SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT made this 16th day of January, 2003 among Xxxxx X.
Xxxxxx ("Xxxxxx"), the Xxxxxx Company, Inc. (the "Company") and SEMX Corporation
("SEMX").
BACKGROUND
WHEREAS:
A. SEMX and the Company have executed an agreement with Schwarzkopf
Technologies Corporation ("Schwarzkopf") of even date herewith, pursuant to
which SEMX will sell all of the issued and outstanding stock of the Company to
Schwarzkopf (the "Stock Purchase Agreement");
X. Xxxxxx has heretofore entered into an employment agreement with the
Company and SEMX dated August 1, 1999 (the "Employment Agreement");
X. Xxxxxx has heretofore entered into an asset purchase agreement dated
April 30, 1993 with Semiconductor Packaging Materials Co., Inc. now known as
SEMX Corporation (the "Xxxxxx Asset Sale Agreement");
X. Xxxxxx has claimed that the closing of the Stock Purchase Agreement
constitutes a change of control as that term is defined in the Employment
Agreement and an event that entitles him to additional payment under the Xxxxxx
Asset Sale Agreement;
E. The Company and SEMX have asserted that no sums are due Xxxxxx by
reason of the closing of the Stock Purchase Agreement;
X. Xxxxxx, the Company and SEMX all believe it is in their best
interests
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and in the best interests of the employees and creditors of the Company and the
shareholders of SEMX to close the transactions contemplated by the Stock
Purchase Agreement;
G. Accordingly, Xxxxxx, the Company and SEMX have agreed to compromise
and settle all claims among and between them conditioned upon the closing of the
Stock Purchase Agreement on the terms and conditions hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. CONDITIONS PRECEDENT. This Agreement is conditioned upon the consent
of PNC Bank, National Association ("PNC") and the closing of the Stock Purchase
Agreement in the form executed. If the Stock Purchase Agreement is amended after
the date hereof and the result of such amendment is to reduce the purchase price
to be paid to SEMX for the stock of the Company, then SEMX may terminate this
Settlement Agreement upon written notice to Xxxxxx no later than five (5)
business days after such amendment has been executed, but in all events prior to
the Closing of the Stock Purchase Agreement. If the Stock Purchase Agreement is
terminated for any reason whatsoever including, without limitation, by reason of
the default of SEMX, the Company or Xxxxxx, then this Agreement shall
automatically terminate. If PNC does not consent to the payment of the
consideration to Xxxxxx set forth herein or if the Stock Purchase Agreement is
terminated or if SEMX exercises its option to terminate this Settlement
Agreement as above provided, then this Settlement Agreement shall be deemed to
be void ab initio.
2. CONSIDERATION. (a) Upon the closing of the Stock Purchase Agreement,
SEMX agrees to:
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(i) Pay to Xxxxxx the sum of Seventy Five Thousand ($75,000)
Dollars in settlement of his claims for additional payment under the Xxxxxx
Asset Sale Agreement;
(ii) Pay to Xxxxxx when finally determined and paid to SEMX by
Schwarzkopf pursuant to the provisions of the Stock Purchase Agreement the
amount, if any, by which the Closing Net Worth of the Company exceeds the Target
Net Worth of the Company, as such terms are defined in the Stock Purchase
Agreement;
(iii) Deliver to Xxxxxx, in settlement of his claims for
additional payment under the Xxxxxx Asset Sale Agreement, AS IS and WHERE IS
free and clear of all liens and encumbrances the equipment described in Schedule
A attached hereto (the "Equipment"); and
(iv) Assign and transfer to Xxxxxx its right, title and interest
in Phoenix Home Life Term Policy No. 2,663,389 and Term Policy No. 2,680,730,
contingent on Polese assuming responsibility for paying all premiums hereinafter
due thereon, including the premium payment due January 13, 2003 on Policy No.
2,663,389 as per Exhibit A annexed hereto.
(b) Upon the closing of the Stock Purchase Agreement, Xxxxxx
agrees to execute and deliver a voting agreement with SEMX and Xxxxxxx Xxxxx in
the form attached hereto as Exhibit B.
(c) Upon the closing of the Stock Purchase Agreement, Xxxxxx
agrees to execute and deliver to the Company a release in favor of SEMX, the
Company, and ACI Capital America Fund, LP ("ACI") in the form attached hereto as
Exhibit C excepting therefrom the obligations of SEMX under this Settlement
Agreement
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and any rights of indemnification that Xxxxxx is entitled to as an officer and
director of the Company or SEMX pursuant to any written agreement for
indemnification or the Bylaws or Certificate of Incorporation of the Company or
SEMX, subject to such limitations and qualifications provided therein or by law.
(d) Upon the closing of the Stock Purchase Agreement, the Company
and SEMX agree to (i) execute and deliver a general release in favor of Xxxxxx
in the form attached hereto as Exhibit D excepting therefrom the obligations of
Xxxxxx under this Settlement Agreement, and (ii) cause ACI to deliver to Xxxxxx
a general release in favor of Xxxxxx in the form of Exhibit E.
(e) Within 30 days after the closing of the Stock Purchase
Agreement, SEMX will deliver to Xxxxxx drafts of the entire set of minutes of
the meetings of the Board of Directors of SEMX (the "Board") held during
calendar year 2002 up to and including the date when Xxxxxx ceased to be a
member of the Board. Xxxxxx shall have 14 days from his receipt of such draft
minutes to give notice to SEMX in writing regarding any comments or objections
that he may have with respect to any of such minutes. In the events that: (i)
Xxxxxx delivers timely notice to SEMX of any comments or objections that he may
have to any of such minutes; and (ii) the Board refuses, for any reason, to
cause the objected to minutes to be modified to conform to Xxxxxx'x comments
and/or eliminate his objections, Xxxxxx'x written comments and/or objections
shall be duly noted in the "as approved" minutes, those written comments and/or
objections will be appended thereto; and a complete set of the "as approved"
minutes bearing the signature of the Secretary of SEMX shall be provided to
Xxxxxx as soon as they have been filed in SEMX's minute book
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3. General.
(a) This Settlement Agreement and its terms may not be introduced
into evidence nor may it be used or disclosed in any manner whatsoever in any
court, arbitration, or other legal proceeding, except, if this Settlement
Agreement becomes effective, to enforce the provisions of this Agreement.
(b) This Settlement Agreement is not an admission of liability by
any party and is entered into solely for the purpose of avoiding further
controversy, litigation and expense.
(c) All agreements, covenants, representations and warranties of the
parties hereto concerning the subject matter hereof are contained in this
Settlement Agreement. In entering into this Settlement Agreement, no party has
relied upon any other agreements, covenants, representations or warranties,
whether express or implied, whether oral or written that are not expressly set
forth in this Settlement Agreement and no such other agreements, covenants,
representations or warranties exist. All prior and contemporaneous
conversations, negotiations, possible and alleged agreements, representations,
covenants and warranties concerning the subject matter are merged herein.
(d) This Settlement Agreement shall not be altered, amended,
modified or otherwise changed in any respect or particular whatsoever, except by
a writing duly executed by the parties affected by any such amendment and each
of the parties hereby acknowledges and agrees that it will make no claim at any
time that this Settlement Agreement has been orally altered or modified in any
respect whatsoever.
(e) The parties hereto agree, understand, covenant and represent
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that they were represented by competent counsel of their own choosing to review
the terms and provisions of this Settlement Agreement prior to its execution.
Furthermore, the parties represent that they have entered into this Settlement
Agreement without any undue influence, freely and of their own will, and shall
raise no defenses in respect to the validity of this Settlement Agreement. The
individuals executing this Settlement Agreement on behalf of any entity further
represent that they have full and complete authority to sign this Settlement
Agreement on behalf of their respective parties and that they have the authority
to bind the respective parties to the terms of this Settlement Agreement.
This Settlement Agreement and all other documents referred to herein
shall be governed by, construed and enforced in accordance with the laws of the
State of New York applicable to documents negotiated, executed and to be fully
performed within that jurisdiction, without regard to its conflict of law
provisions.
(f) If for any reason any provision of this Settlement Agreement is
determined to be invalid or unenforceable, the remaining provisions of this
Settlement Agreement nevertheless shall be construed, performed and enforced as
if the invalidated or unenforceable provision had not been included in the text
of the Settlement Agreement.
(g) For all purposes this Settlement Agreement shall be deemed to
have been jointly drafted by the parties.
(h) This Settlement Agreement and all obligations herein shall be
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binding upon the parties and their heirs, personal representatives, successors
and assigns and shall, together with the rights and remedies herein, inure to
the benefit of the parties and their heirs, personal representatives, successors
and assigns.
(i) The parties agree to bear their own costs, including legal fees,
incurred in the negotiation and execution of this Settlement Agreement.
(j) This Settlement Agreement may be executed in counterparts. If
this Settlement Agreement is executed in counterparts, each counterpart shall be
deemed an original and all counterparts so executed shall constitute one
Settlement Agreement binding on all of the parties hereto, notwithstanding that
all of the parties are not signatories to the same counterpart.
(k) A fax transmission of this Settlement Agreement, bearing the
signature of a party to this Settlement Agreement, shall have the same force and
effect as an original thereof.
(l) The parties agree to execute such other and further documents as
may be required in order to carry out the terms of this Settlement Agreement.
Xxxxxx agrees to cooperate with the Company and SEMX in defending against claims
arising out of the release of ammonia from a tank located on the Company's
premises and in prosecuting third party claims of the Company as well as
business interruption claims of the Company arising out of said incident and the
Company or, upon the closing of the Stock Purchase Agreement, SEMX, agrees to
reimburse Xxxxxx for all reasonable expenses incurred by him in connection
therewith.
[Signatures appear on the immediately succeeding page]
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IN WITNESS WHEREOF, the parties have executed this Settlement Agreement
the year and date first above written.
------------------------------------
Xxxxx X. Xxxxxx
SEMX CORPORATION
By:
--------------------------------
Name:
XXXXXX COMPANY, INC.
By:
--------------------------------
Name:
The undersigned spouse of Xxxxx X. Xxxxxx hereby consents to the provisions of
this Settlement Agreement, and waives any and all rights she may have under,
pursuant to or in connection with the Community Property Provisions of the
California Civil Code.
------------------------------------
Xxxx Xxxxxx
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SCHEDULE A - Equipment to be delivered to Xxxxx Xxxxxx as per Settlement
Agreement Dated January 16, 2003 between Xxxxx Xxxxxx, the Xxxxxx
Company, and SEMX Corporation
Net Book Value
At 12/31/02
-----------
1. Spitfire Gyro-Matic Lapping Machine $ 9,597
Model No. - 48PNLC
Serial No. - 9103-48PNLC-C73
2. Mitsubishi EDM $ 6,293
Xxxxx Xx. - XXX00XX
Xxxxxx Xx. - 0000X000
3. Xxxx CNC Machining Center $ 29,900
Xxxxx Xx. - XX-0
Xxxxxx Xx. - 00000
