SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-10938
SEMX CORPORATION
(Name of Business Issuer in its charter)
Delaware 13-3584740
(State of other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1 LABRIOLA COURT, ARMONK, NY 10504 (Address of
principal executive offices, including zip code)
(914) 273-5500
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
(1) Yes |X| No |_|
(2) Yes |X| No |_|
The number of shares outstanding of the Registrant's sole class of common
stock, as of July 31, 1999 was 6,043,516 shares.
<PAGE>
TABLE OF CONTENTS
Page No
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheet at June 30, 1999 and December 31, 1998. 3
Consolidated Statement of Operations and Comprehensive Income
(Loss) for the three and six months ended June 30, 1999 and 1998. 4
Consolidated Statement of Cash Flows for the three and
six months ended June 30, 1999 and 1998. 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders 15
Item 6 Exhibits and Reports on Form 8-K 15
Signatures 15
FORWARD LOOKING INFORMATION
Portions of the narrative set forth in this document that are not historical in
nature are forward looking statements. These forward-looking statements speak
only as of the date of this document, and the Company expressly disclaims any
obligation or undertaking to publicly release any updates or revisions to any
forward-looking statements contained herein. The Company's actual performance
may differ materially from that contemplated by the forward looking statements
as a result of a variety of factors that include, but are not limited to, the
completion of the sale of the wafer reclaim business, the availability of
continuing credit from the Company's banks, the general economic or business
climate, business conditions of the microelectronic and semiconductor markets
and the automotive and communications industry which the Company serves and the
economic volatility in geographic markets, such as Asia.
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEMX CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
(Dollars in thousands)
June 30, December 31,
ASSETS 1999 1998
(Unaudited) (Audited)
----------- ------------
Current Assets:
Cash and cash equivalents $ 1,265 $ 1,141
Accounts receivable, less
allowance for doubtful accounts
of $398 and $245, respectively 7,228 8,007
Inventories 4,835 10,447
Prepaid expenses and other
current assets 1,240 948
Deferred income tax assets -- 5,643
-------- --------
Total current assets 14,568 26,186
-------- --------
Property, Plant and Equipment-at cost,
net of accumulated depreciation
and amortization of $15,746
and $13,974, respectively 35,363 38,352
-------- --------
Other Assets-net of accumulated amortization
Technology rights and intellectual
property 927 963
Goodwill 8,541 15,938
Other 783 885
-------- --------
Total other assets 10,251 17,786
-------- --------
Total Assets $ 60,182 $ 82,324
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 3,285 $ 5,262
Current portion of long-term debt 1,152 17,593
Revolving credit facility 5,627 11,800
Current portion of obligations
under capital leases 2,560 2,648
Accrued expenses 2,940 2,947
Income Taxes Payable 292 --
-------- --------
Total current liabilities 15,856 40,250
Deferred income taxes 1,745 2,329
Long-term debt 6,035 6,657
Obligations under capital leases 5,156 6,398
-------- --------
Total Liabilities 28,792 55,634
-------- --------
Minority Interest in Subsidiary 1,177 1,319
-------- --------
Shareholders' Equity:
Preferred stock-$.10 par value;
authorized 1,000,000 shares,
none issued -- --
Common stock-$.10 par value;
authorized 20,000,000 shares,
issued 6,378,116 and 6,375,616
shares 638 638
Additional paid-in-capital 28,203 28,199
Accumulated other comphrehensive
income (628) (322)
Retained earnings (accumulated
deficit) 2,212 (2,932)
-------- --------
30,425 25,583
Less: Treasury stock:
334,600 shares at cost 212 212
-------- --------
Shareholders' Equity 30,213 25,371
-------- --------
Total Liabilities And
Shareholders' Equity $ 60,182 $ 82,324
======== ========
See Notes to Consolidated Financial Statements
page 3
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SEMX CORPORATION AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
(Dollar amounts in thousands, except per share amounts)
<TABLE>
<CAPTION>
For The Three Months For The Six Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net Sales $ 11,780 $ 11,030 $ 22,705 $ 25,484
Service Revenue 4,268 3,969 8,236 9,407
-------- -------- -------- --------
Total Revenue 16,048 14,999 30,941 34,891
-------- -------- -------- --------
Cost of Goods Sold 7,443 7,602 14,794 17,395
Cost of Services Performed 3,143 3,172 6,314 7,814
-------- -------- -------- --------
Total 10,586 10,774 21,108 25,209
-------- -------- -------- --------
Gross Profit 5,462 4,225 9,833 9,682
Selling, General and Administrative
Expense 3,390 3,376 6,689 7,307
Restructuring Charge -- -- -- 1,950
-------- -------- -------- --------
Operating Income (Loss) 2,072 849 3,144 425
Gain on Sale of Connector Business -- -- 8,430 --
Interest Expense (Net) 511 889 1,211 1,708
-------- -------- -------- --------
Income (Loss) Before Provision for
Income Taxes and Minority Interest
in Consolidated Subsidiary 1,561 (40) 10,363 (1,283)
Provision (Credit) for Income Taxes 556 18 5,213 (434)
-------- -------- -------- --------
Income (Loss) Before Minority Interest
in Consolidated Subsidiary 1,005 (57) 5,150 (849)
Minority Interest in (Income) Loss
of Consolidated Subsidiary (14) 73 (6) 206
-------- -------- -------- --------
Net Income (Loss) $ 991 $ 16 $ 5,144 $ (643)
======== ======== ======== ========
Other Comprehensive Income:
Foreign currency translation net of
tax benefit of $114 and $3; and
$157 and $17, respectively (222) (6) (306) (32)
-------- -------- -------- --------
Comprehensive Income (Loss) $ 769 $ 10 $ 4,838 $ (675)
======== ======== ======== ========
Basic Income (Loss) per Common Share $ .16 $ .00 $ .85 $ (.11)
Diluted Income (Loss) per Common Share $ .16 $ .00 $ .84 $ (.11)
Weighted Average Number of Common
Shares Outstanding - Basic 6,041 6,058 6,041 6,067
Weighted Average Number of Common
Shares Outstanding - Diluted 6,183 6,112 6,112 6,067
</TABLE>
See Notes To Consolidated Financial Statements
page 4
<PAGE>
SEMX CORPORATION AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
(Dollars in thousands)
For The Six Months
Ended June 31
1999 1998
-------- --------
Cash Flows From Operating Activities:
Net Income (Loss) $ 5,144 $ (643)
Adjustments To Reconcile Net
Income To Net
Cash Used In Operating Activities:
(Gain) Loss on Sales of
Connector Business (8,430) --
Depreciation And Amortization
of Property And Equipment 2,506 2,565
Other Amortization 340 523
Deferred Income Taxes 5,373 (107)
Minority Interest in Subsidiary
(Income) Loss 6 (206)
Changes In Operating Assets And
Liabilities:
(Increase) Decrease In Accounts
Receivable (1,527) 1,871
Increase In Inventory (419) (2,879)
(Increase) Decrease In Prepaid
Expenses And
Other Current Assets (425) 522
Decrease In Accounts Payable (1,062) (1,435)
Increase (Decrease) In Accrued
Expenses 184 414
Increase (Decrease) In Income
Taxes Payable 292 (735)
-------- --------
Net Cash Provided By (Used In)
Operating Activities 1,982 (110)
-------- --------
Cash Flows From Investing Activities:
Purchase Of Property And Equipment (696) (1,983)
Proceeds From Sale of Connector
Business 22,191 --
(Increase) Decrease In Other Assets (68) (301)
Acquisition of Subsidiary -- (391)
-------- --------
Net Cash Provided by (Used In)
Investing Activities 21,427 (2,675)
-------- --------
Cash Flows From Financing Activities:
Purchase of Treasury Stock -- (212)
Proceeds From Exercise Of
Stock Options 4
Proceeds From Long-Term Debt -- 1,064
(Repayment) Borrowing Under
Revolving Credit (6,173) 5,650
Payment Under Capital Leases (1,409) (885)
Payment Under Term Loan Agreements (15,637) (3,434)
Borrowing under Term Loan Agreements -- --
-------- --------
Net Cash Provided By (Used In)
Financing Activities (23,215) 2,183
-------- --------
Effect of Exchange Rate Change on Cash (70) (66)
Net Increase (Decrease) In Cash 124 (668)
Cash At Beginning Of Period 1,141 2,260
-------- --------
Cash At End Of Period $ 1,265 $ 1,592
======== ========
Supplemental schedule of noncash
investing and financing activity:
Machinery and equipment acquired
under capital leases $ 890 $ 781
See Notes to Consolidated Financial Statements
page 5
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SEMX CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Amounts in Thousands)
(Unaudited)
Note 1. Basis of Presentation
The consolidated financial statements include the accounts of SEMX Corporation
("SEMX") and its wholly and majority owned subsidiaries. As used herein, the
term "Company" refers to SEMX, its predecessors and its subsidiaries unless the
context indicates otherwise. The Consolidated Balance Sheet at June 30, 1999,
and the Consolidated Statement of Operations and Cash Flows for the three and
six months ended June 30, 1999 and 1998, have been prepared by the Company and
are unaudited. In the opinion of management, the financial statements reflect
all adjustments necessary to present fairly the results for the interim periods.
Such results are not necessarily indicative of results to be expected for the
year. The Consolidated Balance Sheet at December 31, 1998 has been derived from
the audited financial statements at that date. These financial statements should
be read in conjunction with the Company's Annual Report on Form 10-K for the
year ended December 31, 1998. The comparative financial statements for 1998 have
been reclassified to conform to the current period's presentation.
Note 2. Earnings Per Share
Basic earnings per share are computed based on the weighted average number of
common shares outstanding during the period. Diluted earnings per share gives
effect to all dilutive potential common shares outstanding during the period.
Potential dilutive common shares include shares issuable upon exercise of the
Company's stock options.
Note 3. Dispositions
In February 1999, the Company sold its connector businesses, Retconn
Incorporated ("Retconn") and ST Electronics, Inc. ("ST") to Litton Corporation
("Litton"). Litton acquired the specified assets and assumed certain liabilities
of Retconn and ST, as defined in the purchase agreement, in consideration for a
cash payment to the Company of $23,871. The liabilities assumed by Litton
amounted to approximately $3,500. The purchase price is subject to adjustment
for changes in Retconn's closing date balance sheet. In addition, the Company is
prevented from directly competing in the connector business for a period of
three years. The Company recorded a gain during the first quarter of 1999, of
$3,903 on the transaction, net of applicable income taxes of $4,527.
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Note 4. Inventory
Inventories consisted of the following:
June 30, December 31,
1999 1998
-------- ------------
Precious Metals $ 931 $ 1,245
Non Precious Metals 3,904 9,202
------ -------
$4,835 $10,447
------ -------
Inventories, which consist principally of work-in-process inventory, include raw
materials, labor and manufacturing expenses and are stated at the lower of cost,
determined by the first-in, first-out method, or market.
Note 5. Debt
On February 19, 1999, the Company entered into an agreement with First Union and
Fleet (the "Bank") concerning the distribution of $23,871 in proceeds from the
sale of Retconn and ST. Pursuant to the agreement, the Company repaid $15,050 of
term indebtedness and $7,141 of revolving credit borrowings. In addition, the
Company paid approximately $1,680 of transaction-related fees and severance
payments. The agreement also provided for the bank's forbearance of
noncompliance with certain existing covenants and an extension of its revolving
credit and interim term loan facilities through June 30, 1999.
During June 1999, the Company and the Bank entered into an agreement to extend
its bank facilities through August 31, 1999. The Company is in discussions with
its Bank to extend of its bank facilities through October 31, 1999.
The Company is in compliance with all of its bank covenants at June 30, 1999 and
continues to make monthly interest payments to the bank and began making nominal
principal payments in the second quarter of 1999. The Company is currently
pursuing a number of courses of action to refinance its debt with the Bank.
These include continuing negotiations with the Bank, discussions with other
prospective lenders and entering into a letter of intent to sell its wafer
reclaim business as a means of repaying its debt obligations.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS (for the three and six month periods ended June 30, 1999
compared to the three and six month periods ended June 30, 1998)
Revenue:
Total revenue for the three-month period ended June 30, 1999 of $16,048,000,
increased $1,049,000, or 7% and decreased $3,950,000, or 11% for the six month
period as compared to the comparable 1998 periods. On February 19, 1999, the
Company sold its connector business, ("Retconn") as described herein. Retconn
had sales through the February 1999 disposition date of $2,122,000 compared to
sales of $4,701,000 for the three months and $9,707,000 for the six months ended
June 30, 1998. Excluding Retconn sales for all periods presented, total revenue
for the 1999 second quarter increased $5,750,000 or 56% and for the six month
period ended June 30, 1999, increased $3,635,000, or 14% from the prior year
periods.
Excluding Retconn, the Materials Groups 1999 second quarter sales of $11,780 000
increased $5,451,000, or 86% and six month sales of $20,583,000 increased
$4,806,000, or 30%, from the comparable 1998 periods. SPM's 1999 sales increased
by $115,000 or 4% in the second quarter and decreased by $458,000 or 7% in the
six months period, as compared to the comparable 1998 periods. The decrease in
SPM's 1999 six month sales was caused by lower sales to a customer serving the
cellular market, partially offset by increased sales of gold wire during the
second quarter. Polese Company's 1999 sales increased by $5,336,000, or 173% for
the second quarter and increased by $5,264,000, or 60% for the six month period
as compared to the prior year periods. Polese sales have increased due to
improved sales of microprocessor lids, cellular base station heat dissipation
products and the introduction of new products.
The Company's Services Group 1999 revenues increased $299,000 to $4,268,000 for
the second quarter and decreased $1,171,000 to $8,236,000 for the six month
period as compared to the prior year periods. The Services Group six month
revenue decrease was the result of a slowdown in the demand for reclaimed wafers
and pricing pressures caused by a downturn in the semiconductor industry.
Further, in July of 1998, the Company closed its Texas operations and
consolidated all of ASP's domestic business into its Rhode Island facility. The
three and six month periods ended June 30, 1998, included $0 and $1,537,000,
respectively, in revenue from the Texas operation. The Service Group's revenue
from ASP's U.S. and European operations for the second quarter increased a total
of $111,000, or 3% and decreased $1,738,000 or 20%, for the six month period
ended June 30, 1999 as compared to the comparable 1998 periods. Revenue from
International Semiconductor Products Pte. Ltd ("ISP") of $682,000 for the second
quarter of 1999 increased by $188,000 or 38% and six month revenue of $1,299,000
increased $567,000, or 78% over the comparable 1998 periods.
Direct sales of the Company's products into foreign markets as a percentage of
consolidated revenue during 1999 was 32% for the second quarter and 23% for the
six month period, as compared to 21% and 14%, respectively, for the three and
six month periods ended June 30, 1998. The Company currently maintains foreign
manufacturing operations in the Netherlands ("ASP B.V."), in Morocco,
Semiconductor Materials S.A. R. L. ("S.A.R.L."), and in Singapore, ISP. In the
three and six month periods ended June 30, 1999, the Company derived revenue
from ASP B.V. of $818,000 and
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$1,647,000 respectively, from S.A.R.L. of $192,000 and $289,000, respectively,
and from ISP of $682,000 and $1,299,000, respectively. Foreign sales made
through the Company's domestic operations are made through foreign
manufacturer's representatives and are priced and paid for in U.S. dollars.
Sales for ASP B.V., S.A.R.L. and ISP are conducted in the local currencies of
Dutch Guilders, Dirhams, and Singapore Dollars, respectively, and account for
11% in the second quarter and 10% in the six months ended June 30, 1999.
The Company's consolidated backlog as of June 30, 1999 was $22,110,000 and
excludes backlog from the Retconn business which was sold February 19, 1999.
Excluding Retconn, the Company's backlog was $14,496,000 at June 30, 1998 and
$15,161,000 at December 31, 1998. The Polese backlog which was $5,003,000 at the
end of 1998, has improved to $12,666,000 as of June 30, 1999. The backlogs for
ASP and SPM have decreased $405,000 and $309,000, respectively, since the end of
1998 but have increased from beginning of year levels. The Company expects the
consolidated backlog to remain strong for the remainder of 1999.
Gross Profit:
Gross profit of $5,462,000 for the three month period and $9,833,000 for six
month period ended June 30, 1999 increased $1,237,000, or 29% and $151,000, or
2%, respectively, from the comparable 1998 periods. Excluding Retconn from all
periods presented, 1999 gross profit increased by $2,786,000, or 104% during the
second quarter, and increased by $2,634,000, or 41% for the six months period
from the comparable 1998 periods. The Materials Group's gross profit increases
primarily reflected the increased sales at Polese Company. The Service Group's
gross profit of $1,125,000 and $1,922,000 for the three and six month periods
ended June 30, 1999, increased $327,000 or 41% and $329,000 or 21% respectively,
as compared to the comparable periods in 1998 primarily due to the effects of
cost reductions during 1999.
Gross Margins:
The Company's gross margins increased from 28% to 34% and 28% to 32%,
respectively, for the three and six month periods ended June 30, 1999 over the
comparable 1998 periods. Excluding Retconn, the Company's gross margin for the
three and six month periods increased from 26% to 34 % and 26% to 32%,
respectively. The Materials Group's gross margin increased from 31% to 37% and
32% to 35%, respectively, for the three and six month periods ended June 30,
1999 from the comparable 1998 periods. The Service Group's gross margins
increased from 20% to 26% and 17% to 23%, respectively, for the three and six
month periods ended June 30, 1999 from the comparable 1998 periods, reflecting
the consolidation of domestic operations and improved performance at ISP.
Selling, General and Administrative:
Selling, general and administrative ("SG&A") expenses in the three and six month
periods ended June 30, 1999 increased $14,000, or 0% and decreased $618,000 or
8%, respectively, from the comparable 1998 periods. The decrease in SG&A in the
six month period reflects savings realized by the closing of the Services Group
Texas Plant during the second quarter of 1998 as well as reductions in SG&A due
to the sale of Retconn. Excluding Retconn, 1999 SG&A increased by $816,000, or
32% for the second quarter and increased by $497,000, or 9% for the six month
period ending June 30, 1999. The increase in SG&A during 1999 was due to
increased sales and includes bank charges related to extensions of the Company's
lending facilities of $105,000 and $143,000 during the second quarter and six
months periods, respectively. SG&A expenses as a percentage of revenue decreased
from 23% to 21% for the second quarter and increased from 21% to 22% for the six
months ended June 30, 1999 from the comparable 1998 periods.
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Restructuring Charge:
The six month period ended June 30, 1998 includes a restructuring charge of
$1,950,000 associated with the closing of ASP's Texas operation and the
relocation of the equipment and other assets.
Gain on Sale of Connector Business
Income before Income Taxes and Minority Interest for the six months ended June
30, 1999 include a gross $8,430,000 gain on the sale of the Company's Connector
Business to Litton Corporation on February 19, 1999 as described below in
Liquidity and Capital Resources.
Interest Expense (Net):
Net interest expense for the three and six month periods ended June 30, 1999
decreased $378,000 and $497,000,respectively, from the comparable 1998 periods .
The decrease in net interest expense is due to reduced debt levels from February
19, 1999 forward due to the principal repayments from proceeds from the sale of
the Retconn business.
Provision (Credit) for Income Taxes:
A provision of $556,000 and $5,213,000 for income taxes has been made for the
three and six month periods ended June 30, 1999 as compared a provision of
$18,000 and credit of $434,000 for the comparable 1998 periods. The provision
for the six month period ended June 30, 1999 includes a provision of $4,527,000
associated with the gain on the sale of Retconn. The Company has Federal Net
Operating Loss carryforwards available to offset a substantial portion of the
income tax return liability associated with the gain. The credit for the six
month period ended June 30, 1998 includes a $759,000 income tax credit
associated with the restructuring charge.
Minority Interest:
In the three and six month periods ended June 30, 1999 and 1998, the Company has
included income of $14,000 and $6,000, and a loss of $73,000 and $206,000
respectively, associated with ISP in its income (loss) before minority interest
in loss of consolidated subsidiary, net of tax. The Company has a 50.1% interest
in the joint venture and has accordingly, excluded 49.9% of such loss from its
consolidated net income. See the section ISP Joint Venture for further details
herein.
Net Income:
As a result of the above, Net Income of $991,000 for the second quarter
increased by $975,000 from the comparable 1998 period. Net Income of $5,144,000
for the six month period ended June 30, 1999 increased by $5,787,000 from the
comparable period in 1998.
Year 2000
The year 2000 problem arises since many computer programs and some pieces of
computer hardware manipulate and store dates as a two-digit field and are unable
to recognize dates past December 31, 1999.
The Company has completed its initial assessment of the systems and software at
all of its operations, including external interfaces with critical suppliers and
customers. The Company is in the process of replacing non-compliant hardware,
installing new manufacturing enterprise computer software systems at SPM and
installing software upgrades that are year 2000 compliant at its other
locations. The Company expects to complete the installation and testing of these
new systems and upgrades by the end of 1999. Outside suppliers, and customers
have been contacted and requested to complete the Company's assessment
questionnaire. The Company has completed its review of all of the assessment
questionnaires received and is re-contacting third parties who have not
responded to date.
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The Company has expended approximately $300,000 to date and estimates that the
remaining incremental cost of addressing the potential Year 2000 problem beyond
those expenditures already incurred will be less than $250,000 based upon the
information assembled to date.
In the event that the Company's internal software project is not completed, the
Company anticipates that the existing systems could continue functioning without
undue business interruption while the new software installation and testing is
completed. Failure of the Company to achieve year 2000 compliance is not
anticipated to have a material adverse impact on the operations of the Company.
The Company can not predict the potential effect of third parties "Year 2000"
issues on its business for those third parties that either do not complete their
own Year 2000 compliance or do not respond to the Company's assessment
questionnaire in a timely manner.
LIQUIDITY AND CAPITAL RESOURCES
General
To support the Company's growth the Company has historically made significant
capital expenditures to support its facilities and manufacturing processes as
well as working capital needs. The Company has financed its capital needs
through cash flow from operations, its line of credit facility, term loans from
the Bank, other bank financing including gold consignment supply agreements, and
capital leases. The Company has Bank short term debt maturities, standby letter
of credit maturities, gold consignment agreements and debt service requirements
which are presently deferred until August 31, 1999 under a limited forbearance
agreement with its banks. The Company is in discussions with its Bank to extend
of its bank facilities through October 31, 1999. The Company completed the sale
of its Retconn business on February 19, 1999 and repaid $22,191,000 of existing
Bank debt. As discussed herein, the Company is pursuing several additional
courses of action to address its remaining Bank indebtedness, gold consignment
supply needs and refinancing needs.
Summary of 1999 Activity
At June 30, 1999, the Company had cash and cash equivalents of $1,265,000 and an
available balance on its revolving credit facility of $1,000,000 as compared to
$1,141,000 and $200,000 respectively at December 31, 1998.
Net cash provided by operating activities in the six months ended June 30, 1999
amounted to $1,982,000 as compared to a use of $110,000 in the comparable 1998
period. Cash provided by operations increased compared to the first six months
of 1998 principally as a result of 1999 income and working capital changes. The
decrease in the deferred tax assets is due to utilization of net operating loss
carryforwards generated by the 1998 losses.
Cash provided by investing activities amounted to $21,427,000 in the period
ended June 30, 1999. On February 19, 1999 the Company completed the sale of its
Connector business and realized cash proceeds of $22,191,000. During the six
months ended June 30, 1999 and 1998, the Company invested $696,000 and
$1,938,000, respectively, in property and equipment. This investment excludes
$890,000 and $781,000, respectively, in the 1999 and 1998 periods for equipment
acquired under capital leases. At June 30, 1999, the Company had capital
expenditure commitments of approximately $536,000.
Net Cash used by financing activities amounted to $23,215,000 in the period
ended June 30, 1999 as
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compared to cash provided of $2,183,000 during the 1998 period. During the six
months ended June 30, 1999 the Company's repaid $15,637,000 under term loans and
$6,173,000 under its Bank revolving line of credit. In addition, the Company
made payments of $1,409,000 under capital leases obligations.
Factors Affecting Future Liquidity
In January 1997, the Company entered into a $21,000,000 five-year term loan
("Term Loan") with First Union Bank and Fleet National Bank (collectively the
"Bank"). Under a limited forbearance agreement, as amended, the Bank extended a
previous waiver of the Term Loan's financial ratio covenants, agreed to waive
principal payments of $350,000 per month from August 1, 1998 forward and set the
maturity of the Term Loan at June 30, 1999. On February 19, 1999 the Company
repaid the remaining $15,050,000 principal balance outstanding under this Term
Loan.
In January 1997, the Company entered into a $15,000,000 line of credit with the
Bank that originally expired in February 1999. As part of the limited
Forbearance Agreement, as amended, the Bank extended the maturity to August 31,
1999. This credit line includes a standby letter of credit for ISP in the amount
of approximately $3,000,000. Interest is payable monthly at the lower of the
Bank's loan pricing rate or a Eurodollar rate plus 2.25%. The line of credit is
collateralized by substantially all of the company's assets and provides for
limited availability based upon the eligible percentages of the Company's
receivables and inventory. The line of credit, as amended, is subject to various
restrictions and financial covenants.. On February 19, 1999 the Company repaid
$7,141,000 of the outstanding borrowings under this facility.
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On June 19, 1998 the Company entered into a 90-day note for $1,000,000 ("Interim
Term Loan") with the Bank to supplement the Company's working capital
requirements. The Interim Term Loan note provided for the payment of interest
monthly and for the repayment of principal on October 1, 1998. As part of the
limited Forbearance Agreement, as amended, the Bank extended the maturity to
August 31, 1999. The Company in compliance with its financial ratio covenants
and continues to make monthly interest payments. On July 1, 1999 the Company
began making monthly principal payments of $11,905 on the Interim Term Loan.
In December 1996, the Company entered into a consignment agreement (the "Gold
Consignment Agreement") with Fleet Precious Metals ("FPM") which expired
December 23, 1998. As part of the limited Forbearance Agreement, as amended, the
Bank extended the maturity to August 31, 1999. Under the Gold Consignment
Agreement, the Company purchases gold used in its manufacturing of materials.
The Gold Consignment Agreement provides for gold on consignment not to exceed
the lesser of 5,000 troy ounces of gold or gold having a market value of
$1,870,000. The Gold Consignment Agreement requires the Company to pay a
consignment fee of 5.0 % per annum based upon the value of all gold consigned to
the Company. The Company is currently in discussions with FPM to extend and/or
negotiate a new agreement.
The limited Forbearance Agreement discussed herein, was originally signed in
August 1998 and later amended in 1998 and 1999. The Forbearance Agreement, as
amended, waived Term Loan principal payments of $350,000 per month from August 1
forward, extended a previous waiver of financial ratio covenants, set the Term
Loan maturity date to August 31, 1999 and also extended the maturity of the
Interim Term Loan, the Revolving Credit Agreement, the standby letter of credit
and the Gold Consignment agreement to August 31, 1999. The Company is pursuing a
number of courses of action to restructure or refinance its existing debt and
Gold Consignment agreement. These include continuing negotiations with the
current lenders regarding the Banks proposal to extend the facilities through
October 31, 1999, discussions with other prospective lenders and the sale of its
wafer reclaim businesses pursuant to a letter of intent dated May 1999 as a
means of paying its debt obligations. On February 19, 1999, the Company sold its
Retconn business and used $22,191,000 of the cash proceeds to repay $15,050,000
of bank term debt and $7,141,000 of line of credit borrowings. Although the
Company is presently meeting all of the Bank's covenants, as amended, and is
paying interest as due on its obligations, there is no assurance that the
Company will be able to successfully renegotiate the terms of its existing
credit/consignment agreements and/or negotiate new financing arrangements and/or
realize cash through the sale of its wafer reclaim business. Failure to achieve
the necessary financing could have a material adverse effect on the Company.
The Company's 50.1% owned Singapore operation ("ISP") is currently in
discussions with its bank and may not be able to meet its financing obligations
through cash flow from operations without a change in its existing arrangements.
The Company and ISP are pursuing a number of courses of action designed to
provide future capital resources including discussions with its ISP's lenders to
obtain principal repayment forbearance as well as discussions with other
investors who would provide a new source of equity capital. There is no
assurance that ISP will be able to successfully renegotiate the terms of its
existing credit agreements and/or realize cash through an equity investor.
Failure to achieve the necessary financing would have a material adverse effect
on ISP. In addition, ISP's bank could draw down the S$5,000,000 (approximately
$3,000,000 at June 30, 1999) standby letter of credit provided by the Company's
Bank. There is no assurance that the Company would have the resources available
to repay the Bank immediately as required by the Company's Bank agreement in
which case an event of default would exist. Failure to repay the drawn Letter of
Credit would have a material adverse effect on the
13
<PAGE>
Company.
In conjunction with the Company's acquisition of Polese Company on May 27, 1993,
the Company acquired from Frank J. Polese, the former sole shareholder of Polese
Company, all of the rights, including a subsequently issued patent, for certain
powdered metal technology and its application to the electronics industry. For a
period of ten years from May 1993, 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
powdered metal technology. During 1999, the Company charged against operations a
total of $229,300 under this agreement, $75,000 of which have been paid through
June 30, 1999.
On December 18, 1997, the Board of Directors authorized the Company to
repurchase up to $2,000,000 of SEMX common stock on the open market. Repurchased
shares will be held as Treasury shares and may be reissued in the future or may
be reissued pursuant to the Company's stock option programs. During 1998 the
Company had repurchased 34,600 shares at a cost of $212,000. The Company has
suspended the repurchase of any further stock at this time.
The Company continually seeks to broaden its product lines by various means,
including through acquisitions. The Company intends to pursue only those
acquisitions for which it will be able to arrange the necessary financing by
means of the issuance of additional equity, the use of its cash or, through bank
or other debt financing.
The Company is uncertain that without a restructuring or refinancing of Bank
Debt, its working capital and internally generated funds and other sources of
financing will be sufficient to satisfy the Company's currently anticipated cash
requirements on both a short-term and long-term basis.
14
<PAGE>
PART II OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On May 26, 1999, the registrant conducted its annual meeting. At such
meeting, stockholders of record as of the close of business on April 9,
1999 were entitled to notice of and to vote at the meeting. Out of a total
of 6,041,016 shares entitled to vote at the meeting, 5,008,730 shares, or
83%, were present in person or by proxy at said meeting. The matters voted
on at the meeting were limited to: the election of seven directors to
serve for one year and until their successors are elected and qualify and
the ratification of the appointment of Goldstein Golub Kessler LLP as the
Company's auditors for the year ending December 31, 1999.
The following Directors were elected at such meeting:
Mark A. Pinto Richard D. Fain
John U. Moorhead, II Steven B. Sands
Gilbert D. Raker Frank J. Polese
Andrew Lozyniak
The following votes were cast in the election of Goldstein Golub Kessler
LLP as the Company's auditors.
Affirmative Against Abstain
----------- ------- -------
4,964,360 Shares 24,919 Shares 19,451 Shares
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.66 Seventh Amendment and Forbearance Agreement among SEMX Corporation
and Subsidiaries and First Union National Bank dated as of June 29,
1999
10.67 Employment agreement dated as of August 1, 1999 between the Company
and Gilbert D. Raker
10.68 Employment agreement dated as of August 1, 1999 between the Company
and Frank J. Polese
(b) Current Reports on Form 8-K
Form 8-K, Item 5, filed on June 24, 1999, related to the Company's
adoption of a shareholder rights plan.
15
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEMX CORPORATION
Date: August 13, 1999 By: /s/ Gilbert D. Raker
---------------------------------
Name: Gilbert D. Raker
Title: Chairman of the Board
and Chief Executive Officer
Date: August 13, 1999 By: /s/ Mark A. Koch
---------------------------------
Name: Mark A. Koch
Title: Controller and Secretary
(Principal Financial and
Accounting Officer)
16
EXHIBIT 10.66
SEVENTH AMENDMENT AND FORBEARANCE AGREEMENT
AGREEMENT, made as of June 29, 1999, among SEMX CORPORATION
(formerly known as Semiconductor Packaging Materials Co., Inc.) a Delaware
corporation, (the "Borrower") and AMERICAN SILICON PRODUCTS, INC. ("ASP"), a
Delaware corporation, POLESE COMPANY, INC., a California corporation, TYPE III,
INC., a California corporation, SPM HOLDINGS CORPORATION ("SPM Holdings"), a
Delaware corporation, AMERICAN SILICON PRODUCTS, BV ("ASP BV") a Netherland
corporation, THERMAL PACKAGING SOLUTIONS, INC. ("TPS") a Nevada corporation,
(collectively, the "Subsidiary Guarantors") and FIRST UNION NATIONAL BANK, a
national banking association as Lender and agent for Fleet National Bank (the
"Lender").
Background
A. Capitalized terms not otherwise defined shall have the meanings
ascribed to them in the Credit Agreement dated January 23, 1997, between
Semiconductor Packaging Materials Co., Inc. (now known as SEMX Corporation) and
First Union Bank of Connecticut (predecessor in interest to First Union National
Bank) (as modified, amended, restated or supplemented from time to time, the
"Credit Agreement").
B. In order to permit the Borrower to complete the sale of its wafer
reclamation divisions and fully repay the bank indebtedness, including the
Interim Loan, Revolving Loan and First Union National Bank's mortgage loans and
equipment leases, the Borrower and the Subsidiary Guarantors have requested that
the Lender: (i) extend the maturity of the Interim Note to August 31, 1999; and
(ii) extend the maturity of the Revolving Loan from June 30, 1999 to August 31,
1999.
C. The Lender has agreed to the Borrower's and the Subsidiary
Guarantors' requests subject to the terms and conditions of this Agreement.
Agreement
In consideration of the foregoing Background, which is incorporated
by reference, the parties, intending to be legally bound, agree as follows:
<PAGE>
1. Conditions Precedent. The obligation of the Lender under this
Agreement is subject to the receipt and review, to the satisfaction of the
Lender, of the following:
(a) this Agreement shall be duly executed by the parties
hereto;
(b) Borrower shall deliver an Assistant Secretary's
Certificate of the Borrower and each of the Subsidiary
Guarantors authorizing this transaction;
(c) Borrower shall deliver a true and complete copy of the
March 31, 1999 Report on Form 10-Q within three (3) days
after filing by the Borrower with the Securities and
Exchange Commission;
(d) Counsel for the Borrower and Subsidiary Guarantors will
deliver their opinion that this Agreement and the
documents referred to herein are authorized, duly
executed and enforceable against their clients;
(e) The Borrower shall have paid all of the current and past
expenses and fees as provided in Section 19;
(f) Simultaneously herewith Borrower shall pay a $50,000. as
fee agreed to previously in the Sixth Amendment and
Forbearance Agreement;
(g) Simultaneously herewith Borrower shall pay an extension
fee in the sum of $35,000.; and
(h) Borrower shall provide such other agreements and
instruments as the Lender reasonably deems necessary to
carry out the terms and provisions of this Agreement.
2. Modifications to Credit Documents. All of the terms and
conditions contained in the Credit Documents shall remain in full force and
effect except as follows:
a) Modification to Credit Agreement. Section 11.1 is hereby
modified to provide that the following terms will have the following revised
definitions:
2
<PAGE>
"Interim Loan Maturity Date: shall mean August 31, 1999.
"Revolving Loan Maturity Date" shall mean August 31, 1999.
3. Reaffirmation by the Borrower. The Borrower acknowledges that (a)
it is legally, validly and enforceably indebted to Lender under the Revolving
Note and the Interim Note, without offset, claim, defense, counterclaim or right
of recoupment, (b) it is legally, validly and enforceably liable to the Lender
for all costs and expenses of collection and attorneys' fees related to or in
any way arising out of this Agreement, the Credit Agreement, the Revolving Note,
the Interim Note and the other Credit Documents, and (c) as of the date hereof,
the principal amount outstanding under (w) the Revolving Note is $5,627,519.
plus interest; (x) the undrawn amount under the Letter of Credit is 5,000,000.
Singapore Dollars; (y) the Interim Note is $976,190. plus interest; and (z) the
amount outstanding under the Mortgage Loan made by First Union to Borrower is
$1,305,333.23. In addition, Fleet National Bank's affiliate, Fleet Precious
Metals, Inc., has a separate facility to the Borrower in the amount of $983,003.
as of June 28, 1999 pursuant to a consignment agreement (the "Consignment
Agreement") in connection with the consignment of gold (the "Gold Liability")
and Lender has a separate equipment leasing facility to Semiconductor Packaging
Materials Co. Inc. dated October 24, 1995 which have amounts outstanding under
Schedule 1 of $231,193.09, Schedule 2 of $245,751.97 and Schedule 3 of
$450,949.83 plus any applicable interest, fees and other costs (the "Lease
Liability"), all of the separate obligations of the Borrower and Subsidiary
Guarantors under the Gold Liability and the Lease Liability are due and owing
without offset, claim, defense, counterclaim or right of recoupment. Except as
modified by this Agreement, the Borrower hereby remakes all representations,
warranties and covenants contained in the Credit Documents and acknowledges that
the liens and security interests granted pursuant to the Security Documents
encompass the indebtedness of the Revolving Note and the Interim Note. The
Borrower represents that except as described on the Current Report for the
period ended March 31, 1999 of the Borrower, which was filed with the Securities
and Exchange Commission, there are no pending, or to the Borrower's knowledge
threatened, legal proceedings to which the Borrower is a
3
<PAGE>
party, which materially or adversely affect the transactions contemplated by
this Agreement or the ability of the Borrower or any Subsidiary Guarantor to
conduct its business.
4. Payments. Borrower shall continue to make payments under the
Interim Note in the principal sum of $11,905. per month plus interest on the
unpaid principal amount thereof at the rate and calculated in the manner set
forth in the Credit Agreement commencing on July 1, 1999, and monthly thereafter
on the first day of each month.
5. Reaffirmation by the Subsidiary Guarantors. Each Subsidiary
Guarantor acknowledges that it is legally and validly indebted to the Lender
under the Subsidiary Guaranty without defense, counterclaim or offset, and
affirms that the Subsidiary Guaranty is or remains in full force and effect and
includes, without limitation, the indebtedness, liabilities and obligations
arising under, or in any way connected with, the Credit Agreement, the Revolving
Note, the Interim Note, this Agreement and the other Credit Documents, whether
now existing or hereafter arising and acknowledges that the liens and security
interests granted pursuant to the Security Documents to which such Subsidiary
Guarantor is a party encompasses the foregoing indebtedness and obligations and
remain in full force and effect.
6. Other Representations and Agreements by Borrower and Subsidiary
Guarantors. The parties agree that to the best of their knowledge they are not
aware that any Default or Event of Default has occurred and is continuing, other
than as set forth herein on Schedule 6 annexed hereto and made a part hereof and
that the Lender has not given its consent to or waived any Default or Event of
Default other than set forth on Schedule . The Borrower and the Subsidiary
Guarantors represent, warrant and confirm that the Credit Agreement and the
other Credit Documents are in full force and effect and enforceable against the
Borrower and the Subsidiary Guarantors in accordance with the terms thereof
except to the extent that the Borrower and Subsidiary Guarantors make no
representation or warranty as to the effectiveness of the ASPBV guaranty under
Dutch law. The Borrower and each Subsidiary Guarantor confirm all of the rights
and remedies of Lender under the Credit Documents, including, without
limitation, any power of attorney granted to Lender under any of the Credit
4
<PAGE>
Documents. The parties acknowledge and agree that the Credit Agreement, the
Credit Documents, the Consignment Agreement and this Agreement (all as
previously amended, modified or supplemented in writing from time to time)
constitute the entire agreement and understanding between Lender and Borrower
and each Subsidiary Guarantor and supersedes all prior agreements, conversations
and understandings relating to the subject matter hereof; the parties hereto
acknowledge and agree that the parties hereto have not made any representation
except as expressly set forth in this Agreement and even if any such
representations were made, the parties have not relied on any such
representation except as expressly set forth in this Agreement. The Borrower and
each of the Subsidiary Guarantors represent and confirm that as of the date
hereof, neither the Borrower nor any of the Subsidiary Guarantors has any claim
or defense (and to the extent any such defense exists the Borrower and the
Subsidiary Guarantors each hereby waives every claim and defense) against the
Lender arising out of or relating to the Credit Agreement, this Agreement and
the other Credit Documents or the making, administration or enforcement of the
Revolving Note, the Interim Note and the Loans and the remedies provided for
under the Credit Agreements.
7. Release of Lender.
IN CONSIDERATION OF THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS
AGREEMENT BY THE BORROWER AND THE SUBSIDIARY GUARANTORS, THE BORROWER AND EACH
OF THE SUBSIDIARY GUARANTORS RELEASE, REMISE AND DISCHARGE THE LENDER ITS
SUBSIDIARIES AND AFFILIATES AND ALL OF THEIR PAST AND PRESENT OFFICERS,
DIRECTORS, REPRESENTATIVES, EMPLOYEES, ATTORNEYS OF AND FROM ALL ACTIONS, CAUSES
OF ACTION, SUITS, REBORROWINGS, CONTROVERSIES, AGREEMENTS, PROMISES, DAMAGES,
JUDGMENTS, CLAIMS AND DEMANDS IN LAW OR IN EQUITY WHICH ANY OF THEM EVER HAD,
NOW HAS OR WHICH ANY OF THEM SHALL HAVE AGAINST THE LENDER ARISING OUT OF ANY
ACTION OF THE LENDER OCCURRING TO AND INCLUDING THE DATE OF THIS AGREEMENT.
8. Letters of Credit. The maturity of all letters of credit issued
in connection with revolving commitment including the ISP Letter of Credit shall
not be extended for a term beyond August 31, 1999.
5
<PAGE>
9. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York (without regard to such
State's conflicts of law principles).
10. Representation. The execution and delivery of this Agreement and
all of the other Loan Documents are within the Borrowers' and each Subsidiary
Guarantor's powers, corporate or otherwise, have been duly authorized or will be
ratified by all necessary corporate action, and do not contravene, or constitute
a default under any provision of applicable law or regulation of any of its
corporate documents or of any agreement, judgment, injunction, order, decree or
other instrument binding upon the Borrowers and the Subsidiary Guarantors. The
execution and delivery of this Agreement by the Lender are within Lender's power
and has been duly authorized.
11. Acceleration. In the event that the Borrower or any Subsidiary
Guarantor defaults in the prompt payment of the aforesaid obligations or in the
due performance of or compliance with any of the terms or conditions hereof or
of the Credit Documents or if the Borrower or any Subsidiary Guarantor defaults
under any obligations to Fleet National Bank or its affiliates under the Gold
Liability or otherwise or any other loan or facility with Lender under the Lease
Liability or otherwise and after the expiration of any applicable grace, notice
and right to cure provisions in this Agreement or any applicable agreement under
which such default occurred, the Lender may declare all of the obligations in
accordance with the original terms of the Loan Documents to be immediately due
and payable.
12. Remedies. In the event of a demand or default, the Lender shall
have such rights and remedies as are provided and permitted by the Loan
Documents and applicable law.
13. Loan Documents Remain Effective. Except for any modification
specifically set forth herein or in the exhibits, the Loan Documents remain in
full force and effect. Nothing herein shall be construed as a waiver of any
rights or remedies which the Lender may have at law, equity, under the Loan
Documents, as modified hereby, or otherwise, all of which are specifically
reserved.
6
<PAGE>
14. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
15. Amendments, Etc. No amendment, modification, termination, or
waiver of any provision of this Agreement, nor consent to any departure by the
parties from this Agreement, shall in any event be effective unless the same
shall be in writing and signed by the Lender, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
16. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lender and the Borrower, the Subsidiary Guarantors
and their respective successors and assigns, except that the Borrower and
Subsidiary Guarantor may not assign or transfer any of its rights under this
Agreement without the prior written consent of the Lender.
17. No Waiver. No delay or omission in the exercise of any power or
remedy herein provided or otherwise available to the Lender shall impair or
affect the Lender's right thereafter to exercise same, including the execution
of the Agreement.
18. Submission to Jurisdiction. (i) Any legal action or proceeding
with respect to this agreement or any document related hereto may be brought in
the courts of the State of New York or of the United States of America for the
Southern District of New York, and, by execution and delivery of this Agreement,
the Borrower and Subsidiary Guarantors hereby accept for itself and in respect
of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. The parties hereto hereby irrevocably waive any objection,
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens, which any of them may now or hereafter have
to the bringing of any such action or proceeding in such respective
jurisdiction.
(ii) The Borrower and Subsidiary Guarantors irrevocably consent to
the service of process of any of the aforementioned courts in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
7
<PAGE>
postage prepaid, to the Borrower at its address, and such service will become
complete three days after the date such process is so mailed.
(iii) Nothing contained in this Paragraph 21 shall affect the right
of the Lender to serve process in any other manner permitted by law or commence
legal proceedings or otherwise proceed against the Subsidiary Guarantor in any
other jurisdiction.
19. Expenses. The Borrower shall promptly pay all expenses of the
Lender with respect to: (i) the drafting, negotiation and enforcement of this
Agreement and the documents executed in connection therewith, including, but not
limited to, reasonable attorneys fees and disbursements and foreign counsel
fees; (ii) inspection and evaluation of any collateral, from time to time,
including collateral audits and appraisals; (iii) any filing, recording, title
insurance or other fees and taxes or search fees incurred in protecting,
perfecting and insuring the Lender's lien or security interest in the
Collateral; and (iv) all out of pocket expenses in connection therewith incurred
by the Lender, including, but not limited to, site visits to view and observe
the Collateral. Borrower authorizes Lender to debit any account for the payment
of any such fees and disbursements if such amounts are not paid as and when due.
20. Jury Trial Waiver. THE BORROWER AND EACH OF THE SUBSIDIARY
GUARANTORS WAIVES TRIAL BY JURY IN ANY COURT IN ANY SUIT, ACTION OR PROCEEDING
ON ANY MATTER ARISING IN CONNECTION WITH, OR IN ANY WAY RELATED TO, THE
FINANCING TRANSACTIONS OF WHICH THE CREDIT AGREEMENT, THE REVOLVLING NOTE, THE
INTERIM NOTE, THE TERM NOTE, THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS IS A
PARTY OR THE ENFORCEMENT OF ANY OF THE LENDER'S RIGHTS. THE BORROWER AND EACH OF
THE SUBSIDIARY GUARANTORS ACKNOWLEDGES THAT IT MAKES THIS WAIVER KNOWINGLY
WILLINGLY, VOLUNTARILY AND WITHOUT DURESS, AND ONLY AFTER EXTENSIVE
CONSIDERATION OF THE RAMIFICATIONS OF THIS WAIVER WITH ITS ATTORNEYS.
[remainder of page intentionally left blank]
8
<PAGE>
The parties have executed this Agreement as of the date first
written above.
Borrower:
SEMX CORPORATION
By: /s/ Gilbert D. Raker
------------------------------
Name: Gilbert D. Raker
Title: Chairman
Subsidiary Guarantors:
AMERICAN SILICON PRODUCTS, INC.
By: /s/ Gilbert D. Raker
------------------------------
Name: Gilbert D. Raker
Title: Chairman
POLESE COMPANY, INC.
By: /s/ Gilbert D. Raker
------------------------------
Name: Gilbert D. Raker
Title Chairman
TYPE III, INC.
By: /s/ Gilbert D. Raker
------------------------------
Name: Gilbert D. Raker
Title: Director
SPM HOLDINGS CORPORATION
By: /s/ Gilbert D. Raker
------------------------------
Name: Gilbert D. Raker
Title: Chairman
9
<PAGE>
THERMAL PACKAGING SOLUTIONS,
INC.
By: /s/ Gilbert D. Raker
------------------------------
Name: Gilbert D. Raker
Title: Director
ASP, B.V.
By: /s/ Gilbert D. Raker
------------------------------
Name: Gilbert D. Raker
Title: Chairman
Lender:
FIRST UNION NATIONAL BANK
By: /s/ Nancy G. Haskins
------------------------------
Name: Nancy G. Haskins
Title: Vice President
10
<PAGE>
SCHEDULE 6
NONE.
11
EXHIBIT 10.67
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 1, 1999, between SEMX Corporation, a
Delaware corporation ("SEMX" or the "Company"), and Gilbert D. Raker (the
"Executive"), an individual residing at 10 Baldwin Farms South, Greenwich, CT
06831.
WITNESSETH
WHEREAS, the Executive serves as an executive officer of the Company and as such
has had considerable experience in the direct management of the business and
operations of the Company, contributing, in part, to the Company's commercial
success;
WHEREAS, the Company wishes to extend the employment of the Executive as its
President and Chief Executive Officer;
WHEREAS, the Executive is not an at will employee in accordance with the
provisions of the Company's Employee handbook;
WHEREAS, the Executive is willing to accept such employment for the inducements
and upon the terms and conditions hereinafter set forth; and
WHEREAS, the Company has also bargained for the Executive simultaneously to
execute the Company's Intellectual Property Agreement, a copy of which is
annexed hereto as Exhibit A;
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Company and the Executive agree as follows:
Section 1. Employment:
(a) Term of Employment. Upon the terms and subject to the conditions set
forth in this Agreement, the Company hereby employs the Executive, and the
Executive agrees to be employed as the Company's President and Chief
Executive Officer. Subject to earlier termination as provided in Section 4
hereof, the term of the
1
<PAGE>
Executive's employment by the Company under this Agreement (the
"Employment Term"), shall commence as of the date hereof, and shall
continue for an initial term of three (3) years, up to and including July
31, 2002 (the "Initial Term"). The Employment Term shall continue beyond
the Initial Term on a year-to-year basis, which enables the Company and
the Executive to avoid renegotiations as the terms of this Agreement are
automatically extended until modified in writing or one of the parties
hereto terminates this Agreement as provided in section 4, or unless
either party gives written notice of termination to the other not less
than 90 days prior to the expiration of the Employment Term then in
effect. Any such extension of the Employment Term shall be upon the same
terms and conditions as set forth herein for the Employment Term hereunder
except that the Base Salary as hereinafter defined for any extensions
shall be no less than the amount in effect at the end of the previous
term.
(b) Duties. The Executive will serve as the Company's President and Chief
Executive Officer and will perform the services and duties for the Company
designated by the Company's Board of Directors, provided that such duties
are reasonably consistent with Executive's responsibilities and status as
the Company's President and Chief Executive Officer. The Executive shall
also, if elected in accordance with the By-Laws of the Company, serve as a
Director of the Company and/or as an Officer and/or Director of its
affiliates without additional compensation and the Company shall indemnify
Executive to the maximum extent allowable under law for his services as an
Officer and/or Director.
(c) Extent of Services. During the Employment Term, Executive agrees to:
(i) devote a significant amount of his business time, energy and skill to
the business of the Company; (ii) use his best efforts to promote the
interests of the Company; and (iii) discharge such executive and
administrative duties consistent with his position as may be assigned to
him by the Board of Directors. Executive agrees that he will not work for
any other profit making organization in a direct or indirect manner
without the written consent of the Board of Directors of the Company.
Section 2. Compensation
All compensation due Executive under this Agreement shall be payable by the
Company, whether the services rendered are for the Company or one of its
affiliates.
2
<PAGE>
(a) Base Salary. For services rendered by the Executive under this
Agreement, the Company shall pay the Executive an annual salary of Three
Hundred Twelve Thousand ($312,000) Dollars (the "Base Salary"). The Base
Salary shall be earned and shall be payable on the 15th and last day of
each month in accordance with the Company's normal accounting and payroll
practices and the Company may increase, but not decrease, the Base Salary
at any time. Effective August 1, 2000, and August 1, 2001 the Executive's
Base Salary shall be increased at the percentage increase of the Consumer
Price Index or Twelve Thousand ($12,000) Dollars per annum for the
subsequent year, whichever is higher
(b) Bonus.
(i) In addition to Executive's Base Salary, Executive shall be paid an
annual bonus by the Company for a calendar year period (the "Bonus
Period") in such amount (the "Bonus Amount") as may be determined by the
Compensation Committee of the Board of Directors of the Company.
(ii) The Bonus Amount, if any, shall be paid to Executive no later than
fifteen (15) days after the completion of the audit of the Company's
financial statements for the Bonus Period, but no later than March 31.
(iii) The Bonus Amount is due and payable to Executive if and only if
Executive is in the employ of the Company on the last day of the Bonus
Period; provided, however, that the Executive (or his estate) shall be
entitled to a pro rated portion of the Bonus Amount (based on time
elapsed) or a multiple of the Bonus Amount if executive: (a) dies, (b)
becomes disabled, or (c) is terminated without Cause by the Company
(defined below) pursuant to the respective provisions of Section 4, or (d)
exercises the Change of Control provision of Section 4(d) prior to the end
of the Bonus Period.
Section 3. Other Benefits. During the Employment term, the Executive shall be
entitled to the following benefits, which are in addition to, and shall not be
credited against, Executive's Base Salary or Bonus Amount:
(a) vacation time, three (3) weeks annually in accordance with the
Company's policy for executives in effect as determined by the Company
3
<PAGE>
and consistent with the Executive completing his/her responsibilities,
said vacation to accrue if not used in the period earned;
(b) participation in all employee group life, group health and other
fringe benefit programs, including, but not limited to, any executive
officer insurance reimbursement plan, 401(k) plan, incentive compensation,
performance unit, bonus, stock purchase or stock appreciation plans now or
hereafter initiated or maintained by the Company for executive officers of
the Company for which Executive is eligible subject to the right of the
Company to amend or terminate such plans;
(c) reimbursement or direct payment for all software, hardware and home
computer and communication expenses for the Executive including, but not
limited to telephone, fax, computer and internet services and supplies
related thereto.
(d) reimbursement for all of Executive's expenses at the Greenwich Country
Club;
(e) reimbursement for all reasonable and properly documented expenses
incurred or paid by Executive in connection with the performance of his
duties hereunder and in accordance with the general expense reimbursement
policy of the Company then in effect; and
(f) use of a car to be leased by the Company, including automobile
insurance, maintenance expenses, gas, oil and operating expenses and
alternative transportation arrangements when said car is not available.
Section 4. Termination The Employment Term shall terminate upon any of the
following occurrences; provided, however, that upon such termination the
Executive shall be entitled to receive, as and when they would have been
received in the ordinary course if such termination had not occurred, the unpaid
portion of his Base Salary, Bonus and other employee benefits as they shall have
accrued and vested through the date of such termination for services rendered.
(a) Voluntary Termination by the Executive. Except as set forth in Section
4 (d) below, if the Executive voluntarily ceases to be employed by the
Company before the end of the Employment Term, with or without the consent
of the Company, then the Employment Term shall end without
4
<PAGE>
further action by either party hereto and all rights and obligations of
the parties under this Agreement, except those set forth in the
Intellectual Property Protection Agreement shall terminate as of such
date.
(b) Termination for Cause. The Company may not terminate the Employment
Term at any time other than for Cause. For the purposes of this Agreement,
"Cause" shall mean;
(i) conviction of a felony which has a material adverse impact on
the Company, or
(ii) Executive's use of narcotics, illegal drugs or controlled
substances other than as prescribed by a licensed physician.
c) Termination Upon Disability. If, during the Employment Term, the Board
of Directors of the Company reasonably determines that the Executive has
been or will be incapable of fulfilling his obligations hereunder because
of injury or physical or mental illness, for a period of more than four
(4) consecutive months or six (6) months in an aggregate during any period
of twelve (12) consecutive months, the Company may, upon written notice to
the Executive, terminate the Employment Term upon thirty (30) days'
written notice to the Executive, to the extent permitted by applicable
law.
Notwithstanding the termination of the Employment Term hereunder by reason
of disability, the Company shall pay to the Executive his Base Salary for
a period of two and one-half (2 1/2 ) years following the date of such
termination, such payment shall be made to the Executive in one (1) lump
sum payment. In the event of termination based upon disability, the
Company will not take any action which might adversely affect Executive's
disability benefits.
d) Termination by Death. The Employment Term shall automatically terminate
on the date of the Executive's death. Notwithstanding the termination of
the Employment Term hereunder by reason of the Executive's death, the
Company shall maintain a split dollar whole life insurance policy on
Executive in the face amount of Three Hundred Seventy Five Thousand
($375,000) Dollars with a total death benefit of Five Hundred Thousand
($500,000) Dollars naming Nancy Raker as
5
<PAGE>
primary beneficiary of the policy. The Company shall be solely responsible
for making premium payments on said policy and shall receive a death
benefit share upon the Executive's death in accordance with the collateral
assignment section of said policy. The company shall not pledge said
policy or allow any party to have a lien or interest in said policy other
than the designated beneficiary.
Notwithstanding the termination of the Employment Term hereunder by reason
of the death of the Executive, the Company shall pay to the Executive's
estate his Base Salary and prorated Bonus for a period of two (2) years
following the date of such termination, such payment shall be made in one
(1) lump sum. This payment shall be in addition to, and shall not be
credited against, the split dollar life insurance proceeds set forth
above.
(e) Termination after Change in Control. This Agreement may be terminated
by written notice to the Company by the Executive, if there is a Change in
Control. If, after a Change in Control, the Executive terminates this
Agreement within ninety (90) days of the date of such Change in Control,
the Executive will be entitled to the Severance Benefits. The terms Change
in Control, and Severance Benefits are defined in Schedule 4D (attached
hereto).
Section 5. Non-Competition
During the Employment Term and for a period of one (1) year thereafter (the
"Non-Compete Period"), the Executive shall not, directly or indirectly, engage
in, own, manage, operate, join or control, or participate in the ownership,
management, operation or control of any Restricted Enterprise or associate with
any entity, incorporated or otherwise (other than the Company or its
affiliates), which engages or plans to engage in a Restricted Enterprise
anywhere in the United States, whether as a director, officer, employee, agent,
consultant, shareholder, partner, owner, independent contractor or otherwise. As
used herein, a "Restricted Enterprise" shall be any activity that competes with
the business of the Company as constituted or as realistically contemplated
during the Employment term in the United States.
6
<PAGE>
Section 6. General
(i) The Company hereby indemnifies and holds Executive harmless from any
and all expenses or losses, including taxes, incurred by him in
connection with the performance of his duties under this Agreement.
The Company further agrees to pay all legal fees and expenses
related to Executive's enforcing his rights hereunder.
(ii) This Agreement shall be binding upon and inure to the benefit of the
Company and its successors and assigns and shall be binding upon and
inure to the benefit of the Executive and his heirs, executors and
administrators. The Company may not assign this Agreement without
the consent of the Executive and the assignee.
(iii) The waiver by the Company or the Executive of a breach of any
provision of this Agreement by the other party shall not be
construed as a waiver of any subsequent breach of the same provision
or of any other provision of this Agreement.
(iv) All notices, requests, demands and other communications submitted
hereunder shall be in writing and shall be deemed to have been duly
given if delivered by hand or by commercial overnight delivery
service or if mailed by first class, registered mail, return receipt
requested, postage and registry fees prepaid; and addressed; if to
the Executive, to the address set forth in the first paragraph
hereof, and if to the Company, to 1 Labriola Court, Armonk, New
York, 10504, attention Chairman of the Compensation Committee of the
Board of Directors.
(v) This Agreement shall be construed and enforced in accordance with,
and governed by, the laws of the State of New York without regard to
the conflict of laws principles thereof.
(vi) This Agreement, together with the Intellectual Property Protection
Agreement and the Employees' Stock Option Plan Agreement
incorporates the entire understanding of the parties hereto with
respect to the subject matter hereof and supersedes all prior
agreements relating to such subject matter. The invalidity of any
section, provision or portion of this Agreement shall not affect the
validity of any other section, provision or portion of this
7
<PAGE>
Agreement, and each such section, provision or portion shall be
enforced to the full extent permitted by law. This Agreement may not
be modified or amended, or any term or provision hereof waived or
discharged, except by a written instrument signed by the party
against whom such amendment, modification, waiver, or discharge is
sought to be enforced. The headings of this Agreement are for the
purposes of reference only and shall not limit or otherwise affect
the meaning hereof. This Agreement may be executed in several
counterparts, all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have dully executed this Agreement as of
the day and year first above written.
Dated: July 28, 1999 SEMX Corporation
- -----------------------------
/s/ Gilbert D. Raker By /s/ John U. Moorhead II
- ----------------------------- ---------------------------------
Executive John U. Moorhead II,
Chairman of the Compensation
Committee of the Board of Directors
8
EXHIBIT 10.68
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of August 1, 1999, between SEMX Corporation, a
Delaware corporation ("SEMX"), Polese Company, Inc., a California corporation
("Polese Company" or the "Company") and Frank J. Polese (the "Executive"), an
individual residing at 1185 Novara Street, San Diego, CA 92107.
WITNESSETH
WHEREAS, the Company wishes to continue to employ the Executive as it's
President and Chief Executive Officer respectively, an executive who should have
influence in the direct management of the business and should contribute, in
part, to SEMX's and the Company's commercial success.
WHEREAS, the Executive is willing to accept such employment for the inducements
and upon the terms and conditions hereinafter set forth; and
WHEREAS, the Company has also bargained for the Executive simultaneously to
execute the Company's Intellectual Property Agreement, a copy of which is
annexed hereto as Exhibit A.
NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, SEMX, the Company and the Executive agree as
follows:
Section 1. Employment:
(a) Term of Employment. Upon the terms and subject to the conditions set
forth in this Agreement, the Company hereby employs the Executive, and the
Executive agrees to be employed as the Company's President and Chief
Executive Officer. Subject to earlier termination as provided in Section 4
hereof, the term of the Executive's employment by the Company under this
Agreement (the "Employment Term"), shall commence as of the date hereof,
and shall continue for an initial term of five (5) years, up to and
including June 30, 2004 (the "Initial Term"). The Employment Term shall
continue beyond the Initial Term on a year-to-year basis, which enables
the Company and the Executive to avoid renegotiations as the terms of this
Agreement are automatically extended until modified in writing or one of
the parties hereto terminates this Agreement as provided in section 4, or
unless either party gives written notice of termination to the other of
not less than 60 days prior to the expiration of the Employment Term
1
<PAGE>
then in effect. Any extension shall be upon the same terms and conditions
as set forth herein or as subsequently modified or amended for the
Employment Term hereunder except that the Base Salary as hereinafter
defined for any extensions shall be the amount in effect at the end of the
previous term.
(b) Duties. The Executive will serve as the Company's President and Chief
Executive Officer and will perform the services and duties for the Company
designated by SEMX's Chief Executive Officer and the Company's Chairman or
his designee (the "Supervisor"), provided that such duties are reasonably
consistent with Executive's responsibilities and status as the Company's
President and Chief Executive Officer. The Executive shall also, if
elected in accordance with the By-Laws of SEMX and the Company serve as an
Officer and/or Director of SEMX or the Company or their affiliates without
additional compensation and SEMX and the Company shall indemnify Executive
to the maximum extent allowable under law for his services as an Officer
and/or Director.
(c) Extent of Services. During the Employment Term, Executive agrees to:
(i) devote all of his/her business time, energy and skill to the business
of the Company; (ii) use his/her best efforts to promote the interests of
the Company; and (iii) discharge such executive and administrative duties
consistent with his/her position as may be assigned to him/her by the
Supervisor. Executive agrees that he/she will not work for any other
profit making organization in a direct or indirect manner without the
written consent of his Supervisor.
In consideration of the Executive agreeing to serve as an Officer of SEMX,
and his agreement to conduct additional assignments on behalf of SEMX, in
the event that the Executive is not paid his salary by the Company within
three business days of when Executive is entitled to same, at any time
during the period of this contract, and Executive gives written notice of
such failure to SEMX, SEMX guarantees the prompt and full payment to
Executive of all payments of salary not paid by the Company.
Section 2. Compensation
All compensation due Executive under this Agreement shall be payable by the
Company, whether the services rendered are for SEMX, the Company or one of their
affiliates.
(a) Base Salary. For services rendered by the Executive under the
Agreement, the Company shall pay the Executive an annual salary of Two
2
<PAGE>
Hundred Eighteen Thousand ($218,000), dollars (the "Base Salary"). The
Base Salary shall be earned and shall be payable in accordance with the
Company's normal accounting and payroll practices and the Company may
increase, but not decrease, the Base Salary at any time.
(b) Bonus.
(i)In addition to Executive's Base Salary, Executive may be paid an annual
bonus by the Company for a calendar year period (the "Bonus Period") in
such amount (the "Bonus Amount") as may be determined in the sole and
absolute discretion of the Compensation Committee of the Board of
Directors of SEMX.
(ii) The Bonus Amount, if any, shall be paid to Executive no later than
fifteen (15) days after the completion of the audit of SEMX and the
Company's financial statements for the Bonus Period.
(iii) The Bonus Amount is due and payable to Executive if and only if
Executive is in the employ of the Company on the last day of the Bonus
Period; provided, however, that the Executive (or his/her estate) shall be
entitled to a pro rated portion of the Bonus Amount (based on time
elapsed) if executive: (a) dies, (b) becomes disabled (c) is terminated
without Cause by the Company (defined below), or (d) exercises the Change
of Control provision of Section 4(d) prior to the end of the Bonus Period.
Executive shall not be entitled to any Bonus Amount for a calendar year in
which Executive did not perform services for the Company or any affiliate
regardless of the reason therefore or if the Board of Directors of SEMX
determines that performance targets established by it with sole discretion
(subject to a test of reasonableness) were not accomplished for the period
in question.
Section 3. Other Benefits. During the Employment term, the Executive shall be
entitled to the following benefits:
3
<PAGE>
(a) vacation time, three (3) weeks annually in accordance with the
Company's policy for executives in effect as determined by the Company
and consistent with the Executive completing his/her responsibilities;
(b) participation in all employee group life, group health and other
fringe benefit programs, including, but not limited to, any 401K plan,
incentive compensation, performance unit, bonus, stock purchase or stock
appreciation plans now or hereafter initiated or maintained by the Company
for executive officers of the Company for which Executive is eligible
subject to the right of the Company to amend or terminate such plans;
(c) reimbursement for all reasonable and properly documented expenses
incurred or paid by Executive in connection with the performance of
his/her duties hereunder and in accordance with the general expense
reimbursement policy of the Company then in effect; and
(d) use of a car to be leased by the Company (said lease payment not to
exceed $1,500.00 per month) or $1,500.00 per month car allowance.
Section 4. Termination The Employment Term shall terminate upon any of the
following occurrences; provided, however, that upon such termination the
Executive shall be entitled to receive, as and when they would have been
received in the ordinary course if such termination had not occurred, the unpaid
portion of his Base Salary and other employee benefits as they shall have
accrued and vested through the date of such termination for services rendered.
(a) Voluntary Termination by the Executive. Except as set forth in Section
4 (d) below, if the Executive voluntarily ceases to be employed by the
Company before the end of the Employment Term, with or without the consent
of the Company, subject to paragraph 4D, then the Employment Term shall
end without further action by either party hereto and all rights and
obligations of the parties under this Agreement, except those set forth in
the Intellectual Property Protection Agreement shall terminate as of such
date.
(b) Termination for Cause. The Company may terminate the Employment Term
at any time for Cause. For the purposes of this Agreement, "Cause" shall
mean;
4
<PAGE>
(i) the failure of Executive to perform his duties in all material
respects provided that prior to termination Executive has been given
an opportunity to remedy such dissatisfaction within thirty (30)
days or, if such dissatisfaction is not subject to cure, the
repetition of the act or omission which dissatisfied his/her
Supervisor is repeated by Executive after Executive received such
notice;
(ii) conviction of (A) any serious crime or serious offense
involving misappropriation of money or other property of the
Company, or (B) any felony; or
(iii) Executive's use of narcotics, illegal drugs or controlled
substances other than as prescribed by a licensed physician.
(iv) violation of the terms and conditions for employment as set
forth in the Company's Employee Handbook.
c) Termination Upon Disability. If, during the Employment Term, the Board
of Directors of SEMX reasonably determines that the Executive has been or
will be incapable of fulfilling his obligations hereunder because of
injury or physical or mental illness, for a period of more than three (3)
consecutive months or six (6) months in an aggregate during any period of
twelve (12) consecutive months, the Company may, upon written notice to
the Executive, terminate the Employment Term upon thirty (30) days'
written notice to the Executive, to the extent permitted by applicable
law.
(d) Termination after Change in Control. This Agreement may be terminated
by the Executive, if there is a Change in Control. If, after a Change in
Control, the Executive terminates this Agreement, the Executive will be
entitled to the Severance Benefits. The terms Change in Control, and
Severance Benefits are defined in Schedule 4D (attached hereto).
Section 5. Non-Competition
During the Employment Term and for a period of one (1) year thereafter (the
"Non-Compete Period"), the Executive shall not, directly or indirectly, engage
in, own, manage,
5
<PAGE>
operate, join or control, or participate in the ownership, management, operation
or control of any Restricted Enterprise or associate with any entity,
incorporated or otherwise (other than the Company or its affiliates), which
engages or plans to engage in a Restricted Enterprise anywhere in the United
States, whether as a director, officer, employee, agent, consultant,
shareholder, partner, owner, independent contractor or otherwise. As used
herein, a "Restricted Enterprise" shall be any activity that competes with the
business of the Company as constituted or as realistically contemplated during
the Employment term in the United States.
Section 6. General
(i) This Agreement shall be binding upon and inure to the benefit of
SEMX and the Company and its successors and assigns and shall be
binding upon and inure to the benefit of the Executive and his
heirs, executors and administrators. If SEMX or the Company assigns
this Agreement, the assignee shall be required to expressly assume
all obligations of SEMX and the Company under this Agreement.
(ii) The waiver by SEMX or the Company or the Executive of a breach
of any provision of this Agreement by the other party shall not be
construed as a waiver of any subsequent breach of the same provision
or of any other provision of this Agreement.
(iii) All notices, requests, demands and other communications
submitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered by hand or by commercial overnight
delivery service or if mailed by first class, registered mail,
return receipt requested, postage and registry fees prepaid; and
addressed; if to the Executive, to the address set forth in the
first paragraph hereof, and if to SEMX, to 1 Labriola Court, Armonk,
New York, 10504, attention Chairman, and if to the Company, 10103
Carroll Canyon Road, San Diego, CA 92131, attention Chairman.
(iv) This Agreement shall be construed and enforced in accordance
with, and governed by, the laws of the State of New York without
regard to the conflict of laws principles thereof.
(v) This Agreement together with the Intellectual Property
Protection Agreement, the Employees' Stock Option Plan Agreement,
the Amended
6
<PAGE>
Stock Option Plan Agreement, the Company's Employee Handbook, and
the Asset Purchase Agreement dated April 3, 1999 incorporates the
entire understanding of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements relating
to such subject matter. The invalidity of any section, provision or
portion of this Agreement shall not affect the validity of any other
section, provision or portion of this Agreement, and each such
section, provision or portion shall be enforced to the full extent
permitted by law. This Agreement may not be modified or amended, or
any term or provision hereof waived or discharged, except by a
written instrument signed by the party against whom such amendment,
modification, waiver, or discharge is sought to be enforced. The
headings of this Agreement are for the purposes of reference only
and shall not limit or otherwise affect the meaning hereof. This
Agreement may be executed in several counterparts, all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have dully executed this Agreement as of
the day and year first above written.
Dated: July 28, 1999 SEMX Corporation
- -----------------------------
/s/ Frank J. Polese By /s/ Gilbert D. Raker
- ----------------------------- -----------------------------
Executive Gilbert D. Raker, Chairman
Polese Company, Inc.
By /s/ Gilbert D. Raker
-----------------------------
Gilbert D. Raker, Chairman
7
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0
0
<COMMON> 638
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<TOTAL-LIABILITY-AND-EQUITY> 60,182
<SALES> 22,705
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