Exhibit 10(xvi)
Lumex, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxxx, Xxx Xxxx 00000
August 17, 1995
Xx. Xxxx X. Xxxxx
00 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxx 00000
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:
(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 xxxx-
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.
(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.
(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;
(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.
(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.
(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.
(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/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman
Accepted and Agreed to:
/s/ Xxxx X. Xxxxx
Xxxx X. Xxxxx
