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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934.
[X] AMENDMENT TO QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended 9/30/95
or
[ ] AMENDMENT TO TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-4538
LUMEX, INC.
(Exact name of registrant as specified in its charter)
New York 11-1731581
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
81 Spence St., Bay Shore, N.Y. 11706
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (516)273-2200
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
On September 30, 1995 the registrant had outstanding 4,324,759 shares
of Common Stock, par value $.10 per share, which is the registrant's
only class of common stock.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10(xv)- Employment Agreement, dated
August 9, 1995 between J.
Raymond Elliott and the Company.
(filed herewith)(replacing the
Employment Agreement originally
filed as Exhibit 10(xv) with the
Company's Quarterly Report on
Form 10-Q for the quarter ended
September 30, 1995)
10(xvi)-Employment Agreement, dated
August 17, 1995, between John R.
Cowin and the Company. (filed
herewith)
27 - Financial Data Schedule. (filed
herewith)
(b) There were no reports on Form 8-K filed
during the quarter ended September 30,
1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
LUMEX, INC.
Date: December 7, 1995 By /s/ J. Raymond Elliott
J. Raymond Elliott
President and
Chief Executive Officer
Date: December 7, 1995 By /s/ Robert McNally
Robert McNally
Senior Vice President and
Chief Financial Officer
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Exhibit Index
Exhibit No.
10(xv) - Employment Agreement, dated August 9, 1995, between J.
Raymond Elliott and the Company.(filed herewith) (replacing
the Employment Agreement originally filed as Exhibit 10(xv)
with the Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1995).
10(xvi)- Employment Agreement, dated August 17, 1995, between John R.
Cowin and the Company. (filed herewith)
27 - Financial Data Schedule. (filed herewith)
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Exhibit 10(xv)
Lumex, Inc.
81 Spence Street
Bay Shore, NY 11706
August 9, 1995
Mr. J. Raymond Elliott
6169-5th Line Eramosa Township
Wellington County, Ontario NOB 2KO
Dear Ray:
This letter confirms our agreement
concerning your employment with Lumex, Inc. (the "Company") as follows:
1. Term. Your employment will be
for a term of three years beginning September 1, 1995 through August
31, 1998 (the "Term"). If the Company does not extend or renew this
Agreement at the end of the Term, the Company shall make a termination
payment equal to your Base Salary, at the annual rate in effect at the
time of such termination, for a period of 12 months after the effective
date of termination. In this case, the Base Salary shall be paid to
you in such intervals and in the same manner as it was paid immediately
prior to the end of the Term.
2. Duties.
(a) You shall serve as the
Company's President and Chief Executive Officer, which shall be the
most senior officer of the Company. As such, you shall have all the
functions, duties and responsibilities of a President and Chief
Executive Officer, and all other senior executives of the Company shall
report to you.
(b) During the Term, you shall
devote your full busi-ness time and energies to the business and
affairs of the Company, and shall not accept other employment, except
that, if approved by the Company's Board of Directors (the "Board"),
you may serve as a member of one of the boards of directors of other
companies. You shall use your best efforts and abilities to promote
the interests of the Company, to serve as a director or officer of any
subsidiary of the Company to which you are elected and you shall
perform such duties consistent with your status as Chief Executive
Officer as may be assigned to you by the Board.
(c) So long as you shall comply
with your obligations under this Agreement and you continue to be
employed by the Company as its President and Chief Executive Officer,
throughout the Term, you shall be proposed for election to the Board.
As an executive of the Company and a member of the Board, you will be
a "covered person" under the Company's policy of directors' and
officers' liability insurance.
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(d) You will perform your services
principally at the Company's Bay Shore, New York executive office,
acknowledging that the nature of your duties will require reasonable
domestic and international travel from time to time.
3. Compensation. Your compensation
shall consist of the salary and benefits described below:
(a) A base salary at the annual
rate of $300,000 ("Base Salary"). The Compensation Committee of the
Board shall review the Base Salary in 1997, and depending upon the
Company's 1996 Results of Operations, Base Salary shall be subject to
an increase in 1997. Such review shall occur not later than March 31,
1997, and shall be effective as of January 1, 1997. Thereafter, Base
Salary shall be reviewed in accordance with the Company's customary
practices respecting executive compensation, but which in any event
will occur at least once in each calendar year.
(b) You shall participate in the
Company's Bonus Incentive Compensation Plan (the "BIC Plan") in
accordance with its terms, except that the following special provisions
shall be applicable to you:
(i) Your "Target" shall be 50%,
your "Maximum" 100% and your "Max-Max" 150%, as each term is defined in
the BIC Plan.
(ii) Whether or not the 1996
Target is achieved, you shall receive on September 1, 1996 a minimum,
non-forfeitable allowance of $70,000 under the BIC Plan for the year
ending December 31, 1996, and if it develops that you are entitled
under the BIC Plan to more than $70,000 for such year, such balance
shall be paid in 1997 in accordance with the terms of the BIC Plan; and
(iii) At your election, you may
receive between 10% and 40% of the amount payable to you under the BIC
Plan in the form of the Company's common stock, converted at a value
equal to 85% of its market value, all in accordance with the BIC Plan.
(c) You shall be granted the
following under the Company's 1995 Omnibus Incentive Plan, based on the
value of the Company's common stock as of the close of trading on
August 2, 1995:
(i) A restricted stock grant of
25,000 shares of restricted common stock, in accordance with the terms
of a Restricted Stock Award agreement which will provide, among other
things, that 20% of such restricted common stock will vest on each
anniversary date of your employment, but if any "Change of Control" (as
defined in paragraph 9) occurs sooner, all 25,000 shares of the
restricted stock will vest on the effective date of the Change of
Control;
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(ii) A restricted stock grant of
20,000 shares of restricted common stock, in accordance with the terms
of a Restricted Stock Award agreement which will provide, among other
things, that 100% of such restricted common stock will vest on the
earliest of (A) February 8, 1996, (B) the effective date of a Change of
Control and (C) if a "Partial Sale" (as defined in paragraph 9) occurs,
on the effective date of the Partial Sale;
(iii) A non-qualified stock
option for 25,000 shares of common stock, in accordance with a grant
letter which will provide, among other things, that such options will
vest at the rate of 25% each year beginning on the first anniversary of
your employment, but if any Change of Control or Partial Sale occurs
sooner, the option will 100% vest on the effective date of the Change
of Control or Partial Sale.
(d) You shall receive reimbursement
for your reasonable out-of-pocket expenses in connection with searching
for a residence on Long Island, which shall include up to six months of
temporary housing costs on Long Island, real estate broker's fees or
commissions for the sale of your current residence, mortgage "points"
and your actual out-of-pocket moving costs. You also will receive all
other amounts which are payable in accordance with the Company's re-
location policies covering its most senior executives.
(e) The Company will arrange
to have your residence purchased through either its relocation service,
PHH Home Equity or a suitable relocation service of your choosing. The
Company also shall pay you up to $35,000 to reimburse you for your
"Market Loss" (defined below) associated with purchasing your existing
residence through the relocation service. Market Loss shall be
computed by subtracting from the actual gross sales price of such
residence the market value of same, as determined averaging two
appraisals by companies selected by the relocation service. The
Company shall tax protect you for the amount of the Market Loss it pays
to you, by paying you additional compensation sufficient to reimburse
you for the federal and state income tax, at your highest marginal
rate, that you are required to pay on any Market Loss payment to you
under this paragraph ("Tax Reimbursement"). The amount of the Tax
Reimbursement shall be determined by and set forth in a certificate of
your tax accountant, subject to review by the Company's accountants.
(f) You shall be reimbursed
for your actual ordinary and reasonable out-of-pocket expenses incurred
in the conduct of the Company's business. You shall either receive an
annual automobile allowance (payable in monthly installments) or be
furnished with a company-leased automobile, in either case commensurate
with your position as and in accordance with the policies and proce-
dures that the Company applies to its most senior executive officer.
(g) A supplemental insurance
benefit which will provide you with up to $10,000 to be used for any
one or more of the following purposes:
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(i) either (A) your purchase of
an individual policy of health insurance covering any gaps in the
coverage for you and your family that is available under the Company's
group health insurance plan or (B) your expenses for providing medical
care to you and your family members that are not paid or reimbursed
under the Company's group health insurance plan due to the application
of deductibles, co-insurance or exclusions;
(ii) your purchase of life
insurance to provide benefits up to three times your Base Salary; and
(iii) a policy of disability
insurance which would reduce or eliminate the waiting period under the
Company's group disability program and/or increase the monthly benefit
available to you under that program.
(h) All compensation and benefits
shall be subject to all withholdings that the Company determines are
required by federal, state or local law, and to such deductions as may
be applicable under the various benefit plans in which you participate.
4. Other Benefits. In addition to
the compensation and benefits described in paragraph 3, you shall
receive paid vacation of four weeks in each calendar year, in accor-
dance with the policies and procedures that the Company applies to a
senior executive officer. You shall be eligible for and participate in
sick leave and coverage under any life, health, dental, disability or
other insurance programs made available to other senior executive
officers. You shall also be eligible to participate in any pension,
profit-sharing, restricted stock award, stock option or other future
employment benefit, incentive or compensation program made available to
senior executive officers of the Company, and where appropriate, with
special application to you as Chief Executive Officer.
5. Termination. Termination of
employment can occur in the following manner:
(a) The Company shall have
the right to terminate this Agreement "for cause", which as used herein
shall be limited to one or more of the following:
(i) fraud or embezzlement, or
conviction of a felony or the entry of a plea (including a plea of nolo
contendere) for any felony.
(ii) breach of your material
obligations under the confidentiality or non-competition obligations
described in paragraph 8;
(iii) any act of moral turpitude
or willful misconduct which either results in your personal enrichment
at the Company's expense or, in the reasonable judgment of the Board,
has a material adverse impact on the business or reputation of the
Company or any of its affiliates; or
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(iv) your material breach of or
willful failure or refusal to perform your obligations under this
Agreement. You will not be considered to have materially breached this
Agreement or willfully failed to perform your obligations if you
correct the same 30 days after the Board provides notice to you
specifying the nature of the breach, failure or refusal, or if the
Board determines that you did not act in bad faith or that your action
or inaction was based on your reasonable belief that it was in the
Company's best interests.
(b) If you should die during the
Term.
(c) If you become "disabled"
during the Term. For the purpose of this Agreement, disability shall
mean either any disability as defined under the Company's disability
insurance policy that is applicable to you, or if no such policy is
available, a determination by a licensed physician practicing in New
York City or Long Island that you have suffered any physical or mental
disability or incapacity which causes you to be incapable of performing
the services required under paragraph 2. You will be considered
"disabled" if the disability actually prevents you from performing such
services for a period of three consecutive months or a total of three
months during any twelve-month period.
(d) The Company may
terminate this Agreement other than for cause, in which case you shall
receive your Base Salary, at the annual rate in effect at the time of
such termination, for a period equal to the greater of (i) the balance
of the Term after the effective date of termination, or (ii) 12 months
from such date ("Severance Pay"). In this case, 50% of the Severance
Pay shall be paid to you in equal payments over three months, and the
balance in equal payments over the applicable Severance Pay continua-
tion period, in such intervals and in the same manner as Base Salary
was paid at the time of termination. If the Company terminates other
than for cause, you also shall receive a bonus under the BIC Plan if
you reach the Target at the date termination occurs. Any bonus under
the BIC Plan will be pro rata, based upon the month of termination, and
shall be paid in the same manner and at the same time as it would have
been paid if you were still employed at the date the BIC Plan bonus was
awarded.
(e) Subject to the provisions of
paragraph 9, you shall have the right to terminate this Agreement if
there is a Change of Control.
(f) The Company shall have the
right to terminate this Agreement if, by December 31, 1995, the Company
has not obtained on your behalf your resident visa for your employment
by the Company as a result of any event that had occurred in the past
with respect to you which would, if it occurred during the Term,
constitute termination for cause under subparagraphs 5(a)(i) or (iii).
In that case, the Company shall pay all your reasonable out-of-pocket
expenses relating to your contemplated employment with the Company.
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6. Other Termination Provisions.
(a) Upon any termination of your
employment or non-renewal of the Term, you shall immediately resign
from all positions and offices with the Company and its subsidiaries,
whether or not you submit a formal letter of resignation. Any
termination or non-renewal shall not affect your confidentiality or
non-disclosure obligations referred to in paragraph 8. At any
termination or non-renewal, you shall receive any restricted stock
grants which are then vested, and you shall be entitled to exercise any
stock options which are then exercisable in accordance with the terms
of your stock option grant letter with the Company.
(b) Any termination shall be by
notice given in accordance with paragraph 10(e), shall specify the
effective date of termination, and shall provide the reasons for such
action, as required by paragraph 5.
(c) If termination occurs as a
result of death, the Company shall pay to your spouse, if she survives
you, or to such persons as your legal representative may direct if your
spouse does not survive you, an amount equal to your then effective
Base Salary and such other compensation or benefits to which you are
entitled, prorated to the date of death. If termination occurs under
paragraphs 5(a), 5(c) or 5(f), the Company's obligations shall be
limited to paying you your then effective Base Salary and any other
compensation or benefits prorated to the effective date of termination.
7. Representations and Covenants.
(a) You represent and warrant to
the Company that you are not now subject to any non-competition,
restrictive covenant or other restriction or agreement which would
prevent, limit or impair in any way your ability to perform all your
obligations under this Agreement. You have no obligation to any former
employer or other person which is inconsistent with or conflicts with
your duties and obligations hereunder, and the terms and conditions of
the services to be performed for the Company, as set forth herein. You
have not ever applied for and been denied a resident visa for employ-
ment in the United States, and you know of no reason why you would not
be able to obtain the resident visa necessary for you to enter into
this Agreement and perform your services as contemplated by it.
(b) At the Company's request, you
shall complete reasonable medical examinations from time to time if
necessary to obtain insurance on your life for any "keyman" insurance
policy the Company may apply for, or if required under any Company
sponsored benefit plan.
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8. Confidentiality, Ownership and
Non-Competition Agreements. You shall sign the same agreements with
the Company concerning confidentiality, ownership of inventions and
other discoveries, and non-competition which the Company customarily
requires of its senior executive officers at the same time you sign
this Agreement. A copy of that form of that agreement is annexed.
However, to the extent the non-competition provisions of that agreement
cover a shorter time, the period shall be enlarged to extend through
the end of any period you continue to receive payments under this
Agreement, including payments on Change of Control.
9. Change of Control.
(a) "Change of Control" means any
one of the following:
(i) a change of control of a
nature that would be required to be reported in the Company's proxy
statement under the Securities Exchange Act of 1934, as amended (the
"Exchange Act");
(ii) the approval by the Board
of a sale of all or substantially all of the Company's assets to any
unrelated third party and the consummation of such transaction;
(iii) the consummation of any
merger, consolidation, or like business combination or reorganization
of the Company which is approved by the Board and which results either
in an event described in clause (i) above.
Change of Control excludes the sale or other disposition (by spin-off,
split-off or otherwise) of all or substantially all of the assets of
one of the two divisions known today as the Lumex and Cybex Divisions
of the Company ("Partial Sale"), under circumstances where you continue
to be employed by the remaining division pursuant to all the terms and
conditions of this Agreement.
(b) If you wish to exercise your
right to terminate your employment upon a Change of Control you must
give the Company at least 90 days' notice not more than 30 days after
any event constituting a Change of Control occurs. Your failure to
give such notice shall preclude you from terminating employment upon a
Change of Control, but only with respect to that occurrence. During
the 90 day period following the delivery of your notice of termination,
you shall cooperate fully with the Company (or its successor) to effect
the orderly transfer of your duties to another person or persons.
Notwithstanding the foregoing, upon receipt of your notice of termina-
tion upon a Change of Control, the Company may cause your termination
to become effective prior to the end of the 90 day period (or if later,
the date specified in your notice of termination) upon not less than
two business days' notice.
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(c) If you terminate employment
upon a Change of Control, the Company (or its successor) shall pay you
an amount equal to the Base Salary, at the annual rate in effect at the
time of such termination, multiplied by 2.99. Of the amount so deter-
mined, 50% shall be paid to you in equal installments for a period of
12 months after the effective date of termination, and the balance in
equal installments over the next 24 months. In both cases, payments
shall be in such intervals and in the same manner as Base Salary was
paid at the time of termination.
(d) Notwithstanding the foregoing,
you shall have no right to terminate upon a Change of Control if you
are offered continued employment for at least three full years
following the Change of Control in a comparable position, with
comparable responsibilities at comparable total compensation, all as
provided herein. If, within the three-year period following the Change
of Control, you are offered and accept such comparable employment but
(i) you are subsequently demoted to non-comparable employment, (ii) you
are terminated without Cause (as defined in paragraph 5(a)) or (iii)
you terminate for "Good Reason" (determined below), the Company (or its
successor) shall pay to you, in a single installment, an amount equal
to the difference between (i) the amount you actually received in the
new employment following the Change of Control and (ii) your Base
Salary, at the annual rate in effect at the time the Change of Control
occurred, multiplied by 2.99. Good Reason means the assignment of any
duties inconsistent in any material respect with the your position
immediately prior to the Change of Control (including office, titles
and reporting requirements), material decrease in your authorities,
duties and responsibilities, any material negative changes to Base
Salary, annual bonuses, incentives, stock plans, savings and incentive
plans, welfare/benefits plans, expense policies, fringe benefits, or
your office, support staff and physical location. Also, you would have
Good Reason to terminate if there was an attempt to terminate your
employment other than for cause, as expressly permitted by paragraph
5(a) of this Agreement.
10. Miscellaneous.
(a) Your obligations under this
Agreement are not assignable (except as provided in paragraph 6(c)) and
shall not be delegated. This Agreement and all of the Company's
rights and obligations hereunder may be assigned or transferred to and
shall be assumed by and be binding upon any corporation or other
business entity which, by merger, consolidation, purchase of the assets
or otherwise, including after a Change of Control, acquires all or a
material part of the assets of the Company.
(b) If any provision contained in
this Agreement or the agreements referred to in paragraph 8 is
determined to be unenforceable for any reason, the remainder of this
Agreement or such other agreements shall be construed as if such
provision was not included, and the remaining parts shall continue in
full effect. If the unenforceability relates to the scope, duration or
the area covered by any non-competition agreement, we agree that the
court making such determination shall have the power to reduce the
breadth of its scope or the duration or area of such restriction, and
in reduced form, such restriction shall then be enforceable.
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(c) This Agreement is executed and
delivered in the State of New York and shall be interpreted in
accordance with New York law, without regard to its principles of
conflicts of laws. Any action or proceeding to enforce any provisions
of this Agreement may be brought in a federal or state court located in
the New York State Counties of New York, Nassau or Suffolk, and any
such action may be commenced and process served as provided in the laws
or rules applicable to the federal or state court where the action is
brought.
(d) This Agreement and those
referred to in paragraph 8 constitute the entire understanding of the
parties with respect to your employment with the Company, and they may
not be amended, and none of their respective provisions may be waived
other than by a writing signed by both of us.
(e) All notices and other communi-
cations required or permitted hereunder shall be in writing and shall
be sufficient if delivered personally, sent by any national overnight
courier or mailed by certified mail, return receipt requested, to the
addresses indicated on page one. Any item delivered in accordance with
the provisions of this paragraph shall be deemed to have been delivered
(i) on the date of personal delivery, (ii) on the business day
following the date sent by overnight courier or (iii) on the fifth
business day following the date on which it was so mailed, as the case
may be. Notice to the Company shall be to the attention of its Chief
Financial Officer.
(f) You shall receive all your
payments in and all dollar references in this letter are to U.S.
dollars.
(g) Subject to your compliance with
the agreements referred to in paragraph 8, your right to receive the
payments set forth herein on termination or non-renewal is otherwise
unconditional. Accordingly, you shall not be required to mitigate by
seeking new employment or substitute sources of income. Further, your
obtaining other employment or positions (subject to compliance with the
agreements referred to in paragraph 8) shall not affect your right to
receive and the Company's obligation to pay or provide you with all the
termination or non-renewal payments and benefits provided herein.
Please countersign this letter where
indicated, whereupon it will become effective to amend and restate your
Employment Agreement, effective August 9, 1995.
Sincerely,
LUMEX, INC.
By: /s/ John C. Spratt
Name: John C. Spratt
Title: Chairman of the Board
Accepted and Agreed to:
/s/ J. Raymond Elliott
J. Raymond Elliott
<PAGE>
Exhibit 10(xvi)
Lumex, Inc.
81 Spence Street
Bay Shore, New York 11706
August 17, 1995
Mr. John R. Cowin
40 Preston Street
Huntington, New York 11743
Dear Skip:
This letter confirms our agreement
concerning your employment with Lumex, Inc. (the "Company") as set
forth below. Except as noted herein, this Agreement supersedes any
prior Agreement with the Company relating to your employment.
1. Term. Your employment will be
for a term of one year beginning August 1, 1995 through July 31, 1996
(the "Term").
2. Duties.
(a) You shall serve as the
Company's Chief Operating Officer. As such, you shall have all the
functions, duties and responsibilities of a Chief Operating Officer.
During the Term, you shall devote your full business time and energies
to the business and affairs of the Company, and shall not accept other
employment. You shall use your best efforts and abilities to promote
the interests of the Company, to serve as a director or officer of any
subsidiary of the Company to which you are elected and you shall
perform such duties consistent with your status as Chief Operating
Officer as may be assigned to you by the Company's Board of Directors
("Board").
(b) You will perform your
services principally at the Company's Bay Shore, New York executive
office, acknowledging that the nature of your duties will require
reasonable domestic and international travel from time to time.
3. Compensation. Your compensa-
tion shall consist of the salary and benefits described below:
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(a) A base salary during the
Term at the annual rate of $237,000 ("Base Salary"). If this
Agreement is renewed and the Term extended, the Compensation
Committee of the Board shall review the Base Salary in accordance
with the Company's customary practices respecting executive
compensation.
(b) You shall participate in
the Company's Bonus Incen-tive Compensation Plan (the "BIC Plan")
in accordance with its terms, except that your "Target" shall be
40%, your "Maximum" 80% and your "Max-Max" 120%, as each term is
defined in the BIC Plan. In evaluating whether you meet your
Target, 50% will be based upon the performance of the Company's
Lumex division, and 50% on performance of the Cybex division. We
both acknowledge in this regard that the Board has not yet approved
a budget for the Cybex division.
(c) You shall be granted the
following under the Com-pany's 1995 Omnibus Incentive Plan based
upon the market price of the Company's Common Stock as of the close
of trading on August 2, 1995:
(i) A restricted stock grant
of 2,500 shares of restricted common stock, in accordance with the
terms of a Restricted Stock Award agreement which will provide,
among other things, that 20% of such restricted common stock shall
vest on each July 31st during your continued employment with the
Company; and
(ii) A non-qualified stock
option for 15,000 shares of common stock, in accordance with a
grant letter which will provide, among other things, that such
options will vest at the rate of 25% each year beginning on July
31, 1996.
(d) You shall receive a bonus
of $25,000, to be paid on signing this Agreement.
(e) You shall receive reim-
bursement of up to $5,000 for the reasonable fees of legal,
accounting and other professional advisors for tax and estate
planning and similar financial consulting advice.
(f) The Company
currently has a loan receivable from you in the amount of $58,000
(the "Loan"). To the extent that all or part of the Loan repre-
sents "Market Loss" (defined below) on the sale of your former
residence in Wyckoff, New Jersey, that portion of the Loan ("Base
Loan Amount") shall automatically be reduced, on the first day of
each month during your continued employment with the Company,
beginning on August 1, 1995, by an amount computed by dividing the
Base Loan Amount by 24. You shall not be required to pay any
interest on the Loan, and the Company shall tax protect you for the
amount of the Base Loan Amount reduced hereunder by paying you
additional compensation sufficient to reimburse you for the federal
and state income tax, at your highest marginal rate, that you are
required to pay on both the forgiveness of debt income and such
additional compensation ("Tax Reimbursement"). The amount of the
Tax Reimbursement shall be determined by and set forth in a
certificate of your tax accountant, subject to review by the
Company's accountants. The Base Loan Amount shall be determined by
your furnishing the Company's Chief Financial Officer with satis-
factory documentation of the Market Loss. Market Loss means the
difference between the actual gross sales price of your former
residence and the sum of (i) your cost for your former residence
and (ii) the cost of your renovations, construction, re-construc-
tion and other capital improvements to it. In no event shall
Market Loss exceed the amount of the Loan.
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(g) You shall be
reimbursed for your actual ordinary and reasonable out-of-pocket
expenses incurred in the conduct of the Company's business. You
shall either receive an annual automobile allowance (payable in
monthly installments) or be furnished with a company-leased
automobile, in either case commensurate with your position as and
in accordance with the policies and procedures that the Company
applies to a senior executive officer.
(h) All compensation and
benefits shall be subject to all withholdings that the Company
determines are required by federal, state or local law, and to such
deductions as may be applicable under the various benefit plans in
which you participate.
4. Other Benefits. In addition
to the compensation and benefits described in paragraph 3, you
shall receive paid vacation of four weeks, in accordance with the
policies and procedures that the Company applies to a senior
executive officer. You shall be eligible for and participate in
sick leave and coverage under any life, health, dental, disability
or other insurance programs made available to other senior
executive officers. You shall also be eligible to participate in
any pension, profit-sharing, restricted stock award, stock option
or other future employment benefit, incentive or compensation
program made available to senior executive officers of the Company.
5. Termination. Termination of
employment can occur in the following manner:
(a) The Company shall
have the right to terminate this Agreement "for cause", which as
used herein shall be limited to one or more of the following:
(i) fraud or embezzlement,
or conviction of a felony or the entry of a plea (including a plea
of nolo contendere) for any felony.
<PAGE>
(ii) breach of your material
obligations under the confidentiality or non-competition obliga-
tions described in paragraph 8;
(iii) any act of moral
turpitude or willful miscon-duct which either results in your
personal enrichment at the Company's expense or, in the reasonable
judgment of the Board, has a material adverse impact on the
business or reputation of the Company or any of its affiliates; or
(iv) your material breach of
or willful failure or refusal to perform your obligations under
this Agreement. You will not be considered to have materially
breached this Agreement or willfully failed to perform your
obligations if you correct the same 30 days after the Board
provides notice to you specifying the nature of the breach, failure
or refusal, or if the Board determines that you did not act in bad
faith or that your action or inaction was based on your reasonable
belief that it was in the Company's best interests.
(b) If you should die during
the Term.
(c) If you become
"disabled" during the Term. For the purpose of this Agreement,
disability shall mean either any disability as defined under the
Company's disability insurance policy that is applicable to you, or
if no such policy is available, a determination by a licensed
physician practicing in New York City or Long Island that you have
suffered any physical or mental disability or incapacity which
causes you to be incapable of performing the services required
under paragraph 2. You will be considered "disabled" if the
disability actually prevents you from performing such services for
a period of three consecutive months or a total of three months
during any twelve-month period.
(d) The Company may
terminate this Agreement at any time without cause, or it may elect
not to renew your employment after the end of the Term. In either
event, you shall receive the following:
(i) Your Base Salary, at the
annual rate in effect at the time of such termination, for a period
of 12 months after the effective date of termination. In this
case, the Base Salary shall be paid to you in such intervals and in
the same manner as it was paid at the time of termination;
(ii) The right to exercise
through July 31, 1997 any stock options which are exercisable at
that date;
<PAGE>
(iii) Any restricted stock
awards which have vested at the effective date of termination; and
(iv) Until the sooner of (A)
the date you have a new, permanent employment position at a level
of compensation that is comparable to your Base Salary or (B) one
year after the effec-tive date of termination, you shall continue
to have use of your Company automobile on the same terms as at
present, and you and your family members shall continue to
participate in the Company's health, medical and dental programs,
consistent with past practice.
6. Other Termination Provisions.
(a) Upon any termination of
your employment, you shall resign from all positions and offices
with the Company and its subsidiaries, whether or not you submit a
formal letter of resigna-tion. Any termination shall not affect
your confidentiality or non-disclosure obligations referred to in
paragraph 8.
(b) Any termination shall be by
notice given in accor-dance with paragraph 10(e), shall specify the
effective date of termination, and shall provide the reasons for
such action, as required by paragraph 5.
(c) If termination occurs as a
result of death, the Company shall pay to your spouse, if she
survives you, or to such persons as your legal representative may
direct if your spouse does not survive you, an amount equal to your
then effective Base Salary and such other compensation or benefits
to which you are entitled, prorated to the date of death. If
termination occurs under para-graph 5(a), the Company shall pay you
your then effective Base Salary and any other compensation or
benefits prorated to the effective date of termination.
(d) Any amount of the Loan
outstanding at the effective date of termination shall be offset
against the severance pay and benefits you will receive under
paragraph 5.
7. Representations and Cove-
nants.
(a) You represent and warrant
to the Company that you are not now subject to any non-competition,
restrictive covenant or other restriction or agreement which would
prevent, limit or impair in any way your ability to perform all
your obligations under this Agreement. You have no obligation to
any former employer or other person which is inconsistent with or
conflicts with your duties and obligations hereunder, and the terms
and conditions of the services to be performed for the Company, as
set forth herein. You have not ever applied for and been denied a
resident visa for employment in the United States, and you know of
no reason why you would not be able to obtain the resident visa
necessary for you to enter into this Agreement and perform your
services as contemplated by it.
<PAGE>
(b) At the Company's request,
you shall complete reasonable medical examinations from time to
time if necessary to obtain insurance on your life for any "keyman"
insurance policy the Company may apply for, or if required under
any Company sponsored benefit plan. However, to the extent the
non-competition provisions of that agreement cover a shorter time,
the period shall be enlarged to extend through the end of any
payment period under paragraph 5(d).
8. Confidentiality, Ownership
and Non-Competition Agreements. If you have not already done so,
you shall sign the same agreements with the Company concerning
confidentiality, ownership of inventions and other discoveries, and
non-competition which the Company customarily requires of its
senior executive officers at the same time you sign this Agreement.
If you have signed it, you reconfirm and agree to all the terms of
such agree-ment. However, to the extent the non-competition
provisions of that agreement cover a shorter time, the period shall
be enlarged to extend through the end of any period you continue to
receive payments under this Agreement or under your Change of
Control agreement.
9. Change of Control. The
Change of Control Agreement that you and the Company previously
executed is not affected by this Agreement.
10. Miscellaneous.
(a) Your obligations under this
Agreement are not assignable (except as provided in paragraph 6(c))
and shall not be delegated. This Agreement and all of the
Company's rights and obligations hereunder may be assigned or
transferred to and shall be assumed by and be binding upon any
corporation or other business entity which, by merger, consolida-
tion, purchase of the assets or otherwise, including after a Change
of Control, acquires all or a material part of the assets of the
Company.
(b) If any provision contained
in this Agreement or the agreements referred to in paragraph 8 is
determined to be unenforceable for any reason, the remainder of
this Agreement or such other agreements shall be construed as if
such provision was not included, and the remaining parts shall
continue in full effect. If the unenforceability relates to the
scope, duration or the area covered by any non-competition
agreement, we agree that the court making such determination shall
have the power to reduce the breadth of its scope or the duration
or area of such restriction, and in reduced form, such restriction
shall then be enforceable.
<PAGE>
(c) This Agreement is executed
and delivered in the State of New York and shall be interpreted in
accordance with New York law, without regard to its principles of
conflicts of laws. Any action or proceeding to enforce any
provisions of this Agree-ment may be brought in a federal or state
court located in the New York State Counties of New York, Nassau or
Suffolk, and any such action may be commenced and process served as
provided in the laws or rules applicable to the federal or state
court where the action is brought.
<PAGE>
(d) This Agreement and those
referred to in paragraphs 8 and 9 constitute the entire understand-
ing of the parties with respect to your employment with the
Company, and they may not be amended, and none of their respective
provisions may be waived other than by a writing signed by both of
us.
(e) All notices and other
communications required or permitted hereunder shall be in writing
and shall be sufficient if delivered personally, sent by any
national overnight courier or mailed by certified mail, return
receipt requested, to the addresses indicated on page one. Any
item delivered in accordance with the provisions of this paragraph
shall be deemed to have been delivered (i) on the date of personal
delivery, (ii) on the business day following the date sent by
overnight courier or (iii) on the fifth business day following the
date on which it was so mailed, as the case may be. Notice to the
Company shall be to the attention of its Chief Operating or Chief
Financial Officer.
Please countersign this letter
where indicated, whereupon it will become our binding Agreement.
We look forward to your joining us on September 1st.
Sincerely,
LUMEX, INC.
By: /s/ John C. Spratt
Name: John C. Spratt
Title: Chairman
Accepted and Agreed to:
/s/ John R. Cowin
John R. Cowin
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from
the financial statements contained in the body of the
Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1995
<CASH> 936
<SECURITIES> 4,992
<RECEIVABLES> 28,119
<ALLOWANCES> 691
<INVENTORY> 20,327
<CURRENT-ASSETS> 61,923
<PP&E> 50,023
<DEPRECIATION> 25,310
<TOTAL-ASSETS> 106,340
<CURRENT-LIABILITIES> 39,840
<BONDS> 13,316
<COMMON> 439
0
0
<OTHER-SE> 50,963
<TOTAL-LIABILITY-AND-EQUITY> 106,340
<SALES> 99,411
<TOTAL-REVENUES> 99,411
<CGS> 62,465
<TOTAL-COSTS> 103,000
<OTHER-EXPENSES> (1,550)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,134
<INCOME-PRETAX> (3,173)
<INCOME-TAX> (1,110)
<INCOME-CONTINUING> (2,063)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,063)
<EPS-PRIMARY> (.47)
<EPS-DILUTED> (.47)
</TABLE>
