upon the grant or the exercise
of the option, (ii) the amount by which the fair market value of the shares
acquired by the exercise of the option at the time of exercise exceeds the
option price is included in alternative minimum taxable income for purposes of
determining the employee's alternative minimum tax, (iii) any gain or loss (the
difference between the net proceeds received upon the disposition of the shares
and the option price paid therefor) upon a qualifying disposition of the shares
acquired by the exercise of the option will be treated as capital gain or loss
if the stock qualifies as a capital asset in the hands of the employee, and (iv)
no deduction will be allowed to the Company for Federal income tax purposes in
connection with the grant or exercise of an ISO or a qualifying disposition of
the shares. A disposition by an employee of shares acquired upon exercise of an
ISO will constitute a qualifying disposition if it occurs more than two years
after the grant of the option or one year after the issuance of the shares to
the employee, whichever is later. If such shares are disposed of by the employee
before the expiration of
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<PAGE>
those time limits, the transfer would be a "disqualifying disposition", and the
employee, in general, will recognize ordinary income (and the Company will
receive an equivalent deduction) equal to the lesser of (i) the aggregate fair
market value of the shares as of the date of exercise less the option price, or
(ii) the amount realized on the disqualifying disposition less the option price.
Ordinary income from a disqualifying disposition will constitute compensation
for which withholding may be required under Federal and state law. The maximum
rate of tax on ordinary income is greater than the maximum rate of tax on
capital gains. The tax rate advantage of long-term capital gains was enhanced
under the Tax Relief Act of 1997 (the "1997 Act"). Such legislation reduces the
maximum rate of taxation on capital gains for individuals from 28% to 20%, but
it increases the holding period for assets to more than 18 months. These rates
will apply for both regular and alternative minimum tax ("AMT") purposes, which
means that there is no AMT adjustment for the new capital gains rates. In
addition, under the Revenue Reconciliation Act of 1993, holders of options
granted after August 10, 1993 may be entitled to exclude up to 50% of the gain
on any such sale occurring five years after the date of exercise. The
availability of such exclusion for so-called "qualified small business stock" is
dependent upon the Company not (i) having in excess of $50 million of aggregate
gross assets at any time before the exercise of the options, (ii) being in the
trade or business of operating hotels, motels, restaurants, or similar
businesses, or (iii) being in a trade or business where the principal asset is
the reputation or skill of one or more of its employees. The 1997 Act does not
change the capital gain treatment of qualified small business stock and,
therefore, such gains will remain taxed at no higher than 14% (25% rate x 50%
exclusion). No assurance can be given that the Company will be considered
meeting such requirements currently or in the future. To the extent that a
portion of any gain is excluded, one-half of the excluded gain is a tax
preference item for AMT purposes.
The foregoing discussion is only a brief summary of the applicable
Federal income tax laws as in effect on this date and should not be relied upon
as being a complete statement. The Federal tax laws are complex, and they are
subject to legislative changes and new or revised judicial or administrative
interpretations at any time. In addition to the Federal income tax consequences
described herein, a grantee may also be subject to state and/or local income tax
consequences in the jurisdiction in which the grantee works and/or resides.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 3
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PROPOSAL 4
PROPOSAL TO AMEND THE
NON-QUALIFIED
INCENTIVE STOCK OPTION PLAN
The Board of Directors of the Company has adopted, subject to the
approval of stockholders, an amendment to the Company's Non-Qualified Incentive
Stock Option Plan (the "Non-Qualified Plan" or "Plan"). The amendment provides
for grants of non-qualified options to employees of the Company or any
subsidiary thereof, which options are not intended to qualify under Section
422(b) of the Internal Revenue Code of 1986, as amended, (the "Code"). The Board
also reserved, subject to stockholders ratification, an additional 200,000
shares of common stock for the grant of non-qualified options, bringing the
number of shares reserved under the Plan to 300,000 shares from 100,000 shares
previously reserved. A copy of the Amended Non-Qualified Plan is annexed hereto
as Exhibit "B".
The Board of Directors believe that the adoption of the amendment
of the Non-Qualified Plan gives the Company a mechanism to provide employees of
the Company and its subsidiaries, involved in the continuing development and
success of the Company, an opportunity to acquire or increase their proprietary
interest in the financial success and progress of the Company by means of grants
of non-qualified options to purchase Common Stock. It is the opinion of the
Board of Directors that this will maintain and strengthen the Company's
employees desire to remain with the Company, stimulate their efforts on the
Company's behalf, and also enable the Company to attract other qualified
personnel to the Company's employ.
The Board of Directors deemed it in the best interests of the
Company to amend the Non-Qualified Plan so as to provide the Company with a
degree of flexibility in compensating its employees, that is not available to it
pursuant to the Company's Amended Employment Incentive Stock Option Plan.
The affirmative vote by holders of a majority of the Common Stock
of the Company entitled to vote is required for approval of the amendment to the
Non-Qualified Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE FOREGOING PROPOSAL 4.
The following statements summarize certain provisions of the
amended Non-Qualified Plan, which is qualified in its entirety by reference to
the text of the Plan which is annexed hereto as Exhibit "B".
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Eligibility for Participation
The amended Non-Qualified Plan provides that non-qualified stock options
("NQSOs" or "Options") may be granted to employees of the Company and its
subsidiaries thereof, non-employee members of the Board of Directors of the
Company and non-employees of the Company, and its subsidiaries thereof
(collectively referred to as "Participants"). The Board of Directors or a
committee appointed by the Board will select the optionees and determine the
number of shares to be subject to each option. In making such determination,
there will be taken into account the nature of the services rendered by
Participants, their present and potential contributions to the success of the
Company, and such other relevant factors as the Board of Directors or the
Committee, in its discretion shall deem relevant.
Administration
The Plan is to be administered either by the Board of Directors of the
Company or by a committee ("Non-Qualified Stock Option Committee" or the
"Committee") of not less than two non-employee directors of the Company
appointed by the Board. The Non-Qualified Stock Option Committee is comprised of
Mark Pinto and Steven B. Sands. The interpretation and construction of any
provisions of the Plan by the Board or its Committee shall be final and
conclusive. Members of the Board will receive no compensation for their services
in connection with the administration of the Non-Qualified Plan.
Terms of Options
The terms of options granted under the Plan are to be determined by the
Board or the Non-Qualified Stock Option Committee. Each option is to be
evidenced by a stock option agreement between the Company and the optionee, and
is subject to the following additional terms and conditions:
(a) Exercise of the Option: The Board of Directors or the Non-Qualified
Stock Option Committee will determine the time periods during which options
granted under the Non-Qualified Plan may be exercised. An option must be granted
within ten (10) years from the date the Plan will be adopted. Options will be
exercisable at any time during the period, but will not have an expiration date
later than ten (10) years from the date of grant. NQSOs granted to holders of
more than 10% of the Company's Common Stock may not have a term of more than
five years. Unless otherwise provided in any option agreement issued under the
Plan,
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any option granted under the Plan may be exercisable in whole or in part at any
time during the exercise period. An option is exercised by giving written notice
of exercise to the Company specifying the number of full shares of Common Stock
to be purchased and tendering payment of the purchase price to the Company in
cash or certified check, or at the discretion of the Board or the Non-Qualified
Stock Option Committee, by delivery of shares of Common Stock having a fair
market value equal to the Option Price.
The Option Price of the shares of common Stock subject to each NQS0
shall be such price as established by the Board of Directors or the
Non-Qualified Stock Option Committee at the date of grant.
The Company's non-employee directors will receive options to purchase
2,500 shares of Common Stock on the date of the annual meeting of stockholders,
said options will bear an exercise price equal to 100% of the fair market value
of the Common Stock on the date of grant.
(c) Termination of Employment: Death: If the optionee ceases to be
employed by the Company or any subsidiary thereof, or the contractual
relationship of an optionee with the Company is terminated other than by
retirement, death or disability, such optionee's options shall immediately
terminate, provided the Non-Qualified Stock Option Committee may allow the
options to be exercised at any time within the three months after the date of
termination.
In the event an optionee dies while an employee of the Company or a
subsidiary thereof, or in service of the Company or a subsidiary thereof, his
option may be exercised by a legatee or legatees of such option under such
optionee's Last Will and Testament or by his personal representatives or
distributees at any time within one year after his death or prior to the
expiration of the Options.
In any event, an option may only be exercised to the extent that it
could have been exercised by the optionee at the time of his termination of
employment by the Company or death. In no event may an Option be exercised after
the expiration of ten years from the date of its grant.
(d) Termination of Employment - Retirement
In the event of the termination of employment of the optionee by
reason of retirement, the optionee may exercise his Options at any time after
such termination, provided that the Options may not be exercised after the
expiration of such Options.
(e) Termination of Employment - Disability
In the event an optionee becomes disabled while an employee of the
Company or in service thereof and ceases to be employed or
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<PAGE>
in service to the Company as a result thereof, the optionee may exercise his
Options at any time within one year after the optionee's termination due to
disability, provided that the Options may not be exercised after the expiration
of such Options.
(f) Non-transferability of Options. No Liens
An Option is nontransferable and non-assignable by the optionee, other
than by will or the laws of descent and distribution, and is exercisable during
the optionee's lifetime only by the optionee, or in the event of his or her
death, by a person who acquires the right to exercise the Option by bequest or
inheritance or by reason of the death of the optionee.
The option agreement may contain such other terms, provisions and
conditions not inconsistent with the Plan as may be determined by the Board of
Directors or the Non-Qualified Stock Option Committee
Termination; Amendment or Discontinuance
The Non-Qualified Plan (but not Options previously granted under the
Non-Qualified Plan) shall terminate ten years from the earlier dates of its
adoption by the stockholders or its Effective Date. No Option will be granted
after termination of the Plan.
The Board of Directors may terminate the Plan at any time prior
to its expiration date, or from time to time make such modifications or
amendments to the Plan as it deems advisable. However, the Board may not,
without the approval of a majority of the outstanding shares of Common Stock
entitled to vote thereon, except under conditions described under "Adjustments
Upon Changes in Common Stock", increase the maximum number of shares as to which
Options may be granted under the Plan, change the eligibility under the Plan,
increase the benefits which may accrue to participants under the Plan, or
require prior approval of a majority vote of the stockholders of the Company
under the applicable provisions of the General Corporation Law of Delaware
Adjustments Upon Changes in Common Stock.
The Plan provides for appropriate adjustments in the aggregate
number of shares of common Stock available under the Plan, in the number of
shares of Common Stock reserved for issuance upon the exercise of the
outstanding options and in the exercise prices of such Options, in the event the
number of outstanding shares of the Company is changed by reason of a stock
split reverse stock split or stock dividend.
31
<PAGE>
Federal Income Tax Consequences
In the case of NQSOs granted under the Non-Qualified Plan, no income
generally is recognized by the optionee at the time of the grant of the option,
assuming such NQSO does not have a readily ascertainable fair market value. The
optionee generally will recognize ordinary income at the time the NQSO is
exercised equal to the aggregate fair market value of the shares acquired less
the option price. Notwithstanding the foregoing, if a sale of the shares at a
profit could subject an optionee to liability under Section 16(b) of the
Securities Exchange Act of 1934, the optionee generally will not recognize
income until the date a sale thereof would not give rise to a suit under Section
16(b) of the Securities Exchange Act of 1934, at which time he will recognize
income in an amount equal to the fair market value of the shares on such date
less the option price. However, such an optionee may elect ("Section 83(b)
Election") within 30 days after the date of exercise to recognize ordinary
income as of the date of exercise based on the fair market value at the date of
exercise. Ordinary income from NQSOs will constitute compensation for which
withholding may be required under Federal and state law. The Company will
receive a deduction equal to the amount of compensation so recovered by the
optionee, subject to the limitation imposed by the 1993 Act limiting the
otherwise allowable deduction for compensation paid or accrued by a covered
employee of a publicly held corporation to no more than $1 million per year.
Shares acquired upon exercise of NQSOs will have a tax basis equal to
their fair market value on the exercise date or other relevant date on which
ordinary income is recognized and the holding period for the shares generally
will begin on the date of the exercise or such other relevant date. Upon
subsequent disposition of the shares, the optionee will recognize capital gain
or loss if the stock is a capital asset in his hands. Provided the shares are
held by the optionee for more than eighteen months prior to disposition, such
gain or loss will be long-term capital gain or loss. As set forth above, the
maximum rate of tax on ordinary income is greater than the rate of tax on
capital gains. To the extent an optionee recognizes a capital loss, such loss
may currently generally offset capital gains and $3,000 of ordinary income. Any
excess capital loss is carried forward indefinitely.
The foregoing discussion is only a brief summary of the applicable
Federal income tax laws as in effect on this date, and should not be relied upon
as being a complete statement. The Federal tax laws are complex, and they are
subject to legislative changes and new or revised judicial or administrative
interpretations at any time. In addition to the Federal income
32
<PAGE>
tax consequences described herein, an optionee may also be subject to state
and/or local income tax consequences in the jurisdiction in which he works
and/or resides.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSAL 4
PROPOSAL 5
RATIFICATION OF THE APPOINTMENT OF
GOLDSTEIN GOLUB KESSLER & COMPANY, P.C. AS
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Goldstein Golub Kessler & Company, P.C. of New York have been selected
by the Company's Board of Directors as the Company's independent public
accountants for the year ending December 31, 1998. Goldstein Golub Kessler &
Company, P.C. have been the Company's independent certified public accountants
since 1988. It is expected that a representative of Goldstein Golub Kessler &
Company, P.C. will have an opportunity to make a statement if he or she so
desires to do so and to respond to appropriate questions. Proxies are being
solicited by management in favor of ratifying the appointment of Goldstein Golub
Kessler & Company, P.C.
THE BOARD OF DIRECTORS RECOMMEND A VOTE "FOR" PROPOSAL 5
OTHER MATTERS
The Board of Directors is not aware of any business to be presented at
the Annual Meeting except the matters set forth in the Notice and described in
this Proxy Statement. Unless otherwise directed, all shares represented by Board
of Directors' Proxies will be voted in favor of the proposals of the Board of
Directors described in this Proxy Statement. If any other matters come before
the Annual Meeting, the persons named in the accompanying Proxy will vote on
those matter according to their best judgment.
EXPENSES
The entire cost of preparing, assembling, printing and mailing this
Proxy Statement, the enclosed Proxy and other materials, and the cost of
soliciting Proxies with respect to the Annual Meeting, will be borne by the
Company. The Company will request banks and brokers to solicit their customers
who beneficially own shares listed of record in names of nominees,
33
<PAGE>
and will reimburse those banks and brokers for the reasonable out-of-pocket
expenses of such solicitations. The original solicitation of Proxies by mail may
be supplemented by telephone and telegram by officers and other regular
employees of the Company, but no additional compensation will be paid to such
individuals.
STOCKHOLDER PROPOSALS
No person who intends to present a proposal for action at a forthcoming
stockholders' meeting of the Company may seek to have the proposal included in
the proxy statement or form of proxy for such meeting unless that person (a) is
a record beneficial owner of at least 1% or $1,000 in market value of shares of
Common Stock, has held such shares for at least one year at the time the
proposal is submitted, and such person shall continue to own such shares through
the date on which the meeting is held; (b) provides the Company in writing with
their name, address, the number of shares held by him and the dated upon which
they acquired such shares with documentary support for a claim of beneficial
ownership; (c) notified the Company of their intention to appear personally at
the meeting or by a qualified representative under Delaware law to present their
proposal for action; and (d) submits their proposal timely. A proposal to be
included in the proxy statement or proxy for the Company's next annual meeting
of stockholders will be submitted timely only if the proposal has been received
at the Company's principal executive office no later than November 24, 1998. If
the date of such meeting is changed by more than 30 calendar days from the date
such meeting is scheduled to be held under the Company's By-Laws, or if the
proposal is to be presented at any meeting other than the next annual meeting of
stockholders, the proposal must be received at the Company's principal executive
office at a reasonable time before the solicitation of proxies for such meeting
is made.
Even if the foregoing requirements are satisfied, a person may submit
only one proposal of not more than 500 words with a supporting statement if the
latter is requested by the proponent for inclusion in the proxy materials, and
under certain circumstances enumerated in the Securities and Exchange
Commissions's rules relating to the solicitation of proxies, the Company may be
entitled to omit the proposal and any statement in support thereof from its
proxy statement and form of proxy.
34
<PAGE>
BY ORDER OF THE BOARD OF DIRECTORS
Armonk New York Andrew A. Lozyniak
March 30, 1998 Secretary
Copies of the Company's Annual Report on Form 10-K for the year ended
December 31, 1997 as filed with the Securities and Exchange Commission,
including the financial statements, can be obtained without charge by
stockholders (including beneficial owners of the Company's Common Stock) upon
written request to Andrew A. Lozyniak, the Company's Secretary, Semiconductor
Packaging Materials Co., Inc., One Labriola Court, Armonk, New York 10504.
35
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
SEMICONDUCTOR PACKAGING MATERIALS CO., INC.
Adopted in accordance with the provisions of
Section 242 of the General Corporation Law
of the State of Delaware
We, Gilbert D. Raker, Chairman of the Board of Directors, and
Andrew A. Lozyniak, Secretary of Semiconductor Packaging Materials Co., Inc., a
corporation organized and existing under the laws of the State of Delaware (the
"Corporation"), do hereby certify as follows:
FIRST: The Certificate of Incorporation of the Corporation was
filed in the office of the Secretary of State of the State of Delaware on
October 31, 1988.
SECOND: The Certificate of Incorporation of the Corporation,
Article FIRST, is hereby amended to read in part as follows:
"FIRST" The name of the Corporation is SEMX Corporation.
THIRD: This amendment has been duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, we have signed this Certificate and caused
the corporate seal of the Corporation to be affixed as of this 28th day of
April, 1998
-----------------------------
Gilbert D. Raker, Chairman of
the Board of Directors
Attest:
- -----------------------------
Andrew A. Lozyniak, Secretary
<PAGE>
EXHIBIT B
AMENDED NON-QUALIFIED INCENTIVE STOCK OPTION PLAN
OF
SEMICONDUCTOR PACKAGING MATERIALS CO., INC.
<PAGE>
SEMICONDUCTOR PACKAGING MATERIALS CO., INC.
NON-QUALIFIED STOCK OPTION PLAN
1. Purpose.
The Semiconductor Packaging Materials Co., Inc. Non-Qualified Stock
Option Plan (the "Plan") is intended to provide employees, non-employee members
of the Board of Directors of Semiconductor Packaging Materials Co., Inc. (the
"Company") and non-employees of the Company, its "subsidiaries," as defined
under Section 424(f) of the Internal Revenue Code of 1986, as amended (the
"Code") and its "parent," as defined under Section 424(e) of the Code, if any,
such as consultants, contractors and other persons involved in the continuing
development and successes of the Company, its subsidiaries and parent, if any,
as determined by from time to time by the Board of Directors or a committee
appointed by the Board of Directors (the "Non-Qualified Stock Option Committee"
or the "Committee"), an opportunity to acquire or to increase their holdings of
common stock of the Company (the "Common Stock") and other proprietary interests
in the Company in order to promote a closer identification of their interests
with those of the Company and its stockholders, thereby further stimulating
their efforts to increase the efficiency, soundness, profitability, growth and
stockholder value of the Company. This purpose will be carried out by means of
periodic grants of options to purchase Common Stock. The Plan allows the Company
to grant Non-Qualified Stock Options ("NQSOs" or "Options") not qualifying under
Section 422(b) of the Code.
2. Shares Subject to the Plan.
The total number of shares of Common Stock that may be subject to
Options granted under the Plan shall be 300,000 in the aggregate, subject to
adjustment as provided in Paragraph 7 of the Plan. The Company shall at all
times while the Plan is in force reserve such number of shares of Common Stock
underlying all outstanding Options granted under the Plan. In the event any
Option granted under the Plan shall expire or terminate for any reason without
having been exercised in full or shall cease for any reason to be exercisable in
whole or in part, the unpurchased shares subject thereto shall again be
available for grant under the Plan.
3. Eligibility.
NQSOs may be granted to employees of the Company, its subsidiaries and
its parent, if any, non-employee members of the Company's Board of Directors,
its subsidiaries and its parent, if any, and non-employees of the Company, its
subsidiaries and parent, if any, such as consultants, contractors and other
persons involved in the continuing development and successes of the Company, its
subsidiaries and parent, if any. The Board of Directors or the
<PAGE>
Non-Qualified Stock Option Committee will select the optionees to whom Options
will be granted (the "Optionees") and determine the number of shares to be
subject to each Option. In making such determination, there will be taken into
account the nature of the services rendered by the persons eligible to receive
Options, their present and potential contributions to the success of the
Company, and such other relevant factors as the Board of Directors or the
Committee in its discretion shall deem relevant.
4. Administration of the Plan.
(a) Subject to Paragraph 13 hereof, the Plan shall be administered by
the Board of Directors of the Company and/or by the Committee which shall be
comprised of at least two non-employee directors (the term "non-employee
Directors" having the meaning ascribed to it by Rule 16b-3 of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) appointed by the Board of
Directors. As and to the extent authorized by the Board of Directors, the
Non-Qualified Stock Option Committee may exercise the power and authority vested
in the Board of Directors under the Plan. The Board of Directors or the
Committee are hereinafter referred to as the "Committee".
(b) Any action of the Committee with respect to the Plan may be taken by
a written instrument signed by all of the members of the Committee and any such
action so taken by written consent shall be as fully effective as if it had been
taken by a majority of the members at a meeting duly held and called. Subject to
the provisions of the Plan, the Committee shall have full and final authority in
its discretion to take any action with respect to the Plan including, without
limitation, the authority (i) to determine all matters relating to Options,
including selection of individuals to be granted Options, the types of Options,
the number of shares of the Common Stock, if any, underlying an Option, and all
terms, conditions, restrictions and limitations of an Option; (ii) to prescribe
the form or forms of agreements evidencing any Options granted under the Plan;
(iii) to establish, amend and rescind rules and regulations for the
administration of the Plan; and (iv) to construe and interpret the Plan and
agreements evidencing Options granted under the Plan, to make all other
determinations deemed necessary or advisable for administering the Plan.
(c) In making its determinations, the Committee may take into account
the nature of the services rendered by the participants, their present and
potential contributions to the Company's success, and such other factors as the
Committee, in its discretion, shall deem relevant. The determination of the
Committee on the matters referred to in this paragraph shall be conclusive.
2
<PAGE>
5. Prices and Terms of Options.
An NQSO enables the optionee to purchase from the Company, at any time
during a specified exercise period , a specified number of shares of Common
Stock at a specified price (the "Option Price"). The non-employer Directors will
receive options to purchase 2,500 shares of Common Stock as of the date of the
Company's Annual Meeting of Shareholders, commencing with the Annual Meeting of
1997. The Options granted to the non-employee Directors will have an exercise
price equal to 100% of the fair market value of the Common Stock on the date of
grant. The character and terms of each Option granted under the Plan, with the
exception of Options granted to non-employee Directors as provided herein, shall
be determined by the Committee consistent with the provisions of the Plan,
including the following:
(a) The Option Price of the shares of Common Stock subject to each NQSO
shall be such price as established by the Committee at the date of grant.
(b) Any Option granted under the Plan shall expire at such time as
established by the Committee at the date of grant.
(c) Unless otherwise provided in any Option agreement under the Plan, an
Option granted under the Plan shall become exercisable in whole at any time, or
in part from time to time, but in no case may an Option (i) be exercised as to
less than one hundred (100) shares of common Stock at any one time, or the
remaining shares of Common Stock covered by the Option if less than one hundred
(100), or (ii) become fully exercisable more than five years from the date of
its grant nor shall less than 20% of the Option become exercisable in any of the
first five years of the Option.
(d) An Option granted under the Plan shall be exercised by the delivery
by the optionee to the Company, at its principal office (to the attention of the
Secretary), of written notice of the full number of shares of Common Stock with
respect to which the Option is being exercised, accompanied by payment in full,
in cash or by certified check payable to the order of the Company, of the Option
Price of such shares of Common Stock, or, at the discretion of the Committee, by
the delivery of shares of Common Stock having a fair market value equal to the
Option Price, or by a combination of cash and such shares (subject to the
restriction above) held by the optionee that have a fair market value together
with such cash that shall equal the Option Price, and, at the discretion of the
Committee by having the Company withhold from the shares of Common Stock to be
issued upon exercise of the Option the number of shares having a fair market
value equal to the exercise price and/or the tax withholding amount due, or
otherwise provide for withholding as set forth in paragraph 8(c) hereof.
3
<PAGE>
(e) The optionee shall have none of the rights of a stockholder with
respect to the shares of Common Stock underlying such optionee's Option until
such shares of Common Stock shall be issued to such optionee upon the exercise
of the Option.
(f) An Option granted under the Plan shall not be transferable otherwise
than by will or the laws of descent and distribution. Any Option granted under
the Plan may be exercised during the lifetime of the holder thereof only by the
optionee. No Option granted under the Plan shall be subject to execution,
attachment or other similar process.
6. Death, Disability or Termination of Service.
(a) If the contractual relationship with the Company of an optionee
under the Plan is terminated or if the optionee ceases to be employed by the
Company, as the case may be, otherwise than by death, disability, retirement or
end of term, such optionee's Options shall immediately terminate, provided the
Committee may, at the time of grant, allow for the Options to be exercised at
any time within the three months after the date of termination.
(b) In the event an optionee dies while employed or in the service of
the Company or a subsidiary or parent thereof, his Option may be exercised by a
legatee or legatees of such optionee under such optionee's Last Will and
Testament or by his personal representatives or distributees, at any time,
within one year after his death or prior to the expiration of the Option. In any
event, an Option may only be exercised to the extent that it could have been
exercised by the optionee at the time of the termination of his/its contractual
relationship with the Company or his/her death.
(c) In the event of the termination of employment of the optionee by
reason of retirement, the optionee may exercise his options at any time after
such termination, provided that the options may not be exercised after the
expiration date of such options.
(d) If an optionee becomes disabled within the definition of section 22
(e)(3) of the Code while contractually engaged with the Company or a subsidiary
or parent thereof, such Option may, subject to the provisions of subparagraph
(d) of this Paragraph 6, be exercised at any time within one year after such
holder's termination of contractual relationship or employment due to the
disability.
(e) An Option may not be exercised pursuant to this Paragraph 6(b), (c)
and (d) except to the extent that an optionee was entitled to exercise the
Option at the time of death or disability. In any event, an Option may not be
exercised after the original expiration date of such Option.
4
<PAGE>
7. Adjustment Upon Changes in Capitalization.
(a) In the event that the outstanding shares of Common Stock are
hereafter changed by reason of recapitalization, reclassification, stock
split-up, combination or exchange of shares of Common Stock or the like, or by
the issuance of dividends payable in shares of Common Stock, an appropriate
adjustment shall be made by the Committee in the aggregate number of shares of
Common Stock available under the Plan and in the number of shares of Common
Stock and price per share subject to outstanding Options. In the event of the
proposed dissolution, liquidation, merger or sale of substantially all of the
assets of the Company, all outstanding Options under the Plan will, unless
otherwise provided by the Committee, automatically terminate. The Committee may
in its discretion make provision for accelerating the exercisability of Options
under the Plan in such circumstances.
(b) Any adjustment in the number of shares of Common Stock shall apply
proportionately only to the unexercised portion of the Options granted
hereunder. If fractions of shares of Common Stock result from any such
adjustment, the adjustment shall be revised to the next lower whole number of
shares of Common Stock.
8. Further Conditions of Exercise.
(a) Unless the shares of Common Stock issuable upon the exercise of an
Option under the Plan have been registered with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), prior
to the exercise of the Option, the notice of exercise shall be accompanied by a
representation or agreement of the optionee to the Company to the effect that
such shares of Common Stock are being acquired for investment and not with a
view to the resale or distribution thereof, or such other documentation as may
be required by the Company, unless, in the opinion of counsel to the Company,
such representation, agreement or documentation is not necessary to comply with
the Act.
(b) The Company shall not be obligated to deliver any shares of Common
Stock until they have been listed on each securities exchange on which the
shares of Common Stock may then be listed or until there has been qualification
under or compliance with such state or federal laws, rules or regulations as the
Company may deem applicable.
(c) The Committee may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes that the Company
is required by any law or regulation of any governmental authority, whether
federal, state or local, domestic or foreign, to withhold in connection with the
exercise of any Option, including, but not limited to, (i) the withholding of
payment of all or any portion of such Option until the holder
5
<PAGE>
reimburses the Company for the amount the Company is required to withhold with
respect to such taxes, (ii) the cancelling of any number of shares of Common
Stock issuable upon exercise of such Option in an amount sufficient to reimburse
the Company for the amount it is required to so withhold, (iii) the selling of
any property contingently credited by the Company for the purpose of exercising
such Option, or (iv) withholding the amount due from other amounts which the
Company, its subsidiaries or parent, if any, may owe the optionee.
9. Termination, Modification and Amendment.
The Plan (but no Options previously granted under the Plan) shall
terminate ten (10) years from the earliest of the date of its adoption by the
Board of Directors, or the date the Plan is approved by the Shareholders of the
Company, or such earlier date of termination as hereinafter provided. No Option
shall be granted after the termination of the Plan.
The Board of Directors may amend the Plan, not more than once every six
months, to provide that the Company will grant Options to its non-employee
Directors in an amount different than that provided in paragraph 5 hereof.
The Plan may, from time to time, be terminated, modified or amended by
the affirmative vote of the holders of a majority of the outstanding shares of
capital stock of the Company entitled to vote thereon.
The Board of Directors of the Company may at any time, prior to ten (10)
years from the earlier of the date of the adoption of the Plan by such Board of
Directors or the date the Plan is approved by the Shareholders, terminate the
Plan or, from time to time, make such modifications or amendments of the Plan as
it may deem advisable; provided, however, that the Board of Directors shall not,
without approval by the affirmative vote of the holders of a majority of the
outstanding shares of capital stock of the Company entitled to vote thereon,
increase (except as provided by Paragraph 7) the maximum number of shares of
Common Stock underlying an Option which may be granted under the Plan,
materially change the standards of eligibility under the Plan or materially
increase the benefits which may accrue to optionees under the Plan. Any
amendment to the Plan which, in the opinion of counsel to the Company, will be
deemed to result in the adoption of a new Plan, will not be effective until
approved by the affirmative vote of the holders of a majority of the outstanding
shares of capital stock of the Company entitled to vote thereon.
No termination, modification or amendment of the Plan may adversely
affect the rights under any outstanding Options without the consent of the
holders of such Options.
6
<PAGE>
10. Effective Date of the Plan.
The Plan shall become effective upon adoption by the Board of Directors
of the Company. The Plan shall be submitted for approval by the affirmative vote
of the holders of a majority of the outstanding shares of capital stock of the
Company entitled to vote thereon within one year before or after adoption of the
Plan by the Board of Directors.
11. Not a Contract of Services.
Nothing contained in the Plan or in any Option granted under the Plan
shall be deemed to confer upon any Optionee any right to be or remain employed
or associated with the Company or of a subsidiary or parent thereof or, in any
way, limit the right of the Company, or of any subsidiary or parent thereof, to
terminate such relationship.
12. Other Compensation Plans.
The adoption of the Plan shall not affect any other stock option plan,
incentive plan or any other compensation plan in effect for the employees and
non-employees of the Company, nor shall the Plan preclude the Company from
establishing any other form of stock option plan, incentive plan or any other
compensation plan for employees or non-employees of the Company.
13. Section 16(b) Compliance.
It is the intention of the Company that the Plan shall comply in all
respects with Rule 16b-3 under the 1934 Act, and in all events, the Plan shall
be construed in favor of it meeting the requirements of Rule 16b-3.
Notwithstanding anything contained herein to the contrary, at anytime during the
period the Company's Common Stock is registered pursuant to Section 12(g) of the
1934 Act, the Non-Qualified Stock Option Committee shall have the exclusive
right to grant Options to persons subject to Section 16 of the 1934 Act and set
forth the terms and conditions thereof. With respect to persons subject to
Section 16 of the 1934 Act, transactions under the Plan are intended, to the
extent possible, to comply with all applicable conditions of Rule 16b-3, as
amended from time to time, (and its successor provisions, if any) under the 1934
Act. To the extent any provision of the Plan or action by the Committee fails to
so comply, it shall be deemed null and void to the extent permitted by law.
Furthermore, notwithstanding anything to the contrary in the Plan, the
Non-Qualified Stock Option Committee or the Board of Directors, in its sole and
absolute discretion, may bifurcate the Plan so as to restrict, limit or
condition the use of any provision of the Plan to participants who are officers
subject to Section 16 of the 1934 Act without so restricting, limiting or
conditioning the Plan with respect to other participants.
7
<PAGE>
PROXY
SEMICONDUCTOR PACKAGING MATERIALS CO., INC.
One Labriola Court, Armonk, New York 10504
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
on April 28, 1998
The undersigned, a holder of Common Stock of Semiconductor
Packaging Materials Co., Inc. a Delaware corporation (the "Company"), hereby
appoints GILBERT D. RAKER and ANDREW A. LOZYNIAK and each of them, the proxies
of the undersigned, each with full power to appoint their substitutes, and
hereby authorizes them to attend, represent and vote for the undersigned, all of
the shares of the Company held of record by the undersigned on March 17, 1998,
at the Annual Meeting of Stockholders of the Company to be held at The Club 101,
101 Park Avenue, New York at 11:00 a.m. E.S.T. on April 28, 1998 and any
adjournments(s) thereof, as follows:
1. ELECTION OF DIRECTORS, as provided in the Company's Proxy
Statement:
[ ] FOR all nominees [ ] WITHHOLD AUTHORITY to vote
for listed below. all nominees listed below.
(Instructions: To withhold authority to vote for an individual nominee, strike a
line through or otherwise strike out the nominee's name below.) Gilbert D.
Raker/Frank J. Polese/Mark A. Pinto/Richard D. Fain/John U. Moorhead, II/Stephen
B. Sands.
2. The amendment to Article First of the Company's Certificate
of Incorporation to change the name of the Company to SEMX Corporation.
<PAGE>
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. The ratification of the amendment to the Company's Amended
Employee's Incentive Stock Option Plan to increase the authorized option shares
from 600,000 to 900,000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. The ratification of the amendment to the Company's
Non-Qualified Incentive Stock Option Plan to increase the authorized option
shares from 100,000 to 300,000, and to make employees eligible to participate in
the Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. The ratification of the appointment of Goldstein Golub
Kessler & Company, P.C. as the Company's auditors for the year ending December
31, 1998.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
6. Upon such other matters as may properly come before the
meeting or any adjournments thereof.
The Board of Directors recommends a vote FOR Proposal 1, 2, 3, 4
and 5.
The undersigned hereby revokes any other proxy to vote at such
Annual Meeting and hereby ratifies and confirms all that said attorneys and
proxies, and each of them, may lawfully do by virtue hereof. With respect to
matters not known at the time of the solicitations hereof, said proxies are
authorized to vote in accordance with their best judgment.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN ACCORDANCE
WITH THE INSTRUCTIONS ON THE OTHER SIDE HEREOF, IF NO DIRECTION IS MADE, THIS
PROXY WILL BE VOTED FOR THE ELECTION OF
<PAGE>
THE DIRECTORS NAMED IN PROPOSAL 1, FOR THE ADOPTION OF PROPOSALS 2, 3, 4 AND 5,
AND AS SAID PROXIES SHALL DEEM ADVISABLE ON SUCH OTHER BUSINESS AS MAY COME
BEFORE THE MEETING.
The undersigned acknowledges receipt of a copy of the Notice of
Annual Meeting and accompanying Proxy Statement dated March 30, 1998 relating to
the Annual Meeting and the 1997 Annual Report to stockholders.
Dated: , 1998
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Signature(s) of Stockholder(s)
(Please sign exactly as name appears herein. When signing as executor,
administrator, trustee, guardians, attorney, please give full title as such. For
joint accounts or as fiduciaries, all joint or co-fiduciaries should sign).
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OR SEMICONDUCTOR PACKAGING
MATERIALS CO., INC. PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY USING
THE ENCLOSED ENVELOPE. IT IS IMPORTANT FOR YOU TO VOTE.
