-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RmTjDy9Y73y4MGWZsQU1GOV31JDbfK8H7m0HTRsaiMYUvJvsgl/5jhneEDSDzYS4 W6Tw7aO+OCfCMF+ao14fUA== /in/edgar/work/20000616/0000950136-00-000853/0000950136-00-000853.txt : 20000919 0000950136-00-000853.hdr.sgml : 20000919 ACCESSION NUMBER: 0000950136-00-000853 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000601 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000616 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEMX CORP CENTRAL INDEX KEY: 0000880858 STANDARD INDUSTRIAL CLASSIFICATION: [3460 ] IRS NUMBER: 133584740 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10938 FILM NUMBER: 656134 BUSINESS ADDRESS: STREET 1: 1 LABRIOLA COURT CITY: ARMONK STATE: NY ZIP: 10504 BUSINESS PHONE: 9146985353 MAIL ADDRESS: STREET 1: 431 FAYETTE AVE CITY: MAMARONECK STATE: NY ZIP: 10543 FORMER COMPANY: FORMER CONFORMED NAME: SEMICONDUCTOR PACKAGING MATERIALS CO INC DATE OF NAME CHANGE: 19930328 8-K 1 0001.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) June 1, 2000 SEMX CORPORATION ---------------- (Exact Name of Registrant as Specified in its Charter) Delaware 1-10938 13-3584740 - ------------------------- ----------------- ---------------------- (State or Other (Commission (I.R.S. Employer Jurisdiction of Incorporation) File Number) Identification No.) 1 Labriola Court Armonk, New York (914) 273-5500 10504 - ------------------------- ----------------- -------------------- (Address of Principal (Registrant's Telephone No., (Zip Code) Executive Offices) Including Area Code) ITEM 5. OTHER EVENTS On June 1, 2000, the Registrant sold $10,000,000 of six (6%) percent cumulative, 5-year redeemable, Series B Preferred Stock to an investor group led by ACI Capital Co. Inc., an integrated investment firm. The Registrant also issued 5-year warrants to purchase a total of 1,000,000 shares of the Registrant's common stock at an initial exercise price of $10 per share. One year after closing, the exercise price of the warrants will be set at the lower of (i) $10 per share or (ii) the lowest average trading price for any twenty (20) consecutive trading days during the preceding 12 months, but in no event will the exercise price be set below $7 per share. The Agreement between the Registrant and the investor group provides for rights of registration relating to the shares of common stock underlying the warrants. Additionally, the investor group has the right to appoint two (2) directors to the Registrant's Board of Directors. The Registrant intends to use the proceeds of the private financing to, in part, introduce new products in the wireless infrastructure, fiber optics and internet server markets and to pursue growth opportunities. ITEM 7(c). EXHIBITS 4.1 Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series B Preferred Stock; 4.2 First Amendment to the Rights Agreement between Registrant and Continental Stock Transfer & Trust Company dated June 1, 2000; 4.3 Preferred Stock Purchase Agreement between Registrant and ACI Capital American Fund LP and Exeter Venture Lenders LP dated as of June 1, 2000; 4.4 Form of Warrant; 4.5 Registration Rights Agreement. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: June 15, 2000 SEMX CORPORATION By: /s/ ------------------------------- Mark A. Koch Secretary and Controller EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 4.1 Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series B Preferred Stock; 4.2 First Amendment to the Rights Agreement between Registrant and Continental Stock Transfer & Trust Company dated June 1, 2000; 4.3 Preferred Stock Purchase Agreement between Registrant and ACI Capital American Fund LP and Exeter Venture Lenders LP dated as of June 1, 2000; 4.4 Form of Warrant; 4.5 Registration Rights Agreement. EX-4.1 2 0002.txt CERTIFICATE OF DESIGNATION Exhibit 4.1 CERTIFICATE OF DESIGNATION, NUMBER, POWERS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND OTHER RIGHTS OF SERIES B PREFERRED STOCK OF SEMX CORPORATION SEMX Corporation (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware, hereby certifies that, pursuant to the provisions of Section 141 of the General Corporation Law of the State of Delaware, by a duly authorized committee of its Board of Directors, adopted the following resolution on June 1, 2000: WHEREAS, the Board of Directors of the Corporation is authorized by the Certificate of Incorporation, as amended, to issue up to 1,000,000 shares of preferred stock in one or more Series and, in connection with the creation of any series, to fix by the resolutions providing for the issuance of shares the powers, designations, preferences and relative, participating, optional or other rights of the Series and the qualifications, limitations or restrictions thereof; and WHEREAS, it is the desire of the Board of Directors of the Corporation, pursuant to such authority, to authorize and fix the terms and provisions of a series of preferred stock and the number of shares constituting such Series; NOW, THEREFORE, BE IT RESOLVED, that there is hereby authorized a series of preferred stock on the terms and with the provisions herein set forth on Annex A attached to this resolution. /s/ ------------------------------------- Name: Gilbert D. Raker Title: Chairman, President and CEO ATTEST: /s/ - ------------------------------------- Name: Mark Koch Title: Secretary ANNEX A SERIES B PREFERRED STOCK The powers, designations, preferences and relative, participating, optional or other rights of the Series B Preferred Stock of SEMX Corporation (the "Corporation") are as follows: 1. DESIGNATION AND AMOUNT. This series of preferred stock shall be designated as "Series B Preferred Stock." The Series B Preferred Stock shall have $.10 par value per share. The number of authorized shares constituting this series shall be 100,000 shares. Shares of the Series B Preferred Stock shall have a stated value of $100.00 per share (the "Stated Value"). 2. DIVIDENDS. (a) Right to Receive Dividends. Holders of the Series B Preferred Stock shall be entitled to receive, when and as declared by the Board of Directors of the Corporation (the "Board of Directors"), to the extent permitted by the General Corporation Law of the State of Delaware, cumulative dividends at the rate, in the form, at the times and in the manner set forth in this Section 2. Such dividends shall accrue on any given share from the date of issuance of such share and shall accrue from day to day at the rate specified in Section 2(c) below whether or not earned or declared. (b) Form of Dividend. All dividend payments made with respect to the Series B Preferred Stock shall be made in cash out of funds legally available for such purpose. (c) Dividend Rate. The dividend rate on the Series B Preferred Stock shall be 6% per annum (such rate, as applicable, the "Dividend Rate") of the Stated Value per share plus all accrued and unpaid dividends as of the most recent Dividend Payment Date (as defined below) (after giving effect to payments made on such date), subject to the following adjustments: (i) Upon the occurrence and during the continuance of any Triggering Event (as defined in Section 6 hereof) other than the failure to pay dividends on the Series B Preferred Stock as set forth in Section 6(b), the Dividend Rate shall be the lesser of (A)18% per annum or (B) the highest annual percentage rate then permissible by law or applicable regulations. (ii) If the Corporation at any time shall fail for a second time or a third time (which need not be consecutive) to pay any dividend on any Series B Preferred Stock on any Dividend Payment Date (including any unpaid dividends from previous Dividend Payment Dates) in accordance with this Section 2 for any reason, including but not limited to, that such payment is prohibited by applicable law or any loan document to which the Corporation is a party (including without limitation that certain Revolving Credit, Term Loan and Security Agreement dated November 1, 1999, among PNC Bank, National Association, the Corporation and certain of the Corporation's affiliates, as the same may be amended from time to time (the "PNC Loan Agreement")) or the Board of Directors elects not to declare or pay such dividend, and such failure shall not be cured within a period of 30 days after such Dividend Payment Date, then from and after such Dividend Payment Date through the date such failure is fully cured, the Dividend Rate shall be the lesser of (A) LIBOR (as defined below) plus 600 basis points or (B) the highest annual percentage rate then permissible by law or applicable regulations. For purposes of this Section 2(c), "LIBOR" shall mean the six month annual rate reported in the index called the "LONDON INTERBANK OFFERED RATES (LIBOR)" in The Wall Street Journal listing of "Money Rates"on the applicable Dividend Payment Date (or if The Wall Street Journal is not published on the such Dividend Payment Date, then on the last date it was published prior to such Dividend Payment Date). (iii) If the Corporation at any time shall fail for a fourth time or any additional times (which need not be consecutive) to pay any dividend on any Series B Preferred Stock on any Dividend Payment Date (including any unpaid dividends from previous Dividend Payment Dates) in accordance with this Sec tion 2 for any reason, including but not limited to, that such payment is prohibited by applicable law or any loan document to which the Corporation is a party (including without limitation the PNC Loan Agreement) or the Board of Directors elects not to declare or pay such dividend, and such failure shall not be cured within a period of 30 days after such Dividend Payment Date, then from and after such Dividend Payment Date through the date such failure is fully cured, the Dividend Rate shall be the lesser of (A) LIBOR (as defined below) plus 1,300 basis points or (B) the highest annual percentage rate then permissible by law or applicable regulations. (iv) During any such period that the Corporation is obligated to pay an adjusted dividend rate under both Section 2(c)(i) and either Section 2(c)(ii) or (iii), then the Dividend Rate during the period of such concurrence shall be the higher of the two adjusted rates. (d) Payment of Dividends. Dividends shall be payable semi-annually in arrears, when and as declared by the Board of Directors, on March 31 and September 30 of each year, commencing September 30, 2000 (each such semiannual payment date, a "Dividend Payment Date"), except that if any such date is a Saturday, Sunday or legal holiday then such dividend shall be payable on the first immediately succeeding calendar day which is not a Saturday, Sunday or legal holiday. Dividends shall accrue on each share of Series B Preferred Stock from the date of issuance of such share and, after payment of a dividend as required hereunder, from and after each such Dividend Payment Date based on the number of days elapsed and a 365-day year. The dividend payable on the first Dividend Payment Date with respect to any share of Series B Preferred Stock shall be the pro rata portion of the Dividend Rate based upon the 2 number of days from and including the date of issuance, up to and including such first Dividend Payment Date and a 365-day year. Each dividend shall be paid to the holders of record of shares of the Series B Preferred Stock as they appear on the books of the Corporation on such record date, which record date shall be not more than 45 days nor fewer than 10 days preceding the respective Dividend Payment Date, as shall be fixed by the Board of Directors. (e) Dividend Preference. Dividends on the Series B Preferred Stock shall be payable before any dividends or distributions or other payments shall be paid or set aside for payment upon the common stock, $.10 par value, of the Corporation (the "Common Stock"), Series A Preferred Stock, $.10 par value, or any other stock ranking on liquidation or as to dividends or distributions junior to the Series B Preferred Stock (any such stock, together with the Common Stock and Series A Preferred Stock, being referred to hereinafter as "Junior Stock"), other than a dividend, distribution or payment paid solely in shares of Common Stock or other Junior Stock that is not Redeemable Stock (as defined below). If at any time dividends on the outstanding Series B Preferred Stock at the rate set forth herein shall not have been paid or declared and set apart for payment with respect to all preceding and current periods, the amount of the deficiency shall be fully paid or declared and set apart for payment, before any dividend, distribution or payment shall be declared or paid upon or set apart for the shares of any other class or series of Junior Stock, other than a dividend, distribution or payment paid solely in shares of Common Stock or other Junior Stock that is not Redeemable Stock. The term "Redeemable Stock" shall mean any equity security that by its terms or otherwise is required to be redeemed for cash at any time or is redeemable for cash at the option of the holder thereof at any time. If dividends on the Series B Preferred Stock are in arrears, in making any dividend payment on account of such arrears, the Corporation shall make payments ratably upon all outstanding shares of the Series B Preferred Stock. 3. LIQUIDATION PREFERENCE. In the event of any bankruptcy, liquidation, dissolution or winding up of the Corporation, either voluntary or involuntary, each holder of Series B Preferred Stock at the time thereof shall be entitled to receive, prior and in preference to any distribution of any of the assets or funds of the Corporation to the holders of the Common Stock or other Junior Stock by reason of their ownership of such stock, an amount per share of Series B Preferred Stock equal to the Stated Value plus any accrued and unpaid dividends to the date of liquidation. If the assets and funds legally available for distribution among the holders of Series B Preferred Stock shall be insufficient to permit the payment to the holders of the full aforesaid preferential amount, then the assets and funds shall be distributed ratably among holders of Series B Preferred Stock in proportion to the number of shares of Series B Preferred Stock owned by each holder. If the assets and funds of the Corporation available for distribution to stockholders upon any bankruptcy, liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, shall be insufficient to permit the payment to holders of the full aforesaid preferential amount, the holders of Series B Preferred Stock shall share ratably (and 3 ratably as to cash, in-kind or other distributions) in any distribution of assets of the Corporation in proportion to the full respective preferential amounts to which they are entitled. 4. VOTING RIGHTS. In addition to any voting rights provided elsewhere herein or in the Corporation's Certificate of Incorporation, as amended, as it may be further amended or restated from time to time (the "Certificate of Incorporation"), and any voting rights provided by law, for so long as Warrants have not been exercised with respect to more than 75% of the total number of shares of Common Stock issuable upon the exercise of all the initially issued Warrants (as adjusted for stock splits, reverse stock splits, stock dividends and similar events), holders of shares of Series B Preferred Stock shall have the following voting rights: (a) Election of Directors. (i) Subject to the terms hereof, ACI Capital America Fund, LP ("ACI"), as designee of the holders of the Series B Preferred Stock, shall have the right (which right, together with the other rights of ACI set forth in this Section 4(a), may be assigned to ACI Capital Co., Inc. or an affiliate thereof), at any time on or after the day after the first date of the issuance of Series B Preferred Stock (the "Issuance Date"), to elect two directors (in addition to the directors elected by holders of Common Stock or any other capital stock of the Corporation). (ii) Any director elected by ACI shall be referred to herein as a "Series B Preferred Director." The initial terms of the two directors to be appointed pursuant to Sec tion 4(a)(i) will commence upon their election by ACI and shall expire at the 2001 annual meeting of stockholders of the Corporation. Upon expiration of the initial terms of such Series B Preferred Directors, so long as the Series B Preferred Stock is outstanding, ACI shall have the right, subject to Section 4(a)(vi), to elect two Series B Preferred Directors to replace such directors in the same manner described above in Section 4(a)(i). A Series B Preferred Director so elected shall hold office for a term expiring at the next annual meeting of stockholders following the election of such director. Notwithstanding the foregoing, a Series B Preferred Director elected under Section 4(a)(i) shall serve until such Series B Preferred Director's successor is duly elected and qualified or until such director's earlier removal as provided in Section 4(a)(iii) or death or resignation and, in the event a vacancy occurs, a replacement Series B Preferred Director shall be selected as provided in Section 4(a)(i). (iii) A Series B Preferred Director may be removed by, and shall not be removed except by, the vote of ACI. (iv) The Corporation shall at all times reserve and keep available a sufficient number of vacant seats on the Board of Directors solely for the purpose of enabling the ACI to designate Series B Preferred Directors as provided in this Section 4(a). (v) Each Series B Preferred Director shall be entitled to receive from the Corporation director fees, fees for committee membership (if applicable) and expense 4 reimbursements consistent with the Corporation's established policies for compensating its other outside directors. (vi) The right of ACI to elect two directors pursuant to this Section 4(a) shall terminate at such time as the initial holders of Series B Preferred Stock and their affiliates (as such term is defined in Rule 501 under the Securities Act of 1933) no longer hold in the aggregate at least 25% of the initially issued shares of Series B Preferred Stock and at such time the term of any Series B Preferred Director shall immediately terminate. (b) Certain Corporate Actions. Until such time as the initial holders of Series B Preferred Stock and their affiliates (as such term is defined in Rule 501 under the Securities Act of 1933) no longer hold in the aggregate at least 25% of the initially issued shares of Series B Preferred Stock the Corporation shall not, and shall not permit any of its subsidiaries to, without first obtaining the prior written approval of ACI (which right to consent may be assigned to ACI Capital Co., Inc. or an affiliate thereof): (i) redeem or repurchase any securities other than the redemption of shares of Series B Preferred Stock in accordance with the terms hereof; (ii) issue any securities other than (A) Junior Stock that is not Redeemable Stock or (B) a Permitted Issuance (as defined in Section 8(a)); (iii) incur, or allow any subsidiary to incur, indebtedness for borrowed money including, without limitation, any capitalized lease obligations, accounts receivable financing or other asset-backed financing, any guarantee or other similar contingent obligation or any lease financing (whether a capitalized lease, operating lease, pursuant to a sale leaseback arrangement or otherwise), which would cause the Corporation's ratio of the aggregate amount of such included items of indebtedness on any date to Consolidated EBITDA for the most recently ended 12 full months prior to such date to exceed 3.5, but excluding the incurrence of indebtedness the proceeds of which are intended to be and are immediately used to redeem all of the outstanding shares of Series B Preferred Stock and to repurchase all of the outstanding Warrants in accordance with the terms thereof. All issued and outstanding shares of preferred stock (valued at the amount of the liquidation preference of such preferred stock) shall be included in the Corporation's aggregate indebtedness for purposes of calculating said ratio; For purposes of this Section 4(b)(iii), "Consolidated EBITDA" means, with respect to any period, the consolidated earnings before interest, taxes, depreciation and amortization for the Corporation and its 5 consolidated subsidiaries for such period, determined in accordance with generally accepted accounting principles, consistently applied; (iv) declare or pay or set aside for payment any dividend or distribution or other payment (other than under the Rights Agreement or a dividend or distribution paid solely in shares of Common Stock or other Junior Stock that is not Redeemable Stock upon the Common Stock or upon any other Junior Stock); (v) engage in any transaction with an affiliate, director or officer of the Corporation or any of its subsidiaries; provided, however, that the consent of ACI required by this Section 4(b)(v) shall not apply to any compensation or severance arrangements with affiliates, directors or officers of the Corporation except for any proposed arrangement that would result in the increase of Gilbert D. Raker's annual compensation (excluding stock options) in any one year by more than $500,000 or would provide for any severance payment to Mr. Raker in an amount in excess of $500,000 more than the severance to which he would be entitled to receive as of the Issuance Date or to inter-company loans, guarantees or management charges by the Company to its wholly-owned subsidiaries; (vi) create an executive or other committee of the Board of Directors of the Corporation or any subsidiary or adopt rules governing the election of members of such committee; (vii) authorize or permit the purchase by the Corporation or any of its subsidiaries of assets or of equity or other interests in any other entity in one or a series of transactions if: (i) the Corporation's and its subsidiaries' investments in such assets or equity exceed 50 percent of the total assets of the Corporation and its subsidiaries consolidated as of the end of the most recently completed fiscal year; or (ii) the increase in the Corporation's and its subsidiaries' income from continuing operations before income taxes, extraordinary items and cumulative effect of a change in accounting principles as a result of the purchase of such assets or equity exceeds 50 percent of such income of the Corporation and its subsidiaries consolidated for the most recently completed fiscal year; (viii) authorize or permit the assignment, transfer, conveyance, lease or other disposal of any of the material properties or assets of the Corporation or its subsidiaries other than sales of inventory in the ordinary course of business if: (i) the aggregate fair market value of such transferred material properties or assets exceeds 50 percent of the fair market value of the total assets of the Corporation and its subsidiaries consolidated as of the end of the most recently completed fiscal year; or (ii) the Corporation's and its subsidiaries' income from continuing operations before income taxes, 6 extraordinary items and cumulative effect of a change in accounting principles derived from such transferred material properties or assets exceeded 50 percent of the total such income of the Corporation and its subsidiaries consolidated for the most recently completed fiscal year; (ix) engage in any liquidation, dissolution, voluntary bankruptcy or similar events; (x) adopt any amendment, alteration or change to the Corporation's Certificate of Incorporation (including any Certificate of Designation made a part thereof) or Bylaws that would adversely affect the rights, privileges or preferences of the holders of the Series B Preferred Stock or the Warrants; (xi) change in any material respect the nature of the business of the Corporation and its subsidiaries taken as a whole, which business is to provide materials and services to the electronics and semi-conductor industries; or (xii) agree to do any of the foregoing. (c) Voting with Common Stockholders. Except with respect to the right of holders of Common Stock to vote for members of the Board of Directors or as otherwise required by law, each holder of shares of Series B Preferred Stock shall be entitled to the number of votes equal to (i) the number of shares of Common Stock into which such shares of Series B Preferred Stock theoretically would be converted on the record date for the vote or consent of stockholders or, if no record date is established, at of the date such vote is taken or any consent of stockholders solicited, were each share of Series B Preferred Stock convertible into the number of shares of Common Stock determined by dividing the Stated Value, by a presumed current market price per share of $10.00 (subject to equitable adjustments from time to time for any stock splits, reverse stock splits, stock dividends, reorganizations or other recapitalizations), minus (ii) (A) the aggregate number of shares of Common Stock, if any, that have been issued as of the applicable record date of any given vote or consent pursuant to the exercise of Warrants (as adjusted for stock splits, reverse stock splits, stock dividends and similar events) multiplied by (B) a fraction, the numerator of which is the number of shares of Series B Preferred Stock held by such holder and the denominator of which is the total number of shares of Series B Preferred Stock outstanding, and shall have voting rights and powers equal to the voting rights and powers of the Common Stock. The holder of each share of Series B Preferred Stock shall be entitled to notice of any stockholders' meeting in accordance with the Corporation's Bylaws and applicable law and shall vote with holders of the Common Stock upon any matter submitted to a vote of stockholders, except for the elections of directors and those matters required by law or this Certificate of Designation to be submitted to a class vote. Fractional votes by the holders of Series B Preferred Stock shall not, however, be permitted and any fractional voting rights resulting from the above formula (after aggregating all shares into which shares of Series B Preferred Stock held by each holder theoretically could be converted under this Section 4(c)) shall be rounded down to the nearest whole number. 7 (d) Conflict with By-Laws. In the event of a conflict or inconsistency between the By-Laws of the Corporation and any term of this Certificate of Designation, including, but not limited to this Section 4, the terms of this Certificate of Designation shall prevail. 5. REDEMPTION. (a) Mandatory Redemption. On the fifth anniversary of the Issuance Date, the Corporation shall redeem all, but not less than all, of the outstanding shares of Series B Preferred Stock for a per share redemption price consisting of cash in an amount equal to the Stated Value of such share, plus any accrued but unpaid dividends on such share. (b) Optional Early Redemption. At any time prior to the fifth anniversary of the Issuance Date, the Corporation, at its sole option, may redeem all, but not less than all, of the outstanding shares of Series B Preferred Stock for a per share redemption price consisting of cash in an amount equal to the Stated Value of such share, plus any accrued but unpaid dividends on such share, plus a prepayment penalty equal to a percentage of the aggregate Stated Value of the shares being redeemed, based on the following chart: Date of Redemption Prepayment Penalty ------------------ ------------------ On or prior to 1st Anniversary of Issuance Date 5% After 1st Anniversary of Issuance Date and on or Prior to 2nd Anniversary of Issuance Date 4% After 2nd Anniversary of Issuance Date and on or Prior to 3rd Anniversary of Issuance Date 3% After 3rd Anniversary of Issuance Date and on or Prior to 4th Anniversary of Issuance Date 2% After 4th Anniversary of Issuance Date and on or Prior to 5th Anniversary of Issuance Date 1% 8 (c) Redemption Upon Change of Control. (i) If a Change of Control occurs, then the Corporation, subject to the holders' right to override provided below, shall redeem all, but not less than all, of the outstanding shares of Series B Preferred Stock for a per share redemption price consisting of cash in an amount equal to the Stated Value of such share, plus any accrued but unpaid dividends on such share, such redemption to occur not less than 10 nor more than 30 days following the date of the Change of Control Notice (defined below) and in the event of a Change of Control described in paragraphs (C), (D) and (E) of the definition of "Change of Control" below, on or prior to the date of the Change of Control. At least 20 days prior to the occurrence of any Change of Control or, if such early notice is not reasonably practicable, then as many days prior to or as soon after the occurrence of such Change of Control as is reasonably practicable, the Corporation shall send written notice of such occurrence to each holder of shares of Series B Preferred Stock by mail, overnight courier or personal delivery (the "Change of Control Notice"). The Change of Control Notice shall state the nature and salient terms of the Change of Control, and shall inform such holder of the pending redemption of such holder's shares of Series B Preferred Stock and its right to elect to override the Corporation's redemption obligation pursuant to the following sentence. In the event that, within 10 days following the date of the Change of Control Notice, the holders of record of a majority of the outstanding shares of Series B Preferred Stock send written notice to the Corporation of their election to override the Corporation's redemption obligation under this Section 5(c), then the Corporation shall not redeem any of the outstanding shares of Series B Preferred Stock pursuant to this Section 5(c) by reason of the occurrence of the Change of Control identified in the Change of Control Notice. In such event, however, this Section 5(c) shall continue to apply with respect to any future Change(s) of Control. (ii) For the purposes of this Section 5(c), "Change of Control" means the occurrence of one or more of the following events: (A) any person or entity or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of persons or entities (in each case, a "Beneficial Owner"), in a single transaction or through a series of related transactions, shall have become the beneficial owner of a majority (by voting power or otherwise) of the securities of the Corporation ordinarily having the right to vote in the election of directors; (B) during any consecutive three-year period commencing on or after the Issuance Date, individuals who at the beginning of such period constituted the Board of Directors (together with any directors who are members of such Board Directors on the Issuance Date, any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Corporation was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; 9 (C) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Corporation to any Beneficial Owner (other than any wholly owned subsidiary of the Corporation); (D) the merger or consolidation of the Corporation with or into another corporation or the merger of another corporation into the Corporation with the effect that immediately after such transaction any Beneficial Owner shall have become the beneficial owner of securities of the surviving corporation of such merger or consolidation representing a majority of the combined voting power of the outstanding securities of the surviving corporation ordinarily having the right to vote in the election of directors; or (E) the adoption of a plan leading to the liquidation or dissolution of the Corporation. (d) Redemption Upon Triggering Event. In the event of the occurrence of any Triggering Event set forth in Section 6, then on any date following the occurrence of such Triggering Event, each holder of shares of Series B Preferred Stock may require that the Corporation redeem all, but not less than all, of such holder's outstanding shares of Series B Preferred Stock for a per share redemption price consisting of cash in an amount equal to the Stated Value of such share, plus any accrued but unpaid dividends on such share, payable at the holder's option. (e) Notice of Redemption. Notice of redemption pursuant to Section 5(a) or (b) shall be given by the Corporation by first class mail, postage prepaid, mailed not less than 15 nor more than 45 days prior to the redemption date to such holder's address as the same appears on the books of the Corporation. Each such notice shall state: (i) the redemption date; (ii) the number of shares of Series B Preferred Stock to be redeemed; (iii) the subsection of this Section 5 pursuant to which shares are to be redeemed; (iv) the amount of cash constituting the redemption price and the formula for determination of the redemption price; (v) the place or places where certificates for such shares of Series B Preferred Stock are to be surrendered for payment of the redemption price; and (vi) that dividends on the shares of Series B Preferred Stock to be redeemed will cease to accrue on the redemption date. (f) Cessation of Dividends on Shares of Series B Preferred Stock Redeemed; Shares No Longer Outstanding. Notice having been mailed pursuant to Section 5(e), from and after the close of business on the redemption date (unless default shall be made by the Corporation in providing money for the payment of the redemption price), dividends on the shares of Series B Preferred Stock redeemed shall cease to accrue, and the shares of Series B Preferred Stock redeemed shall no longer be deemed to be outstanding, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. 10 (g) Status of Redeemed Shares of Series B Preferred Stock. Any shares of Series B Preferred Stock which have been redeemed shall be retired and thereafter have the status of authorized but unissued shares of preferred stock, without designation as to series until such shares are once more designated as part of a particular series by the Board of Directors or a duly authorized committee thereof. 6. TRIGGERING EVENTS. Any of the following actions or events shall constitute a "Triggering Event" for purposes hereof: (a) Failure to Redeem. The Corporation shall fail to redeem any Series B Preferred Stock when required in accordance with Section 5 or shall otherwise fail for any reason to comply with any other term of Section 5 hereof. (b) Failure to Pay Dividends. The Corporation shall fail to pay any dividend on any Series B Preferred Stock on any Dividend Payment Date in accordance with Section 2 for any reason, including but not limited to, that such payment is prohibited by applicable law or any loan document to which the Corporation is a party (including without limitation the PNC Loan Agreement) or the Board of Directors elects not to declare or pay such dividend, or shall otherwise violate any term of Section 2 and such failure shall not be cured within a period of 30 days after such Dividend Payment Date or violation. Notwithstanding the above, the first three such failures to pay dividends shall not constitute a Triggering Event. (c) Failure to Obtain Consent. The Corporation shall enter into any transaction or take any action required to be consented to by any party pursuant to Section 4(b) without obtaining the requisite consent. (d) Warrant Agreement. The Corporation shall (i) fail for any reason to issue Common Stock as required under the Warrants upon exercise of any Warrant then held by any of the holders of Series B Preferred Stock or any of their respective affiliates; or (ii) so long as any holders of Series B Preferred Stock or any of their respective affiliates hold Warrants, fail to make any anti-dilution adjustment required thereunder and such failure to make such adjustment shall continue for a period of 30 days after notice from any affected holder of Series B Preferred Stock. (e) Registration Rights Agreement. The Corporation shall fail in any material respect to comply with the Registration Rights Agreement dated as of the Issuance Date, among the Corporation and the parties listed on Exhibit A thereto as "Purchasers" and their permitted successors and assigns, and such failure shall continue for a period of 30 days after notice from any such holder. (f) Preferred Stock Purchase Agreement. The Corporation shall fail to comply with any of its covenants or agreements under the Preferred Stock Purchase Agreement and such failure shall continue for a period of 30 days after notice from the Purchaser[s] (as 11 defined in the Preferred Stock Purchase Agreement) or the representations made under Sections 4.01 (Organization) (first sentence only), 4.02 (Capitalization), 4.03 (Authorization, etc.) or 4.04(a) (Consents and Approvals) of the Preferred Stock Purchase Agreement shall prove to have been incorrect or misleading in any material respect when made pursuant thereto or any other material representation made under the Preferred Stock Purchase Agreement shall prove to have been incorrect or misleading in any substantial material respect when made. (g) Rights Agreement. The occurrence of any event that shall cause any person or entity to be deemed an "Acquiring Person" or constitute a "Triggering Event" under that certain Rights Agreement dated as of June 15, 1999, between the Corporation and Continental Stock Transfer & Trust Company, Rights Agent (the "Rights Agreement"). (h) Nasdaq Listing. The Common Stock of the Corporation at any time shall fail to be quoted on the Nasdaq Stock Market or other National Stock Exchange. 7. REMEDIES. (a) Upon the occurrence and during the continuance of any Triggering Event, the Dividend Rate on all outstanding Series B Preferred Stock shall be increased as provided in Section 2 without any action on the part of any holder of the Series B Preferred Stock or the Corporation. (b) Upon the occurrence of any Triggering Event, each holder of shares of Series B Preferred Stock shall have the option to require that the Corporation redeem such shares in accordance with Section 5(d). (c) The Corporation stipulates that the remedies at law of each holder of Series B Preferred Stock in the event of any Triggering Event or threatened Triggering Event or otherwise or other failure in the performance of or compliance with any of the terms hereof are not and will not be adequate and that, to the fullest extent permitted by law, such terms may be specifically enforced by a decree for the specific performance of any agreement contained herein or by an injunction against a violation of any of the terms hereof or otherwise without requiring any holder to post a bond or other security except to the extent required by applicable law. (d) Any holder of Series B Preferred Stock shall be entitled to recover from the Corporation the reasonable attorneys' fees and expenses incurred by such holder in connection with any Triggering Event or enforcement by such holder of any obligation of the Corporation hereunder. (e) No failure or delay on the part of any holder of Series B Preferred Stock in exercising any right, power or remedy hereunder or under applicable law or otherwise shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy hereunder or thereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law or otherwise. 12 8. PREEMPTIVE RIGHTS. (a) In the event (and on each occasion) that, after the date hereof, the Corporation shall decide to undertake an issuance of additional shares of Common Stock or any rights, warrants or options to purchase Common Stock or any securities convertible into Common Stock ("New Securities"), other than a Permitted Issuance (as defined below), the Corporation shall give each holder of the Series B Preferred Stock written notice (an "Offer Notice") of the Corporation's decision, describing the type and amount of New Securities to be issued, the price per share at which the New Securities are to be issued, and the general terms upon which the Corporation has decided to issue the New Securities. Each holder of the Series B Preferred Stock shall have thirty (30) days from the date on which the Corporation shall give the written Offer Notice to agree to purchase such New Securities for the price per share and upon the general terms specified in the Offer Notice, and in compliance with Section 8(c) hereof, by giving written notice to the Corporation and stating therein the quantity of New Securities to be purchased by such holder of the Series B Preferred Stock. If, in connection with such a proposed issuance of New Securities, a holder of the Series B Preferred Stock shall for any reason fail or refuse to give such written notice to the Corporation within such period of thirty (30) days, such holder of the Series B Preferred Stock shall, for all purposes of this Section 8, be deemed to have refused (in that particular instance only) to purchase any of such New Securities and to have waived (in that particular instance only) all rights of such holder under this Section 8 to purchase any of such New Securities. "Permitted Issuance" shall mean (i) the issuance of shares of Common Stock pursuant to an underwritten public offering; (ii) the issuance of shares of Common Stock upon an exercise of Warrants; (iii) the issuance of shares of Common Stock pursuant to the Stock Option Plan; (iv) the issuance of up to 100,000 shares of Common Stock in connection with the Company's acquisition of the assets of Advanced Packaging Concepts, Inc.; (v) the issuance of New Securities to any one or more persons or entities which, following such issuance, together with their affiliates, hold collectively less than five percent (5%) of the Fully Diluted Outstanding shares of Common Stock; and (vi) the issuance of up to a total of 60,000 shares of Common Stock pursuant to warrants issued to VM Equity Partners, Inc. and Rodman and Renshaw as finders fees in connection with the transactions related to this Certificate of Designation. (b) In the event that a holder of the Series B Preferred Stock shall fail or refuse to exercise in full their preemptive rights within said thirty (30) day period, the Corporation shall have forty-five (45) days thereafter to sell the quantity of New Securities which such holder of the Series B Preferred Stock did not agree to purchase pursuant to Section 8(c), at a price per share and upon general terms no more favorable to the purchasers thereof than specified in the Corporation's Offer Notice to the holder(s) of the Series B Preferred Stock. In the event the Corporation has not sold the New Securities within said period of forty-five (45) days, the Corporation will not thereafter issue or sell any New Securities without first offering such securities to the holder(s) of the Series B Preferred Stock in the manner provided by the foregoing provisions of this Section 8. 13 (c) Each holder of the Series B Preferred Stock shall be entitled to purchase the number of shares of New Securities equal to the product obtained by multiplying the total number of New Securities proposed to be issued by a fraction, the numerator of which is the sum of (i) the number of shares of Common Stock which such holder would be entitled to receive if such holder's shares of Series B Preferred Stock theoretically were converted into Common Stock on the date of the issuance of the New Securities at the rate described in Section 4(c), plus (ii) the number of shares of Common Stock which may be acquired by such holder of the Series B Preferred Stock upon full exercise of such holder's Warrants, and the denominator of which is the total number of Fully Diluted Outstanding (as defined below) shares of Common Stock immediately prior to the issuance of the New Securities. "Fully Diluted Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all shares of Common Stock outstanding at such date and all shares of Common Stock issuable in respect of options or warrants to purchase, or securities convertible into, shares of Common Stock outstanding on such date which would be deemed outstanding in accordance with generally accepted accounting principles in the United States of America as in effect at the time for purposes of determining book value or net income per share. (d) Notwithstanding the foregoing, preemptive rights may not be assigned to any transferee if the exercise of such right by the transferee would, in the reasonable judgment of the Board of Directors of the Corporation after consultation with counsel to the Corporation, make an exemption from the registration requirements of the Securities Act of 1933, or applicable state securities laws, with respect to the offer and sale of the New Securities, unavailable. (e) The Corporation will not, at any time after the effective date of this Agreement, enter into any agreement or contract (whether written or oral) which is inconsistent in any respect with the preemptive rights granted by the Corporation to the holder(s) of the Series B Preferred Stock pursuant to this Section 8. 9. NO TRANSFERS TO COMPETITORS. No holder of Series B Preferred Stock shall at any time sell, assign, encumber, hypothecate, pledge, convey in trust, gift or transfer by bequest, or otherwise effect a transfer or disposition of any kind, whether voluntary or by operation of law, directly or indirectly (other than in a sale to the public pursuant to a registration statement filed with, and declared effective by, the Securities and Exchange Commission under the Securities Act of 1933) any shares of Series B Preferred Stock to any person or entity that such holder knows, after reasonable inquiry, is engaged in a business that competes in any material way with the business of the Corporation or any of its subsidiaries (other than a holder of less than 5% of the public securities of any such person or entity). 14 EX-4.2 3 0003.txt FIRST AMENDMENT TO THE SEMX CORPORATION RIGHTS AGREEMENT Exhibit 4.2 FIRST AMENDMENT TO THE SEMX CORPORATION RIGHTS AGREEMENT This amendment amends the Rights Agreement entered into between SEMX CORPORATION and CONTINENTAL STOCK TRANSFER AND TRUST COMPANY, dated as of June 15, 1999 (the "Rights Agreement"). BACKGROUND WHEREAS: A. The Corporation entered into the Rights Agreement to issue Rights to the holders of its Common Shares; B. The Corporation is simultaneously with the execution of this First Amendment to the SEMX Corporation Rights Agreement entering into a Preferred Stock Purchase Agreement among the Corporation, ACI Capital American Fund, LP, and Exeter Venture Lenders, LP, (collectively, the "Warrant Holders") dated June 1, 2000 (the "Preferred Stock Purchase Agreement"); C. Pursuant to the Preferred Stock Purchase Agreement the Corporation is issuing to the Warrant Holders simultaneously herewith warrants (the "Warrants") to purchase in the aggregate one million (1,000,000) Common Shares; D. The Corporation desires to provide to the Warrant Holders the same protection afforded to its Common Share Holders under the Rights Agreement; and E. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Rights Agreement. Accordingly, in consideration of the premises and the mutual agreements set forth, the parties agree as follows: 1. AMENDMENT TO SECTION 1(A). Clause (iii) of Section 1(a) of the Rights Agreement is hereby amended by adding to the end thereof the following: "or were issued pursuant to the Warrants." 2. AMENDMENT TO SECTION 3(A). Section 3(a) of the Rights Agreement is hereby amended to read in its entirety as follows: "(a) Until the earlier of (i) the close of business on the tenth Business Day after the Shares Acquisition Date, or (ii) the close of business on the tenth Business Day after the date of the commencement of, or first public announcement of the intent to commence, a tender or exchange offer by any Person (other than an Exempt Person) if upon consummation thereof, any such Person other than an Exempt Person would be the Beneficial Owner of 15% or more of the Common Shares then outstanding (the earlier of such dates, including any such date which is after the date of this Agreement and prior to the issuance of the Rights, being herein referred to as the "Distribution Date"): (x) the Rights will be evidenced (subject to the provisions of paragraph (b) of this Section 3) by the certificates for Common Shares registered in the names of the holders thereof or Warrant certificates, which Warrant certificates were issued pursuant to the Preferred Stock Purchase Agreement to the Warrant Holders (which certificates for Common Shares or Warrants shall be deemed also to be Right Certificates) and not by separate Right Certificates, and (y) the Rights will be transferable only in connection with the transfer of the underlying Common Shares or Warrants (including a transfer to the Corporation). As soon as practicable after the Distribution Date, the Corporation will prepare and execute and the Rights Agent will countersign, and the Rights Agent, if requested by the Corporation, will send, by first-class, insured, postage prepaid mail, or, if requested by or on behalf of a holder, shall otherwise deliver, to each record holder of Common Shares as of the close of business on the Distribution Date, and each holder of the Warrants at the address of such holder shown on the records of the Corporation, one or more Right Certificates, in substantially the form of Exhibit B hereto (the "Right Certificates"), evidencing one Right for each Common Share or one Right for each Common Share which may be purchased pursuant to the terms of each of the Warrants, as the case may be, so held, subject to adjustment. In the event that an adjustment in the number of Rights per Common Share has been made pursuant to Section 11(p) hereof, at the time of distribution the Corporation shall make the necessary and appropriate rounding adjustments (in accordance with Section 14(a) hereof) so that Right Certificates evidencing only whole numbers of Rights are distributed and cash is paid in lieu of fractional Rights. As of and after the Distribution Date, the Rights will be evidenced solely by such Right Certificates. The Rights Certificates issued in respect of the Warrants shall have printed on them a legend stating: 2 'These Rights are subject to forfeiture as provided in Section 18 of the Warrant pursuant to which these Rights were issued, a copy of which Warrant may be examined at the principal office of the Corporation.'" 3. AMENDMENT TO SECTION 3(C). Section 3(c) of the Rights Agreement is hereby amended to read in its entirety as follows: "(c) Rights shall be issued in respect of all Common Shares and Warrants that shall become outstanding after the Record Date but prior to the earlier of the Distribution Date or the Expiration Date, except as otherwise provided in Section 11(p). Certificates representing such Common Shares and Warrants (and certificates delivered pursuant to Sections 6 and 7(d)) shall also be deemed to be Right Certificates, and shall have impressed on, printed on, written on or otherwise affixed to them the following legend: This certificate also evidences and entitles the holder hereof to certain Rights as set forth in a Rights Agreement between SEMX Corporation and Continental Stock Transfer & Trust Company, as Rights Agent, dated as of June 15, 1999 as the same may be amended from time to time (the "Rights Agreement"), the terms of which are hereby incorporated herein by reference and a copy of which is on file at the principal executive offices of SEMX Corporation and available for inspection by the holder of this certificate. Under certain circumstances set forth in the Rights Agreement, such Rights will be evidenced by separate certificates and will no longer be evidenced by this certificate. SEMX Corporation will mail to the holder of this certificate a copy of the Rights Agreement without charge within five days after receipt of a written request therefor. Under certain circumstances set forth in the Rights Agreement, Rights issued to, or held by, any Person who is, was or becomes an Acquiring Person or any Affiliate or Associate thereof (as such terms are defined in the Rights Agreement) and any subsequent holder of such Rights may become null and void. In no event may the Rights be exercised after June 29, 2009. With respect to such certificates containing the foregoing legend, until the Distribution Date (or the earlier Expiration or Final Expiration Date), the Rights associated with the Common Shares and Warrants represented by such certificates shall be evidenced by such certificates alone and registered holders of Common Shares and Warrants shall also be the registered holders of the associated Rights, and the transfer of any such certificate shall also constitute the transfer of the Rights associated with the Common Shares and Warrants represented thereby. In 3 the event that the Corporation purchases or otherwise acquires any Common Shares after the Record Date but prior to the Distribution Date, any Rights associated with such Common Shares shall be deemed cancelled and retired so that the Corporation shall not be entitled to exercise any Rights associated with the Common Shares which are no longer outstanding." 4. AMENDMENT TO SECTION 11(P). Section 11(p) of the Rights Agreement is hereby amended to read in its entirety as follows: "(p) Anything in this Agreement to the contrary notwithstanding, in the event that the Corporation shall at any time after the date of this Agreement and prior to the Distribution Date (i) pay a dividend on the outstanding Common Shares payable in Common Shares, (ii) subdivide the outstanding Common Shares, (iii) combine the outstanding Common Shares into a smaller number of shares, or (iv) issue any shares of its capital stock in a reclassification of the outstanding Common Shares, the number of Rights associated with each Common Share then outstanding, or issued or delivered thereafter but prior to the Distribution Date, shall be proportionately adjusted so that the number of Rights thereafter associated with each Common Share or Warrant following any such event (including other Common Shares and Warrants issued after the date of such event, but prior to the Distribution Date and including Common Shares which may be purchased pursuant to the Warrants) shall equal the result obtained by multiplying the number of Rights associated with each Common Share and Warrant immediately prior to such event by a fraction the numerator of which shall be the total number of Common Shares outstanding immediately prior to the occurrence of the event and the denominator of which shall be the total number of Common Shares outstanding immediately following the occurrence of such event." 5. AMENDMENT TO SECTION 16 OF THE RIGHTS AGREEMENT. Section 16 of the Rights Agreement is hereby amended to read in its entirety as follows: SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by accepting the same consents and agrees with the Corporation and the Rights Agent and with every other holder of a Right that: (a) prior to the Distribution Date, the Rights will be transferable only in connection with the transfer of the Common Shares or Warrants; (b) after the Distribution Date, the Right Certificates are transferable only on the registry books of the Rights Agent if surrendered at the principal office of the Rights Agent, duly endorsed or accompanied by a proper instrument of transfer; and 4 (c) the Corporation and the Rights Agent may deem and treat the person in whose name the Right Certificate (or, prior to the Distribution Date, the associated Common Shares or Warrants certificate) is registered as the absolute owner thereof and of the Rights evidenced thereby (notwithstanding any notations of ownership or writing on the Right Certificates or the associated Common Shares or Warrants certificate made by anyone other than the Corporation or the Rights Agent) for all purposes whatsoever, and neither the Corporation nor the Rights Agent shall be affected by any notice to the contrary. (d) notwithstanding anything in this Agreement to the contrary, neither the Corporation nor the Rights Agent shall have any liability to any holder of a Right or other Person as a result of its inability to perform any of its obligations under this Agreement by reason of any preliminary or permanent injunction or other order, decree or ruling issued by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission, or any statute, rule, regulation or executive order promulgated or enacted by any governmental authority, prohibiting or otherwise restraining performance of such obligation; provided, however, the Corporation must use its best efforts to have any such order, decree or ruling lifted or otherwise overturned as soon as possible. 6. RATIFICATION. Except as hereby amended, the Rights Agreement is hereby ratified and confirmed. IN WITNESS WHEREOF, the parties have executed this Agreement on the 1st day of June, 2000. SEMX CORPORATION By: /s/ Gilbert D. Raker -------------------------------- Name: Gilbert D. Raker ------------------------------ Title: Chairman, President and CEO ----------------------------- CONTINENTAL STOCK TRANSFER & TRUST COMPANY By: /s/ William F. Seegraber -------------------------------- Name: William F. Seegraber ------------------------------ Title: Vice President ----------------------------- 5 EX-4.3 4 0004.txt PREFERRED STOCK PURCHASE AGREEMENT Exhibit 4.3 PREFERRED STOCK PURCHASE AGREEMENT BETWEEN SEMX CORPORATION AND ACI CAPITAL AMERICA FUND, LP AND EXETER VENTURE LENDERS, L.P. DATED AS OF JUNE 1, 2000 TABLE OF CONTENTS PAGE ARTICLE I AUTHORIZATION, PURCHASE AND SALE OF PREFERRED SHARES......................1 1.01 Authorization of the Preferred Shares and the Warrants..............1 1.02 Purchase and Sale of Preferred Shares...............................1 (a) The Closing....................................................1 (b) Use of Proceeds................................................2 (c) Allocation of Purchase Price...................................2 ARTICLE II PREFERRED SHARE CERTIFICATES; CERTAIN TERMS OF THE PREFERRED SHARES....................................................................2 2.01 Form of Preferred Shares............................................2 2.02 Replacement of Preferred Share Certificates.........................2 2.03 Registration; Transfer; Registration of Transfer and Exchange of Preferred Shares.................................................3 2.04 Taxes...............................................................4 ARTICLE III CONDITIONS TO CLOSING.....................................................4 3.01 Conditions to Purchaser's Obligations...............................4 (a) Representations and Warranties.................................4 (b) Performance....................................................4 (c) All Proceedings to be Satisfactory.............................4 (d) Legal Opinion..................................................4 (e) Necessary Consents.............................................5 (f) No Material Adverse Effect.....................................5 (g) Payment of Fees and Expenses...................................5 (h) No Injunctions, Restraining Order or Adverse Litigation........5 (i) Side Letter....................................................6 (j) Issuance of Warrants...........................................6 (k) Rights Plan....................................................6 (l) Documentation at Closing.......................................6 3.02 Conditions to the Company's Obligations.............................7 (a) Representations and Warranties.................................7 (b) Purchasers' Certificates.......................................7 (c) Injunction.....................................................7 i PAGE ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.............................8 4.01 Organization........................................................8 4.02 Capitalization......................................................8 4.03 Authorization; Validity of Agreement; Company Action................9 4.04 Consents and Approvals; No Violations; Licenses....................10 4.05 SEC Reports and Financial Statements...............................10 4.06 No Undisclosed Liabilities.........................................11 4.07 Absence of Certain Changes.........................................12 4.08 Employee Benefit Plans; ERISA; Labor...............................12 4.09 Litigation.........................................................12 4.10 No Default; Compliance with Applicable Laws........................13 4.11 Taxes..............................................................13 4.12 Environmental Matters..............................................13 4.13 Insurance..........................................................14 4.14 Transactions with Affiliates.......................................14 4.15 Patents and Other Intangible Assets................................14 4.16 Brokers............................................................15 4.17 Nasdaq Approvals...................................................16 4.18 Rights Plan Not Triggered..........................................16 4.19 Certain Payments...................................................16 ARTICLE V COVENANTS OF THE COMPANY.................................................16 5.01 Financial and Business Information.................................16 5.02 Notice of Certain Events...........................................18 5.03 Public Announcement................................................18 5.04 Expiration of Covenants............................................19 ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS........................................................19 6.01 Representations by Purchaser.......................................19 ARTICLE VII CERTAIN SECURITIES LAW MATTERS; RESTRICTIONS ON TRANSFER.................19 7.01 Representations by Purchasers......................................19 7.02 (a) Restrictions on Transfer......................................20 (b) Securities Legend.............................................20 ii PAGE (c) Termination of Restriction....................................20 ARTICLE VIII MISCELLANEOUS............................................................21 8.01 Indemnification....................................................21 8.02 No Waiver: Cumulative Remedies.....................................21 8.03 Amendments, Waiver and Consents....................................22 8.04 Notices............................................................22 8.05 Expenses...........................................................23 8.06 Binding Effect; Assignment.........................................23 8.07 Survival of Representations and Warranties.........................23 8.08 Severability.......................................................23 8.09 Prior Agreements...................................................23 8.10 Governing Law......................................................24 8.11 Arbitration........................................................24 8.12 Headings...........................................................24 8.13 Counterparts.......................................................24 8.14 Further Assurances.................................................24 iii Index of Defined Terms PAGE Agreement..................................................................1, 10 Basic Documents................................................................1 CERCLA........................................................................14 Certificate of Designation.....................................................1 Closing........................................................................1 environment...............................................................13, 14 Environmental Law ............................................................13 Exchange Act..................................................................11 GAAP..........................................................................11 Governmental Entity...........................................................10 Indemnified Liabilities.......................................................21 Indemnitees...................................................................21 Material Adverse Effect........................................................5 Materials of Environmental Concern............................................14 Person.........................................................................3 Preferred Share................................................................1 Purchase Price.................................................................1 release.......................................................................14 Restricted Securities.........................................................20 SEC...........................................................................10 Securities.....................................................................1 Subsidiary.....................................................................5 Voting Debt....................................................................8 Warrant Shares.................................................................1 iv PREFERRED STOCK PURCHASE AGREEMENT THIS PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is made as of June 1, 2000, between SEMX CORPORATION, a Delaware corporation (the "Company"), and the parties listed on the Schedule of Purchasers attached to this Agreement as Exhibit A (each hereinafter individually referred to as a "Purchaser" and collectively referred to as the "Purchasers"). ARTICLE I AUTHORIZATION, PURCHASE AND SALE OF PREFERRED SHARES 1.01 Authorization of the Preferred Shares and the Warrants. Pursuant to its Certificate of Incorporation, as amended, the Company has established a class of preferred stock designated as "Series B Preferred Stock" and authorized the issuance of up to100,000 shares of such preferred stock (each such share, a "Preferred Share") in accordance with the terms of the Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series B Preferred Stock, attached as Exhibit B hereto (the "Certificate of Designation"). The Company has authorized the issuance and sale to the Purchasers of an aggregate amount of 100,000 Preferred Shares and the issuance to the Purchasers of warrants (the "Warrants") to purchase an aggregate amount of 1,000,000 shares of the Company's common stock, $.10 par value (the "Common Stock"). The terms of the Warrants are set forth in the form of Warrant attached as Exhibit C hereto. The shares of Common Stock issuable upon exercise of the Warrants are referred to as the "Warrant Shares." The Preferred Shares, the Warrants and the Warrant Shares are sometimes referred to herein as the "Securities." This Agreement, the Certificate of Designation, the Warrants, the Registration Rights Agreement (as hereinafter defined) and the amendment to the Rights Plan required under Section 3.01(k), including the schedules and exhibits attached hereto and thereto, are referred to herein as the "Basic Documents." 1.02 Purchase and Sale of Preferred Shares. (a) The Closing. The Company agrees to issue and sell to each Purchaser, and, subject to and in reliance upon the representations, warranties, terms and conditions of this Agreement, each Purchaser agrees, severally and not jointly, to purchase the number of Preferred Shares set forth beside such Purchaser's name on Exhibit A, at a purchase price (the "Purchase Price") of $100.00 per Preferred Share. Such purchase and sale shall take place at a closing (the "Closing") to be held contemporaneous with the execution of this Agreement as of the date first written above (the "Closing Date"). At the Closing, the Company will issue to each Purchaser a certificate or certificates ("Preferred Share Certificates") representing the number of Preferred Shares purchased by such Purchaser. At the Closing, each Purchaser will deliver to the Company, by wire transfer of immediately available funds to an account designated by the Company by written notice to the Purchasers, the Purchase Price for such Purchaser's Preferred Shares. If at the Closing, the Company shall fail to issue any Preferred Shares to the Purchasers as provided above in this Section 1.02(a), or any of the conditions specified in Article III shall not have been fulfilled, the Purchasers shall, at their election, be relieved of all further obligations under this Agreement. (b) Use of Proceeds. The Company agrees to use the full proceeds from the sale of the Preferred Shares for acquisitions and the Company's working capital, capital expenditures and other corporate purposes. (c) Allocation of Purchase Price. Under both generally accepted accounting principles and the regulations promulgated under the Internal Revenue Code of 1986, as amended (the "Code"), the purchase of Preferred Shares and the Warrants for an aggregate Purchase Price may require an allocation of the Purchase Price between the Preferred Shares and the Warrants. Accordingly, on or as soon as practicable following the Closing Date, the Company and the Purchasers shall mutually agree in writing upon the aggregate value allocated to the Preferred Shares and the aggregate value allocated to the Warrants (which values shall be used by the Company and the Purchasers for all purposes, including the preparation of tax returns and the preparation of financial statements of the Company and its Subsidiaries). ARTICLE II PREFERRED SHARE CERTIFICATES; CERTAIN TERMS OF THE PREFERRED SHARES 2.01 Form of Preferred Shares. The Preferred Share Certificates shall be substantially in the form of Exhibit D hereto, and may have such letters, numbers or other marks of identification and such legends printed, lithographed or engraved upon them as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement or the Certificate of Designation. 2.02 Replacement of Preferred Share Certificates. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Preferred Share Certificate, and, if requested in the case of any such loss, theft or destruction, upon delivery of an indemnity bond or other agreement or security reasonably satisfactory to the Company, or, in the case of any such mutilation, upon surrender and cancellation of any such Preferred Share Certificate, the Company will issue a new Preferred Share Certificate, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Preferred Share Certificate; provided, however, if any Preferred Share Certificate of which a Purchaser, its nominee, or any of its officers or principals is the registered holder is lost, stolen or destroyed, the affidavit of such principal or officer of such holder setting forth the circumstances with respect to such loss, theft or destruction, together with an agreement by ACI Capital America Fund, LP or ACI Capital Co., Inc. to indemnify the Company with respect thereto, shall be accepted as satisfactory evidence thereof, and no bond or other security shall be required as a condition to the execution and delivery by the Company of a new Preferred Share Certificate in replacement of such lost, stolen or destroyed Preferred Share Certificate. 2 2.03 Registration; Transfer; Registration of Transfer and Exchange of Preferred Shares. The Preferred Shares shall be issued in registered form only. The Company, or a transfer agent appointed by the Company (the Company or such designated agent, in such capacity, the "Preferred Share Agent"), shall number and list each Preferred Share Certificate, as it is issued, in a register (the "Preferred Share Register") which the Company or such agent shall maintain at the principal executive offices of the Company or at such office specified in a notice to the registered holders (the "Holders") of the Preferred Shares pursuant to Section 8.04 of this Agreement (the "Office"). At the option of any Holder of Preferred Shares, any Preferred Share Certificate may be exchanged at the Office for a new Preferred Share Certificate (or new Preferred Share Certificates, in the same or different denominations), upon payment of the charges (if any) hereinafter provided. Whenever any Preferred Share Certificates are so surrendered for exchange the Company shall execute, and, if applicable, the Preferred Share Agent shall countersign and deliver, the Preferred Share Certificates that the Holder making the exchange is entitled to receive. Subject to compliance with the restrictions set forth in this Agreement (including, without limitation, Section 7.02 hereof), the Preferred Share Certificates shall be transferable only on the Preferred Share Register, upon delivery thereof duly endorsed by the Holder or by his duly authorized attorney or representative, or accompanied by proper evidence of succession, assignment or authority to transfer. In all cases of transfer by an attorney, the original power of attorney, duly approved, or a copy thereof, duly certified, shall be deposited and remain with the Company or the Preferred Share Agent. In case of transfer by executors, administrators, guardians or other legal representatives, duly authenticated evidence of their authority shall be produced, and may be required to be deposited and to remain with the Preferred Share Agent in its discretion. Upon any registration of transfer, the Company shall execute and, if applicable, the Preferred Share Agent shall countersign and deliver, a new Preferred Share Certificate(s) to the Persons entitled thereto. As used in this Agreement, "Person" means any natural person, corporation, partnership, joint venture, limited liability company, firm, association, joint-stock company, trust, unincorporated organization, government or governmental agency or political subdivision or any other entity, whether acting in an individual, fiduciary or other capacity. All Preferred Share Certificates issued upon any registration of transfer or exchange of Preferred Share Certificates shall be the valid obligations of the Company, evidencing the same obligations, and entitled to the same benefits under this Agreement, as the Preferred Share Certificates surrendered for such registration of transfer or exchange. No service charge shall be made to a Holder for any registration of transfer or exchange of Preferred Share Certificates. The Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Preferred Share Certificates. Any Preferred Share Certificate when duly endorsed in blank shall be deemed negotiable, and when a Preferred Share Certificate shall have been so endorsed, the Holder 3 thereof may be treated by the Company, the Preferred Share Agent and all other Persons dealing therewith as the absolute owner thereof for any purpose and as the Person entitled to exercise the rights represented thereby, or the transfer thereof on the Preferred Share Register, any notice to the contrary notwithstanding, but until such transfer on the Preferred Share Register, the Company and the Preferred Share Agent may treat the registered Holder thereof as the owner for all purposes. 2.04 Taxes. The Company will pay all taxes (including interest and penalties), other than taxes imposed on the income of the Purchasers, which may be payable in respect of the execution and delivery of this Agreement or of the issuance and delivery (but not the transfer) of any of the Securities. ARTICLE III CONDITIONS TO CLOSING 3.01 Conditions to Purchasers' Obligations. The obligation of the Purchasers to purchase and pay for the Preferred Shares at the Closing is subject to the fulfillment by the Company or waiver by the Purchasers of each of the following conditions: (a) Representations and Warranties. Each of the representations and warranties of the Company set forth in Article IV hereof and in the Basic Documents shall have been true and correct in all material respects when made and, except for representations expressly stated to have been made as of a specific date, shall be true and correct in all material respects on the Closing Date as if made on the Closing Date. (b) Performance. The Company shall have performed and complied in all material respects with all covenants and agreements contained herein and received any and all consents, approvals or waivers necessary in order to complete the transactions required to be performed or complied with by it or prior to or at the Closing. (c) All Proceedings to be Satisfactory. All corporate and other proceedings to be taken by the Company in connection with the transactions contemplated hereby and all documents incident thereto shall be satisfactory in form and substance to the Purchasers, including, without limitation, the filing of the duly adopted Certificate of Designation with the Secretary of State of the State of Delaware. The Purchasers shall have received all such counterpart originals or certified or other copies of such documents as it reasonably may request. (d) Legal Opinion. The Purchasers shall have received an originally executed copy of the opinion of Salon, Marrow, Dyckman & Newman, LLP, special counsel for the Company, in form and substance reasonably satisfactory to the Purchasers and their counsel, dated as of the Closing Date and setting forth substantially the matters in the opinions designated in Exhibit E hereto, and as to such other matters as the Purchasers may reasonably request. 4 (e) Necessary Consents. On or before the Closing Date, the Company shall have obtained any required governmental authorizations with respect to the Basic Documents and shall have obtained all material consents to the transactions contemplated under the Basic Documents, of any Person required under any contractual obligation or any other obligations (including any obligations imposed by law) of the Company or any of its Subsidiaries. As used in this Agreement, the word "Subsidiary" means, with respect to any party, any corporation or other organization, whether incorporated or unincorporated, of which at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the Board of Directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such party and one or more of its Subsidiaries. (f) No Material Adverse Effect. Since December 31, 1999, no Material Adverse Effect shall have occurred. As used in this Agreement, any reference to "Material Adverse Effect" means any event, change or effect that is materially adverse to the consolidated financial condition, businesses, results of operations, cash flows or prospects of the Company and its Subsidiaries, taken as a whole, or that impairs the ability of the Company to perform or the Purchasers to enforce the obligations of the Company under the Basic Documents. (g) Payment of Fees and Expenses. Without limiting the provisions of Section 8.05 hereof, the Company shall have paid to the Purchasers on or before the Closing, a funding fee in the amount of $150,000, and all other reasonable fees, charges and disbursements of the Purchasers, including the fees and expenses of Kaye, Scholer, Fierman, Hays & Handler, LLP, counsel to the Purchasers, such payments not to exceed $75,000 in the aggregate. (h) No Injunctions, Restraining Order or Adverse Litigation. No order, judgment or decree of any Governmental Entity (as hereinafter defined) shall purport to enjoin or restrain the Purchasers from acquiring Preferred Shares on the Closing Date. As of the Closing Date, there shall not be pending or, to the knowledge of Company, threatened, any action, suit, proceeding, governmental investigation or arbitration against or affecting the Company or any of its Subsidiaries or any property of the Company or any of its Subsidiaries that has not been disclosed by the Company in writing pursuant to Section 4.09, and there shall have occurred no development not so disclosed in any such action, suit, proceeding, governmental investigation or arbitration so disclosed, that, in either event, could reasonably be expected to have a Material Adverse Effect; and no injunction or other restraining order shall have been issued and no hearing to cause an injunction or other restraining order to be issued shall be pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated by this Agreement or the other Basic Documents. (i) Side Letter. The Company shall have signed and delivered to the Purchasers an side letter in the form of Exhibit F attached hereto. (j) Issuance of Warrants. The Warrants shall have been issued to the Purchasers. 5 (k) Rights Plan. The Company shall have complied with Section 18 of the Warrants with respect to the issuance of "Rights" to the holders of the Warrants under the Rights Plan (as defined in Section 4.18 hereof), by amending the Rights Plan. (l) Documentation at Closing. The Purchasers shall have received prior to or at the Closing all of the following, each in form and substance satisfactory to the Purchasers: (i) A Registration Rights Agreement executed by the Company, substantially in the form attached as Exhibit G hereto (the "Registration Rights Agreement"); (ii) The Certificate of Designation, adopted by the Board of Directors of the Company, as attested by the Secretary or an Assistant Secretary of the Company and filed with the Secretary of State of the State of Delaware; (iii) A certified copy of the Company's Certificate of Incorporation, as amended, and the Company's Bylaws; a certified copy of the resolutions of the Board of Directors evidencing approval of the Basic Documents, the Preferred Shares, the Warrants and other matters contemplated hereby; and certified copies of all documents evidencing other necessary corporate, shareholder or other action and governmental approvals, if any, with respect to the execution, delivery and performance of the Basic Documents, the Preferred Shares and the Warrants; (iv) A certificate of the Secretary or an Assistant Secretary of the Company which shall certify the names of the officers authorized to sign this Agreement and the other Basic Documents and issue the Preferred Shares and the Warrants on behalf of the Company, together with the true signatures of such officers. The Purchasers may rely conclusively on such certificates until it shall receive a further certificate of the Secretary or an Assistant Secretary of the Company canceling or amending the prior certificate and submitting the signatures of the officers named in such further certificate; (v) A certificate from a duly authorized officer of the Company stating that (a) the representations and warranties contained in Article IV hereof and the other Basic Documents or otherwise made by the Company in writing in connection with the transactions contemplated hereby were true and correct in all material respects when made and, except for representations expressly stated to have been made as of a specific date, are true and correct in all material respects on the Closing Date as if made on the Closing Date; (b) the Company has performed and complied with all covenants and agreements contained herein in all material respects and has received any and all consents, approvals or waivers necessary in order to complete the transactions required to be performed or complied with by it prior to or on the Closing Date; (c) no event shall have occurred and be continuing as of the Closing, or would result from the consummation of the purchase of the Preferred Shares or the other transactions contemplated by the Basic Documents, that would constitute a "Triggering Event" under the Certificate of Designation or a breach or violation of any Basic Document; and (d) the Company 6 has delivered to the Purchasers all documents and satisfied all conditions referred to in Sec tions 3.01(e) and (h) hereof; and (vi) other evidence reasonably requested by the Purchasers of the satisfaction of the conditions set forth in this Article III. 3.02 Conditions to the Company's Obligations. The obligation of the Company to issue and deliver the Securities on the Closing Date, as provided in Article II hereof, is subject to the performance by the Purchasers of their agreements theretofore to be performed hereunder and to the fulfillment, prior thereto or concurrently therewith, of the following further conditions: (a) Representations and Warranties. Each of the representations and warranties of the Purchasers contained in this Agreement shall be true and correct in all material respects when made and shall be true and correct in all material respects on the Closing Date as if made on the Closing Date, except as otherwise affected by the transactions contemplated hereby. (b) Purchasers' Certificates. The Company shall have received a certificate from each Purchaser, dated the Closing Date, signed by a duly authorized representative of such Purchaser, certifying that (a) the representations and warranties contained in Articles VI and VII hereof and the other Basic Documents or otherwise made by such Purchaser in writing in connection with the transactions contemplated hereby were true and correct in all material respects when made and, except for representations expressly stated to have been made as of a specific date, are true and correct in all material respects on the Closing Date as if made on the Closing Date; and (b) such Purchaser has performed and complied with all covenants and agreements contained herein in all material respects and has received any and all consents, approvals or waivers necessary in order to complete the transactions required to be performed or complied with by it prior to or on the Closing Date. (c) Injunction. There shall be no effective injunction, writ, preliminary restraining order or any order of any nature issued by a court of competent jurisdiction directing that the transactions provided for herein not be consummated as herein provided. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY In order to induce the Purchasers to enter into this Agreement and purchase the Preferred Shares, the Company represents, warrants and covenants to the Purchasers as follows: 4.01 Organization. (a) Each of the Company and its Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite corporate power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its 7 business as now being conducted. The Company and each of its Subsidiaries is duly qualified or licensed to do business and in good standing in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so duly qualified or licensed and in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent the Company from consummating any of the transactions contemplated hereby. (b) The Company has heretofore made available to the Purchasers a complete and correct copy of its Certificate of Incorporation, as amended as of the date hereof, and its By-Laws and the organizational documents of each of its Subsidiaries, as currently in effect. Each such document is in full force and effect and no other organizational documents are applicable to or binding upon the Company or any Subsidiary. (c) Schedule 4.01 identifies all Subsidiaries of the Company. 4.02 Capitalization. (a) The authorized capital stock of the Company consists of 20,000,000 shares of Common Stock, $.10 par value, 20,000 shares of Series A Preferred Stock, $.10 par value and 980,000 shares of preferred stock, $.10 par value, undesignated as to class or series. Schedule 4.02 sets forth the (i) the number of issued and outstanding shares of Common Stock as of the date hereof; (ii) a description of all unexpired options to purchase Common Stock ("Company Options"), including number of shares, exercise price, date of vesting and exercise date as well as a statement describing outstanding Company options; and (iii) all other shares of Common Stock issuable to any person pursuant to any existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character. As of the date hereof and immediately prior to the Closing, no shares of preferred stock are issued and outstanding or held in the treasury of the Company, and no shares of Common Stock are held in the treasury of the Company. The Company has taken all necessary corporate, shareholder and other action to authorize and reserve and to permit it to issue shares of Common Stock which may be issued pursuant to Company Options or the transactions contemplated hereby. There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) ("Voting Debt") of the Company or any of its Subsidiaries issued and outstanding. Except as set forth in Schedule 4.02, as of the date hereof, (i) there are no shares of capital stock of the Company authorized, issued or outstanding, (ii) there are no existing options, warrants, calls, preemptive (or similar) rights, subscriptions or other rights, agreements, arrangements or commitments of any character, relating to the issued or unissued capital stock of the Company or any of its Subsidiaries, obligating the Company or any of its Subsidiaries to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interest or obligations of the Company or any of its Subsidiaries, and (iii) there are no outstanding contractual obligations of the Company or any of its Subsidiaries to register under the Securities Act of 1933, as amended (the "Securities Act") or to repurchase, redeem or otherwise acquire any shares or Common Stock, or capital stock of the Company or any Subsidiary or affiliate of the Company. 8 (b) All of the outstanding shares of capital stock of each of the Company's Subsidiaries are beneficially owned by the Company, directly or indirectly, free and clear of all security interests, liens, claims, pledges, agreements, limitations on voting rights, charges or other encumbrances of any nature whatsoever. (c) There are no voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party with respect to the voting of the capital stock of the Company or any of its Subsidiaries. None of the Company or its Subsidiaries is required to redeem, repurchase or otherwise acquire shares of capital stock of the Company, or any of its Subsidiaries, respectively, as a result of the transactions contemplated by this Agreement. (d) As of the Closing, the Preferred Shares and the Warrants will be validly issued, fully paid and non-assessable and not subject to preemptive (or similar) rights. The rights, privileges and preferences of the Preferred Shares will be as set forth in the Certificate of Designation. If issued in accordance with the terms of the Warrants, the Warrant Shares will be validly issued, fully paid and non-assessable and not subject to preemptive (or similar) rights. (e) The Company has authorized and reserved 1,000,000 shares of Common Stock for issuance upon exercise of the Warrants. 4.03 Authorization; Validity of Agreement; Company Action. The Company has full corporate power and authority to execute and deliver each Basic Document and the Warrants, to issue the Preferred Shares and the Warrants and to consummate the transactions contemplated hereby and thereby. The Certificate of Designation has been duly approved by the Company and filed with the Secretary of State of the State of Delaware. The execution, delivery and performance by the Company of each Basic Document and the Warrants and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by the Board of Directors of the Company and no other corporate or shareholder action on the part of the Company is necessary to authorize the execution, delivery or performance by the Company of any Basic Document or Warrant, the issuance of any Preferred Shares or Warrants or the consummation by it of the transactions contemplated hereby and thereby. This Agreement, the Warrants and the Registration Rights Agreement have been duly executed and delivered by the Company and (assuming due and valid authorization, execution and delivery hereof by the other parties hereto and thereto) this Agreement and the other Basic Documents are valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. 4.04 Consents and Approvals; No Violations; Licenses. (a) None of the execution, delivery or performance of any Basic Document or Warrant by the Company, the 9 issuance of any Preferred Shares or Warrants or the consummation by the Company of the transactions contemplated hereby or thereby, nor compliance by the Company with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the Certificate of Incorporation, as amended, or the By-Laws or other organizational documents of the Company or of any of its Subsidiaries, (ii) require on the part of the Company any filing with, or permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or other governmental or regulatory authority or agency (a "Governmental Entity"), including, without limitation, any consent or approval of any federal, state, local or foreign insurance industry agency, commission or other governing body, except for in the case of clause (ii) filings, permits, authorizations, consents and approvals as may be required under state securities or blue sky laws, and the laws of other states in which the Company is qualified to do or is doing business, (iii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any material note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which any of them or any of their properties or assets may be bound (the "Material Agreements") or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any of its Subsidiaries or any of their properties or assets. (b) The Company or one of its Subsidiaries holds all material licenses, permits, certificates, franchises, ordinances, registrations, or other rights, applications, consents, approvals and authorizations filed with, granted or issued by, or entered by any Governmental Entity, or any federal, state, local or foreign regulatory authorities or any federal, state, local or foreign public service commission, public utility commission or industry agency or commission that are required for the conduct of the Company's and its Subsidiaries' businesses as now being conducted. 4.05 SEC Reports and Financial Statements. (a) The Company and its Subsidiaries have filed with the Securities and Exchange Commission ("SEC") all forms, reports, schedules, statements, and other documents required to be filed by them with the SEC (as such documents have been amended since the time of their filing, collectively, the "SEC Documents"), and have filed all exhibits required to be filed with the SEC Documents. As of their respective dates or, if amended, as of the date of the last such amendment, the SEC Documents, including, without limitation, any financial statements or schedules included therein, complied in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934 (the "Exchange Act"), and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the Company's Subsidiaries is required to file any forms, reports or other documents with the SEC pursuant to Section 12 or 15 of the Exchange Act. The financial statements of the Company included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999 (including the related notes thereto), copies of which have been furnished to the Purchasers (together, the "Financial Statements"), have been prepared from, and are in accordance with, the books and records of the Company and its consolidated Subsidiaries, comply in all material respects with applicable accounting requirements and with 10 the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles ("GAAP") applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto and subject, in the case of unaudited interim financial statements, to normal year-end adjustments), and fairly present the consolidated financial position and the consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries as at the dates thereof or for the periods presented therein. The Company and its Subsidiaries have maintained a system of accounting established in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. (b) No representation or warranty of the Company contained in any Basic Document or in any other document, certificate or written statement furnished to the Purchasers by or on behalf of the Company or any of its Subsidiaries for use in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein when made not misleading in light of the circumstances in which the same were made. 4.06 No Undisclosed Liabilities. Except (i) as disclosed in the SEC Documents that have been delivered to the Purchasers prior to the date hereof, (ii) as set forth in Schedule 4.06, and (iii) for liabilities incurred in the ordinary course of business and consistent with past practice, and liabilities incurred in connection with the consummation of the transactions contemplated hereby (none of which, individually or in the aggregate, could reasonably have a Material Adverse Effect) since December 31, 1999, neither the Company nor any of its Subsidiaries has incurred any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which would be required by GAAP to be reflected on a consolidated balance sheet of the Company and its Subsidiaries (including the notes thereto), or which individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 4.07 Absence of Certain Changes. Except as contemplated by this Agreement and the other Basic Documents, or as disclosed in the SEC Documents that have been delivered to the Purchasers prior to the date hereof or in Schedule 4.07, since December 31, 1999, (i) the Company and its Subsidiaries have conducted their respective businesses only in the ordinary course of business and consistent with past practice, (ii) there has not been any change in the business, properties, assets, liabilities, financial condition, cash flows, operations, licenses, franchises, results of operations or prospects of the Company or its Subsidiaries which could reasonably be expected to have a Material Adverse Effect, (iii) the Company has not (A) declared, set aside or paid any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (B) directly or indirectly, split, combined or reclassified the outstanding shares of Common Stock; or (C) adopted a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries. 4.08 Employee Benefit Plans; ERISA; Labor. Except as set forth on Schedule 4.08, neither the Company nor any trade or business which, together with the Company, is treated 11 as a single employer under the applicable provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") or the Code, including but not limited to Section 414 thereof, ("ERISA Affiliate") maintains, contributes or has any obligation with respect to, and none of the employees of the Company or any ERISA Affiliate is covered by, any "employee benefit plan" (as defined in Section 3(1) of ERISA) or any plan that provides benefits following employment or retirement that is not intended to be "qualified" within the meaning of Section 401(a) of the Code (collectively, a "Plan"). Except as set forth on Schedule 4.08, neither the Company nor any ERISA Affiliate has (1) ever maintained or had an obligation to contribute to an "employee pension benefit plan" (as defined in Section 3(2) of ERISA that is subject to Title IV of ERISA ("Pension Plan") or a "multiemployer plan" (as defined in Section 3(37) or 4001(a)(3) of ERISA ("Multiemployer Plan"), or (2) incurred any liability or taken any action, and neither the Company nor any ERISA Affiliate has any knowledge of any action or event, that could reasonably be expected to cause it to incur any liability (A) with respect to any Pension Plan (including, without limitation, any liability under Section 412 of the Code or Title IV of ERISA), (B) on account of a partial or complete withdrawal (as such terms are defined in Sections 4203 and 4205 of ERISA, respectively) with respect to any Multiemployer Plan, or (C) on account of unpaid contributions to any Multiemployer Plan. Except as set forth on Schedule 4.08, neither the Company nor any ERISA Affiliate has any obligation to provide benefits to any employee or former employee. 4.09 Litigation. Schedule 4.09 hereto sets forth each suit, action or proceeding pending (as to which the Company has received notice), or, to the knowledge of the Company, threatened against the Company, any of its Subsidiaries, or their properties or assets on the date hereof, or to which the Company or any of its Subsidiaries is a party. Except as set forth on Schedule 4.09 hereto, none of the foregoing, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect if resolved adversely to the Company or its Subsidiaries. As of the date hereof, neither the Company nor any of its Subsidiaries, nor any of their respective properties, is subject to any material order, writ, judgment, injunction, decree, determination or award. 4.10 No Default; Compliance with Applicable Laws. Neither the Company nor any of its Subsidiaries is in default or violation in any material respect of any term, condition or provision of (i) its respective Certificate of Incorporation or By-laws or other organizational documents, (ii) any Material Agreement or (iii) any federal, state, local or foreign statute, law, ordinance, rule, regulation, judgment, decree, order, concession, grant, franchise, permit or license or other governmental authorization or approval applicable to the Company or any of its Subsidiaries or by which they or their respective assets may be bound (other than matters addressed in Sections 4.04, 4.08, 4.11, and 4.12). 4.11 Taxes. The Company and its Subsidiaries have filed all tax returns, reports, schedules and other documents which are required to be filed by them with the Internal Revenue Service or any other domestic or foreign governmental taxing authority. All such tax returns are accurate and complete in all material respects and all taxes shown to be due and payable on such returns, any charges, fees, levies or other assessments imposed, and all other taxes and estimated payments ("Taxes") due and payable by the Company and each Subsidiary 12 on or before the Closing Date have been paid. The charges, accruals and reserves on the books of the Company for all fiscal periods are adequate for the payment of all Taxes not yet due and payable. The Company knows of no unpaid assessment for additional Taxes for any period or any basis for any such assessment, except for assessments the amount or the validity of which is currently being contested in good faith by appropriate proceedings and with respect to which adequate reserves in accordance with GAAP have been provided on the books of the Company. There are no audits or other proceedings presently pending with regard to any Taxes of the Company or its Subsidiaries. The Company and its Subsidiaries have complied with all applicable laws and regulations relating to the payment and withholding of Taxes. The Company and its Subsidiaries are not party to any tax sharing agreement. 4.12 Environmental Matters. (a) The Company and its Subsidiaries have complied in all material respects with all applicable Environmental Laws (as defined below). There is no pending or, to the knowledge of the Company, threatened, civil or criminal litigation, written notice or violation, formal administrative proceeding or investigation, inquiry or information request by any Governmental Entity relating to any Environmental Law involving the Company or any of its Subsidiaries or any of their properties. For purposes of this Agreement, "Environmental Law" means any foreign, federal, state or local law, statute, rule or regulation or the common law relating to the environment or occupational health and safety, including, without limitation, any statute, regulation or order pertaining to (i) treatment, storage, disposal, generation or transportation of industrial, toxic or hazardous substances or solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the release or threatened release into the environment of industrial, toxic or hazardous substances, or solid or hazardous waste, including, without limitation, emissions, discharges, injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (v) the protection of wildlife, marine sanctuaries and wetlands, including, without limitation, all endangered and threatened species; (vi) storage tanks, vessels and containers; (vii) underground and other storage tanks or vessels, abandoned, disposed or discarded barrels, containers and other closed receptacles; (viii) health and safety of employees and other persons; and (ix) manufacture, processing, use, distribution, treatment, storage, disposal, transportation or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or oil or petroleum products or solid or hazardous waste. As used above, the terms "release" and "environment" shall have the meaning set forth in the federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"). (b) There have been no releases of any Materials of Environmental Concern (as defined below) into the environment by the Company or any of its Subsidiaries, or, to the knowledge of the Company, by any other party at any parcel of real property or any facility formerly or currently owned, operated or controlled by the Company or any of its Subsidiaries. For purposes of this Agreement, "Materials of Environmental Concern" means any chemicals, pollutants or contaminants, hazardous substances (as such term is defined under CERCLA), solid wastes and hazardous wastes (as such terms are defined under the federal Resource Conservation and Recovery Act), toxic materials, oil or petroleum and petroleum products, or any other material subject to regulation under any Environmental Law. 13 4.13 Insurance. There is in full force and effect one or more policies of insurance issued by insurers of recognized responsibility, insuring the Company and its Subsidiaries and their properties and businesses against such losses and risks, and in such amounts, as are customary in the case of corporations of established reputation engaged in the same or similar businesses and similarly situated. None of the Company or any of its Subsidiaries has been refused any insurance coverage sought or applied for, and the Company and its Subsidiaries have no reason to believe that they will be unable to renew their existing insurance coverage as and when the same shall expire upon terms at least as favorable as those presently in effect, other than possible increases in premiums that do not result from any act or omission of the Company or any of its Subsidiaries. 4.14 Transactions with Affiliates. Except as set forth in the SEC Documents that have been delivered to the Purchasers prior to the date hereof or on Schedule 4.14, since December 31, 1999, neither the Company nor any of its Subsidiaries has entered into any transaction with any current director or officer of the Company or any Subsidiary or any transaction which would be subject to disclosure under the Exchange Act pursuant to the requirements of Item 404 of Regulation S-K. 4.15 Patents and Other Intangible Assets. (a) Except as set forth on Schedule 4.15, the Company and its Subsidiaries (i) own or have the right to use, free and clear of any lien, pledge, mortgage, security interest, encumbrance or charge of any kind (collectively "Encumbrances"), and any other claim or restriction, all patents, trademarks, service marks, trade names, internet domain names, copyrights, licenses and rights with respect to the foregoing, used in or necessary for the conduct of their businesses as now conducted or proposed to be conducted (all of which are set forth on Schedule 4.15), (ii) are not infringing upon or otherwise acting adversely to the right or claimed right of any Person under or with respect to any patent, trademark, service mark, trade name, internet domain name, copyright or license with respect thereto, and (iii) are not obligated or under any liability whatsoever to make any payments by way of royalties, fees or otherwise to any owner or licensee of, or other claimant to, any patent, trademark, service mark, trade name, internet domain name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of their businesses or otherwise. (b) The Company and/or one or more of its Subsidiaries owns and has the unrestricted right to use all material product rights, manufacturing rights, trade secrets, including know-how, negative know-how, formulas, patterns, compilations, programs, devices, methods, techniques, processes, inventions, designs, computer programs and technical data and all information that derives independent economic value, actual or potential, from not being generally known or known by competitors and which the Company and its Subsidiaries have taken reasonable steps to maintain in secret (all of the foregoing of which are collectively referred to herein as "intellectual property") required for or incident to the development, manufacture, operation and sale of all products and services sold or proposed to be sold by the Company or any of its Subsidiaries, free and clear of any right, Encumbrance or claim of others, including without limitation former employers of its employees; provided, however, that the 14 possibility exists that other Persons, completely independently of the Company and its Subsidiaries or their employees or agents, could have developed trade secrets or items of technical information similar or identical to those of the Company and its Subsidiaries. The Company and its Subsidiaries are not aware of any such development of similar or identical trade secrets or technical information by others. (c) Except as specifically disclosed in the SEC Documents, no director, officer, employee, agent or stockholder of the Company or any of its Subsidiaries owns or has any right in the intellectual property of the Company and its Subsidiaries, or any patents, trademarks, service marks, trade names, internet domain names, copyrights, licenses or rights with respect to the foregoing, or any inventions, developments or discoveries used in or necessary for the conduct of the Company's and its Subsidiaries' businesses as now conducted or as proposed to be conducted. (d) Except as set forth on Schedule 4.15, none of the Company or any of its Subsidiaries has received any communication alleging or stating that the Company or any of its Subsidiaries or any employee or agent has violated or infringed, or by conducting business as proposed, would violate or infringe, any patent, trademark, service mark, trade name, internet domain name, copyright, trade secret, proprietary right, process or other intellectual property of any other Person. 4.16 Brokers. Except as set forth on Schedule 4.16, no broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission from the Company in connection with the issuance and sale of securities pursuant to this Agreement and the Company hereby indemnifies each of the Purchasers against, and agrees that it will hold each Purchaser harmless from, any claim, demand or liability for any such broker's or finder's fees alleged to have been incurred in connection therewith and any expenses (including reasonable fees, expenses and disbursements of counsel) arising in connection with any such claim, demand or liability. 4.17 Nasdaq Approvals. The issuance by the Company of the Securities will not require shareholder approval under the applicable rules of The Nasdaq Stock Market. 4.18 Rights Plan Not Triggered. Neither (i) the execution of this Agreement and the other Basic Documents, nor (ii) the exercise at any time of any or all of the Warrants, nor (iii) the performance by the Company or the Purchasers at any time of any or all of their other respective rights and obligations under this Agreement or any of the other Basic Documents, shall cause the Purchasers at any time to be deemed an "Acquiring Person" or constitute a "Triggering Event" under that certain Rights Agreement dated as of June 15, 1999, between the Company and Continental Stock Transfer & Trust Company, Rights Agent (the "Rights Plan"). Other than the Rights Plan, the Company is not a party to, and its Board of Directors has not adopted or authorized the adoption of, any shareholder rights or similar agreement. 4.19 Certain Payments. To the best of the Company's knowledge, since January 1, 1997, neither the Company nor any director, officer, agent or employee of the 15 Company, nor any other Person associated with or acting for or on behalf of the Company, has directly or indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback or other payment to any entity or person, private or public, regardless of form, whether in money, property or services (i) to obtain favorable treatment in securing business, (ii) to pay for favorable treatment for business secured, (iii) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any affiliate of the Company or (iv) in violation of any federal, state, local or foreign statute, law, ordinance, rule or regulation or (b) established or maintained any fund or asset for such purposes that has not been recorded in the books and records of the Company. ARTICLE V COVENANTS OF THE COMPANY 5.01 Financial and Business Information. The Company will maintain, and cause each of its Subsidiaries to maintain, a system of accounting established in accordance with sound business practices to permit preparation of financial statements in conformity with GAAP. The Company during the term of this Agreement will, and (where applicable) will cause its Subsidiaries to, deliver to the Purchasers (provided that the Company shall not deliver to the Purchasers any such information to the extent that the Purchaser have requested in writing to the Company that such information not be delivered to the Purchasers): (a) As soon as practicable and in any event within 90 days after the close of each fiscal year of the Company, beginning with the current fiscal year, a consolidated balance sheet of the Company and its Subsidiaries as of the close of such fiscal year and consolidated statements of operations, shareholders' equity and cash flows for the Company and its Subsidiaries for the fiscal year then added, certified by the chief executive officer or chief financial officer of the Company to be true and accurate in all material respects (it being understood by the parties hereto that the delivery to the Purchasers of the Company's annual report on Form 10-K will satisfy the requirements of this Section 5.01(a)); (b) As soon as practicable and in any event within 45 days after the end of each of the first three fiscal quarters of each fiscal year, the consolidated and consolidating balance sheet of Company and its Subsidiaries as at the end of such fiscal quarter and the related consolidated and consolidating statements of operations, shareholders' equity and cash flows of Company and its Subsidiaries for such fiscal quarter and for the period from the beginning of the current fiscal year to the end of such fiscal quarter, all in reasonable detail and certified by the chief financial officer of Company that they fairly present the financial condition of Company and its Subsidiaries as at the dates indicated and the results of its operations and its cash flows for the periods indicated, subject to changes resulting from audit and normal year-end adjustments (it being understood by the parties hereto that the delivery to the Purchasers of the Company's quarterly report on Form 10-Q will satisfy the requirements of this Section 5.01(b)); (c) As soon as practicable and in any event within 45 days after the end of each fiscal quarter of each fiscal year, a written certificate from the chief financial officer 16 of the Company certifying the Company's ratio of Indebtedness to Consolidated EBITDA for such fiscal quarter. For purposes of this Section 5.01(c), "Indebtedness" means, with respect to any period, the aggregate amount of indebtedness for borrowed money incurred by the Company and its Subsidiaries, without duplication, including, without limitation, any capitalized lease obligations, accounts receivable financing or other asset-backed financing, any guarantee or other similar contingent obligation or any lease financing (whether a capitalized lease, operating lease, pursuant to a sale leaseback arrangement or otherwise), but excluding the incurrence of indebtedness the proceeds of which are intended to be and are immediately used to redeem all of the outstanding shares of Series B Preferred Stock in accordance with the terms of the Certificate of Designation and to repurchase all of the outstanding Warrants in accordance with the terms thereof. All issued and outstanding shares of preferred stock (valued at the amount of the liquidation preference of such preferred stock) shall be included in the calculation of Indebtedness. For purposes of this Section 5.01(c), "Consolidated EBITDA" means, with respect to any period, the consolidated earnings before interest, taxes, depreciation and amortization for the Company and its consolidated subsidiaries for such period, determined in accordance with generally accepted accounting principles, consistently applied; (d) Prompt notice of any event having a Material Adverse Effect; (e) Promptly upon their becoming available, copies of (i) all financial statements, reports, notices and proxy statements sent or made available generally by Company to its security holders, (ii) all regular and periodic reports, if any, filed by Company or any of its Subsidiaries with any securities exchange or with the SEC or any governmental or private regulatory authority, and (iii) all press releases and other statements made available generally by Company or any of its Subsidiaries to the public concerning material developments in the business of Company or any of its Subsidiaries; (f) Promptly upon any officer of Company or any of its Subsidiaries obtaining knowledge of any condition or event that constitutes a Triggering Event (as defined in the Certificate of Designation) or a violation or default of any material term of any Basic Document or Warrant or an event of default or potential event of default under any indebtedness of Company or any of its Subsidiaries, or becoming aware that any person has given any notice or taken any other action with respect to a claimed event of default or potential event of default; and (g) Within a reasonable time, such other information about the property, financial condition and operations of the Company and its Subsidiaries as the Purchasers may from time to time reasonably request. 17 5.02 Notice of Certain Events. Unless the Purchasers shall otherwise request in writing, the Company during the term of this Agreement will, and will cause its Subsidiaries to, promptly give notice in writing to the Purchasers of any litigation or proceeding before any court or administrative body involving the Company or any Subsidiary which, if determined adversely to the Company or such Subsidiary, would be reasonably likely to have a Material Adverse Effect. 5.03 Public Announcement. Following the Closing, the Company will issue a press release regarding the transactions contemplated hereby, which press release shall be satisfactory in all respects to the Purchasers. 5.04 Expiration of Covenants. The Company's obligations under Sections 5.01 and 5.02 shall terminate at such time as the Purchasers and their affiliates (as such term is defined in Rule 501 under the Securities Act of 1933) no longer hold in the aggregate at least 25% of the Preferred Shares. ARTICLE VI REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASERS 6.01 Representations by Purchasers. Each Purchaser represents and warrants to the Company that: (a) It has full power and authority to execute and deliver this Agreement and the other Basic Documents to which it is a party and to perform its obligations hereunder and thereunder. (b) It has taken all action necessary for the authorization, execution, delivery, and performance of this Agreement and the other Basic Documents to which it is a party, and its obligations hereunder and thereunder, and, upon execution and delivery by the Company, this Agreement and other Basic Documents to which it is a party shall constitute the valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with their respective terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, affecting creditors' rights generally, and (ii) the remedy of specific performance and injunctive and other relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. (c) There are no claims for brokerage commissions or finder's fees or similar compensation in connection with the issuance and sale of Preferred Shares pursuant to this Agreement based on any arrangement made by or on behalf of the Purchaser and the Purchaser agrees to indemnify and hold the Company harmless against any costs or damages incurred as a result of any such claim. 18 ARTICLE VII CERTAIN SECURITIES LAW MATTERS; RESTRICTIONS ON TRANSFER 7.01 Representations by Purchasers. Each Purchaser represents and warrants to the Company that: (a) The Purchaser is an "Accredited Investor" within the meaning of Rule 501 under the Securities Act. (b) The Preferred Shares are being acquired for the Purchaser's own account for the purpose of investment and not with a present view to or for sale in connection with any distribution thereof; provided, that the disposition of the Purchaser's property shall at all times be and remain within its control. (c) The Purchaser understands that (i) none of the Preferred Shares or the Warrants have been registered under the Securities Act, (ii) the Preferred Shares and the Warrants must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act or an exemption from registration is available under applicable securities laws then in effect, and (iii) the Preferred Shares and the Warrants will bear a legend to such effect and the Company will make a notation on its transfer books to such effect. (d) The Purchaser understands that no public market now exists for the Preferred Shares or the Warrants. 7.02 Restrictions on Transfer. (a) The Preferred Shares, the Warrants and the Warrant Shares (collectively, the "Restricted Securities") shall be transferable only if sold pursuant to a registration statement under the Securities Act (as hereinafter defined), or pursuant to an exemption from the registration requirements of the Securities Act. (b) Securities Legend. The Warrant and certificates representing the Warrant Shares shall bear legends in accordance with Section 10 of the Warrants. Each certificate representing the Preferred Shares initially shall bear a legend in substantially the following form: "The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under the securities or blue sky laws of any state, and may not be sold, or otherwise transferred, in the absence of such registration or an exemption therefrom under such Act and under any such applicable state laws." (c) Termination of Restriction. The restrictions imposed by Sec tion 7.02(a) upon the transferability of the Restricted Securities shall cease and terminate as to 19 any particular Restricted Securities and any securities issued in exchange therefor or upon transfer thereof when, in the opinion of counsel reasonably acceptable to the Company, such restrictions are no longer required in order to assure compliance with the Securities Act, or when such Restricted Securities have been registered under the Securities Act. Whenever any of such restrictions shall cease and terminate as to any Restricted Securities, the holder thereof shall be entitled to receive from the Company, without expense, new certificates not bearing the legend set forth in Section 7.02(b). (d) The Restricted Securities shall be subject to other restrictions on transferability set forth in Section 10.3 of the Warrant and Section 9 of the Certificate of 20 Designation. In addition to the securities legend set forth in Section 7.02(b), each certificate representing the Preferred Shares shall bear a legend in substantially the following form: "The securities represented by this certificate are subject to a restriction on transfer as set forth in the Corporation's Certificate of Designation, Number, Powers, Preferences and Relative, Participating, Optional and Other Rights of Series B Preferred Stock, as may be amended from time to time." ARTICLE VIII MISCELLANEOUS 8.01 Indemnification. In addition to the payment of expenses pursuant to Section 8.05, the Company agrees to defend, indemnify, pay and hold harmless, each Purchaser, and the officers, directors, partners, stockholders, members, managers, employees, agents and affiliates of the Purchaser (collectively, the "Indemnitees") from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without limitation, the reasonable fees and disbursements of counsel for such Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including, without limitation, securities and commercial laws, statutes, rules or regulations), on common law or equitable cause or on contract or otherwise, that may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of this Agreement, the other Basic Documents, the Warrants or the transactions contemplated hereby or thereby (including, without limitation, the Purchasers' agreement to purchase the Preferred Shares or the use or intended use of the proceeds of such purchase) or the statements contained in any letter of intent delivered by any Purchaser to the Company with respect thereto (collectively called the "Indemnified Liabilities"); provided that the Company shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of that Indemnitee as determined by a final judgment of a court or competent jurisdiction. To the extent that the undertaking to defend, indemnify, pay and hold harmless set forth in the preceding sentence may be unenforceable because it is violative of any law or public policy, the Company shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by the Indemnitees or any of them. 8.02 No Waiver: Cumulative Remedies. No failure or delay on the part of the Purchasers, or any other holder of any Security in exercising any right, power or remedy hereunder or thereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise 21 of any other right, power or remedy hereunder or thereunder. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 8.03 Amendments. Waiver and Consents. No amendment, modification or addition to this Agreement, and no waiver of or consent to noncompliance with any covenant or other provision of this Agreement shall be effective unless in writing and duly executed by the party against whom enforcement of such amendment, modification, addition, waiver or consent is sought. Any waiver or consent may be given subject to satisfaction of conditions stated therein and any waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. 8.04 Notices. All notices, demands, requests, or other communications which may be or are required to be given, served, or sent by any party to any other party pursuant to this Agreement shall be in writing and shall be mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or transmitted by hand delivery (including delivery by courier), or facsimile transmission, addressed as follows: (a) If to the Company: SEMX Corporation 1 Labriola Court Armonk, NY 10504 Attention: Gilbert D. Raker, Chairman, President and CEO Facsimile: (914) 273-5860 with a copy to: Joel Salon, Esquire Salon, Marrow, Dyckman & Newman, LLP 685 Third Avenue New York, NY 10017 Facsimile: (212) 661-3339 (b) If to the Purchasers, to their respective addresses listed on Exhibit A, with a copy to: Kaye, Scholer, Fierman, Hays & Handler, LLP 425 Park Avenue New York, New York 10022 Attention: Emanuel Cherney, Esq. Facsimile: (212) 836-8689 Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, 22 request or communication shall be deemed to have been duly given five business days after being deposited in the mail, postage prepaid, if mailed; when delivered by hand, if personally delivered; or upon receipt, if sent by facsimile (followed by a confirmation copy sent by either overnight or two (2) day courier). 8.05 Expenses. The Company agrees to pay promptly (a) the fees, expenses and disbursements of counsel to the Purchasers in connection with the negotiation, preparation, execution and administration of the Basic Documents and the Warrants, which payments by the Company shall not exceed $75,000 in the aggregate, and any consents, amendments, waivers or other modifications hereto or thereto and any other documents or matters requested by the Company; (b) the funding fee in accordance with Section 3.01(g) hereof; and (c) all costs and expenses, including reasonable attorneys' fees and costs of settlement, incurred by the Purchasers in enforcing any obligations of or in collecting any payments due from the Company hereunder or under the other Basic Documents or the Warrants by reason of any breach or default by the Company or in connection with any refinancing or restructuring of the arrangements provided under the Basic Documents or the Warrants in the nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings. 8.06 Binding Effect; Assignment. This Agreement shall be binding upon and inure to the benefit of the Company and the Purchasers and their respective heirs, estates, personal representatives, successors and assigns, except that the Company shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of the Purchasers. 8.07 Survival of Representations and Warranties. All representations and war ranties made in this Agreement or any other Basic Document or Warrant, shall survive the execution and delivery hereof and thereof and the issuance of any of the Securities. Notwithstanding anything in this Agreement or implied by law to the contrary, the agreements of the Company set forth in Sections 2.05, 4.16, 8.01 and 8.05 shall survive the payment or redemption of any Securities. 8.08 Severability. In case any provision in or obligation under this Agreement or the Securities shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 8.09 Prior Agreements. This Agreement constitutes the entire agreement between the parties and supersedes any prior understandings or agreements concerning the subject matter hereof. 8.10 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflict of laws principles thereof. 23 8.11 Arbitration. Any claim or dispute between the parties hereto arising out of or in connection with this Agreement or any of the provisions hereof, or the interpretation, meaning or effect hereof, or the transactions contemplated hereby, shall be submitted to and determined by arbitration in New York, New York in accordance with the procedures, rules and regulations of the American Arbitration Association as in effect at such time. The decision, findings or award of the arbitrator(s) in the matter shall be final and nonappealable and binding upon the parties (and their respective successors) with respect to the subject matter herein concerned, and judgment thereon may be entered in any court or forum having jurisdiction thereof. 8.12 Headings. Article, Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agree ment for any other purpose. 8.13 Counterparts. This Agreement may be executed in any number of counter parts, all of which taken together shall constitute one and the same instrument, and each of the parties hereto may execute this Agreement by signing any such counterpart. 8.14 Further Assurances. From and after the date of this Agreement, upon the request of the Purchasers, the Company and each Subsidiary shall execute and deliver such instruments, documents and other writings as may be necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement, the Preferred Shares, the Warrants, the Registration Rights Agreement and the other agreements and instruments contemplated hereby. [Remainder of Page Intentionally Left Blank] 24 IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed on its behalf as of the date first above written. SEMX CORPORATION By: /s/ Gilbert D. Raker -------------------------------------- Name: Gilbert D. Raker Title: Chairman, President and CEO ACI CAPITAL AMERICA FUND, LP By: ACI Capital America GP, LLC, its General Partner By: /s/ Kevin S. Penn ---------------------------------- Name: Kevin S. Penn Title: Managing Member EXETER VENTURE LENDERS, L.P. By: Exeter Venture Advisors, Inc., its corporate General Partner By: /s/ Kurt F. Bergquist ---------------------------------- Name: Kurt F. Bergquist Title: Vice President 25 EXHIBIT A SCHEDULE OF PURCHASERS Name and Address Number of Shares of Series B of Purchaser Preferred Stock Purchased Purchase Price ------------ ------------------------- -------------- ACI Capital America Fund, LP 90,000 $9,000,000 65 East 55th Street 18th Floor New York, NY 10022 Attention: Kevin S. Penn Facsimile: (212) 634-3351 Exeter Venture Lenders, L.P. 10,000 $1,000,000 10 East 53rd Street, 32nd Floor New York, NY 10022 Attention: Kurt F. Bergquist Facsimile: (212) 872-1198 26 EX-4.4 5 0005.txt FORM OF WARRANT Exhibit 4.4 Form of Warrant THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE AND MAY NOT BE SOLD, OR OTHERWISE TRANSFERRED, IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT. THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF JUNE 1, 2000. THIS WARRANT ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN SEMX CORPORATION AND CONTINENTAL STOCK TRANSFER & TRUST COMPANY, AS RIGHTS AGENT, DATED AS OF JUNE 15, 1999, AS AMENDED ON THE DATE HEREOF AND AS THE SAME MAY BE FURTHER AMENDED FROM TIME TO TIME (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF SEMX CORPORATION AND AVAILABLE FOR INSPECTION BY THE HOLDER OF THIS WARRANT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS WARRANT. SEMX CORPORATION WILL MAIL TO THE HOLDER OF THIS WARRANT A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY "PERSON" WHO IS, WAS OR BECOMES AN "ACQUIRING PERSON" OR ANY "AFFILIATE" OR "ASSOCIATE" THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. IN NO EVENT MAY THE RIGHTS BE EXERCISED AFTER JUNE 29, 2009. WARRANT To Purchase Common Stock of SEMX CORPORATION Issuance Date: June 1, 2000 Issued To: No. of Shares of Common Stock: TABLE OF CONTENTS
Page 1. DEFINITIONS............................................................................1 2. CURRENT WARRANT PRICE ...............................................................7 2.1. Initial Warrant Price............................................................7 2.2. Reset of Warrant Price...........................................................7 3. EXERCISE OF WARRANT....................................................................7 3.1. Manner of Exercise...............................................................7 3.2. Payment of Taxes.................................................................8 3.3. Fractional Shares................................................................9 3.4. Continued Validity...............................................................9 3.5. NASD Rule........................................................................9 4. TRANSFER, DIVISION AND COMBINATION.....................................................9 4.1. Transfer.........................................................................9 4.2. Division and Combination........................................................10 4.3. Expenses........................................................................10 4.4. Maintenance of Books............................................................10 5. ADJUSTMENTS...........................................................................10 5.1. Subdivisions and Combinations...................................................10 5.2. Issuance of Additional Shares of Common Stock...................................11 5.3. Issuance of Warrants or Other Rights............................................11 5.4. Issuance of Convertible Securities..............................................12 5.5. Superseding Adjustment..........................................................13 5.6. Other Provisions Applicable to Adjustments Under This Section...................14 5.7. Reorganization, Reclassification, Liquidation, Dissolution, Merger, Consolidation or Disposition of Assets..........................................16 5.8. Other Action Affecting Common Stock.............................................17 5.9. Certain Limitations.............................................................17 6. NOTICES TO WARRANT HOLDERS............................................................17 6.1. Notice of Adjustments...........................................................17 6.2. Notice of Certain Corporate Action..............................................18 7. NO IMPAIRMENT.........................................................................18 8. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY........................................18
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Page 9. TAKING OF A RECORD; STOCK AND WARRANT TRANSFER BOOKS..................................19 10. RESTRICTIONS ON TRANSFERABILITY.......................................................19 10.1. Restrictive Legends.............................................................19 10.2. Notice of Proposed Transfers; Requests for Registration.........................20 10.3. No Transfer to Competitor.......................................................21 10.4. Termination of Restrictions.....................................................21 11. SUPPLYING INFORMATION.................................................................21 12. LOSS OR MUTILATION....................................................................22 13. OFFICE OF THE COMPANY.................................................................22 14. REPURCHASE BY THE COMPANY OF WARRANTS AND WARRANT STOCK.....................................................................22 14.1. Obligation to Repurchase Warrant................................................22 14.2. Payment of Repurchase Price.....................................................24 15. REGISTRATION RIGHTS...................................................................24 16. LIMITATION OF LIABILITY...............................................................24 17. DIVIDENDS ON UNDERLYING COMMON STOCK..................................................24 17.1. Right to Receive Dividends......................................................24 17.2. Repayment of Dividends..........................................................25 18. RIGHTS PLAN...........................................................................26 18.1. Issuance of Rights..............................................................26 18.2. Return of Rights................................................................26 19. MISCELLANEOUS.........................................................................26 19.1. Nonwaiver and Expenses..........................................................26 19.2. Notice Generally................................................................27 19.3. Indemnification.................................................................27 19.4. Successors and Assigns..........................................................28 19.5. Amendment.......................................................................28 19.6. Severability....................................................................28 19.7. Headings........................................................................28 19.8. Governing Law...................................................................28 19.9. Arbitration.....................................................................28
ii THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES OR BLUE SKY LAWS OF ANY STATE AND MAY NOT BE SOLD, OR OTHERWISE TRANSFERRED, IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND UNDER ANY SUCH APPLICABLE STATE LAWS, OR IN VIOLATION OF THE PROVISIONS OF THIS WARRANT. THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND CONDITIONS OF A REGISTRATION RIGHTS AGREEMENT DATED AS OF JUNE 1, 2000. THIS WARRANT ALSO EVIDENCES AND ENTITLES THE HOLDER HEREOF TO CERTAIN RIGHTS AS SET FORTH IN A RIGHTS AGREEMENT BETWEEN SEMX CORPORATION AND CONTINENTAL STOCK TRANSFER & TRUST COMPANY, AS RIGHTS AGENT, DATED AS OF JUNE 15, 1999, AS AMENDED ON THE DATE HEREOF AND AS THE SAME MAY BE FURTHER AMENDED FROM TIME TO TIME (THE "RIGHTS AGREEMENT"), THE TERMS OF WHICH ARE HEREBY INCORPORATED HEREIN BY REFERENCE AND A COPY OF WHICH IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICES OF SEMX CORPORATION AND AVAILABLE FOR INSPECTION BY THE HOLDER OF THIS WARRANT. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, SUCH RIGHTS WILL BE EVIDENCED BY SEPARATE CERTIFICATES AND WILL NO LONGER BE EVIDENCED BY THIS WARRANT. SEMX CORPORATION WILL MAIL TO THE HOLDER OF THIS WARRANT A COPY OF THE RIGHTS AGREEMENT WITHOUT CHARGE WITHIN FIVE DAYS AFTER RECEIPT OF A WRITTEN REQUEST THEREFOR. UNDER CERTAIN CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY "PERSON" WHO IS, WAS OR BECOMES AN "ACQUIRING PERSON" OR ANY "AFFILIATE" OR "ASSOCIATE" THEREOF (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY BECOME NULL AND VOID. IN NO EVENT MAY THE RIGHTS BE EXERCISED AFTER JUNE 29, 2009. Warrant Number: Date of Issuance: June 1, 2000 No. of Shares of Common Stock: WARRANT To Purchase Common Stock of SEMX CORPORATION THIS IS TO CERTIFY THAT _____________________________ or its registered assigns, is entitled, at any time during the Exercise Period (as hereinafter defined), to purchase from SEMX Corporation, a Delaware corporation (the "Company"), __________________________________ shares of Common Stock (as hereinafter defined and subject to adjustment as provided 1 herein), in whole or in part, including fractional parts, at an initial purchase price of $10.00 per share (subject to adjustment as set forth herein), all on the terms and conditions and pursuant to the provisions hereinafter set forth. 1. DEFINITIONS As used in this Warrant, the following terms have the respective meanings set forth below: "Additional Shares of Common Stock" shall mean all shares of Common Stock issued by the Company after the Closing Date, other than Warrant Stock, whether now authorized or not. "Affiliate" of any Person shall mean a Person that directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with, such Person. "ASP" shall mean American Silicon Products, Inc., a Rhode Island corporation. "ASP Common Stock" shall mean the Common Stock of ASP. "Business Day" shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York. "Change of Control" shall mean the occurrence of one or more of the following events: (1) any Person or group (as that term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) of persons or entities (in each case, a "Beneficial Owner"), in a single transaction or through a series of related transactions, shall have become the beneficial owner of a majority (by voting power or otherwise) of the securities of the Company ordinarily having the right to vote in the election of directors; (2) during any consecutive three-year period commencing on or after the Closing Date, individuals who at the beginning of such period constituted the Board of Directors of the Company (together with any new directors whose election by such Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of 66 2/3% of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office; 2 (3) any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company to any Beneficial Owner (other than any wholly owned subsidiary of the Company); (4) the merger or consolidation of the Company with or into another corporation or the merger of another corporation into the Company with the effect that immediately after such transaction any Beneficial Owner shall have become the beneficial owner of securities of the surviving corporation of such merger or consolidation representing a majority of the combined voting power of the outstanding securities of the surviving corporation ordinarily having the right to vote in the election of directors; or (5) the adoption of a plan leading to the liquidation or dissolution of the Company. "Closing Date" shall mean June 1, 2000. "Commission" shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws. "Common Stock" shall mean (except where the context otherwise indicates) the Common Stock, $.10 par value, of the Company as constituted on the Closing Date, and any capital stock into which such Common Stock may thereafter be changed, and shall also include (i) capital stock of the Company of any other class (regardless of how denominated) issued to the holders of shares of Common Stock upon any reclassification thereof which is also not preferred as to dividends or assets over any other class of stock of the Company and which is not subject to redemption and (ii) shares of common stock of any successor or acquiring corporation (as defined in Section 5.7) received by or distributed to the holders of Common Stock of the Company in the circumstances contemplated by Section 5.7. "Convertible Securities" shall mean evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable, with or without payment of additional consideration in cash or property, for Additional Shares of Common Stock, either immediately or upon the occurrence of a specified date or a specified event. "Current Market Price" shall mean, in respect of any share of Common Stock (or Other Common Stock, as the case may be) on any date herein specified, the average of the Daily Market Prices for the 20 consecutive Trading Days immediately preceding such date. "Current Warrant Price" shall mean, in respect of a share of Common Stock at any date herein specified, the price at which a share of Common Stock may be purchased pursuant to this Warrant on such date, as set forth in Section 2 hereof, subject to adjustment pursuant to Section 5. 3 "Daily Market Price" shall mean, for each given Trading Day: (i) the last sale price on such day on the National Stock Exchange on which the Common Stock (or the Other Common Stock, as the case may be) is then listed or admitted to trading, (ii) if no sale takes place on such day on such exchange, the last reported sale price as officially quoted on such exchange, (iii) if the Common Stock (or the Other Common Stock, as the case may be) is not then listed or admitted to trading on any National Stock Exchange, the last reported sale price on the over-the-counter market, as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices), or if such sale price is not available on such date, the average of the closing bid and asked prices on such date as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices), or (iv) if there is no such organization or agency, as furnished by any member of the NASD selected mutually by the Majority Holders and the Company or, if they cannot agree upon such selection, by a member selected by two such members of the NASD, one of which shall be selected by the Majority Holders and one of which shall be selected by the Company. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time. "Exercise Period" shall mean the period beginning on the Closing Date and ending at 5:00 P.M., New York time, on the fifth anniversary of the Closing Date. "Expiration Date" shall mean the date of the expiration of the Exercise Period. "Fully Diluted Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all shares of Common Stock Outstanding at such date and all shares of Common Stock issuable in respect of this Warrant outstanding on such date and other options or warrants to purchase, or securities convertible into, shares of Common Stock outstanding on such date, whether or not such options, warrants or other securities are presently convertible or exercisable. "Holder" shall mean, as the context requires, the Person in whose name this Warrant or one of the other Warrants is registered on the books of the Company maintained for such purpose and/or the Person holding any Warrant Stock. "Independent Counsel" shall mean counsel to the Holder reasonably acceptable to the Company. "Majority Holders" shall mean, at any given time, holders of Warrants then outstanding who would hold a majority of the Common Stock purchasable upon exercise of all Warrants in the event all Warrants were so exercised at such time. 4 "NASD" shall mean the National Association of Securities Dealers, Inc., or any successor corporation thereto. "National Stock Exchange" shall mean the Nasdaq Stock Market, the New York Stock Exchange or the American Stock Exchange. "New Securities" shall mean any Additional Shares of Common Stock, and any rights or options to purchase any Additional Shares of Common Stock, and any Convertible Securities. "Other Common Stock" shall mean the common stock of a company other than the Company, including without limitation ASP Common Stock. "Other Property" shall have the meaning set forth in Section 5.7. "Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, except shares then owned or held by or for the account of the Company or any Subsidiary, and shall include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock. "Payment Shares" shall have the meaning set forth in Section 3.1. "Permitted Issuances" shall mean (i) the issuance of shares of Common Stock pursuant to an underwritten public offering; (ii) the issuance of shares of Common Stock upon exercise of the Warrants; (iii) the issuance of shares of Series B Preferred Stock pursuant to the Preferred Stock Purchase Agreement; (iv) the issuance of up to 100,000 shares of Common Stock in connection with the Company's acquisition of the assets of Advanced Packaging Concepts, Inc.; (v) the issuance of shares of Common Stock upon the exercise of options issued to management employees of the Company or its Subsidiaries pursuant to the Stock Option Plans; and (vi) the issuance of up to a total of 60,000 shares of Common Stock pursuant to warrants issued to VM Equity Partners, Inc. and Rodman and Renshaw as finders fees in connection with the transactions related to this Warrant. "Person" shall mean any individual, sole proprietorship, partnership, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof). "Preferred Stock Purchase Agreement" shall mean the Preferred Stock Purchase Agreement dated as of the Closing Date, by and among the Company, the initial Holder hereof and other designated purchasers. 5 "Registration Rights Agreement" shall mean the Registration Rights Agreement dated as of the Closing Date among the Company, the initial Holder hereof and other designated parties. "Reorganization" shall have the meaning set forth in Section 5.7. "Repurchase Price" shall have the meaning set forth in Section 14.2. "Reset Date" shall have the meaning set forth in Section 2.2. "Restricted Common Stock" shall mean shares of Common Stock which are, or which upon their issuance on the exercise of this warrant would be, evidenced by a certificate bearing the restrictive legend set forth in Section 10.1(a). "Restrictions" shall have the meaning set forth in Section 14.1(c). "Securities Act" shall mean the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time. "Series B Certificate of Designation" shall mean the Certificate of Designation, Number, Powers, Preferences and Relative Participating, Optional and Other Rights of Series B Preferred Stock of the Company, as in effect on the Closing Date. "Series B Preferred Stock" shall mean the Company's Series B Preferred Stock issued pursuant to the Series B Certificate of Designation and the Preferred Stock Purchase Agreement. "Stock Option Plans" shall mean the Company's Amended Employee's Incentive Stock Option Plan adopted by the Board of Directors on May 27, 1993, and the Company's non-qualified stock option plan for members of its Board of Directors adopted by the Board of Directors on January 31, 1995. "Subsidiary" shall mean any corporation of which an aggregate of more than 50% of the outstanding stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time, directly or indirectly, owned legally or beneficially by the Company and/or one or more Subsidiaries of the Company. "Trading Day" shall mean any day on which stock is traded on the New York Stock Exchange. 6 "Transfer" shall mean any disposition of any Warrant or Warrant Stock or of any interest in either thereof, which would constitute a sale thereof within the meaning of the Securities Act. "Underlying Series B Preferred Stock" shall mean the Series B Preferred Stock issued to the initial Holder of this Warrant on the date this Warrant was originally issued. "Warrants" shall mean this warrant and all other warrants issued pursuant to the terms of the Preferred Stock Purchase Agreement, and all warrants issued upon Transfer, division or combination of, or in substitution or exchange for, any thereof. "Warrant Price" shall mean an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of this Warrant pursuant to Section 3.1, multiplied by (ii) the Current Warrant Price as of the date of such exercise. "Warrant Stock" shall mean the shares of Common Stock purchased by Holders of the Warrants upon the exercise thereof. 2. CURRENT WARRANT PRICE 2.1. Initial Warrant Price. For a period commencing on the Closing Date and concluding at 5:00 P.M., New York time on the first anniversary of the Closing Date ("Year One"), the Current Warrant Price shall be $10.00 per share of Common Stock, subject to adjustment pursuant to Section 5. 2.2. Reset of Warrant Price. From and after the first Business Day following the first anniversary of the Closing Date (the "Reset Date"), the Current Warrant Price, subject to adjustment pursuant to Section 5 and the remaining provisions of this Section 2.2, shall be the lower of (a) the then existing Current Warrant Price pursuant to Section 2.1, or (b) the lowest average Daily Market Price of the Common Stock for any given 20 consecutive Trading Days during Year One. In the event that during Year One the Company issues dividends to the Holder hereof under Section 17 in the form of cash and/or shares of Other Common Stock, then the amount calculated pursuant to clause (b) in the previous sentence shall be increased by (i) the total amount of any cash dividends distributed to any Holder prior to the Reset Date on account of one share of Common Stock for which this Warrant is exercisable, plus (ii) the total value of any shares of Other Common Stock distributed to any Holder prior to the Reset Date on account of one share of Common Stock for which this Warrant is exercisable, valued at the lowest average Daily Market Price of such shares of Other Common Stock for any given 20 consecutive Trading Days during Year One in which any Holder owned such shares of Other Common Stock, in either case as equitably adjusted for stock splits, combinations, stock dividends and the like. Notwithstanding the foregoing, in no event shall the Current Warrant Price be adjusted pursuant to this Section 2.2 to an amount which is lower than $7.00, as such may be adjusted pursuant to Section 5. 7 3. EXERCISE OF WARRANT 3.1. Manner of Exercise. At any time during the Exercise Period, the Holder may exercise this Warrant, on any Business Day, for all or any part of the number of shares of Common Stock purchasable hereunder. In order to exercise this Warrant, in whole or in part, the Holder shall deliver to the Company at its office at 1 Labriola Court, Armonk, New York 10504, or at the office or agency designated by the Company pursuant to Section 13, (i) a written notice of the Holder's election to exercise this Warrant, which notice shall specify the number of shares of Common Stock to be purchased, (ii) payment of the Warrant Price in the manner provided below, and (iii) this Warrant. Such notice shall be substantially in the form of the subscription form appearing at the end of this Warrant as Exhibit A, duly executed by the Holder or its duly appointed agent or attorney. Upon receipt thereof, the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute or cause to be executed and deliver or cause to be delivered to the Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the Holder shall request in the notice and shall be registered in the name of the Holder or, subject to Section 10, such other name as shall be designated in the notice. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the notice, together with the cash or check or checks, if any, and this Warrant, are received by the Company as described above and all taxes required to be paid by the Holder, if any, pursuant to Section 3.2 prior to the issuance of such shares have been paid. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Stock, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased shares of Common Stock called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant, or, at the request of the Holder, appropriate notation may be made on this Warrant and the same returned to the Holder. Notwithstanding any provision herein to the contrary, the Company shall not be required to register shares in the name of any Person who acquired this Warrant (or part hereof) or any Warrant Stock otherwise than in accordance with this Warrant. Payment of the Warrant Price shall be made at the option of the Holder by (i) cash, (ii) wire transfer to an account in a bank located in the United States designated for such purpose by the Company, (iii) certified or official bank check, (iv) delivery of shares of Series B Preferred Stock with an aggregate stated value, plus accrued and unpaid dividends thereon, equal to the Warrant Price, (v) delivery of shares of Common Stock, valued per share at the Daily Market Price as of the last Trading Day prior to the date of delivery of such shares to the 8 Company, with an aggregate value equal to the Warrant Price, or (vi) any combination of the foregoing; provided, however, that the Holder shall have the right, at its election, in lieu of delivering the Warrant Price in cash, to instruct the Company in the form of Subscription Notice to retain, in payment of the Warrant Price, a number of shares of Common Stock (the "Payment Shares") equal to the quotient of the aggregate Warrant Price of the shares as to which this Warrant is then being exercised divided by the Current Market Price. 3.2. Payment of Taxes. All shares of Common Stock issuable upon the exercise of this Warrant pursuant to the terms hereof shall be validly issued, fully paid and nonassessable and without any preemptive rights. The Company shall pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issue or delivery thereof, unless such tax or charge is imposed by law upon the Holder, in which case such taxes or charges shall be paid by the Holder. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any transfer involved in the issue of any certificate for shares of Common Stock issuable upon exercise of this Warrant in any name other than that of the Holder, and in such case the Company shall not be required to issue or deliver any stock certificate until such tax or other charge has been paid or it has been established to the satisfaction of the Company that no such tax or other charge is due. 3.3. Fractional Shares. The Company shall not be required to issue a fractional share of Common Stock upon exercise of any Warrant. As to any fraction of a share which the Holder of one or more Warrants, the rights under which are exercised in the same transaction, would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to the same fraction of the Current Market Price per share of Common Stock on the date of exercise. 3.4. Continued Validity. A holder of shares of Common Stock issued upon the exercise of this Warrant, in whole or in part (other than a holder who acquires such shares after the same have been publicly sold pursuant to a Registration Statement under the Securities Act or sold pursuant to Rule 144 thereunder), shall continue to be entitled with respect to such shares to all rights to which it would have been entitled as the Holder under Sections 7, 11, 14, 15, and 16 of this Warrant, subject to the obligations thereunder. The Company will, at the time of each exercise of this Warrant, in whole or in part, upon the request of the holder of the shares of Common Stock issued upon such exercise hereof, acknowledge in writing, in form reasonably satisfactory to such holder, its continuing obligation to afford to such holder all such rights; provided, however, that if such holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such holder all such rights. 3.5. NASD Rule. Notwithstanding any other provision hereof, in no event shall this Warrant be exercisable if such exercise would violate NASD Rule 4460(i)(1)(D)(ii) or any successor provision. If the Holder is unable to exercise this Warrant because such exercise would violate said rule, the Company, at the request of the Holder, shall cooperate in a 9 reasonable manner to seek assurances from The Nasdaq Stock Market, including the waiver of said NASD rule, in order to facilitate the exercise of this Warrant. 4. TRANSFER, DIVISION AND COMBINATION 4.1. Transfer. Subject to compliance with Section 10, Transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company referred to in Section 3.1 or the office or agency designated by the Company pursuant to Section 13, together with a written assignment of this Warrant substantially in the form of Exhibit B hereto duly executed by the Holder or its agent or attorney and if such Transfer is not to be made pursuant to Section 10, funds sufficient to pay any transfer taxes payable upon the making of such Transfer. Upon such surrender and, if required, such payment, the Company shall, subject to Section 10, execute and deliver a new Warrant or Warrants in the name(s) of the assignee or assignees and in the denomination(s) specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be canceled. A Warrant, if properly assigned in compliance with Section 10, may be exercised by a new Holder for the purchase of shares of Common Stock without having a new Warrant issued. If requested by the Company, a new Holder shall acknowledge in writing, in form reasonably satisfactory to the Company, such Holder's continuing obligation under Section 10. 4.2. Division and Combination. Subject to Section 10, this Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office or agency of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4.1 and with Section 10, as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. 4.3. Expenses. The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 4. 4.4. Maintenance of Books. The Company agrees to maintain, at its aforesaid office or agency, books for the registration and the registration of transfer of the Warrants. 5. ADJUSTMENTS The number of shares of Common Stock for which this Warrant is exercisable, or the price at which such shares may be purchased upon exercise of this Warrant (as well as each of the prices included in the calculation to determine the Current Warrant Price after Year One pursuant to Section 2.2), shall be subject to adjustment from time to time as set forth in this 10 Section 5. The Company shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 5 at the time of such event. 5.1. Subdivisions and Combinations. If at any time the Company shall: (a) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (b) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, by a reverse stock split or otherwise, then (i) the number of shares of Common Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (ii) the Current Warrant Price shall be adjusted to equal (A) the Current Warrant Price multiplied by the number of shares of Common Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares for which this Warrant is exercisable immediately after such adjustment. 5.2. Issuance of Additional Shares of Common Stock. (a) In the event the Company shall issue or sell any Additional Shares of Common Stock, other than Permitted Issuances, for a consideration per Additional Share of Common Stock less than the Current Market Price, then the Current Warrant Price shall be reduced to a price calculated by multiplying the then existing Current Warrant Price by a fraction the numerator of which shall be the sum of (i) the number of Fully Diluted Outstanding shares of Common Stock immediately prior to such issue or sale multiplied by the Current Market Price per share of Common Stock immediately prior to such issue or sale plus (ii) the consideration received by the Company upon such issue or sale, and the denominator of which shall be the total number of Fully Diluted Outstanding shares of Common Stock immediately after such issue or sale multiplied by the Current Market Price per share of Common Stock immediately prior to such issue or sale. For purposes of this subsection (a), the date as of which the Current Market Price per share of Common Stock shall be computed shall be the earlier of the date upon which the Company shall (i) enter into a firm contract for the issuance of such shares or (ii) issue such shares. Upon any adjustment of the Current Warrant Price as provided in this Section 5.2(a), the Holder shall thereafter be entitled to purchase, at the Current Warrant Price resulting from such adjustment, the number of shares of Common Stock (calculated to the nearest 1/100th of a share) obtained by multiplying the Current Warrant Price in effect immediately prior 11 to such adjustment by the number of shares of Common Stock purchasable hereunder immediately prior to such adjustment and dividing the product thereof by the Current Warrant Price resulting from such adjustment. (b) The provisions of this Section 5.2 shall not apply to any issuance of Additional Shares of Common Stock for which an adjustment is provided under Section 5.1. No adjustment shall be made under this Section 5.2 upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Convertible Securities, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Convertible Securities (or upon the issuance of any warrant or other rights therefor) pursuant to Section 5.3 or Section 5.4. 5.3. Issuance of Warrants or Other Rights. Except with respect to Permitted Issuances and distributions on behalf of which a payment is made to the Holder of this Warrant pursuant to Section 17 hereof, if at any time the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Company is the surviving corporation) issue or sell, any warrants (other than the Warrants) or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities, whether or not the rights to exchange or convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon the exercise of such warrants or other rights or upon conversion or exchange of such Convertible Securities shall be less than the Current Market Price in effect immediately prior to the time of such distribution, issue or sale, then the number of shares of Common Stock for which this Warrant is exercisable and the Current Warrant Price shall be adjusted as provided in Section 5.2(a) on the basis that (i) the maximum number of Additional Shares of Common Stock issuable pursuant to all such warrants or other rights or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and outstanding, (ii) the price per share for such Additional Shares of Common Stock shall be deemed to be the lowest price per share at which such Additional Shares of Common Stock are issuable to such holders, and (iii) the Company shall have received all of the consideration, if any, payable for such warrants or other rights as of the date of the actual issuance thereof. No further adjustments of the number of shares of Common Stock for which this Warrant is exercisable or of the Current Warrant Price shall be made upon the actual issue of such Common Stock or of such Convertible Securities upon exercise of such warrants or other rights or upon the actual issue of such Common Stock upon such conversion or exchange of such Convertible Securities. 5.4. Issuance of Convertible Securities. Except with respect to Permitted Issuances and distributions on behalf of which a payment is made to the Holder of this Warrant pursuant to Section 17 hereof, if at any time the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a distribution of, or shall in any manner (whether directly or by assumption in a merger in which the Company is the surviving corporation) issue or sell, any Convertible Securities, whether or not the rights to exchange or 12 convert thereunder are immediately exercisable, and the price per share for which Common Stock is issuable upon such conversion or exchange shall be less than the Current Market Price in effect immediately prior to the time of such issue or sale, then the number of shares of Common Stock for which this Warrant is exercisable and the Current Warrant Price shall be adjusted as provided in Section 5.2(a) on the basis that (i) the maximum number of Additional Shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities shall be deemed to have been issued and outstanding, (ii) the price per share of such Additional Shares of Common Stock shall be deemed to be the lowest possible price in any range of prices at which such Additional Shares of Common Stock are available to such holders, and (iii) the Company shall have received all of the consideration payable therefor, if any, as of the date of actual issuance of such Convertible Securities. No further adjustment of the number of shares of Common Stock for which this Warrant is exercisable or of the Current Warrant Price shall be made under this Section 5.4 upon the issuance of any Convertible Securities which are issued pursuant to the exercise of any warrants or other subscription or purchase rights therefor, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights pursuant to Section 5.3. No further adjustments of the number of shares of Common Stock for which this Warrant is exercisable or of the Current Warrant Price shall be made upon the actual issue of such Common Stock upon conversion or exchange of such Convertible Securities and, if any issue or sale of such Convertible Securities is made upon exercise of any warrant or other right to subscribe for or to purchase or any warrant or other right to purchase any such Convertible Securities for which adjustments thereof have been or are to be made pursuant to other provisions of this Section 5, no further adjustments shall be made by reason of such issue or sale. 5.5. Superseding Adjustment. If, at any time after any adjustment of the number of shares of Common Stock for which this Warrant is exercisable shall have been made pursuant to Section 5.3 or Section 5.4 as the result of any issuance of warrants, rights or Convertible Securities, and either (a) such warrants or rights, or the right of conversion or exchange in such other Convertible Securities, shall expire, and all or a portion of such warrants or rights, or the right of conversion or exchange with respect to all or a portion of such other Convertible Securities, as the case may be, shall not have been exercised, or (b) the consideration per share for which shares of Common Stock are issuable pursuant to such warrants or rights, or such other Convertible Securities, shall be increased or decreased by virtue of provisions therein contained, then such previous adjustment shall be rescinded and annulled and the Additional Shares of Common Stock which were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled shall no longer be deemed to have been issued by virtue of such computation. Thereupon, a recomputation shall be made of the 13 effect of such rights or options or other Convertible Securities on the then outstanding Warrants, but not on any then outstanding Warrant Stock, on the basis of (c) treating the number of Additional Shares of Common Stock or other property, if any, theretofore actually issued or issuable pursuant to the previous exercise of any such warrants or rights or any such right of conversion or exchange, as having been issued on the date or dates of any such exercise and for the consideration actually received and receivable therefor, and (d) treating any such warrants or rights or any such other Convertible Securities which then remain outstanding as having been granted or issued immediately after the time of such increase or decrease of the consideration per share for which shares of Common Stock or other property are issuable under such warrants or rights or other Convertible Securities. 5.6. Other Provisions Applicable to Adjustments Under This Section. The following provisions shall be applicable to the making of adjustments provided for in this Section 5: (a) Computation of Consideration. To the extent that any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities shall be issued for cash consideration, the consideration received by the Company therefor shall be the amount of the cash received by the Company therefor, or, if such Additional Shares of Common Stock or Convertible Securities are offered by the Company for subscription, the subscription price, or, if such Additional Shares of Common Stock or Convertible Securities are sold to underwriters or dealers for public offering without a subscription offering, the public offering price (in any such case subtracting any amounts paid or receivable for accrued interest or accrued dividends, but not subtracting any compensation, discounts or expenses paid or incurred by the Company for and in the underwriting of, or otherwise in connection with, the issuance thereof). To the extent that such issuance shall be for a consideration other than cash, then, except as herein otherwise expressly provided, the amount of such consideration shall be deemed to be the fair value of such consideration at the time of such issuance as determined in good faith by the Board of Directors of the Company. In case any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase such Additional Shares of Common Stock or Convertible Securities shall be issued in connection with any merger in which the Company issues any securities, the amount of consideration therefor shall be deemed to be the fair value, as determined in good faith by the Board of Directors of the Company, of such portion of the assets and business of the nonsurviving corporation as such Board 14 in good faith shall determine to be attributable to such Additional Shares of Common Stock, Convertible Securities, warrants or other rights, as the case may be. The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by the Company for issuing such warrants or other rights plus the additional consideration payable to the Company upon exercise of such warrants or other rights. The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of any Convertible Securities shall be the consideration, if any, received by the Company for issuing warrants or other rights to subscribe for or purchase such Convertible Securities, plus the consideration paid or payable to the Company in respect of the subscription for or purchase of such Convertible Securities, plus the additional consideration, if any, payable to the Company upon the exercise of the right of conversion or exchange in such Convertible Securities. In case of the issuance at any time of any Additional Shares of Common Stock or Convertible Securities in payment or satisfaction of any dividends upon any class of stock other than Common Stock, the Company shall be deemed to have received for such Additional Shares of Common Stock or Convertible Securities a consideration equal to the amount of such dividend so paid or satisfied. (b) When Adjustments to Be Made. The adjustments required by this Section 5 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock for which this Warrant is exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Stock, as provided for in Section 5.1) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than 1% of the shares of Common Stock for which this Warrant is exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made upon the earlier of (i) the date upon which such adjustment, together with other adjustments required by this Section 5 and not previously made, would result in a minimum adjustment, and (ii) the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. (c) Fractional Interests. In computing adjustments under this Section 5, fractional interests in Common Stock shall be taken into account to the nearest 1/10th of a share. (d) When Adjustment Not Required. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to 15 receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (e) Escrow of Warrant Stock. If after any property becomes distributable pursuant to this Section 5 by reason of the taking of any record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, the Holder exercises this Warrant, any Additional Shares of Common Stock issuable and other property distributable upon exercise by reason of such adjustment shall be held in escrow for the Holder by the Company to be issued to the Holder upon and to the extent that the event actually takes place, upon payment of the then Current Warrant Price. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be canceled by the Company and escrowed property returned. (f) Challenge to Good Faith Determination. Whenever the Board of Directors of the Company shall be required to make a determination in good faith of the fair value of any item under this Section 5, such determination may be challenged in good faith by the Majority Holders, and any dispute shall be resolved by an investment banking firm of recognized national standing selected by the Company and acceptable to the Majority Holders. 5.7. Reorganization, Reclassification, Liquidation, Dissolution, Merger, Consolidation or Disposition of Assets. (a) Subject to the provisions of Section 5.7(b), in case the Company shall reorganize its capital, reclassify its capital stock, liquidate its assets, dissolve, consolidate or merge with or into another corporation (where the Company is not the surviving corporation or where there is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation or other entity (hereinafter, a "Reorganization") and, pursuant to the terms of such Reorganization, shares of common stock of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Stock of the Company, then the Holder shall have the right following the effectiveness of such Reorganization to receive, upon exercise of such Warrant, or, in the case of a liquidation of assets or a dissolution to receive, upon such liquidation or dissolution, without taking any further action, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such Reorganization by a holder of the number of 16 shares of Common Stock for which this Warrant is exercisable immediately prior to such event (without regard to the number of shares of Common Stock available or set aside for issuance upon such exercise). In case of any such Reorganization, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such appropriate modifications as are satisfactory to the Holder in order to provide for adjustments of shares of the Common Stock for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 5. For purposes of this Section 5.7 "common stock of the successor or acquiring corporation" shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 5.7 shall similarly apply to successive Reorganizations. (b) From and after the expiration of 18 months following the Closing Date, in the event of a Reorganization in which the Company is not the surviving corporation and in which Other Property is to be received by or distributed to the holders of Common Stock of the Company, and in the event the successor or acquiring corporation is unwilling to comply with the applicable provisions of Section 5.7(a), then the Company, in lieu of compliance with the provisions of Section 5.7(a), shall have the right, upon written notice to the Holder at least 20 days prior to the occurrence of the Reorganization, to require the Holder to either (i) exercise this Warrant in full prior to or contemporaneous with the occurrence of the Reorganization, or (ii) elect to have this Warrant repurchased pursuant to Section 14. 5.8. Other Action Affecting Common Stock. In case at any time or from time to time the Company shall take any action in respect of its Common Stock, other than any action described in this Section 5 for which a specific adjustment is provided, then, unless such action will not have a materially adverse effect upon the rights of the Holder, the number of shares of Common Stock or other stock for which this Warrant is exercisable and/or the purchase price thereof shall be adjusted in such manner as may be equitable in the circumstances. 5.9. Certain Limitations. Notwithstanding anything herein to the contrary, the Company agrees not to enter into any transaction which, by reason of any adjustment hereunder, would cause the Current Warrant Price to be less than the par value per share of Common Stock. 17 6. NOTICES TO WARRANT HOLDERS 6.1. Notice of Adjustments. Whenever the number of shares of Common Stock or the class or type of stock or other property for which this Warrant is exercisable, or whenever the price at which a share of such Common Stock may be purchased upon exercise of this Warrant, shall be adjusted pursuant to Section 5, the Company shall forthwith prepare a certificate to be executed by the chief financial officer of the Company setting forth, in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of the Company determined the fair value of any evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights referred to in Section 5.6(a)), specifying the number of shares of Common Stock for which this Warrant is exercisable and (if such adjustment was made pursuant to Section 5.7 or 5.8) describing the number and kind of any other shares of stock or Other Property for which this Warrant is exercisable, and any change in the purchase price or prices thereof, after giving effect to such adjustment or change. The Company shall promptly cause a signed copy of such certificate to be delivered to the Holder in accordance with Section 19.2. The Company shall keep at its office or agency designated pursuant to Section 13 copies of all such certificates and cause the same to be available for inspection at said office during normal business hours by the Holder or any prospective purchaser of a Warrant designated by the Holder. 6.2. Notice of Certain Corporate Action. The Holder shall be entitled to the same rights to receive notice of corporate action as any holder of Common Stock. 7. NO IMPAIRMENT The Company shall not by any action including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any shares of Common Stock receivable upon the exercise of this Warrant above the Current Warrant Price immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock, free and clear of any liens, claims, encumbrances and restrictions (other than as provided herein) upon the exercise of this Warrant, and (c) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. 18 Upon the request of the Holder, the Company will at any time during the period this Warrant is outstanding acknowledge in writing, in form satisfactory to the Holder, the continuing validity of this Warrant and the obligations of the Company hereunder. 8. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY From and after the Closing Date, subject to the limitation set forth in the last sentence of this paragraph, the Company shall at all times reserve and keep available for issue upon the exercise of warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to permit the exercise in full of all outstanding Warrants, the Company will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, taking appropriate board action, recommending such an increase to the holders of Common Stock, holding shareholders meetings, soliciting votes and proxies in favor of such increase to obtain the requisite shareholder approval and upon such approval, the Company shall reserve and keep available such additional shares solely for the purpose of permitting the exercise of Warrants. All shares of Common Stock which shall be so issuable, when issued upon exercise of any Warrant and payment therefor in accordance with the terms of such Warrant, shall be duly and validly issued, fully paid and nonassessable and free and clear of any liens, claims and restrictions (other than as provided herein). Except as provided in this Warrant, no stockholder of the Company has or shall have any preemptive rights to subscribe for such shares of Common Stock. Before taking any action which would result in an adjustment in the number of shares of Common Stock or the type of consideration for which this Warrant is exercisable or in the Current Warrant Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. If any shares of Common Stock required to be reserved for issuance upon exercise of Warrants require registration or qualification with any governmental authority under any federal or state law (otherwise than as provided in Section 10) before such shares may be so issued, the Company will in good faith and as expeditiously as possible and at its expense endeavor to cause such shares to be duly registered. 9. TAKING OF A RECORD; STOCK AND WARRANT TRANSFER BOOKS 19 In the case of all dividends or other distributions by the Company to the holders of its Common Stock with respect to which any provision of Section 5 refers to the taking of a record of such holders, the Company will in each such case take such a record and will take such record as of the close of business on a Business Day. The Company will not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant. 10. RESTRICTIONS ON TRANSFERABILITY The Holder shall not Transfer all or any portion of this Warrant or any shares of the Warrant Stock before satisfaction of the conditions specified in this Section 10. The Holder, by acceptance of this Warrant, agrees to be bound by the provisions of this Section 10. 10.1. Restrictive Legends. (a) Except as otherwise provided in this Section 10, each certificate for Warrant Stock initially issued upon the exercise of this Warrant, and each certificate for Warrant Stock issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with legends in substantially the following form: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended, or under the securities or blue sky laws of any state and are subject to the conditions specified in a certain Warrant dated June 1, 2000, originally issued by SEMX Corporation. The shares represented by this certificate may not be sold, or otherwise transferred, in the absence of such registration or an exemption therefrom under such Act and under any such applicable state laws, or in violation of the provisions of the Warrant. A copy of the form of said Warrant is on file with the Secretary of SEMX Corporation. The holder of this certificate, by acceptance of this certificate, agrees to be bound by the provisions of such Warrant." "The shares represented by this certificate are subject to the terms and conditions of a Registration Rights Agreement, dated as of June 1, 2000." (b) Except as otherwise provided in this Section 10, each Warrant shall be stamped or otherwise imprinted with legends in substantially the following form: "This Warrant and the securities represented hereby have not been registered under the Securities Act of 1933, as amended, or under the securities or blue sky laws of any state and may not be sold, or otherwise transferred, in the absence of such registration or an exemption therefrom 20 under such Act and under any such applicable state laws, or in violation of the provisions of this Warrant." "This Warrant and the securities represented hereby are subject to the terms and conditions of a Registration Rights Agreement, dated as of June 1, 2000." 10.2. Notice of Proposed Transfers; Requests for Registration. Prior to any Transfer or attempted Transfer of any Warrants or any shares of Restricted Common Stock, the Holder of such Warrants or Restricted Common Stock shall deliver to the Company either a written opinion of Independent Counsel, which opinion shall be reasonably acceptable to the Company, addressed to the Company or a no-action letter from the Commission to the effect that the proposed Transfer of such Warrants or such Restricted Common Stock may be effected without registration under the Securities Act and applicable state securities or blue sky laws. After delivery of the written opinion or the no-action letter to the Company, such Holder shall thereupon be entitled to Transfer such Warrants or such Restricted Common Stock. Each certificate, if any, evidencing such shares of Restricted Common Stock issued upon such Transfer shall bear the restrictive legend set forth in Section 10.1(a), and each Warrant issued upon such Transfer shall bear the restrictive legend set forth in Section 10.1(b), unless in the written opinion of Independent Counsel addressed to the Company such legend is not required in order to ensure compliance with the Securities Act. 10.3. No Transfer to Competitor. Until the termination in accordance with Section 10.4 of the restrictions on transferability imposed by this Section 10, the Holder shall not Transfer all or any portion of this Warrant, the Warrant Stock or the Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) to any Person that the Holder knows, after reasonable inquiry, is engaged in a business that competes in any material way with the business of the Company or any of its Subsidiaries (other than a holder of less than 5% of the public securities of any such Person). In clarification and not in limitation of the above, the Holder shall be permitted to effect such a Transfer to such a competitor in connection with the sale of securities (i) in a public distribution or a public securities transaction, or (ii) pursuant to Rule 144 (or any successor provision to such Rule) under the Securities Act, provided such Transfer is not a directed sale. 10.4. Termination of Restrictions. Notwithstanding the foregoing provisions of Section 10, the restrictions imposed by this Section upon the transferability of the Warrants, the Warrant Stock and the Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) and the legend requirements of Section 10.1 shall terminate as to any particular Warrant or share of Warrant Stock or Restricted Common Stock (or Common Stock issuable upon the exercise of the Warrants) (i) when and so long as such security shall have been effectively registered under the Securities Act and disposed of pursuant thereto, or (ii) when the Company shall have delivered to the Holder or Holders of Warrants, Warrant Stock or Restricted Common Stock the written opinion of Independent Counsel stating that such legend is not 21 required in order to ensure compliance with the Securities Act. Whenever the restrictions imposed by Section 9 shall terminate as to this Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive from the Company, at the expense of the Company, a new Warrant bearing the following legend in place of the first restrictive legend set forth hereon: "THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT CONTAINED IN SECTION 10 HEREOF TERMINATED ON ____________, 200__, AND ARE OF NO FURTHER FORCE AND EFFECT." All Warrants issued upon registration of Transfer, division or combination of, or in substitution for, any Warrant or Warrants entitled to bear such legend shall have a similar legend endorsed thereon. Whenever the restrictions imposed by this Section shall terminate as to any share of Restricted Common Stock, as hereinabove provided, the Holder thereof shall be entitled to receive from the Company, at the Company's expense, a new certificate representing such Common Stock not bearing the restrictive legend set forth in Section 10.1(a). 11. SUPPLYING INFORMATION The Company shall cooperate with each Holder of a Warrant and each Holder of Restricted Common Stock in supplying such information as may be reasonably requested by such Holder or reasonably necessary for such Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of an exemption from the Securities Act for the sale of any Warrant or Restricted Common Stock. 12. LOSS OR MUTILATION Upon receipt by the Company from the Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity reasonably satisfactory to it (it being understood that the written indemnity agreement of Exeter Venture Lenders, L.P. shall be sufficient indemnity) and in case of mutilation upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to the Holder; provided, in the case of mutilation, no indemnity shall be required if this warrant in identifiable form is surrendered to the Company for cancellation. 13. OFFICE OF THE COMPANY As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices of the Company) where the warrants may be presented for exercise, registration of Transfer, division or combination as provided in this Warrant. 14. REPURCHASE BY THE COMPANY OF WARRANTS AND WARRANT STOCK 22 14.1. Obligation to Repurchase Warrant. (a) If a Change of Control occurs at any time during the Exercise Period, the Holder at its election by notice to the Company (the "Put Notice"), may demand repurchase, at any time concurrently with or within 60 days following the occurrence of such Change in Control, of the entire unexercised portion of this Warrant, provided that (i) either (A) at the time of the election under this Section 14.1, the Holder owns all of the shares of the Underlying Series B Preferred Stock or (B) at the time the Holder acquired this Warrant, the Holder also acquired all of the Underlying Series B Preferred Stock and, during the period in which the Holder owned such shares, such shares were redeemed pursuant to Section 5 of the Series B Certificate of Designation, and (ii) in the event the Holder, at the time of the election under this Section 14.1, owns any shares of the Underlying Series B Preferred Stock, such shares have been or are being redeemed pursuant to Section 5(c) of the Series B Certificate of Designation prior to or contemporaneously with the repurchase of this Warrant. Subject to the provisions of Section 14.2, the Company shall, on the date (not less than 15 days after the date of the Put Notice) designated in such Put Notice (the "Repurchase Date"), repurchase from the Holder the entire unexercised portion of this Warrant for an amount calculated to return to the Holder the total purchase price initially paid to the Company for the Underlying Series B Preferred Stock by the initial holder thereof plus a 20% annual internal rate of return (or such lower applicable rate consented to by the Holder) on said initial purchase price from the first date of issuance of the Series B Preferred Stock through the Repurchase Date. Such calculation shall take into account (x) the total cash redemption price received by the Holder by reason of the redemption of the Holder's shares of the Underlying Series B Preferred Stock under Section 5 of the Series B Certificate of Designation, (y) all cash or shares of Other Common Stock (which shares shall be valued at the average Daily Market Price of such shares for the first 60 consecutive Trading Days following the date of the issuance of such dividend or, to the extent any such shares were sold during such 60 day period, then such sold shares shall be valued at the price actually received for such shares) received by the existing or any former holder of this Warrant as dividends pursuant to Section 17, and (z) the value of any and all shares of Common Stock issued to the existing or any former holder of this Warrant by reason of the exercise of any portion of this or any other Warrant or shares of Other Common Stock distributed to the existing or any former holder of this Warrant as dividends pursuant to Section 17 (whether or not any or all of such shares are owned by the Holder on the Repurchase Date). Such shares of Common Stock that are not owned by the holder hereof on the date of the Put Notice shall be valued at a per share price equal to the Current Market Price of such share as of the date such shares were acquired by exercise of a Warrant. Such shares of Common Stock that are owned by the holder hereof on the date of the Put Notice shall be valued at a per share price of the Current Market Price of such share as of the Repurchase Date or the date such shares were acquired by exercise of a Warrant, whichever is greater. (b) Notwithstanding the provisions of Section 14.1(a), if, at any time during the period between the date on which the Holder shall have delivered a Put Notice and the Repurchase Date, a Reorganization shall occur and the consideration received or receivable by stockholders in connection with such Reorganization shall consist solely of cash, then the Holder shall (whether or not the Holder shall have previously surrendered its Warrant for repurchase by 23 the Company pursuant to this Section 14) be entitled to receive, on the date of repurchase, the higher of (i) the amount payable to the Holder as determined pursuant to Section 14.1(a) and (ii) an amount equal to the amount of cash the Holder would have received upon the occurrence of such Reorganization had the Holder's Warrant been fully exercised immediately prior thereto less, in the event of a repurchase of this Warrant, the purchase price payable at such time for the purchase of the shares of Common Stock then subject to the Holder's Warrant. (c) The Company shall not be obligated under this Section 14.1 to repurchase any Warrant if and to the extent such a repurchase (i) would cause an event of default to exist by reason of such repurchase, which event of default has not been waived, with respect to any agreement or instrument evidencing the Company's or any of its Subsidiaries' indebtedness for borrowed money, or would violate any provision of any such agreement or instrument, or (ii) would be in violation of applicable law ("Restrictions"), in any such case as determined by an opinion of counsel to the Company reasonably acceptable to the Holder; provided, however, that the Company shall use its reasonable best efforts to have any such Restriction either waived or terminated (including, without limitation, by obtaining refinancing for any such indebtedness). In the event that, following receipt of a Put Notice, the Company will not repurchase such Warrant because of the existence of any Restriction, the Company shall, within ten (10) days of receipt of the Put Notice, so notify the Holder in writing, setting forth that the Warrant will not be repurchased and the Restrictions which apply, and deliver to the Holder a copy of the opinion referred to in the prior sentence. In addition, in such event, the Company shall thereafter, upon the request of the Holder, use its best efforts to register the Warrant Stock and/or the Common Stock subject to this Warrant, in accordance with the terms of the Registration Rights Agreement. 14.2. Payment of Repurchase Price. The purchase price for any repurchase pursuant to Section 14.1 (the "Repurchase Price") shall be determined pursuant to Section 14.1 and shall be payable in cash. On the date of any repurchase of Warrants pursuant to this Section 14, the Holder shall assign to the Company its Warrant, without any representation or warranty (other than that the Holder has good and marketable title thereto, free and clear of liens, encumbrances and restrictions of any kind), by the surrender of the Holder's Warrant at the principal office of the Company referred to in Section 3.1 against payment therefor of the Repurchase Price by, at the option of the Holder, (i) wire transfer to an account in a bank located in the United States designated by the Holder for such purpose or (ii) a certified or official bank check payable to the order of the Holder. 15. REGISTRATION RIGHTS This Warrant is entitled to the benefits of the registration rights provisions contained in the Registration Rights Agreement, subject to the restrictions on the transfer of the rights contained therein set forth in Section 2(b)(iii) thereof. The Company shall keep a copy of 24 the Registration Rights Agreement, and any amendments thereto, at the office or agency designated by the Company pursuant to Section 13 and shall furnish copies thereof to the Holder upon request. 16. LIMITATION OF LIABILITY No provision hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of the Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company. 17. DIVIDENDS ON UNDERLYING COMMON STOCK 17.1. Right to Receive Dividends. In the event that, at any time the Company shall pay a dividend or make any other distribution with respect to its Common Stock whether in the form of cash, Other Common Stock, evidences of indebtedness, securities or other property, then the Company shall pay to the Holder of this Warrant on the date of payment of such dividend or other distribution, an amount in cash or a number of evidences of indebtedness, securities or other property which a holder of the number of shares of Common Stock issuable upon exercise of this Warrant in full on the record date for such dividend or other distribution would be entitled to receive on account of such dividend or distribution. A reclassification of the Common Stock (other than a change in par value, or from par value to no par value or from no par value to par value) into shares of Common Stock and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Common Stock of such shares of such other class of stock within the meaning of this Section 17 and, if the outstanding shares of Common Stock shall be changed into a larger or smaller number of shares of Common Stock as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding shares of Common Stock within the meaning of Section 5.1. 17.2. Repayment of Dividends. (a) In the event the Company at any time issues dividends to any Holder hereof under Section 17.1 and this Warrant is never exercised during the Exercise Period, then within 30 days following the Expiration Date, provided the Company has redeemed the Underlying Series B Preferred Stock for cash in a timely manner in accordance with the terms of the Series B Certificate of Designation, the final Holder hereof shall pay to the Company an amount equal to the excess, if any, by which the annual internal rate of return on the initial purchase price for this Warrant and the Underlying Series B Preferred Stock from the first date of issuance of the Series B Preferred Stock through the Expiration Date exceeds 15%. The calculation of said annual rate of return shall include any shares of Other Common Stock received by the Holder hereof as a dividend under Section 17.1, which shares shall be valued at the average Daily Market Price of such shares for the first 60 consecutive Trading Days following the date of the issuance of such dividend or, to the extent any such shares were sold during such 60 day period, then such sold shares shall be valued at the price actually received for 25 such shares. If the Holder becomes obligated to make a payment to the Company pursuant to this Section 17.2, such payment may be made in cash and/or by the assignment to the Company of shares of Other Common Stock valued in accordance with the previous sentence. (b) In the event a portion, but less than all, of this Warrant is exercised during the Exercise Period, then the components of the calculation of any amounts payable to the Company under Section 17.1 shall be appropriately prorated. For example, if 50% of this Warrant had been exercised, then the calculation would include 50% of the initial purchase price for this Warrant and the Underlying Series B Preferred Stock, 50% of the total dividends and redemption price, if any, paid with respect to the Underlying Series B Preferred Stock, and 50% of any shares of Other Common Stock received by the Holder hereof as a dividend under Section 17.1. (c) Notwithstanding the above, in the event the Company on any fourth (or more) occasion shall fail to pay any dividend on any Series B Preferred Stock on the applicable Dividend Payment Date (as defined in the Series B Certificate of Designation) in accordance with Section 2 of the Series B Certificate of Designation for any reason, including but not limited to, that such payment is prohibited by applicable law or any loan document to which the Company is a party (including without limitation that certain Revolving Credit, Term Loan and Security Agreement dated November 1, 1999, among PNC Bank, National Association, the Corporation and certain of the Corporation's affiliates, as the same may be amended from time to time) or the Board of Directors of the Company elects not to declare or pay such dividend, and such failure shall not be cured within a period of 30 days after such Dividend Payment Date, then this Section 17.2 thereafter shall be null and void and of no effect. (c) Notwithstanding the provisions of this Section 17, the Company acknowledges that there are certain restrictions on the issuance of dividends set forth in Section 4(b)(iv) of the Series B Certificate of Designation. 18. RIGHTS PLAN 18.1. Issuance of Rights. Contemporaneous with the issuance of this Warrant, the Company shall execute all documents and take all actions necessary to issue to the Holder, pursuant to that certain Rights Agreement dated as of June 15, 1999, between the Company and Continental Stock Transfer & Trust Company, Rights Agent (the "Rights Plan"), effective as of the Closing Date, the number of Rights (as defined in the Rights Plan) that would be issued to the Holder were the Holder to own the total number of shares of Common Stock issuable to the Holder upon the full exercise of this Warrant, and to assure that the Holder is entitled to all the rights, privileges and protections of a holder of Rights under the Rights Plan. 18.2. Return of Rights. In the event that a Triggering Event under the Rights Plan occurs during the Exercise Period but this Warrant is never exercised during the Exercise Period, then the Holder's Rights under the Rights Plan granted pursuant to Section 18.1 shall expire on 26 the Expiration Date. In the event a portion, but less than all, of this Warrant is exercised during the Exercise Period, then the Holder's prorated share of the Rights corresponding to the unexercised portion of this Warrant shall so expire. 19. MISCELLANEOUS 19.1. Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice the Holder's rights, powers or remedies. If the Company fails to make, when due, any payments provided for hereunder, or fails to comply with any other provision of this Warrant, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. 19.2. Notice Generally. All notices, demands, requests, or other communications which may be or are required to be given, served, or sent by any party to any other party pursuant to this Warrant shall be in writing and shall be mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or transmitted by hand delivery (including delivery by courier), or facsimile transmission, addressed as follows: (a) If to the Company: SEMX Corporation 1 Labriola Court Armonk, NY 10504 Attention: Gilbert D. Raker, Chairman, President and CEO Facsimile: (914) 273-5860 with a copy to: Joel Salon, Esquire Salon, Marrow, Dyckman & Newman, LLP 685 Third Avenue New York, NY 10017 Facsimile: (212) 661-3339 (b) If to the Holder, at its last known address appearing on the books of the Company maintained for such purpose. Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request or communication shall be deemed to have been duly given five business days after being deposited in the mail, postage prepaid, if mailed; when delivered by hand, if personally 27 delivered; or upon receipt, if sent by facsimile (followed by a confirmation copy sent by either overnight or two (2) day courier). 19.3. Indemnification. The Company agrees to indemnify and hold harmless the Holder, its officers, directors, employees, agents, and attorneys from and against any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of any kind which may be imposed upon, incurred by or asserted against the Holder relating to or arising out of any litigation to which the Holder is made a party in its capacity as a stockholder or warrantholder of the Company; provided, however, that the Company will not be liable hereunder to the extent that any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys' fees, expenses or disbursements are found in a judgment by a court to have resulted from (i) the Holder's gross negligence or willful misconduct, (ii) actions or omissions taken or not taken by the Holder in any capacity other than as a stockholder or warrantholder of the Company or (iii) actions or omissions taken or not taken by the Holder solely as a stockholder or warrantholder of the Company and for which stockholders or warrantholders may be held liable under Delaware law. 19.4. Successors and Assigns. Subject to the provisions of Sections 4.1 and 10, (i) this Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and assigns of the Holder, and (ii) the provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant, and shall be enforceable by any such Holder. 19.5. Amendment. The Warrants may be modified or amended or the provisions thereof waived with the written consent of the Company and the Holder. 19.6. Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant. 19.7. Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. 19.8. Governing Law. This Warrant shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to the conflict of laws principles thereof. 19.9. Arbitration. Any claim or dispute between the parties hereto arising out of or in connection with this Warrant or any of the provisions hereof, or the interpretation, meaning or effect hereof, or the transactions contemplated hereby, shall be submitted to and determined by arbitration in New York, New York in accordance with the procedures, rules and regulations of 28 the American Arbitration Association as in effect at such time. The decision, findings or award of the arbitrator(s) in the matter shall be final and nonappealable and binding upon the parties (and their respective successors) with respect to the subject matter herein concerned, and judgment thereon may be entered in any court or forum having jurisdiction thereof. [Remainder of Page Intentionally Left Blank] 29 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its duly authorized officer and its corporate seal to be impressed hereon and attested by its Secretary or Assistant Secretary. Dated: June 1, 2000 SEMX CORPORATION By: /s/ --------------------------------- Name: Gilbert D. Raker Title: Chairman, President and CEO Attest: By: /s/ --------------------------- Name: Mark Koch Title: Secretary EXHIBIT A SUBSCRIPTION FORM [To be executed only upon exercise of Warrant] The undersigned registered owner of this Warrant irrevocably exercises this Warrant for the purchase of _______ shares of Common Stock of SEMX Corporation and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant and requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to __________________ whose address is ___________________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned. - -------------------------- (Name of Registered Owner) - -------------------------- (Signature of Registered Owner) - -------------------------- (Street Address) - -------------------------- (City) (State) (Zip Code) NOTICE: The signature on this subscription must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever. EXHIBIT B ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of shares of Common Stock set forth below: Name and Address of Assignee No. of Shares of Common Stock - ---------------------------- ----------------------------- and does hereby irrevocably constitute and appoint ______________ attorney-in-fact to register such transfer on the books of SEMX Corporation maintained for the purpose, with full power of substitution in the premises. Dated: ----------------------- Name: ------------------------ Signature: ------------------- Witness: --------------------- NOTICE: The signature on this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever. EX-4.5 6 0006.txt REGISTRATION RIGHTS AGREEMENT Exhibit 4.5 This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as of June 1, 2000, by and among SEMX Corporation, a Delaware corporation (the "Company"), and the parties listed on Exhibit A attached to this Agreement (each hereinafter individually referred to as a "Purchaser" and collectively referred to as the "Purchasers"). RECITALS WHEREAS, the Company and the Purchasers have entered into that certain Preferred Stock Purchase Agreement, dated as of the date hereof (the "Purchase Agreement"), pursuant to which, among other things, the Purchasers are acquiring Warrants (the "Warrants") to purchase an aggregate amount of 1,000,000 shares of the Company's common stock, $.10 par value (the "Common Stock"); and WHEREAS, in connection with the purchase of the Warrants, the Company has agreed, on the terms and conditions set forth herein, to register shares of Common Stock as set forth below. NOW THEREFORE, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: SECTION 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Affiliate" means, with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Business Day" means any day that is not a Saturday, a Sunday or a legal holiday on which banking institutions in the State of New York are not required to be open. "Capital Stock" means, with respect to any Person, any and all shares, interests, participations or other equivalents (however designated) of corporate stock issued by such Person, including each class of common stock and preferred stock of such Person. "Common Stock" shall have the meaning set forth in the Recitals. "Company" shall have the meaning set forth in the Recitals. "Delay Period" shall have the meaning set forth in Section 2(d) hereof. "Demand Notice" shall have the meaning set forth in Section 2(b) hereof. "Demand Registration" shall have the meaning set forth in Section 2(b) hereof. "Demanding Holders" means the Holders delivering the Demand Notice pursuant to Section 2(b) hereof. "Effectiveness Period" shall have the meaning set forth in Section 2(d) hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder. "Hold Back Period" shall have the meaning set forth in Section 4 hereof. "Holder" means such Person or Persons who owns Registrable Shares or securities exercisable for Registrable Shares. "Interruption Period" shall have the meaning set forth in Section 5 hereof. "Losses" shall have the meaning set forth in Section 8(a) hereof. "Majority-in-Interest" of any group of Holders means holders of more than 50% of the Registrable Shares held by such Holders or obtainable by such Holders upon exercise of Warrants. "Person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof. "Piggyback Registration" shall have the meaning set forth in Section 3 hereof. "Prospectus" means the prospectus included in any Registration Statement (including a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Shares covered by such Registration Statement and all other amendments and supplements to such prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such prospectus. "Purchase Agreement" shall have the meaning set forth in the Recitals. "Registrable Shares" means the Warrant Shares and any shares of Common Stock issued or issuable with respect to the Warrant Shares upon any stock split, stock dividend, recapitalization or similar event; provided, however, that shares of Common Stock shall only be registrable pursuant to this Agreement if and so long as they (i) have not been sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, (ii) may not be disposed of pursuant to Rule 144(k) (or any successor provision to such Rule) under 2 the Securities Act as confirmed in a written opinion of counsel to the Company addressed to the Holders of the applicable shares of Common Stock or (iii) have not been sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions and restrictive legends with respect to such shares of Common Stock are removed upon the consummation of such sale and the Company and the seller and purchaser of such shares of Common Stock shall have received an opinion of counsel for the seller, which shall be in form and content reasonably satisfactory to the Company and the seller and purchaser and their respective counsel, to the effect that such shares of Common Stock in the hands of the purchaser are freely transferable without restriction or registration under the Securities Act in any public or private transaction. "Registration" means registration under the Securities Act of an offering of Registrable Shares pursuant to a Demand Registration or a Piggyback Registration. "Registration Statement" means any registration statement of the Company under the Securities Act that covers any of the Registrable Shares pursuant to the provisions of this Agreement, including the related Prospectus, all amendments and supplements to such registration statement, including pre- and post-effective amendments, all exhibits thereto and all material incorporated by reference or deemed to be incorporated by reference in such registration statement. "Required Registration" shall have the meaning set forth in Section 2(a) hereof. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder. "underwritten registration or underwritten offering" means a registration under the Securities Act in which securities of the Company are sold to an underwriter for reoffering to the public. "Warrants" shall have the meaning set forth in the Recitals. "Warrant Shares" shall mean the shares of Common Stock issuable or issued upon exercise of the Warrants. SECTION 2. Required Registration; Demand Registration. (a) Required Registration. In the event that the Holders of Warrants to purchase in the aggregate at least 25% of the total number of Warrant Shares issuable upon the exercise of all the initial Warrants (as adjusted for stock splits, reverse stock splits, stock dividends and similar events) exercise their right to require the Company to repurchase their Warrants pursuant to Section 14 of the Warrants, and the Company is not obligated to repurchase such Warrants due to the existence of a Restriction (as defined in Section 14.1(c) of the Warrants), the Company, within 60 days following the date of the Holders' Put Notice (as defined in Section 14.1(a) of the Warrants), 3 shall file with the SEC, and the Company shall thereafter use its best efforts to cause to be declared effective within 120 days following the date of the Holders' Put Notice (the "Put Target Effective Date"), a Registration Statement on the appropriate form for the registration and sale, in accordance with the intended method or methods of distribution, of the total Warrant Shares issuable or issued upon exercise of the Warrants that were the subject of the Put Notice (a "Put Required Registration"). (b) Demand Registration of Warrant Shares. (i) At any time and from time to time following the expiration of 180 days following the date of this Agreement, a Majority-in- Interest of the Holders shall have the right, by written notice (the "Demand Notice") given to the Company, to request the Company to register under and in accordance with the provisions of the Securities Act all or any portion of the Warrant Shares held by such Holders and/or the Warrant Shares for which Warrants held by such Holders are exercisable, as designated by such Holders; provided, however, that the aggregate number of Warrant Shares requested to be registered pursuant to any Demand Notice shall be at least 25% of the total number of Warrant Shares issuable upon the exercise of all the initial Warrants (as adjusted for stock splits, reverse stock splits, stock dividends and similar events). Upon receipt of any such Demand Notice, the Company shall promptly, but in no event more than five days after receipt thereof, notify all other Holders of the receipt of such Demand Notice and, subject to the limitations set forth below, shall include in the proposed registration all Warrant Shares with respect to which the Company has received written requests for inclusion therein within 20 days after delivery of the Company's notice. In connection with any Demand Registration in which more than one holder of securities participates, in the event that such Demand Registration involves an underwritten offering and the managing underwriter or underwriters participating in such offering advise in writing the Holders of Warrant Shares and the holders of other securities to be included in such offering that the total number of Warrant Shares and other securities to be included in such offering exceeds the amount that can be sold in (or during the time of) such offering without delaying or jeopardizing the success of such offering (including the price per share of the Warrant Shares and other securities to be sold), then the amount of Warrant Shares and other securities to be offered for the account of such Holders shall be reduced as follows: first, pro rata on the basis of the number of securities other than Warrant Shares requested to be registered by the holders of such securities; second, pro rata on the basis of the number of Warrant Shares requested to be registered by Holders other than the Demanding Holders; and third, pro rata on the basis of the number of Warrant Shares requested to be registered by the Demanding Holders. The Holders as a group shall be entitled to three Demand Registrations pursuant to this Section 2(b); provided, that any Demand Registration that does not become effective or is not maintained for the time period required in accordance with Section 2(c) shall not count as one of such Demand Registrations, except as set forth in Section 2(f). Anything herein to the contrary notwithstanding, the Company shall not be required to effect a Demand Registration pursuant to this Section 2(b) within a period of six (6) months after the effective date of any other Demand Registration. (ii) The Company, within 60 days following the date on which the Company receives a Demand Notice, shall file with the SEC, and the Company shall thereafter use its best efforts to cause to be declared effective within 120 days following the date the 4 Company receives such Demand Notice, a Registration Statement on the appropriate form for the registration and sale, in accordance with the intended method or methods of distribution, of the total number of Warrant Shares specified by the Holders in such Demand Notice (a "Demand Registration"). [(iii) The Holders shall not have the right to assign their registration rights under this Section 2(b) to any Person or group of Persons which, contemporaneously with such assignment, do not acquire collectively Warrant Shares and/or Warrants to purchase Warrant Shares constituting at least one third of the total number of Warrant Shares then issued or issuable upon the exercise of all the outstanding Warrants.] (c) The Company shall use commercially reasonable efforts to keep each Registration Statement filed pursuant to Section 2(a) or (b) continuously effective and usable for the resale of the Registrable Shares covered thereby for a period of 180 days from the date on which the SEC declares such Registration Statement effective, as such period may be extended pursuant to this Section 2, or if shorter, until all the Registrable Shares covered by such Registration Statement have been sold pursuant to such Registration Statement. (d) The Company shall be entitled to postpone the filing of any Registration Statement otherwise required to be prepared and filed by the Company pursuant to this Section 2, or suspend the use of any effective Registration Statement under this Section 2, for a reasonable period of time which shall be as short as practicable, but in any event not in excess of 90 days (a "Delay Period"), if the Company determines in good faith that the registration and distribution of the Registrable Shares covered or to be covered by such Registration Statement would materially interfere with any pending material financing, acquisition or corporate reorganization or other material corporate development involving the Company or any of its subsidiaries or would require premature disclosure thereof and promptly gives the Holders written notice of such determination, containing a statement of the reasons for such postponement and an approximation of the period of the anticipated delay; provided, however, that (i) the aggregate number of days included in all Delay Periods during any consecutive 12 months shall not exceed the aggregate of (x) 180 days minus (y) the number of days occurring during all Hold Back Periods and Interruption Periods during such consecutive 12 months and (ii) a period of at least 90 days shall elapse between the termination of any Delay Period, Hold Back Period or Interruption Period and the commencement of the immediately succeeding Delay Period. If the Company shall so postpone the filing of a Registration Statement, the Holders of Registrable Shares to be registered shall have the right to withdraw the request for registration by giving written notice from the Holders of a majority of the Registrable Shares that were to be registered to the Company within 45 days after receipt of the notice of postponement or, if earlier, the termination of such Delay Period. The time period for which the Company is required to maintain the effectiveness of any Registration Statement shall be extended by the aggregate number of days of all Delay Periods, all Hold Back Periods and all Interruption Periods occurring during such Registration and such period and any extension thereof is hereinafter referred to as the "Effectiveness Period". The Company shall not be entitled to initiate a Delay Period unless it shall (A) to the extent permitted by agreements with other security holders of the Company, concurrently prohibit sales by such other security holders under registration statements covering 5 securities held by such other security holders and (B) in accordance with the Company's policies from time to time in effect, forbid purchases and sales in the open market by senior executives of the Company. (e) The Company shall not include any securities that are not Registrable Shares in any Registration Statement filed pursuant to this Section 2 without the prior written consent of a Majority-in-Interest of the Holders of the Registrable Shares covered by such Registration Statement. (f) The Demanding Holders may, at any time prior to the effective date of the Registration Statement relating to a Demand Registration, revoke such request by providing a written notice to the Company revoking such request. In the event of such revocation, the Demanding Holders shall reimburse the Company for all of its out-of-pocket expenses incurred in connection with the preparation, filing and processing of the Registration Statement, unless (i) there has been a material adverse change in the business, assets, properties, condition (financial or other), results of operations or prospects of the Company and its subsidiaries, since the time of the Demand Notice, (ii) such revocation was based on the Company's failure to comply in any material respect with its obligations hereunder or (iii) the Demanding Holders choose to count the Demand Registration as one of the Demand Registrations to which the Demanding Holders are entitled pursuant to the second-to-last sentence of Section 2(b)(ii). SECTION 3. Piggyback Registration. (a) Right to Piggyback. If at any time the Company proposes to file a registration statement under the Securities Act with respect to a public offering of securities of the same type as the Registrable Shares for its own account (other than a registration statement (i) on Form S-8 or any successor form thereto, (ii) filed solely in connection with a dividend reinvestment plan or employee benefit plan covering officers or directors of the Company or its Affiliates or (iii) on Form S-4 or any successor form thereto, in connection with a merger, acquisition or similar corporate transaction) or for the account of any holder of securities of the same type as the Registrable Shares, then the Company shall give written notice of such proposed filing to the Holders at least 30 days before the anticipated filing date. Such notice shall offer the Holders the opportunity to register such amount of Registrable Shares as they may request (a "Piggyback Registration"). Subject to Section 3(b) hereof, the Company shall include in each such Piggyback Registration all Registrable Shares with respect to which the Company has received written requests for inclusion therein within 20 days after notice has been given to the Holders. Each Holder shall be permitted to withdraw all or any portion of the Registrable Shares of such Holder from a Piggyback Registration at any time prior to the effective date of such Piggyback Registration. (b) Priority on Piggyback Registrations. The Company shall permit the Holders to include all such Registrable Shares on the same terms and conditions as any similar securities, if any, of the Company included therein. Notwithstanding the foregoing, if the Company or the managing underwriter or underwriters participating in such offering advise the Holders in writing that the total amount of securities requested to be included in such Piggyback Registration exceeds the amount which can be sold in (or during the time of) such offering without delaying or jeopardizing the success of the offering (including the price per share of the 6 securities to be sold), then the amount of securities to be offered for the account of the Holders and other holders of securities who have piggyback registration rights with respect thereto shall be reduced (to zero if necessary) pro rata on the basis of the number or amount of Common Stock (or the equivalent) requested to be registered by each such Holder or holder participating in such offering. (c) Right To Abandon. Nothing in this Section 3 shall create any liability on the part of the Company to the Holders if the Company in its sole discretion should decide not to file a registration statement proposed to be filed pursuant to Section 3(a) hereof or to withdraw such registration statement subsequent to its filing, regardless of any action whatsoever that a Holder may have taken, whether as a result of the issuance by the Company of any notice hereunder or otherwise. SECTION 4. Holdback Agreement. If (i) the Company shall file a registration statement (other than in connection with the registration of securities issuable pursuant to an employee stock option, stock purchase or similar plan or pursuant to a merger, exchange offer or a transaction of the type specified in Rule 145(a) under the Securities Act) with respect to the Common Stock or similar securities or securities convertible into, or exchangeable or exercisable for, such securities and (ii) with reasonable prior notice, the Company (in the case of a nonunderwritten public offering by the Company pursuant to such registration statement) advises the Holders in writing that a public sale or distribution of such Registrable Shares would materially adversely affect such offering or the managing underwriter or underwriters (in the case of an underwritten public offering by the Company pursuant to such registration statement) advises the Company in writing (in which case the Company shall notify the Holders with a copy of such underwriter's notice) that a public sale or distribution of Registrable Shares would materially adversely impact such offering, then each Holder shall, to the extent not inconsistent with applicable law, refrain from effecting any public sale or distribution of Registrable Shares during the ten (10) days prior to the effective date of such registration statement and until the earliest of (A) the abandonment of such offering, (B) 180 days after the effective date of such registration statement and (C) if such offering is an underwritten offering, the termination in whole or in part of any "hold back" period obtained by the underwriter or underwriters in such offering from the Company in connection therewith (each such period, a "Hold Back Period"), provided, that the Holder shall be under no such obligation unless each other beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of at least 5% of the Company's Common Stock and each director and executive officer of the Company also agrees to refrain from effecting any such public sale or distribution. SECTION 5. Registration Procedures. In connection with the registration obligations of the Company pursuant to and in accordance with Sections 2 and 3 hereof (and subject to Sections 2 and 3 hereof), the Company shall use commercially reasonable efforts to effect such registration to permit the sale of such Registrable Shares in accordance with the intended method or methods of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible (but subject to Sections 2 and 3 hereof): 7 (a) prepare and file with the SEC a Registration Statement for the sale of the Registrable Shares on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate in accordance with such Holders' intended method or methods of distribution thereof, subject to Section 2 hereof, and use commercially reasonable efforts to cause such Registration Statement to become effective and remain effective as provided herein; (b) prepare and file with the SEC such amendments (including post-effective amendments) to such Registration Statement, and such supplements to the related Prospectus, as may be required by the applicable rules, regulations or instructions under the Securities Act during the applicable period in accordance with the intended methods of disposition specified by the Holders of the Registrable Shares covered by such Registration Statement, make generally available earnings statements satisfying the provisions of Section 11(a) of the Securities Act (provided that the Company shall be deemed to have complied with this clause if it has complied with Rule 158 under the Securities Act), and cause the related Prospectus as so supplemented to be filed pursuant to Rule 424 under the Securities Act; provided, however, that before filing a Registration Statement or Prospectus, or any amendments or supplements thereto (other than reports required to be filed by it under the Exchange Act), the Company shall furnish to the Holders of Registrable Shares covered by such Registration Statement and their counsel for review and comment, copies of all documents required to be filed; (c) notify the Holders of any Registrable Shares covered by such Registration Statement promptly and (if requested) confirm such notice in writing, (i) when a Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to such Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the SEC for amendments or supplements to such Registration Statement or the related Prospectus or for additional information regarding such Holders, (iii) of the issuance by the SEC of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose, and (v) of the happening of any event that requires the making of any changes in such Registration Statement, Prospectus or documents incorporated or deemed to be incorporated therein by reference so that they will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; (d) use commercially reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Registration Statement, or the lifting of any suspension of the qualification or exemption from qualification of any Registrable Shares for sale in any jurisdiction in the United States; (e) furnish to the Holder of any Registrable Shares covered by such Registration Statement, each counsel for such Holders and each managing underwriter, if any, without charge, one conformed copy of such Registration Statement, as declared effective by the SEC, and of each post-effective amendment thereto, in each case including financial statements 8 and schedules and all exhibits and reports incorporated or deemed to be incorporated therein by reference; and deliver, without charge, such number of copies of the preliminary prospectus, any amended preliminary prospectus, each final Prospectus and any post- effective amendment or supplement thereto, as such Holder may reasonably request in order to facilitate the disposition of the Registrable Shares of such Holder covered by such Registration Statement in conformity with the requirements of the Securities Act; (f) prior to any public offering of Registrable Shares covered by such Registration Statement, use commercially reasonable efforts to register or qualify such Registrable Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Holders of such Registrable Shares shall reasonably request in writing; provided, however, that the Company shall in no event be required to qualify generally to do business as a foreign corporation or as a dealer in any jurisdiction where it is not at the time so qualified or to execute or file a general consent to service of process in any such jurisdiction where it has not theretofore done so or to take any action that would subject it to general service of process or taxation in any such jurisdiction where it is not then subject; (g) upon the occurrence of any event contemplated by paragraph 5(c)(v) above, prepare a supplement or post-effective amendment to such Registration Statement or the related Prospectus or any document incorporated or deemed to be incorporated therein by reference and file any other required document so that, as thereafter delivered to the purchaser of the Registrable Shares being sold thereunder (including upon the termination of any Delay Period), such Prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (h) use its best efforts to cause all Registrable Shares covered by such Registration Statement to be listed on each securities exchange, if any, on which similar securities issued by the Company are then listed or quoted and, if no such securities are so listed, to be listed on the Nasdaq Stock Market and, if listed on the Nasdaq Stock Market, use its best efforts to secure designation of all such Registrable Shares covered by such registration statement as "NASDAQ Securities" within the meaning of Rule 11Aa2-1 promulgated under the Exchange Act or, failing that, to secure Nasdaq Stock Market authorization for such Registrable Shares and, without limiting the generality of the foregoing, to arrange for at least two market makers to register as such with respect to such Registrable Shares with the National Association of Securities Dealers, Inc. (the "NASD"); (i) on or before the effective date of such Registration Statement, provide the transfer agent of the Company for the Registrable Shares with printed certificates for the Registrable Shares covered by such Registration Statement, which are in a form eligible for deposit with The Depository Trust Company; (j) make available for inspection by any Holder of Registrable Shares included in such Registration Statement, any underwriter participating in any offering pursuant to such Registration Statement, and any attorney, accountant or other agent retained by any such 9 Holder or underwriter (collectively, the "Inspectors"), all financial and other records and other information, pertinent corporate documents and properties of any of the Company and its subsidiaries and affiliates (collectively, the "Records"), as shall be reasonably necessary to enable them to exercise their due diligence responsibilities; provided, however, that the Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors in writing are confidential shall not be disclosed to any Inspector unless such Inspector signs a confidentiality agreement reasonably satisfactory to the Company (which shall permit the disclosure of such Records in such Registration Statement or the related Prospectus if necessary to avoid or correct a material misstatement in or material omission from such Registration Statement or Prospectus) or either (i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in such Registration Statement or (ii) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction; provided further, however, that (A) any decision regarding the disclosure of information pursuant to subclause (i) shall be made only after consultation with counsel for the applicable Inspectors and the Company and (B) with respect to any release of Records pursuant to subclause (ii), each Holder of Registrable Shares agrees that it shall, promptly after learning that disclosure of such Records is sought in a court having jurisdiction, give notice to the Company so that the Company, at the Company's expense, may undertake appropriate action to prevent disclosure of such Records; and (k) if such offering is an underwritten offering, enter into such agreements (including an underwriting agreement in form, scope and substance as is customary in underwritten offerings) and take all such other appropriate and reasonable actions requested by the Holders of a majority of the Registrable Shares being sold in connection therewith (including those reasonably requested by the managing underwriters) in order to expedite or facilitate the disposition of such Registrable Shares, and in such connection, (i) use commercially reasonable efforts to obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters and counsel to the Holders of the Registrable Shares being sold), addressed to each selling Holder of Registrable Shares covered by such Registration Statement and each of the underwriters as to the matters customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such counsel and underwriters, (ii) use commercially reasonable efforts to obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Company (and, if necessary, any other independent certified public accountants of any subsidiary of the Company or of any business acquired by the Company for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each selling holder of Registrable Shares covered by the Registration Statement (unless such accountants shall be prohibited from so addressing such letters by applicable standards of the accounting profession) and each of the underwriters, such letters to be in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with underwritten offerings, (iii) if requested and if an underwriting agreement is entered into, provide indemnification provisions and procedures reasonably requested by such underwriters. The above shall be done at each closing under such underwriting or similar agreement, or as and to the extent required thereunder. The Company may require each Holder of Registrable Shares 10 covered by a Registration Statement to furnish such information regarding such Holder and such Holder's intended method of disposition of such Registrable Shares as it may from time to time reasonably request in writing. If any such information is not furnished within a reasonable period of time after receipt of such request, the Company may exclude such Holder's Registrable Shares from such Registration Statement. Each Holder of Registrable Shares covered by a Registration Statement agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv) or 5(c)(v) hereof, that such Holder shall forthwith discontinue disposition of any Registrable Shares covered by such Registration Statement or the related Prospectus until receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(g) hereof, or until such Holder is advised in writing by the Company that the use of the applicable Prospectus may be resumed, and has received copies of any amended or supplemented Prospectus or any additional or supplemental filings which are incorporated, or deemed to be incorporated, by reference in such Prospectus (such period during which disposition is discontinued being an "Interruption Period") and, if requested by the Company, the Holder shall deliver to the Company (at the expense of the Company) all copies then in its possession, other than permanent file copies then in such holder's possession, of the Prospectus covering such Registrable Shares at the time of receipt of such request. Each Holder of Registrable Shares covered by a Registration Statement further agrees not to utilize any material other than the applicable current preliminary prospectus or Prospectus in connection with the offering of such Registrable Shares. SECTION 6. Registration Expenses. Whether or not any Registration Statement is filed or becomes effective but subject to Section 2(f), the Company shall pay all costs, fees and expenses incident to the Company's performance of or compliance with this Agreement, including (i) all registration and filing fees, including NASD filing fees, (ii) all fees and expenses of compliance with securities or Blue Sky laws, including reasonable fees and disbursements of counsel in connection therewith, (iii) printing expenses (including expenses of printing certificates for Registrable Shares and of printing prospectuses if the printing of prospectuses is requested by the Holders or the managing underwriter, if any), (iv) messenger, telephone and delivery expenses, (v) fees and disbursements of counsel for the Company, (vi) fees and disbursements of all independent certified public accountants of the Company (including expenses of any "cold comfort" letters required in connection with this Agreement) and all other Persons retained by the Company in connection with such Registration Statement, (vii) fees and disbursements of one counsel, other than the Company's counsel, representing all of the Holders of Registrable Shares being registered, selected by a Majority-in-Interest of Holders of the Registrable Shares being registered, or in the event of a Demand Registration, selected by the Demanding Holders and reasonably satisfactory to a Majority-in-Interest of Holders of the Registrable Shares being registered other than the Demanding Holders, (viii) fees and disbursements of underwriters customarily paid by the issuers or sellers of securities and (ix) all other costs, fees and expenses incident to the Company's performance or compliance with this Agreement. Notwithstanding the foregoing, any discounts, commissions or brokers' fees or fees of similar securities industry professionals and any transfer taxes relating to the disposition of the Registrable Shares by a Holder, will be payable by such Holder and the Company will have no obligation to pay any such amounts. 11 SECTION 7. Underwriting Requirements. (a) Subject to Section 7(b) hereof, the Demanding Holders shall have the right, by written notice, to require that any Demand Registration provide for an underwritten offering. (b) In the case of any underwritten offering pursuant to a Demand Registration, the Demanding Holders shall select the institution or institutions that shall manage or lead such offering, which institution or institutions shall be reasonably satisfactory to the Company. In the case of any underwritten offering pursuant to a Piggyback Registration, the Company shall select the institution or institutions that shall manage or lead such offering. No Holder shall be entitled to participate in an underwritten offering unless and until such Holder has entered into an underwriting or other agreement with such institution or institutions for such offering in such form as the Company and such institution or institutions shall determine. (c) Each Holder participating in a Registration shall promptly supply in writing such information as the Demanding Holders, the Company or the underwriters reasonably request. SECTION 8. Indemnification. (a) Indemnification by the Company. The Company shall, without limitation as to time, indemnify and hold harmless, to the full extent permitted by law, each Holder of Registrable Shares whose Registrable Shares are covered by a Registration Statement or Prospectus, the officers, directors and agents and employees of each of them, each Person who controls each such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, judgment, costs (including, without limitation, costs of investigation, preparation and reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or based upon any untrue or alleged untrue statement of a material fact contained in such Registration Statement or Prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are based upon information furnished in writing to the Company by or on behalf of such Holder expressly for use therein. (b) Indemnification by Holder of Registrable Shares. In connection with any Registration Statement in which a Holder is participating, such Holder shall indemnify and hold harmless, to the full extent permitted by law, the Company, its directors, officers, agents or employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act) and the directors, officers, agents or employees of such controlling Persons, from and against all Losses arising out of or based upon any untrue or alleged untrue statement of a material fact contained in such Registration Statement or the related Prospectus or any amendment or supplement thereto, or any preliminary prospectus, or arising out of or based upon any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, to the extent, but only to the extent, that such untrue or alleged untrue statement or omission or alleged omission is based upon any information furnished in writing by or on behalf of such Holder to 12 the Company expressly for use in such Registration Statement or Prospectus. Each Holder's indemnity obligations under this Section 8 shall be limited to the total sales proceeds (net of all underwriting discounts and commissions) actually received by such Holder in connection with the applicable offering. (c) Conduct of Indemnification Proceedings. If any Person shall be entitled to indemnity hereunder (an "indemnified party"), such indemnified party shall give prompt notice to the party from which such indemnity is sought (the "indemnifying party") of any claim or of the commencement of any proceeding with respect to which such indemnified party seeks indemnification or contribution pursuant hereto; provided, however, that the delay or failure to so notify the indemnifying party shall not relieve the indemnifying party from any obligation or liability except to the extent that the indemnifying party has been prejudiced by such delay or failure. The indemnifying party shall have the right, exercisable by giving written notice to an indemnified party promptly after the receipt of written notice from such indemnified party of such claim or proceeding, to assume, at the indemnifying party's expense, the defense of any such claim or proceeding, with counsel reasonably satisfactory to such indemnified party; provided, however, that (i) an indemnified party shall have the right to employ separate counsel in any such claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such indemnified party unless: (1) the indemnifying party agrees to pay such fees and expenses; (2) the indemnifying party fails promptly to assume the defense of such claim or proceeding or fails to employ counsel reasonably satisfactory to such indemnified party; or (3) the named parties to any proceeding (including impleaded parties) include both such indemnified party and the indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it that are inconsistent with those available to the indemnifying party or that a conflict of interest is likely to exist among such indemnified party and any other indemnified parties (in which case the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party); and (ii) subject to clause (3) above, the indemnifying party shall not, in connection with any one such claim or proceeding or separate but substantially similar or related claims or proceedings in the same jurisdiction, arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one firm of attorneys (together with appropriate local counsel) at any time for all of the indemnified parties, or for fees and expenses that are not reasonable. Whether or not such defense is assumed by the indemnifying party, such indemnified party shall not be subject to any liability for any settlement made without its consent. The indemnifying party shall not consent to entry of any judgment or enter into any settlement unless (i) there is no finding or admission of any violation of any rights of any Person and no effect on any other claims that may be made against the indemnified party, (ii) the sole relief provided is monetary damages that are paid in full by the indemnifying party and (iii) such judgment or settlement includes as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release, in form and substance reasonably satisfactory to the indemnified party, from all liability in respect of such claim or litigation for which such indemnified party would be entitled to indemnification hereunder. 13 (d) Contribution. If the indemnification provided for in this Section 8 is unavailable to an indemnified party in respect of any Losses (other than in accordance with its terms), then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such indemnifying party, on the one hand, and indemnified party, on the other hand, shall be determined by reference to, among other things, whether any action in question, including any untrue statement of a material fact or omission or alleged omission to state a material fact, has been taken by, or relates to information supplied by, such indemnifying party or indemnified party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent any such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include any legal or other fees or expenses incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 8(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 8(d), an indemnifying party that is a Holder shall not be required to contribute any amount which is in excess of the amount by which the total proceeds (net of all underwriting discounts and commissions) received by such Holder from the sale of the Registrable Shares sold by such Holder in the applicable offering exceeds the amount of any damages that such indemnifying party has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. SECTION 9. Granting of Registration Rights. The Company shall not grant any registration rights inconsistent with those granted hereunder or that give any security holder a position with respect to cut-backs that are superior to the Holders' position as granted herein, without the consent of a Majority-in-Interest of the Holders of the Registrable Shares (voting together as a single class). SECTION 10. Miscellaneous. (a) Rules 144 and 144A. The Company covenants that it will file any reports required to be filed by it under the Securities Act and the Exchange Act so as to enable Holders holding Registrable Shares to sell such Registrable Shares without registration under the Securities Act within the limitation of the exemptions provided by (a) Rules 144 and 144A under the Securities Act, as each such Rule may be amended from time to time, or (b) any similar rule or rules hereafter adopted by the SEC. Upon the request of any such Holder, the Company will forthwith deliver to such Holder a written statement as to whether it has complied with such requirements. (b) Termination. This Agreement and the obligations of the Company and the Holders hereunder (other than Section 8 hereof) shall terminate on the first date on which no 14 Registrable Shares and no securities convertible into or exercisable for Registrable Shares remain outstanding. (c) Notices. All notices, demands, requests, or other communications which may be or are required to be given, served, or sent by any party to any other party pursuant to this Agreement shall be in writing and shall be mailed by first-class, registered or certified mail, return receipt requested, postage prepaid, or transmitted by hand delivery (including delivery by courier), or facsimile transmission, addressed as follows: (i) If to the Company: SEMX Corporation 1 Labriola Court Armonk, NY 10504 Attention: Gilbert D. Raker, Chairman, President and CEO Facsimile: (914) 273-5860 with a copy to: Joel Salon, Esquire Salon, Marrow, Dyckman & Newman, LLP 685 Third Avenue New York, NY 10017 Facsimile: (212) 661-3339 (ii) If to any Holder, at its last known address appearing on the books of the Company maintained for such purpose. Each party may designate by notice in writing a new address to which any notice, demand, request or communication may thereafter be so given, served or sent. Each notice, demand, request or communication shall be deemed to have been duly given five business days after being deposited in the mail, postage prepaid, if mailed; when delivered by hand, if personally delivered; or upon receipt, if sent by facsimile (followed by a confirmation copy sent by either overnight or two (2) day courier). (d) Separability. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. (e) Assignment. Subject to the restrictions on assignment set forth in Section 2(b)(iii), this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, devisees, legatees, legal representatives, successors and assigns. 15 (f) Entire Agreement. This Agreement represents the entire agreement of the parties and shall supersede any and all previous contracts, arrangements or understandings between the parties hereto with respect to the subject matter hereof. (g) Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of a Majority-in-Interest of the Holders. (h) Interpretation. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. (i) Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be one and the same agreement, and shall become effective when counterparts have been signed by each of the parties and delivered to each other party. (j) Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to the conflict of laws principles thereof. (k) Arbitration. Any claim or dispute between the parties hereto arising out of or in connection with this Agreement or any of the provisions hereof, or the interpretation, meaning or effect hereof, or the transactions contemplated hereby, shall be submitted to and determined by arbitration in New York, New York in accordance with the procedures, rules and regulations of the American Arbitration Association as in effect at such time. The decision, findings or award of the arbitrator(s) in the matter shall be final and nonappealable and upon the parties (and their respective successors) with respect to the subject matter herein concerned, and judgment thereon may be entered in any court or forum having jurisdiction thereof. (l) Calculation of Time Periods. Except as otherwise indicated, all periods of time referred to herein shall include all Saturdays, Sundays and holidays; provided, however, that if the date to perform the act or give any notice with respect to this Agreement shall fall on a day other than a Business Day, such act or notice may be timely performed or given if performed or given on the next succeeding Business Day. [Remainder of Page Intentionally Left Blank] 16 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first written above. SEMX CORPORATION By: /s/ --------------------------------- Name: Gilbert D. Raker Title: Chairman, President and CEO ACI CAPITAL AMERICA FUND, LP By: ACI Capital America GP, LLC, its General Partner By: /s/ --------------------------------- Name: Kevin S. Penn Title: Managing Member EXETER VENTURE LENDERS, L.P. By: Exeter Venture Advisors, Inc., its corporate General Partner By: /s/ --------------------------------- Name: Kurt F. Bergquist Title: Vice President 17 EXHIBIT A SCHEDULE OF PURCHASERS
Number of Shares of Name and Address Number of Shares of Series B Common Stock Subject to of Purchaser Preferred Stock Purchased Warrant ------------ ------------------------- ------- ACI Capital America Fund, LP 90,000 $9,000,000 65 East 55th Street 18th Floor New York, NY 10022 Attention: Kevin S. Penn Facsimile: (212) 634-3351 Exeter Venture Lenders, L.P. 10,000 $1,000,000 10 East 53rd Street, 32nd Floor New York, NY 10022 Attention: Kurt F. Bergquist Facsimile: (212) 872-1198
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