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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K/A
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AMENDMENT NO. 1
[x] AMENDMENT TO ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) For the fiscal year
ended December 31, 1995
or
[_] AMENDMENT TO TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (No Fee Required) For the transition
period from ___________ to ___________
Commission file number: 0-4538
LUMEX, INC.
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(Exact Name of Registrant as Specified in its Charter)
NEW YORK 11-1731581
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
2100 SMITHTOWN AVENUE
RONKONKOMA, NEW YORK 11779
(516) 585-9000
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(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
------------------- -------------------
COMMON STOCK, $.10 PAR VALUE AMERICAN STOCK EXCHANGE
Securities registered pursuant to Section 12(g) of the Act:
NONE
- --------------------------------------------------------------------------------
(Title of Class)
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 [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [_].
Aggregate market value of the voting stock (which consists solely of shares of
Common Stock) held by non-affiliates of the registrant as of March 15, 1996,
computed by reference to the closing sale price of the registrant's Common Stock
on the American Stock Exchange on such date: $55,399,427.
On March 15, 1996, the registrant had outstanding 4,426,357 shares of Common
Stock, par value $.10 per share, which is the registrant's only class of common
stock.
DOCUMENTS INCORPORATED BY REFERENCE:
None
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<PAGE>
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K of Lumex,
Inc. (the "Company") for the fiscal year ended December 31, 1995: (a) amends and
restates in their entirety Items 10, 11, 12 and 13 of Part III and (b) amends
and restates in its entirety Item 14 of Part IV solely to add Exhibit 10(xvii).
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
DIRECTORS
The following table lists the name, age, principal occupation and
certain business experience of each of the seven directors of the Company, the
year in which each director's term of office will expire and the year in which
each director was first elected as a director of the Company.
<TABLE>
<CAPTION>
Age at Principal Occupation Year First
March 1, and Certain Year Term Became
Name 1996 Business Experience Will Expire Director
---- ------ ------------------------------------------ ----------- ---------
<S> <C> <C> <C> <C>
Kay Knight Clarke............ 57 President, Templeton, Inc., a 1996 1996
management consulting company, since
July 1995. President, Micromarketing
Division of Advo, Inc., a direct
marketing company, from December
1991 to July 1995. Senior Vice
President of Business Development,
Advo, Inc., from October 1990 to
December 1991. Director, Guardian
Life Insurance Company of America (a
mutual insurance company).
<PAGE>
<CAPTION>
Age at Principal Occupation Year First
March 1, and Certain Year Term Became
Name 1996 Business Experience Will Expire Director
---- ------ ------------------------------------------ ----------- ---------
<S> <C> <C> <C> <C>
J. Raymond Elliott........... 46 President and Chief Executive Officer 1996 1995
of the Company since September 1,
1995. Chairman and Chief Executive
Officer, Cablecom, a cable wire and
communications company, from
January 1995 to September 1995.
President and Chief Executive
Officer, J.R. Elliott
Associates, a turnaround and
mergers and acquisitions
consulting company, from January
1994 to January 1995. President
and Chief Operating Officer,
Southam Newspaper Group, a
newspaper publishing company,
from November 1992 to January
1994. Chairman and Chief
Executive Officer,
Southam/Dittler Group, a
consumer games and lottery
company, from July 1992 to
November 1992. Group President,
Southam Graphics, a graphics and
publishing company, from January
1990 to July 1992.
Thomas W. Kahle.............. 45 Partner, Graydon Head & Ritchey 1996 1991
since 1980. Lead Director of the
Company from August 1994 to August
1995.
Robert R. McMillan........... 63 Partner, McMillan, Rather, Bennett & 1996 1987
Rigano, P.C. since January 1991.
Previously counsel to Rivkin, Radler,
Bayh, Hart & Kremer from March
1990 to January 1991. Prior thereto,
partner, Rivkin, Radler, Dunne &
Bayh from January 1986 to September
1989. Director, Empire Blue Cross
Blue Shield and Key Bank of New
York.
Carol G. Nelson.............. 64 Chairman and Chief Executive Officer 1998 1983
of Security Archives Corporation, a
business records storage and
management company,
since September 1986.
2
<PAGE>
<CAPTION>
Age at Principal Occupation Year First
March 1, and Certain Year Term Became
Name 1996 Business Experience Will Expire Director
---- ------ ------------------------------------------ ----------- ---------
<S> <C> <C> <C> <C>
John C. Spratt............... 44 Chairman and Chief Executive Officer 1998 1990
of Orthopaedic Health Services, Inc., a
health care management company
specializing in rehabilitation and
occupational medicine services, since
May 1988. Partner in SCS Business
Development, a business development
company, since May 1994. From
1985 to May 1988, President of
Lumex Health Services, Inc., formerly
a subsidiary of the Company.
Chairman of the Board of the
Company since August 1995.
Alan H. Weingarten........... 55 Alan H. Weingarten & Associates, 1997 1987
Inc., consultant in general
management, marketing and product
planning, since September 1986.
Director, Boca Raton Capital
Corporation.
</TABLE>
EXECUTIVE OFFICERS
The following table lists the name, age, present position with the
Company and certain business experience with respect to the executive officers
of the Company, other than Mr. Elliott who is listed in the table above and John
R. Cowin, Senior Vice President, whose employment terminated on April 2, 1996.
Age at
March 1, Present Position with the Company
NAME 1996 and Certain Business Experience
---- ---- -------------------------------
Robert McNally........... 49 Senior Vice President-Finance since June
1994. Vice President-Finance from 1981 to
June 1994. Chief Financial Officer and
Secretary since 1981.
3
<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and any persons who own more than ten percent
of the Company's common shares, par value $.10 pre share ("Common Shares") to
file reports of initial ownership of the Company's Common Shares and subsequent
changes in that ownership with the Securities and Exchange Commission and the
American Stock Exchange, Inc. Officers, directors and greater than ten-percent
beneficial owners are also required to furnish the Company with copies of all
Section 16(a) forms they file. Based solely upon a review of the copies of the
forms furnished to the Company, or written representations from certain
reporting persons that no Forms 5 were required, the Company believes that
during the 1995 fiscal year all Section 16(a) filing requirements were complied
with, except that one report for one transaction was filed late by each of James
E. George (former director, president and chief executive officer) and John C.
Spratt.
4
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
----------------------
SUMMARY COMPENSATION TABLE
The following table sets forth information in respect of the
compensation for 1995, 1994, and 1993 of the persons who were, during 1995, the
Chief Executive Officer, and at the end of 1995, all other executive officers of
the Company (sometimes collectively referred to as the "Named Executive
Officers") for services in all capacities to the Company and its subsidiaries.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
----------------------------------------------------- ----------------------------
Other RESTRICTED SECURITIES
Annual STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL Compen- AWARD(S) OPTIONS COMPENSA-
POSITION(S) Year Salary Bonus (1) sation ($) (2) (#) TION(3)
------------- ---- ------ --------- -------------- ------------- ----------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
J. Raymond Elliott,........... 1995 $100,000 $29,859(5) $472,500 25,000 0
President and Chief
Executive Officer (4)
Robert McNally,............... 1995 185,175 $10,000 37,280 12,500 $7,278
Chief Financial Officer, Senior 1994 175,000 12,442 12,500 7,688
Vice President- Finance and 1993 146,000 29,200 8,121
Secretary (6)
John R. Cowin,................ 1995 217,286 25,000 53,512 15,000 10,721
Senior Vice President and 1994 195,000 27,710 15,000 10,638
President of the Lumex 1993 164,000 0 10,026
Division (7)
James E. George,.............. 1995 72,692 0 19,265(10) 10,404
Former President and Chief 1994 90,000 88,921(9) 18,156(10) 15,000 1,648
Executive Officer (8)
<FN>
- ----------------------
(1) Annual bonus incentive compensation is based on performance in the year
shown but determined and paid in the following year.
(2) At December 31, 1995, Mssrs. Elliott, McNally and Cowin held 45,000,
3,431 and 4,853 shares of restricted stock having a value of $421,875,
$32,166 and $45,497, respectively, based upon a closing price of $9.375
per Common Share on December 29, 1995 (the last day of trading in
1995). If cash dividends are paid by the Company, holders of restricted
stock are entitled to receive such dividends whether or not the shares
have vested. Included in the awards to Mr. McNally is a restricted
stock grant on August 8, 1995 of 2,000 shares, which vests in annual
increments of 20% beginning one year after date of grant. For a
description of certain awards of restricted stock made to Mssrs.
Elliott and Cowin, see "Employment and Severance Agreements" below.
(3) "All Other Compensation" for 1995 includes the following: (a)
contributions for Mr. McNally ($3,000) and Mr. Cowin ($3,000) made by
the Company under the Company's Savings and Investment Plan, a defined
contribution plan meeting the requirements of Section 401(k) of the
Internal Revenue Code of 1986, as amended (the "Savings Plan"), to
match 1995 pre-tax elective deferral contributions (included under
Salary) made by each to such plan; (b) contributions for Mr. McNally
($2,935), Mr. Cowin ($2,878) and Mr. George ($2,854) made by the
Company under the Savings Plan's retirement feature whereby the Company
contributes from its current or accumulated earnings 2% (or such
additional
5
<PAGE>
amount as the Company may determine) of the eligible employees'
aggregate annual compensation, which amount is then allocated to
eligible employees based on their proportionate compensation for the
plan year and their full years of service with the Company; (c) the
value of Common Shares allocated in 1995 under the Company's Employee
Stock Ownership Plan to Mr. McNally ($1,343) and Mr. Cowin ($1,343);
(d) imputed compensation of $3,500 for Mr. Cowin reflecting the
difference between a market rate and the interest-free loan extended to
him by the Company (see Item 13); and (e) for Mr. George, Board of
Directors meeting fees ($3,000) and automobile lease payments from June
through December 1995 ($4,550) (but does not include additional
automobile lease payments to be made from January through May 1996
totalling $3,250, and a payment of $35,388 to purchase the automobile
for Mr. George in June 1996, at the end of the lease term).
(4) Mr. Elliott joined the Company on September 1, 1995. His annual base
salary in 1995 was $300,000. Mr. Elliott has an employment agreement
with the Company (see "Employment and Severance Agreements" below).
(5) Includes $25,459 for commuting and living expenses.
(6) Mr. McNally has an employment agreement with the Company (see
"Employment and Severance Agreements" below).
(7) Mr. Cowin has an employment and a severance agreement with the Company
(see "Employment and Severance Agreements" below). Mr. Cowin's
employment with the Company terminated on April 2, 1996.
(8) Mr. George joined the Company on June 2, 1994 and resigned as an
employee on May 24, 1995. His annual base salary in 1995 was $180,000.
Mr. George has a severance agreement with the Company (see "Employment
and Severance Agreements" below).
(9) Includes $71,875, which represents the dollar value of Common Shares
granted to Mr. George on January 17, 1995, calculated by multiplying
the closing price of a Common Share on the date of grant ($14.375) by
the number of shares awarded (5,000). Although granted in 1995, the
award was based on performance in 1994. There are no restrictions on
these shares.
(10) Includes in 1995, $13,715 of rental and utility payments that were made
on a corporate residence used by Mr. George through May 1995, and
includes in 1994, $10,500 of similar payments during the second half of
1994.
</FN>
</TABLE>
6
<PAGE>
OPTION GRANTS IN 1995
The following table shows all grants of options to the Named Executive
Officers of the Company in 1995:
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATES OF
STOCK APPRECIATION FOR
INDIVIDUAL GRANTS (1) OPTION TERM (2)
-----------------------------------------------------------------------------------------------------------
OPTIONS PERCENT OF TOTAL EXERCISE MARKET
GRANTED OPTIONS GRANTED TO PRICE PRICE EXPIRATION
NAME (# OF SHARES) EMPLOYEES IN 1995 ($/SH) ($/SH) DATE 0% ($) 5% ($) 10% ($)
- ---- ------------- ----------------- -------- -------- ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Raymond Elliott 25,000 22.71% $10.00 $10.500 9/1/05 $12,500 $177,585 $430,857
Robert McNally 12,500 11.35% 10.70 11.875 9/8/05 14,688 108,039 251,259
John R. Cowin 15,000 13.62% 10.00 9.875 8/1/05 0 91,280 234,198
James E. George 0 0% -- -- -- -- -- --
<FN>
- ----------------------
(1) The options were granted under the terms of either the Company's
Amended and Restated 1987 Stock Option Plan or 1995 Omnibus Incentive
Plan. Each option was granted on the date 10 years prior to the
expiration date indicated in the table, and becomes exercisable over
four years in annual increments of 25% beginning one year after the
date of grant. The market price of a Common Share on the date of grant
is indicated in the table. The exercise price may be paid in cash, by
delivery of already owned shares, by withholding of shares or by such
other methods as the Compensation Committee may prescribe. The
exercisability of the options automatically accelerate upon a "change
in control" of the Company (and in the case of Mr. Elliott's option,
also a "partial sale" of the Company), and may also be accelerated by
the Compensation Committee.
(2) The potential realizable value is the product of (a) the difference
between: (i) the product of the per-share market price at the time of
the grant and the sum of 1 plus the adjusted stock price appreciation
rate (i.e., the assumed rate of appreciation compounded annually over
the term of the option) and (ii) the per-share exercise price of the
option; and (b) the number of securities underlying the grant at fiscal
year-end. The dollar amounts under these columns are the result of
calculations at the 0% and the 5% and 10% assumed rates of appreciation
prescribed by the Securities and Exchange Commission, and therefore are
not intended to forecast possible future appreciation, if any, of the
market price of the Company's Common Shares. The actual value that any
Named Executive Officer may realize, if any, will depend on the amount
by which the market price of the Common Shares at the time of exercise
exceeds the exercise price.
</FN>
</TABLE>
7
<PAGE>
AGGREGATED OPTION EXERCISES IN 1995 AND
OPTION VALUES AT DECEMBER 31, 1995
Mr. McNally is the only Named Executive Officer who exercised options
in 1995. The following table provides information as to the shares acquired on
exercise and the value realized by Mr. McNally and the value of options held by
the Named Executive Officers at year-end measured in terms of the closing price
of a Common Share on December 31, 1995 ($9.375 per share).
<TABLE>
<CAPTION>
Number of
Securities
Underlying Value of
SHARES Value Unexercised Unexercised In-the-
ACQUIRED ON Realized Options at Dec. Money Options at
EXERCISE (#) ($)(1) 31, 1995 (#) Dec. 31, 1995 ($) (2)
------------ ------- -------------- ---------------------
Exercisable/ Exercisable/
Name Unexercisable Unexercisable
- ---- ------------- -------------
<S> <C> <C> <C> <C>
J. Raymond Elliott................ 0 $ 0 0/ $ 0/
25,000 0
Robert McNally.................... 5,000 25,600 26,000/ 54,688/
27,500 0
John R. Cowin..................... 0 0 25,000/ 0/
30,000 0
James E. George................... 0 0 0/ 0/
0 0
<FN>
- -----------------
(1) Value realized is the difference between the market price of a Common
Share on the date of exercise and the exercise price of the option,
multiplied by the number of Common Shares underlying the option.
(2) Value of unexercised "in-the-money" options is the difference between
the market price of a Common Share on December 31, 1995 and the
exercise price of the option, multiplied by the number of Common Shares
underlying the option.
</FN>
</TABLE>
COMPENSATION OF DIRECTORS
The Company's compensation program for nonemployee directors during
1995 provided that each nonemployee director (except the Lead Director as noted
below) receive an annual retainer of $18,000 in quarterly installments, seventy
percent of which was paid in Common Shares of the Company (using the price per
share on January 1 of such year) pursuant to the Company's 1995 Stock Retainer
Plan for Nonemployee Directors (the "Retainer Plan"). Directors also received
$1,000 for each Board meeting attended or $500 for each telephone meeting.
Directors who acted as a chairperson of a committee generally received an annual
fee of $3,200 while those who were members of a committee (including the
chairperson) generally received a fee of $500 for each special meeting of such
committee attended on a day other than on a day on which a meeting of the Board
of Directors was being held. Members of the search committee received $1,000 for
each special meeting attended. For serving as Lead Director through August 1995,
Thomas W. Kahle received a retainer (and no meeting or committee fees) of
$39,000, paid in three quarterly installments, fifty percent of which was paid
in Common Shares of the Company pursuant to the Retainer Plan. In addition, John
C. Spratt, for serving as the Chairman of the Board beginning in August 1995, is
to receive 5,000 Common Shares payable in four quarterly installments of which
1,250 were issued in 1995. Mr. Spratt also received $33,000 from the Company for
consulting services performed in 1994 and the cancellation of outstanding
options. Alan H. Weingarten received $2,000 during 1995
8
<PAGE>
for representing the Board of Directors in connection with the Company's
engagement of a management information system consulting firm. During 1995
pursuant to the Retainer Plan, Mr. McMillan, Mr. Nelson, Mr. Spratt and Mr.
Weingarten each received a total of 988 Common Shares, and Mr. Kahle received a
total of 1,777 Common Shares under the Retainer Plan, which represents the stock
component of their annual retainer.
EMPLOYMENT AND SEVERANCE AGREEMENTS
The Company and J. Raymond Elliott are parties to an employment
agreement pursuant to which Mr. Elliott is employed as the Company's President
and Chief Executive Officer from September 1, 1995 through August 31, 1998,
unless sooner terminated in accordance with the terms of the agreement. Pursuant
to the agreement, the Company will pay Mr. Elliott a base salary of $300,000 per
annum. Mr. Elliott is eligible to participate in the Company's Bonus Incentive
Compensation Plan (the "BIC Plan") and is guaranteed a minimum bonus of $70,000
for 1996. He may also receive, at his election, between 10% and 40% of amounts
payable to him under the BIC Plan in the form of Common Shares, converted at a
value equal to 85% of its market value. Upon joining the Company on September 1,
1995, Mr. Elliott was granted pursuant to the employment agreement and the
Company's 1995 Omnibus Incentive Plan (the "Omnibus Plan"): (i) 25,000 shares of
restricted common stock, vesting in annual increments of 20% beginning on the
first anniversary of his commencement of employment; (ii) 20,000 shares of
restricted stock, all of which vested on February 8, 1996; and (iii) a
non-qualified stock option to purchase 25,000 Common Shares at an exercise price
of $10.00 per share (the closing price on August 2, 1995), vesting in annual
increments of 25% beginning on the first anniversary of his commencement of
employment; provided, however, the stock option will vest fully upon either a
"change of control" or "partial sale" (each as defined in the employment
agreement), and the restricted stock grant of 25,000 Common Shares will vest
fully upon a change of control. Mr. Elliott is also entitled to various employee
benefits pursuant to the agreement. If the Company terminates the agreement
other than "for cause" (as defined in the employment agreement), Mr. Elliott is
entitled to receive his base salary for the longer of one year or the remainder
of the term of the agreement plus any bonus he has earned under the BIC Plan as
of the date of termination. Mr. Elliott has the right to terminate employment
upon a change of control, in which case he is entitled to receive an amount
equal to 2.99 multiplied by his base salary, of which 50% is payable in equal
installments over the 12 months following termination and the balance is payable
in equal installments over the next 24 months. If the Company does not extend or
renew the employment agreement at the end of its term, the Company is required
to pay Mr. Elliott his base salary over the next 12 months.
The Company and Robert McNally are parties to an employment agreement
pursuant to which Mr. McNally is employed as the Company's Chief Financial
Officer and as a Senior Vice President from September 1, 1995 through August 31,
1998, unless sooner terminated in accordance with the terms of the agreement.
Pursuant to the agreement, the Company will pay Mr. McNally a base salary of
$189,000 per annum. Mr. McNally is eligible to participate in the BIC Plan and
receive, at his election, between 10% and 40% of amounts payable to him under
the BIC Plan in the form of Common Shares, converted at a value equal to 85% of
its market value. Mr. McNally is also entitled to various employee benefits
pursuant to the agreement. If the Company terminates the agreement other than
"for cause" (as defined in the employment agreement), Mr. McNally is entitled to
receive his base salary for the longer of 15 months or the remainder of the term
of the agreement plus any bonus he has earned under the BIC Plan as of the date
of termination. Mr. McNally has the right to terminate employment upon a "change
of control" (as defined in the employment agreement), in which case he is
entitled to receive an amount equal to 2.99 multiplied by his base salary, of
which 50% is payable in equal installments over the 12 months following
termination and the balance is payable in equal installments over the next 24
months. If the Company does not extend or renew the employment agreement at the
end of its term, the Company is required to pay Mr. McNally his base salary over
the next 15 months.
9
<PAGE>
The Company and John R. Cowin are parties to an employment agreement
pursuant to which Mr. Cowin was employed as the President of the Lumex Division
and as a Senior Vice President from August 1, 1995 through April 2, 1996, at
which time his employment was terminated in accordance with the terms of the
agreement. Pursuant to the agreement, Mr. Cowin is entitled to a base salary of
$237,000 per annum. Upon commencement of the employment term, Mr. Cowin was
granted pursuant to the employment agreement and the Company's Omnibus Plan: (i)
2,500 shares of restricted common stock, vesting in annual increments of 20%
beginning on July 31, 1996 during his continued employment with the Company; and
(ii) a non-qualified stock option to purchase 15,000 Common Shares at an
exercise price of $10.00 per share (the closing price on August 2, 1995),
vesting in annual increments of 25% beginning on July 31, 1996. Mr. Cowin also
received a signing bonus of $25,000.
The Company also has an executive severance agreement with Mr. Cowin.
The severance agreement provides that if the employee's employment is terminated
during the two years following a "change in control" of the Company either by
the Company (other than for "cause") or by the employee for a "good reason," as
those terms are defined in the severance agreement, a lump sum payment will be
made to such employee. The severance agreement provides for a lump sum payment
of 2.99 times the "base amount," as defined in Section 280G of the Internal
Revenue Code of 1986, the base amount approximating the average annual
compensation for the five years preceding a change of control of the Company.
The payments and benefits provided by the severance agreement to the employee
are limited such that the value thereof when aggregated with other benefits or
payments paid to such employee in connection with a termination of his
employment would not exceed three times the "base amount" for such employee.
The Company entered into a severance agreement with James E. George,
the Company's former President and Chief Executive Officer, on May 8, 1995,
pursuant to which he resigned as an employee and an officer effective as of May
24, 1995. Under the terms of the agreement, Mr. George received his salary
through May 24, 1995, and until December 31, 1995, substantially the same
medical and health benefits generally provided to the Company's employees. The
agreement also provides that the Company will pay Mr. George's automobile lease
payments through June 1996, the end of the lease term, at which time the Company
will purchase the automobile for Mr. George at no cost to him. Mr. George has
agreed not to compete with the Company through May 24, 1996.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee serving at any time during
1995 were: Thomas W, Kahle, Robert R. McMillan, Carol G. Nelson, John C. Spratt
and Alan H. Weingarten. The Option Committee was discontinued in August 1995 and
consisted of Charles E. Murcott (until June 5, 1995), Robert R. McMillan and
Carol G. Nelson. The functions of the Option Committee were absorbed by the
Compensation Committee.
Robert R. McMillan is a partner in the law firm of McMillan, Rather,
Bennett & Rigano, P.C., which was paid approximately $250,647 by the Company for
providing legal services during 1995. John C. Spratt had been from 1985 to May
1988, President of Lumex Health Services, Inc., formerly a subsidiary of the
Company. Charles E. Murcott had been President of the Company from 1952 to 1978
and from July 1984 to 1986 and Chairman of the Board from 1977 to December 1987.
10
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------------------------------------
As of the close of business on March 15, 1996, the Company had
outstanding 4,426,357 Common Shares. At all meetings of shareholders, holders of
Common Shares are entitled to one vote, exercisable in person or by proxy, for
each Common Share held.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of March 15, 1996, more than five percent of the Company's
outstanding Common Shares (the Company's only outstanding class of voting
securities) were owned beneficially by the persons named in the table below. All
Common Shares are owned directly, except as otherwise indicated. The information
concerning the beneficial owners in the following table, other than Charles E.
Murcott, was obtained from public filings by those companies with the Securities
and Exchange Commission. The Company assumes no responsibility for the accuracy
of such information.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
---------------- -------------------- --------
<S> <C> <C>
Surgical Appliance Industries, Inc........................................... 529,600 12.0%
3960 Rosslyn Drive
Cincinnati, Ohio 45209
Charles E. Murcott........................................................... 256,964 (1) 5.8%
10 Matinecock Farms Road
Glen Cove, NY 11542
Dimensional Fund Advisors Inc................................................ 252,900 (2) 5.7%
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
<FN>
- ---------------------
(1) Includes 5,000 shares held by a charitable trust of which Mr. Murcott is a
co-trustee and shares voting power. Does not include 27,450 shares owned by
Mr. Murcott's wife, Constance Murcott, as to which beneficial ownership is
disclaimed.
(2) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 252,900 Common Shares as
of December 31, 1995, all of which shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and the DFA Participating Group Trust,
investment vehicles for qualified employee benefit plans, all of which
Dimensional Fund Advisors Inc. serves as investment manager. Dimensional
disclaims beneficial ownership of all such shares. Dimensional has sole
voting power for 146,500 Common Shares and sole investment power for
252,900 Common Shares.
</FN>
</TABLE>
11
<PAGE>
SECURITY OWNERSHIP BY MANAGEMENT
The following table sets forth, as of March 15, 1996, information with
respect to the number of Common Shares of the Company beneficially owned by each
director and nominee for director of the Company, by each of the Named Executive
Officers identified in Item 11 under the caption "Summary Compensation Table"
other than Mr. George (for whom the number of Common Shares beneficially owned,
if any, is unknown), and by all directors and executive officers of the Company
as a group. Except as otherwise indicated, all shares are owned directly.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT
NAME OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
- ------------------------ -------------------- --------
<S> <C> <C>
Kay Knight Clarke........................................................... 336 (2) (1)
John R. Cowin............................................................... 30,356 (2)(3)(4) (1)
J. Raymond Elliott.......................................................... 70,000 (2)(4) 1.6%
Thomas W. Kahle............................................................. 7,325 (2) (1)
Robert R. McMillan.......................................................... 3,524 (2) (1)
Robert McNally.............................................................. 42,327 (2)(3)(4) 1.0%
Carol G. Nelson............................................................. 38,324 (2) (1)
John C. Spratt.............................................................. 14,674 (2)(5) (1)
Alan H. Weingarten.......................................................... 5,324 (2) (1)
All directors, nominees and executive
officers as a group (consisting
of 9 persons).............................................................. 212,190 (2)(3) 4.7%
<FN>
- ---------------------
(1) Constitutes less than one percent.
(2) Includes shares which the following persons have the right to acquire
within 60 days through the exercise of stock options: Mr. Cowin, 25,000
shares; Mr. Elliott, 25,000; Mr. Kahle; 2,000 shares; Mr. McMillan, 2,000
shares; Mr. McNally, 16,625 shares; Mr. Nelson, 2,000 shares; Mr. Spratt,
2,000 shares; Mr. Weingarten, 2,000 shares. Also includes shares which the
following nonemployee directors have the right to acquire within 60 days as
partial payment of their retainer: Ms. Clarke, 336 shares; Mr. Kahle, 336
shares; Mr. McMillan, 336 shares; Mr. Nelson, 336 shares; Mr. Spratt, 1,586
shares; Mr. Weingarten, 336 shares. The number of shares that all
directors, nominees and executive officers as a group have the right to
acquire within 60 days is 77,891 Common Shares. In each case the percent of
class is calculated on the basis that such shares are deemed outstanding.
No voting or investment power exists with respect to such shares prior to
acquisition.
(3) Includes shares which the following persons have allocated to them under
the Lumex, Inc. Employee Stock Ownership Plan: Mr. Cowin, 503 shares; Mr.
McNally, 1,071 shares; and all directors, nominees and executive officers
as a group, 1,574 shares.
(4) Includes shares of restricted stock over which the following persons have
voting power but not investment power until such shares vest: Mr. Cowin,
4,853 shares; Mr. Elliott, 25,000 shares; and Mr. McNally, 3,431 shares.
(5) Includes 7,100 shares owned by Orthopaedic Health Services, Inc.
("Orthopaedic") and 200 shares owned by Orthopaedic's pension plan. Mr.
Spratt is the sole owner of Orthopaedic.
</FN>
</TABLE>
12
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
Thomas W. Kahle, a director of the Company, is a partner in the
Cincinnati law firm of Graydon Head & Ritchey, which is general counsel to
Surgical Appliance Industries, Inc., a 12.0% shareholder in the Company (see
Item 12 above). Mr. Kahle disclaims any beneficial interest in the shares of the
Company owned by Surgical Appliance Industries, Inc.
In 1995, the Company purchased approximately $306,875 of products
manufactured by Surgical Appliance Industries, Inc., a 12.0% shareholder in the
Company.
Robert R. McMillan, a director of the Company, is a partner in the law
firm of McMillan, Rather, Bennett & Rigano, P.C., which was paid approximately
$250,647 by the Company for providing legal services during 1995.
In 1993 the Company extended to John R. Cowin, now a former executive
officer of the Company, an interest-free loan in the amount of $67,577 in order
to facilitate his relocation to the Long Island area. The loan is generally
repaid through a deduction from his annual bonus, and in 1995 he paid $9,237 of
the loan from his 1994 bonus. During 1995, the largest amount of the loan
outstanding was $67,577, and as of March 31, 1996, $58,340 was outstanding.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
---------------------------------------------------------------
(a) The following documents are filed or incorporated by reference as a part of
this report:
(1) (2) Financial Statements and Schedules
----------------------------------
See Index to Consolidated Financial Statements and Schedules
(Part II - Item 8).
(3) Exhibits
--------
3(a) Restated Certificate of Incorporation of the Company,
as amended, incorporated by reference to Exhibit 3.1
to the Company's Current Report on Form 8-K, dated
June 7, 1988 (the "June 1988 8-K").
3(b) By-Laws of the Company, as amended, incorporated by
reference to Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the year ended December 31,
1987.
4(i)(a) Rights Agreement dated as of May 23, 1988 between the
Company and Registrar & Transfer Company,
incorporated reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated May 18,
1988 (the "May 1988 8-K").
4(i)(b) Amendment to Rights Agreement dated as of March 15,
1989 between the Company and Registrar & Transfer
Company, incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K dated March
15, 1989.
4(ii)(a) Guaranty dated as of June 1, 1982 by the Company in
favor of Citibank, N.A., incorporated by reference to
Exhibit 4(ii)(a) to the Company's Annual Report on
Form 10-K for the year ended December 1, 1982 (the
"1982 10-K").
4(ii)(b) Bond Purchase Agreement dated as of June 1, 1982 by
and among the Town of Islip Industrial Development
Agency, the Company and Citibank, N.A., incorporated
by reference to Exhibit 4(ii)(b) to the 1982 10-K.
13
<PAGE>
4(ii)(c) Lease Agreement dated as of June 1, 1982 between the
Town of Islip Industrial Development Agency and the
Company, incorporated by reference to Exhibit
4(ii)(c) to the 1982 10-K.
4(ii)(d) Pledge and Assignment with Acknowledgement thereof by
the Company, dated as of June 1, 1982 from the Town
of Islip Industrial Development Agency to Citibank,
N.A., incorporated by reference to Exhibit 4(ii)(d)
to the 1982 10-K.
10(i)(a) Loan Agreement dated December 28, 1983 between City
of Owatonna, Minnesota and the Company, incorporated
by reference to Exhibit 10(i)(b) to the 1983 10-K.
10(i)(b) Combination Mortgage, Security Agreement and Fixture
Financing Statement dated December 28, 1983 between
the Company, Mortgagor, and Norwest Bank Owatonna,
National Association, Mortgagee, incorporated by
reference to Exhibit 10(i)(c) to the 1983 10-K.
10(i)(c) Construction Loan Agreement dated December 28, 1983
by and between the Company and Norwest Bank, National
Association, and the City of Owatonna, incorporated
by reference to Exhibit 10(i)(d) to the 1983 10-K.
10(i)(d) Assignment of Rents and Leases dated December 28,
1983 between the Company and Norwest Bank Owatonna,
National Association, incorporated by reference to
Exhibit 10(i)(e) to the 1983 10-K.
10(i)(e) Form of City of Owatonna Industrial Development
Revenue Note in the principal amount of $3,500,000
dated December 1983, incorporated by reference to
Exhibit 10(i)(f) to the 1983 10-K.
10(ii) Lumex, Inc. Amended and Restated 1987 Stock Option
Plan, incorporated by reference to Exhibit 28 to the
Company's Registration Statement on Form S-8 (No.
33-48124), filed May 26, 1992.*
10(iii)(a) Form of Severance Agreement for certain senior
executives of the Company, incorporated by reference
to Exhibit 10.1 to the June 1988 8-K.*
10(iii)(b) Form of Severance Agreement for certain employees of
the Company, incorporated by reference to Exhibit
10.2 to the June 1988 8-K.*
10(iv) Lumex, Inc. Long-Term Incentive Plan, incorporated by
reference to Exhibit 10(v) to the Annual Report on
Form 10-K for the year ended December 31, 1993 (the
"1993 10-K").*
10(v) Loan Agreement, dated as of July 30, 1993, among the
Company, Cybex Financial Corp., and Chemical Bank,
incorporated by reference to Exhibit 10(vi) to the
1993 10-K.
10(vi) First Amendment to Loan Agreement, dated as of
November 26, 1993, among the Company, Cybex Financial
Corp., and Chemical Bank, incorporated by reference
to Exhibit 10(vii) to the 1993 10-K.
10(vii) Consulting Agreement, dated May 5, 1994, between L.
Cohen and the Company, incorporated by reference to
Exhibit 10(viii) to the Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994.*
14
<PAGE>
10(viii) Loan Agreement, dated as of May 18, 1994, among the
Company, Cybex Financial Corp. and European American
Bank, incorporated by reference to Exhibit 10(ix) to
the Annual Report on Form 10-K for the year ended
December 31, 1994 (the "1994 10-K").
10(ix) Ultimate Net Loss Vendor Agreement with Portfolio
Purchase, dated December 30, 1994, among the Company,
Cybex Financial Corp. and C.I.T., incorporated by
reference to Exhibit 10(x) to the 1994 10-K.
10(x) Portfolio Purchase Agreement, dated December 30,
1994, among the Company, Cybex Financial Corp. and
European American Bank, incorporated by reference to
Exhibit 10(xi) to the 1994 10-K.
10(xi) Consulting Agreement, dated January 27, 1994, between
JDX Limited and the Company, incorporated by
reference to Exhibit 10(xii) to the 1994 10-K.*
10(xii) Lumex, Inc. 1995 Omnibus Incentive Plan, incorporated
by reference to the Company's definitive proxy
statement, dated May 1, 1995, for its Annual Meeting
of Shareholders held on June 5, 1995 (the "1995
Proxy").*
10(xiii) Lumex, Inc. 1995 Stock Retainer Plan for Nonemployee
Directors, incorporated by reference to the 1995
Proxy.*
10(xiv) Employment Agreement, dated August 9, 1995, between
J. Raymond Elliott and the Company, incorporated by
reference to Exhibit 10(xv) to Amendment No. 1 to the
Quarterly Report on Form 10-Q/A for the quarter ended
September 30, 1995 (the "September 1995 10-Q").*
10(xv) Employment Agreement, dated August 17, 1995, between
John R. Cowin and the Company, incorporated by
reference to Exhibit 10(xvi) to the September 1995
10-Q.*
10(xvi) Employment Agreement, dated October 16, 1995, between
Robert McNally and the Company, incorporated by
reference to Exhibit 10(xvi) to the Annual Report on
Form 10-K for the year ended December 31, 1995 (the
"1995 10-K").*
10(xvii) Severance Agreement, dated May 8, 1995, between James
E. George and the Company. (filed herewith)*
21 Subsidiaries of the Registrant, incorporated by
reference to Exhibit 21 to the 1995 10-K.
23 Consent of Ernst & Young LLP, incorporated by
reference to Exhibit 23 to the 1995 10-K.
27 Financial Data Schedule, incorporated by reference to
Exhibit 27 to the 1995 10-K.
- -----------------
* Executive Compensation Plans and Arrangements.
(b) Reports on Form 8-K.
No reports on Form 8-K have been filed during the quarter ended
December 31, 1995.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
Lumex, Inc.
--------------------------
(Registrant)
By: /s/ Robert McNally
--------------------------
Robert McNally
Chief Financial Officer and
Senior Vice President - Finance
Date: April 29, 1996
16
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. PAGE
- ----------- ----
3(a) Restated Certificate of Incorporation of the Company,
as amended, incorporated by reference to Exhibit 3.1
to the Company's Current Report on Form 8-K, dated
June 7, 1988 (the "June 1988 8-K").
3(b) By-Laws of the Company, as amended, incorporated by
reference to Exhibit 3(b) to the Company's Annual
Report on Form 10-K for the year ended December 31,
1987.
4(i)(a) Rights Agreement dated as of May 23, 1988 between the
Company and Registrar & Transfer Company,
incorporated reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K dated May 18,
1988 (the "May 1988 8-K").
4(i)(b) Amendment to Rights Agreement dated as of March 15,
1989 between the Company and Registrar & Transfer
Company, incorporated by reference to Exhibit 4.1 to
the Company's Current Report on Form 8-K dated March
15, 1989.
4(ii)(a) Guaranty dated as of June 1, 1982 by the Company in
favor of Citibank, N.A., incorporated by reference to
Exhibit 4(ii)(a) to the Company's Annual Report on
Form 10-K for the year ended December 1, 1982 (the
"1982 10-K").
4(ii)(b) Bond Purchase Agreement dated as of June 1, 1982 by
and among the Town of Islip Industrial Development
Agency, the Company and Citibank, N.A., incorporated
by reference to Exhibit 4(ii)(b) to the 1982 10-K.
4(ii)(c) Lease Agreement dated as of June 1, 1982 between the
Town of Islip Industrial Development Agency and the
Company, incorporated by reference to Exhibit
4(ii)(c) to the 1982 10-K.
4(ii)(d) Pledge and Assignment with Acknowledgement thereof by
the Company, dated as of June 1, 1982 from the Town
of Islip Industrial Development Agency to Citibank,
N.A., incorporated by reference to Exhibit 4(ii)(d)
to the 1982 10-K.
10(i)(a) Loan Agreement dated December 28, 1983 between City
of Owatonna, Minnesota and the Company, incorporated
by reference to Exhibit 10(i)(b) to the 1983 10-K.
10(i)(b) Combination Mortgage, Security Agreement and Fixture
Financing Statement dated December 28, 1983 between
the Company, Mortgagor, and Norwest Bank Owatonna,
National Association, Mortgagee, incorporated by
reference to Exhibit 10(i)(c) to the 1983 10-K.
10(i)(c) Construction Loan Agreement dated December 28, 1983
by and between the Company and Norwest Bank, National
Association, and the City of Owatonna, incorporated
by reference to Exhibit 10(i)(d) to the 1983 10-K.
17
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. PAGE
- ----------- ----
10(i)(d) Assignment of Rents and Leases dated December 28,
1983 between the Company and Norwest Bank Owatonna,
National Association, incorporated by reference to
Exhibit 10(i)(e) to the 1983 10-K.
10(i)(e) Form of City of Owatonna Industrial Development
Revenue Note in the principal amount of $3,500,000
dated December 1983, incorporated by reference to
Exhibit 10(i)(f) to the 1983 10-K.
10(ii) Lumex, Inc. Amended and Restated 1987 Stock Option
Plan, incorporated by reference to Exhibit 28 to the
Company's Registration Statement on Form S-8 (No.
33-48124), filed May 26, 1992.
10(iii)(a) Form of Severance Agreement for certain senior
executives of the Company, incorporated by reference
to Exhibit 10.1 to the June 1988 8-K.
10(iii)(b) Form of Severance Agreement for certain employees of
the Company, incorporated by reference to Exhibit
10.2 to the June 1988 8-K.
10(iv) Lumex, Inc. Long-Term Incentive Plan, incorporated by
reference to Exhibit 10(v) to the Annual Report on
Form 10-K for the year ended December 31, 1993 (the
"1993 10-K").
10(v) Loan Agreement, dated as of July 30, 1993, among the
Company, Cybex Financial Corp., and Chemical Bank,
incorporated by reference to Exhibit 10(vi) to the
1993 10-K.
10(vi) First Amendment to Loan Agreement, dated as of
November 26, 1993, among the Company, Cybex Financial
Corp., and Chemical Bank, incorporated by reference
to Exhibit 10(vii) to the 1993 10-K.
10(vii) Consulting Agreement, dated May 5, 1994, between L.
Cohen and the Company, incorporated by reference to
Exhibit 10(viii) to the Quarterly Report on Form 10-Q
for the quarter ended June 30, 1994.
10(viii) Loan Agreement, dated as of May 18, 1994, among the
Company, Cybex Financial Corp. and European American
Bank, incorporated by reference to Exhibit 10(ix) to
the Annual Report on Form 10-K for the year ended
December 31, 1994 (the "1994 10-K").
10(ix) Ultimate Net Loss Vendor Agreement with Portfolio
Purchase, dated December 30, 1994, among the Company,
Cybex Financial Corp. and C.I.T., incorporated by
reference to Exhibit 10(x) to the 1994 10-K.
10(x) Portfolio Purchase Agreement, dated December 30,
1994, among the Company, Cybex Financial Corp. and
European American Bank, incorporated by reference to
Exhibit 10(xi) to the 1994 10-K.
10(xi) Consulting Agreement, dated January 27, 1994, between
JDX Limited and the Company, incorporated by
reference to Exhibit 10(xii) to the 1994 10-K.
10(xii) Lumex, Inc. 1995 Omnibus Incentive Plan, incorporated
by reference to the Company's definitive proxy
statement, dated May 1, 1995, for its Annual Meeting
of Shareholders held on June 5, 1995 (the "1995
Proxy").
18
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT NO. PAGE
- ----------- ----
10(xiii) Lumex, Inc. 1995 Stock Retainer Plan for Nonemployee
Directors, incorporated by reference to the 1995
Proxy.
10(xiv) Employment Agreement, dated August 9, 1995, between
J. Raymond Elliott and the Company, incorporated by
reference to Exhibit 10(xv) to Amendment No. 1 to the
Quarterly Report on Form 10-Q/A for the quarter ended
September 30, 1995 (the "September 1995 10-Q").
10(xv) Employment Agreement, dated August 17, 1995, between
John R. Cowin and the Company, incorporated by
reference to Exhibit 10(xvi) to the September 1995
10-Q.
10(xvi) Employment Agreement, dated October 16, 1995, between
Robert McNally and the Company, incorporated by
reference to Exhibit 10(xvi) to the Annual Report on
Form 10-K for the year ended December 31, 1995 (the
"1995 10-K").
10(xvii) Severance Agreement, dated May 8, 1995, between James
E. George and the Company. (filed herewith)
21 Subsidiaries of the Registrant, incorporated by
reference to Exhibit 21 to the 1995 10-K.
23 Consent of Ernst & Young LLP, incorporated by
reference to Exhibit 23 to the 1995 10-K.
27 Financial Data Schedule, incorporated by reference to
Exhibit 27 to the 1995 10-K.
19
NYFS10...:\80\60380\0001\2286\10K4266K.34D
Exhibit 10(xvii)
----------------
LUMEX, INC.
81 Spence Street
Bay Shore, New York 11706
May 8, 1995
Mr. James E. George
c/o Lumex, Inc.
81 Spence Street
Bay Shore, New York 11706
Dear Jim:
This letter will confirm the understandings regarding the
termination of your employment with Lumex, Inc. ("Lumex").
1. Payments and Benefits. Subject to your compliance with
---------------------
the provisions of this Agreement, Lumex shall provide you with the
following payments and benefits in lieu of any and all other
severance, termination, vacation or other rights which you may have
with respect to your employment with Lumex, except as otherwise set
forth herein:
(a) Salary. Your current salary through May 24, 1995.
------
Your compensation for your services rendered as a Director for the
period after May 24, 1995 will be the same as any other non-employee
Director.
(b) Bonus Incentive Compensation Program (the "BIC
----------------------------------------------
Program"). You shall be entitled to, if and when awarded, a pro-rata
---------
share of any bonus made under the BIC Program in 1996 for performance
in 1995.
(c) Relocation Expenses. Lumex will reimburse, or directly
-------------------
pay, your reasonable expenses of relocating you from Bay Shore to your
home at 19 West Cheryl, Phoenix, Arizona 85021, subject to appropriate
substantiation of such expenditures.
(d) Health Coverage. Through December 31, 1995, Lumex will
---------------
provide you with substantially the same medical and health benefits
generally provided to employees of Lumex or reimburse your cost of
COBRA coverage in whatever way is legally appropriate.
<PAGE>
Mr. James E. George
May 8, 1995
Page 2
(e) Automobile. Lumex will continue to pay your lease
----------
payments for your current automobile through June 1996, the end of the
lease term, at which time Lumex will purchase the automobile and
transfer it to you for no additional consideration. All expenses of
operating the automobile, including, without limitation, gas, oil,
insurance and repairs, shall be paid by you.
2. Resignation. You hereby resign as an employee and
-----------
officer of Lumex and its subsidiaries and divisions, effective as of
May 24, 1995.
3. Non-Compete. You agree that for a period ending on May
-----------
24, 1996, you will not, directly or indirectly, within the continental
United States for yourself, or as agent or on behalf of, or in
conjunction with, any person, firm or corporation, design,
manufacture, distribute, sell or deliver any products in competition
with Lumex or engage or participate in, or become employed by or
render advisory, consulting or other services to or for any person,
firm or corporation, or in connection with any business activity,
directly or indirectly, in competition with any business operations or
activities of Lumex, or invest or otherwise become interested in, as
principal, partner, officer, director or stockholder of (otherwise
than through the ownership of not more than 3% of the outstanding
voting securities of any corporation which is listed on a national
securities exchange or whose securities are regularly traded in the
over-the-counter market) any such person, firm or corporation.
4. Confidentiality.
---------------
(a) You will not divulge, furnish or make accessible to
anyone any knowledge or information with respect to confidential or
secret methods, processes, plans, information or materials of Lumex,
or with respect to any other confidential or secret aspects of the
business of Lumex. In furtherance of the foregoing, you shall not,
among other things, furnish, discuss or make accessible to any third
party any information and/or documents with respect to the following:
i) projections or the results of operations of Lumex,
including sales, profits and gross profit margins;
ii) the acquisition of new product lines by Lumex or
plans with respect to new projects;
<PAGE>
Mr. James E. George
May 8, 1995
Page 3
iii) customer lists or business or marketing plans,
including proposals to enter any new markets, or pricing plans or
policies of Lumex; or
iv) any other information of a similar nature which,
in accordance with customary business practices, would be
considered confidential or proprietary to Lumex.
(b) You hereby confirm to Lumex that you have returned to
Lumex all such confidential material in your possession, including,
without limitation, customer lists, long-range plans, specifications
and financial information.
5. Non-disparagement. You shall not make any statements or
-----------------
comments, orally or in writing, publicly or privately, to any third
party that would tend to disparage, denigrate or embarrass Lumex or
its respective management, officers or directors.
6. Injunction. You acknowledge that if you violate any of
----------
the provisions of Sections 3, 4 or 5 with respect to non-competition,
confidentiality and non-disparagement, Lumex and its affiliates would
sustain irreparable harm and, therefore, in addition to any other
remedies which Lumex may have under this Agreement or otherwise, Lumex
shall be entitled to an injunction to be issued by any court of
competent jurisdiction restraining you from committing any such
violation under this Agreement.
7. Miscellaneous.
-------------
(a) The rights and obligations arising under this Agreement
shall inure to the benefit of and shall be binding upon your heirs,
executors, successors, and assigns, and shall inure to the benefit of
and be binding upon Lumex and its successors and assigns.
(b) Any notice required or permitted to be given hereunder
shall be in writing and shall be delivered by hand, telecopy or sent
postage prepaid by registered or certified mail, return receipt
required, if to Lumex at the address set forth above for Lumex,
Attention: Chief Financial Officer, and if to you at your address set
forth above, or at such other addresses as either party may designate
by such notice, and any such notice shall be deemed to have been given
when so delivered or mailed.
<PAGE>
Mr. James E. George
May 8, 1995
Page 4
(c) If, at any time subsequent to the date hereof, any
provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision
shall be of no force and effect, but the illegality or
unenforceability of such provision shall have no effect upon and shall
not impair the enforceability of any other provision of this
Agreement.
(d) This Agreement constitutes the complete understanding
between the parties with respect to the subject matter hereof. This
Agreement shall not be altered, modified, amended or terminated,
except by written instrument signed by each of the parties hereto.
(e) The Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York.
(f) References to Lumex in Sections 3, 4 and 5 shall
include all divisions and subsidiaries of Lumex.
(g) Both of us agree that, except to the extent required by
law, we will maintain the strict confidentiality of this Agreement and
the substance hereof.
If the foregoing correctly reflects our understanding,
kindly sign, where indicated below, and return to the undersigned the
duplicate copy of this letter.
Very truly yours,
LUMEX, INC.
By:/s/ Thomas W. Kahle
----------------------
Thomas W. Kahle
Chairman of the
Compensation Committee and
on behalf of the Board of
Directors
Agreed to:
/s/ James E. George
-------------------------
James E. George
NYFS10...:\80\60380\0001\1196\AGR5035M.16B
